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Executive Summary

In a new technology driven world, studies have shown that more than 51% or an estimate of

3.2 billion of the world’s population is using the internet every day (ITU, 2015). Toys’R’Us,

Inc merchandise is sold in over 1660 stores world-wide in 37 countries and jurisdictions.

The purpose of this audit is to identify the current digital marketing strategy of the company

and propose ways to improve its strategy (Ladaque J, 2014). The company has its fair share

of owned, paid and earned media, however this audit will be carried out to identify the

strengths and weakness in its strategy and its threats and opportunities with relation to its

competitors (Tustin, D.H.; Strydom, J.W.Southern, 2006). Strategies that will be discussed

are the market development and penetration strategies, as well as the customer

engagement strategy with its social media influence (Bocken, Nancy M.P.; Fil, Alison;

Prabhu, Jaideep, 2016). To formulate the strategies of the company, SMART and RACE

objectives will be implemented to ensure them success in a long run (Bjerke, May B; Renger,

R, 2017). Marketing metrics used to measure a Return on Investment (ROI ) and compare

data in areas which require improvement are also discussed. Various tools such as SEO,

social media, email, affiliate programs should be mixed with traditional marketing

techniques to ensure overall success of marketing to customers (Nikolaos; Vlachopoulou,

Maro, 2018). KPIs are being discussed as they are also a key factor in evaluating the

performance and effectiveness in reaching the organisations goals (Muchiri P, Pintelon L,

Martin H, De Meyer A, 2010).


Introduction

Toys “R” Us, Inc was founded in 1948 by its founder Charles P. Lazarus. It is an American

company which manufactures and retails toys for children.

Different elements of online channels

There are three (3) different types of media emphasized in digital marketing which are

Earned, Owned and Paid media (Harrison. F, 2013). Owned and Paid media are directly

linked to the online environment. Social media platforms such as Facebook, Twitter,

YouTube, etc., which belongs directly to the company is known as Owned Media. Paid

Media refers to companies spending its capital on paid searches (PPC), displaying of ads and

affiliate marketing. Earned media which is not in the online environment is the most

important because it consists of Word-of-mouth (WOM) marketing from the customers,


newspaper publishing, site reviews and blogs. Customers tend to believe in a product based

on Earned media more than anything else (Su, Yi-Liang; Lin, Tom M.Y.; Chang, Sue-Ting,

2013). The company’s media presence is shown in the table below.

PAID MEDIA OWNED MEDIA EARNED MEDIA

Affiliate Marketing Social Media Word Of Mouth


- Conversant- 3% for - Facebook - DALLAS Weekly
the UK. - Twitter - Wikipedia
- PepperJam Network- - Pinterest - Black Friday
2% for Canada - YouTube Campaigns
- Impact Radius- - Instagram - Christmas Campaigns
Commission varies - Adscan
for the States Website - Bellevue
- Amazon Associate Https://www.toysrus.com/ - Green Bay
Program - ispot TV
- Television Ads - BBC
- YouTube Ads

Digital Marketing Strategy


The SOSTAC model is a digital marketing strategy model that allows us to conduct a step

by step analysis on the goals to be achieved (Moiseieva, Mariia, 2013). It begins with us

understanding the SITUATION the company is in with regards to what it has done so far

in its digital marketing activities, from this we can set a benchmark on what we would

like to accomplish (Lock, Dennis, 2001). OBJECTIVES are being laid out to direct

accomplishments over a long or short term basis (Mardle, Simon; Pascoe, Sean, 2002).

Following the objectives for the company, we will then have to use a STRATEGY, these

strategies require us to engage the targeted audience before conducting our planning

and research on other competitors, identifying their weakness and using it against them

to gain a competitive edge in the market (Gorman, Michael F, 2011). TACTICS are based

on defining “ how exactly do we get there” by implementing the chosen strategy, what

are the tools needed to make it a success? , these tactics have to exclusive and discrete

so that it will not be easily copied or duplicated by other competitors and they are our
key battle “weapons” for an organisation (Sandberg, William R. ; Hofer, Charles W,

1987). The ACTIONS stage requires the organisation to put its strategies and tactics into

play, constant feedback and innovation is required to constantly improve the process,

