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KB Toys’ Current Strategy and Recommended Strategy Report

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In 2007, KB Toys closed 3o of its stores in order to change its marketing strategy and position, and return to traditional business as a purveyor of primarily close-out merchandise (Annicell 2007). This decision was caused by several years of ineffective policies and a near-bankrupt state of the company under its former CEO. The new CEO, Andrew Bailen, named this a ‘grow strategy’ aimed to stabilize the position of the company and improve its brand image. In 2007, KB Toys introduced “MicroStrategy for reporting on key merchandising and supply chain metrics to improve the management of inventory from its vendors” (KB Toys Selected a Microstrategy 2007). Recent financial data (KB Toys Home Page 2008) suggests that changes made during 2007 were successful and helped the company to improve its sales and financial performance (in comparison with 2004-2005 years).

Correct strategies and decisions are made under conditions of considerable risk, and it is impossible for the CEO to be sure that any specific decision will turn out to be the best one. KB Toys should build a solid market position by accepting modest immediate returns and taking a longer period of time to cover their outlays, thus making it more difficult for new entries, as with a pricing policy. KB Toys should position itself as a premium brand getting a premium price from those segments that will pay it, and then. Between these extremes, they may choose to be reimbursed for their original outlays while still holding a competitive advantage, and then use the advantage to increase volume and build a stronger market position. Also, KB Toys should take into account that pricing strategies must be perceived in terms of the whole product line rather than in terms of each individual product. For instance, some products are priced to engender prestige for the rest of the line rather than to gain their own sale, as is the case with fine china and silverware (KB Toys, Inc. 2007). Other prices are set to permit “trading up,” to establish images, or to meet price lines and price points. rice must be related to market segments. The kind and strength of customer attitudes and the purchase desires of various market segments affect the prices that can be charged, and customer acceptance of prices by a sufficient market sector is essential (KB Toys Home Page 2008).

In order to evaluate the strategies TB Toys have chosen, it will be necessary to analyze its market position in comparison with direct competitors and their pricing decisions, analyze the differences and similarities in marketing mix between KB Toys and its competitors. Also, it will be important to evaluate the historical performance of KB Toys and its drawbacks which led the company to financial problems. This information will KB Toys’ involve marketing campaigns and financial returns, R&D investments, and innovations introduced during recent years. The company should take into account that consumers do not respond to price alone; they respond to value. A lower price does not necessarily mean expanded sales. Moreover, marketing activities influence the price. In order to evaluate this strategy, KB Toys should examine customer loyally (brand loyalty) and buying patterns of the target group: purchasing power, psychological qualities, frequency of purchase, etc. In sum, KB Toys should tailor its strategies in accordance with customers’ demands and unique requirements.

Works Cited

Annicell, C. A Time of Change. 2007. Web.

KB Toys, Inc. BusinessWeek Online. 2008. Web.

KB Toys Home Page. 2008. Web.

2007. Web.

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