Kids Market Consulting

Case study

Presented by
Ayush Agarwal
Prof Suzanne Powers
UC Berkeley Extension
BUS ADM X415 Marketing Strategy
March 11, 2015

1. Porters 5 Force Model

1.1)

Threat of New Entrants

Artificial barriers for the field of marketing research are low in Ukraine. The
Ukrainian Marketing Association (UMA) developed regulations to ensure that
the Research firms adhere to legal regulations, stabilize pricing policies.
However, the regulations were not stringent enough to pose barriers to entry
for the new entrants. Ukraine witnessed poor tax accounting practicing due to
which mispricing was possible.
Hence, threat of new Entrants was low.

1.2)

Bargaining power of buyers

No firms in Ukraine except KMC targeted the population segment of kids.
Even though, only few local companies had brands oriented towards kids, they
hardly had 1 Co. to perform the market research for them. As a result, the
bargaining power of buyers- the local companies was very low.

1.3)

Bargaining power of suppliers

Concentration of suppliers: Ukraine had around 30 market research
companies. None of the firms focused solely on the market research of
children. Also, advertising agencies started performing market research to
meet the client requirements. Hence, there was low bargaining power among
the sellers due to low differentiation.
Switching cost: The switching cost would depend on the terms and agreements
with the local companies.
Brand Value: As the number of supplies was high and consisting of big,
established players; establishing a brand value would be difficult compared to
a situation when the number of players are low.
Forward integration: The market research firms all worked towards satisfying
the customer needs. They were involved in advertising, branding and market
agencies. They did a forward integration which would increase the bargaining
power of the suppliers.

1.4)

Competitive Rivalry
Ukraine witnessed several sources of competition. It had around 30 market
research companies. The major for companies had global sales of 747 million.
AC Neilson also conducted its operations in Ukraine, it being the largest
market research firm in the world.
Advertising agencies joined the competition by doing market research to meet
the client demands. Also, independent consultants did market research work.

1.5)

Availability of substitutes
The substitutes to marketing research firm could be research performed by the
local companies themselves. This could be through field engineer feedback,
customer surveys, magazine surveys, and online forms. However, the local

companies will find the task tedious to perform as it is expensive, and is time
consuming. Hence, availability of substitutes is low.

2. SWOT Analysis:
Strengths:
Better equipped to train the customers for specialized workshop Child
targeted marketing
As KMC was initially a part of DDI, it was possible for them to use the
corporate resources at reduced rates.
KMC were able to use DDIs experience and customer base when they
entered the market.
Cost efficiency as a result of sharing office space with SC-DOM in
Kyiv.
KMC shared the advertising platform with DDI which resulted in
additional cost savings.
Weakness:
KMC faced challenges due to its first mover position in the kids,
tweens and teens niche.
Difficult to obtain information from children.
Difficulty in interpreting and articulating information from the kids.
Due to lack of available information among the local companies about
the children niche segment, the clients initially had low level of
knowledge
Opportunities
Expand globally so as to reach out to global customers.
Using the latest mobile technology to reach to the niche market
Exploring other niche segments. This could include products for retired
population.
Developing techniques for better interpretation of information shared
by children.
Threats
High competition exists in Ukraine. AC Neilson, Worlds largest market
research firm also has its presence in Ukraine. Along with the 30
marketing companies, independent consultants, and advertising
agencies also conduct market research to meet customer demands.
Extensive government intervention can affect the accountability of the
company. The government regulates the pricing.
Like every other industry, recession could hit the market research
industry as well. This would lead to the plummeting of the marketing
expenditures by the customers and would affect research firms
adversely.