ACTIONS also include the organisation monitoring the competitor’s reaction towards

them stepping forward in a different directions and it allows the organisation to come

back with a counter strategy should it be needed (Hemphill, Thomas,2004). Finally there

is the CONTROL stage, this stage monitors the overall digital marketing performance

based on data and analytics , key performance indicators ( KPI )s , have to be set in order

to showcase how well an individual or department is performing and how tactical are

they in keeping and sustaining the competitive edge as well as identifying areas for

improvement, innovation and solutions (Tsai, Yuan-Cheng ; Cheng, Yu-Tien, 2012). To

analyse the current digital marketing activities and to have a clearer understanding on

the situation and lay out objectives, a piece of data is extracted from Similarweb to give

us an overview on its current situation. SWOT analysis and porter’s five ( 5 ) forces are

also included to identify the strengths and weaknesses of Toys “R” Us for us to apply our

strategies and tactics (Zhao, Weilin ; Watanabe, Chihiro ; Griffy-Brown, Charla, 2009).

Situation Analysis and objectives


Channel – Specific Traffic

Toy “R” Us S – Strengths W- Weaknesses

- Good reputation in the toy - There need an


industry. insufficient reach into
- High percentage of the social media
customers access the platforms.
website doing their search - Not enough display of
for specific toys. ads.
- Referrals and direct search - There is an insufficient
tells us that parents share reach from the e-mails.
information about the
product and by directly
searching the website tell us
that they believe in our
brand to deliver quality toys
to children.
0 – Opportunities SO Strategies WO Strategies
- High percentage of - Create more social
- SEO and PPCs / customers access website via media platforms.
ads to drive the search, good opportunity to - Display ads to create
traffic to our display ads, PPCs and SEO to more awareness of the
website when drive the traffic to our brand.
they search. website. - Website has to suggest
- Referrals to the - Customers, who refer our customers to leave E-
website are our website to others, can be our mail I.Ds to receive
leads. leads, more membership newsletters.
- Customers who discounts are to be extended
visit directly to them.
believe in our - Customers, who visit our
product. website directly, believe in
our product, constant emails
and updates are to be sent to
them as well as invitation to
campaigns.

T – Threats ST Strategies WT Strategies


- New competitive - Create more customer - Be very active on social
products coming reviews about products. media to compare
into market. - Customers who provide us prices of toys.
- New entrants referrals, discounts for the - Display ads of new
- Competition for new products have to be products before
products in terms given. competitors do.
of pricing - Launch campaigns for new - Constantly remind
products. customers that the
brand is quality, thus
price in delivering
quality products does
matter.

Market competition analysis

Analyse the factors using the Porter's five (5) forces model to gain the competitive edge

( E.Dobbs M, 2014 ) .

Bargaining power of suppliers- It is important to have many suppliers as it creates a

wide range of products for the customers and also shows the establishment of the

company and a good selling point about Toys “R” Us, Inc is that it has many suppliers

from the toy manufacturers , thus there is less bargaining power of suppliers, we can
maintain the price that we want to pay for the goods (Brown, David T. ; Fee, C. Edward ;

Thomas, Shawn E, 2009 ).

Bargaining power of buyers- If the buyers knew exactly what they want to pay and what

they should be paying for in a product , then the company will not have a lot of

bargaining power towards these buyers, so the buyers can choose to buy their product

somewhere else if the price is not right. But if the product is really exclusive or special,

then the buyers will not have a lot of power, thus Toys “R” Us should retail more

exclusive products that can keep the bargaining power low at that period of time

(Taylor; Curtis R., 1995).

Threats of new entrants- The threat of new entrants in any business is inevitable, in the

toy industry today it is a very competitive market, we have to make sure that quality

products are produced and campaigns are done regularly to keep the parents engaged

as they get to watch their child innovate and have fun using our products. We need

them to believe in the WHY (Sinek, S., 2011) we are in this business, thus companies

from China or online markets cannot gain the competitive edge by making the exact toys

at a cheaper price.

Threat of substitute product of services- Technology is changing everyday, and we see it

in our phones and our computers, however it has also greatly affected our toy industry,

kids these days are very exposed to technology, and there are many companies which

have invested the capital in producing toys with the latest technology (Przybylski,

Andrew K ; Weinstein, Netta, 2013 ), it is important to also note that this trend has to be
kept up to gain the competitive edge. Traditional toys don’t sell as well as technology

driven toys these days.

Rivalry among competitors- There are major competitors in the toy market now, both in

retail stores and online, ranging between the technology, price, creativity and brand .

Since Toys”R”Us,Inc is a niche in the toy industry for many years ,they must keep up with

all these changing trends and use its experience in the market to trigger the “BUY”

button of its customers (Mukherjee, Jaydeep, 2012 ) ,do a market research of customers

to find out what does the majority prefer, like or dislike about the company, and make

amendments immediately to stay competitive and be a major threat in the market.

Force Current Near Recommendations


Situation Future

Bargaining power of suppliers Low Average For now there are adequate
amount of stores , thus there will
be a good number of suppliers to
all outlets , ensure the stores do
not cease operations.

Bargaining power of buyers Average High Focus more on exclusive and


special products

Threats of new entrants High Strong More and more promotions and
constant engagement with
customers is very important as
this builds the relationship
between the business and its
customers , once a relationship is
built, new entrants will find it a
challenge to enter the market.

Threat of substitute product High Strong Pick up the latest trends and
of services products for toys, invest more
capital in toys with technology.
Rivalry among competitors High Strong The toy industry is very
competitive , keep doing SWOT
analysis from time to time to
understand the position of the
company , find out what
customers likes and dislikes.

Direct competitors to Toys’R’Us

- Walmart
- Target.com
- Disney store
- Fao.com
- Etoys.com
- Toywiz.com
- Toystogrowon.com
- Sillyasstoys.com
- Amazon.com
- Bestbuy.com

Digital Marketing Objectives

Specific- To create more awareness of the brand over its social media platforms and

increase sales revenue by 10%.

Measurable- To get one ( 1 ) million followers on all social media platforms.

Attainable- To convert 25% of the followers to leads.


Relevant- To convert at 20% of the leads into customers to increase revenue.

Timely- To complete the task in a eight ( 8 ) month period before review.

Strategy and tactics

To develop a digital marketing strategy and cover the marketing funnel, we have used the

RACE( Reach,Act,Convert,Engage) framework ( Chaffey D, 2015 ) . Reach is the stage that

consists of using tools such as SEO , paid Ads , pay-per-clicks and the type of content to

interest users. Act is the stage where it is crucial to gather as much information of users as
possible , by conducting surveys , gathering feedback, collecting customer interests on

products in campaigns , gathering E-mail addresses and promoting newsletters and

promotions ( Mattis, Cathy,2011 ) it give us an understanding of who are our potential

customers are and generate new leads, they can even give us information on the specific

interests of customers. Convert is the stage when amounts of data about leads have been

collected and how it can be used as an advantage, competitive edge and return on

investment when we convert them into our customers. Sales calls and constant remarketing

to these potential customers will not be a challenge as we will be able to market products of

interest to them (Pitt, Leyland F. ; Berthon, Pierre ; Watson, Richard T. ; Ewing, Michael,

2001). The convert stage can also allow us to look at what have we not been doing right and

how do we improve on our process , more better ideas and brainstorming can be performed

at this stage and then re-evaluated back to the ACT stage again to run a trial and error.

Engage is the final stage where we can provide customization of products to meet the

needs and satisfy certain customers , loyalty programs and discounts can be issued to them ,

constant communication with these customers is crucial as they will be our biggest Word-

Of-Mouth marketers ( Ahrens, Jan ; Coyle, James R ; Strahilevitz, Michal Ann, 2013) , lastly

we can analyse on our objectives to see if they have been met , we can measure our

achievements and our goals and analyse the best strategies through the whole process by

Google Analytics and our social media responses , based on the data collected, we will then

monitor our KPI (key performance indicators) to ensure that specific targets are me. Based

on our SMART objectives and RACE framework we can apply:

Strategy

Reach :
● To create more awareness of the brand over its social Display ads TOFU ( Top of
media platforms and increase sales revenue by 10%. SEOs and PPCs Funnel )
Email Marketing
Content
marketing
Mobile
marketing

Act & Convert :

● To get one ( 1 ) million followers on all social media Reduce bounce


platforms. rates
● To convert 25% of the followers to leads. Add more
content to
website & start
sending
newsletters to
readers
More ads over all MOFU ( Middle
social media of Tunnel )
platforms
Identify 25% of
the followers as
leads based on
likes & readers

Engage :
● To convert at least 20 % of the leads into Personalised
customers to increase revenue. Loyalty program
● To complete the task in a eight ( 8 ) month period Offer discounts ,
before review. invites to all
campaigns
Re-marketing and
re-engagement
Sales calls