3. Advantages & Disadvantages

By treating pre-adolescents as independent, mature consumers, marketers have
been very successful in advertising the products effectively to the target
consumers.
According to the 2008 YTV Kids and Tweens Report, kids influence:
Breakfast choices (97% of the time) and lunch choices (95% of the
time).
Where to go for casual family meals (98% of the time) (with 34% of
kids always having a say on the choice of casual restaurant).
Clothing purchases (95% of the time).
Software purchases (76% of the time) and computer purchases (60% of
the time).
Family entertainment choices (98% of the time) and family trips and
excursions (94% of the time).
As a result, industry spending on advertising to children has exploded over the
past two decades. In the United States alone, companies spent over $17 billion
doing this in 2009 more than double what was spent in 1992.
Parents today are willing to buy more for their kids because trends such as
smaller family size, dual incomes and postponing having children until later in
life mean that families have more disposable income.

Advantages involved in targeting kids, tweens, and teens for marketing

research:
Todays kids have more autonomy and decision-making power within the
family than in previous generations, so it follows that kids are vocal about
what they want their parents to buy. Targeting them directly guarantees parents
acting as gatekeepers will be not be the only ones influencing buying
decisions.
With the help of well-paid researchers and psychologists, advertisers now have
access to in-depth knowledge about childrens developmental, emotional and
social needs at different ages. So now marketers know well their target
populations to plan marketing events effectively
Having developed brand recognition in very early age leads to life long
relationship with the consumers. According to the Centre for a New American
Dream, babies as young as six months of age can form mental images of
corporate logos and mascots.
Disadvantages involved in targeting kids, tweens, and teens for marketing
research:
Budget shortfalls are forcing school boards to allow corporations access to
students in exchange for badly needed cash, computers and educational

materials. School is expected to be the place where student should be

protected from the advertising and consumer messages but not anymore.
Kids are often online alone, without parental supervision. Some small
companies can use the internet medium to influence them for products not
suitable for them and affect their physical and mental health.
The marketing of adult entertainment to children has been, and continues to
be, an ongoing issue between government regulators and various media
industries.
Marketers are using child psychologists to target kids for wrong reasons.
Direct access to the kids, teens make them vulnerable and lead to unethical
practices.

4. Next steps for KMC

In my opinion KMC has already passed the initial challenge of being first
mover position in the kids, teens and tweens niche. Even though there has
been increasing competition from the non-specialized firms in their niche
market, they clearly have better knowledge and experience handling kids,
teens and tweens market. KMC should continue working towards strengthen
the current niche market knowledge base.
Teenagers are an obvious prime audience for digital marketing strategies,
given their avid use of mobile phones, media players, blogs, online video
channels, social networks such as Facebook and Twitter, and other digital
media platforms and devices.
Some of the key areas which KMC can explore apart from maintaining their
prime position in their niche market:
Location-based mobile marketing: - Young people in particular rely on mobile
devices for a growing number of services: phone, web and social network
access, maps and directions, entertainment, and more. The ubiquity of mobile
phones gives marketers the unprecedented ability to follow young people
throughout their daily lives, delivering enticing marketing offers that are
designed to elicit impulsive behaviours. According to the Pew Institute, 74%
of adult smart phone owners ages 18 and older say they use their phone to get
directions or other information based on their current location. KMC should
focus on exposing latest technologies available to reach out to the kids to
perform marketing operations.
Rapid In-Market Experimentation (RIME): Standard concept and producttesting research is replaced by rapid, in-market experimentation (RIME) with
prototype products rapidly introduced into physical and virtual test markets to
better gauge consumer interest. Marketers frequently try exploratory research
altogether. Instead, they follow the lead of their online design communities,
take the highest valued products on their prediction market, and begin
experimenting.
Expanding geographical limits: In order to increase the profit margins KMC
requires having deep insights in nearly every market simultaneously. Smaller

suppliers with only a national footprint cannot compete in this future, and the
large suppliers win comfortably based on their global reach and local depth.
Although it could be possible for client side insights functions to piece
together many local suppliers, it is simply too time consuming. Large, global
suppliers win because they can execute face-to-face interviews in Bahrain and
Sao Paulo simultaneously with elite indigenous staff.