BOFU ( Bottom of
Funnel )

Tactics

Strategy Implementation
Targeting and segmentation Targeting the parents is the key , use content that will engage
both the parent and child , display all products on website for
children to see and choose
Positioning Position the products based on the different interest level of
children from different countries , if there are specific toys
which children from another country will play , position these
toys as a selling point from country to country.
Proposition and the marketing mix Product – Offer a wide range of products.
Place- If there is a lack of reach, reach out to find partnerships
on websites like Amazon and Lazada.
Price- Compare pricing with other large retail outlets and
compete.
Promotion- Invite visitors to like a page or ad and leave
valuable comments to receive special promotions.
People – Provide a live chat service and ensure that the FAQ
page is updated.
Processes- Provide a systematic process.
Physical evidence- Display accounts of true incidents about
how toys help the growth of children, display awards and
testimonials.
Partners- Partnership with movie toy makers, make product
exclusive, examples are selling the latest star wars action
figures.
Brand strategy Use Content Marketing, know the audience, develop books for
children, DVDs, clothes, use after sales support, generate value
to customers.
Online representation and Identify and prioritise long term customers or customers who
presence have given us a good return on investment.
Content and engagement strategy Support buying process and stickiness to promote return visits,
collect reviews , customer feedbacks and ratings.
Digital channel acquisition Ensure adequate communications via
communications strategy SEOs ( Paid and Natural )
Email marketing to leads
Affiliate marketing program
Advertising
Digital channel conversion strategy Ensure page design and layout is user friendly and easy to use,
messaging and performance which makes the visitors engage
and convert.
Digital channel retention To ensure customers keep coming back , focus on the tactics of
communications strategy marketing them offline as well like conducting events, through
these events, create the awareness of website online
presence.
Data strategy Apply the 4 W and 1 H concept , What, Where, When , Why
and How to improve quality of customer data across channels
and increase the relevant awareness.
Multichannel integration strategy Understand the customer journey cycle and which digital
marketing strategy should be used in different parts of the
cycle.
Social media marketing strategy Start promoting on all social media websites , create ways to
“force” the ad to be seen , can be done while a user is
watching a 5 min long video on his/her social media account,
ensure that an ad of about 20 seconds about the brand will be
played in the middle of video.
Digital marketing governance Use the fish-bone diagram to manage internal and external
strategy resources.

Actions & Control

Measuring your digital marketing metrics can be done with websites such as Google

Analytics or SimilarWeb , the data presented can give us a better understanding on how to
constantly make improvements (Nylén, Daniel ; Holmström, Jonny, 2015). Data which can

be useful to us are activity time on the website by overall users, how frequent do they visit

the website, bounce rates and contents which users spend the most time looking at . We

can even monitor which social media sites to improve more marketing activities and which

social media sites are the easiest to reach out to users (Britt Bischoff,2015). After looking at

all the data and drafting up of strategies, we can now set KPIs and measure them , KPIs

have to regularly monitored to know how effective are they and what are the types of KPIs

are needed to ensure that results are achieved (José Ramón Saura ; Pedro Palos-Sánchez ;

Luis Manuel Cerdá Suárez,2017). After all marketing activities are done, the next question is

to know if there is a Return On Investment ( ROI ) ? For this audit , we will be analysing data

taken from SimilarWeb.

Overall Traffic, Bounce rate and Average Visit Duration

KEY PERFORMACE INDICATORS ( KPI ) ARE RESULTS BEING MET ?


● Increase amount of visitors to 70 million world-wide in 4 YES NO
months, considering the size of the company and the
number of years it has been in operation.
● Increase the average visit duration to at least 10 mins to YES NO
engage visitors in content which they find useful to them
and it gives us an insight of their level of interest.
● The bounce rate has to be decreased as 31 % is considered YES NO
to be quite high , targeting the right campaigns and
removing irrelevant sources.
Recommendations :

Channel-Specific Traffic
KEY PERFORMACE INDICATORS ( KPI ) ARE RESULTS BEING MET ?
● Reach out to individual social media platforms and invest YES NO
more capital in the paid ads , ensure that the ads are being
displayed more than 5 times per day to users.
● More marketing to be done via E-mail when sending out YES NO
newsletters.
● Increase reach on YouTube by video marketing and increase YES NO
more tweets about promotions on twitter , both sites are
big platforms.
Recommendations :

User Demographics

KEY PERFORMACE INDICATORS ( KPI ) ARE RESULTS BEING MET ?


● High percentage of visitors come from the home country , YES NO
United States, more awareness has to be created to
different countries. Television advertisements are a good
start.
Recommendations :

Search Trends

KEY PERFORMACE INDICATORS ( KPI ) ARE RESULTS BEING MET ?


● High percentage of visitors come to the website via search YES NO
engines, ensure that there are PPCs and SEO to drive traffic
to website.
Recommendations :
Referrals

KEY PERFORMACE INDICATORS ( KPI ) ARE RESULTS BEING MET ?


● Work on a Business to Business ( B2B ) proposal to sites YES NO
referring our website, assist to refer their site as well, the
both parties must stand to gain from a win-win situation.
Recommendations :

Total Conversions and Return On Investment ( ROI )


The conversion rates will allow us to understand how many of visitors to the website are

being converted into clients, customers , subscribers and leads. However the website

content should be based only on data and metrics (Hu, Nan ; Liu, Ling ; Bose, Indranil ; Shen,

Jialie, 2010 ). Building a website that generates revenue requires careful management ,

setting goals and monitoring them (Mithas, Sunil ; Ramasubbu, Narayan ; Krishnan, M. S. ;

Fornell, Claes, 2006 ). In monitoring our conversion rate , we can use a Clickstream Analysis

to find out how many clicks stands between the visitors and the desired outcomes , or a

drop off point where the visitors leave the page (Heim, E. ; Seitel, A. ; Isensee, F. ; Andrulis, J.

; Stock, C. ; Ross, T. ; Maier-Hein, L., 2017 ). For some cases , removing a page , editing
contents and generating a more easier way to make a purchase can lead to an increase in

the conversion rate. Conversion metrics is about finding out what works best for your

website and making the necessary investments and changes to track progress overtime. A

Return On Investment is completed when money invested into managing a website, hosting

a campaign or driving traffic through PPCs converts a visitor into a customer or client

(Wildner Raimund ; Modenbach Guido, 2015 ). All companies want to have a ROI on their

digital marketing activities, in doing so they have to constantly monitor and measure the

campaigns from start to finish, do an evaluation from time to time , understanding the latest

trends and updating their site to ensure they keep up with competitors and lastly do the

measurement again to see if objectives are met (Mogollon, Manuel ; Raisinghani, Mahesh,

2003 ).

Steps to improve conversion rates

- Identify the drop-offs and remove them.

- What is the best product or source which converted the visitor.

- What were the specific actions that the visitor completed before converting.

- Take note of certain details of what your “regular visitors” looks like.

- Do the visitors return?

Recommendations
The basic definition of digital marketing is to promote a brand’s product and service through

various forms of digital channels to consumers. However one must bear in the mind that

sales and marketing rely on the performance of a company and how well it does to keep its

promises to customers, marketing will be considered in-effective if a company cannot meet

the demand standards. I would recommend Deming’s Approach of Total Quality

Management, which focuses on improving work flow and standards from a bottom-up

approach and how setting an organisation culture is important, marketing departments

have to work with operational departments hand in hand to understand its constraints as

well as top management profit and loss concerns before designing a marketing tactic. The

similar theory applies for Toys “R” Us as well, they should start by employing floor staff with

the right attitude as they are the first point of contact to customers, employees who go

beyond the call the duty to satisfy customer’s needs, a good backend operation team who

can support the products arriving on time to the stores and creating a simple yet elegant

layout of the toys in the stores and management committed to providing the best customer

experience. All these factors contribute to marketing. Developing a good strategy would be

to infiltrate the social media platforms to make its promotions and brand as viral as possible

(Wuebben, Daniel, 2016 ) , going viral is best Word-Of-Mouth ( WOM ) marketing tactic,

ways to do this can be promoting new exclusive or unique products which can be difficult to

purchase in most small retailers (Andritsos, Dimitrios A. ; Tang, Christopher S. , 2010 ).

Understanding the customer journey cycle, techniques to perfect the strategy is very

important, a key factor in perfection is to gather as much feedbacks as possible from

customers as quoted by Edgar Mitchell , “ if We don’t take of our customers, someone else

will “ , slashing prices during festive periods and providing free deliveries after purchase are
examples of “taking care” of customers (Gupta, Sunil ; Lehmann, Donald R. ; Stuart, Jennifer

Ames, 2004 ).

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