UGEARS: Target Market Analysis and Detailed Market Segmentation

This report provides a comprehensive analysis of UGEARS' marketing strategy, focusing on consumer buying patterns and the competitive landscape within the toy industry. It begins with an overview of UGEARS, a Ukrainian toy manufacturing company specializing in self-propelled mechanical wooden models, highlighting its global presence and unique product offerings. The report then delves into consumer analysis, identifying primary (children and kids) and secondary (parents and engineering students) target segments, considering demographic and economic factors. A thorough competitor analysis examines the broader toy market, noting key players like Lego and the competitive pressures UGEARS faces. The SWOT analysis assesses UGEARS' strengths, weaknesses, opportunities, and threats, providing a strategic perspective on its market position. The report concludes by emphasizing the importance of innovation and a well-designed selling proposition for UGEARS to achieve long-term sustainability in the competitive toy market.

TARGET MARKET ANALYSIS AND MARKET SEGMENTATION

Table of Contents
Introduction........................................................................................................................3
Company Overview...........................................................................................................3
Consumer Analysis............................................................................................................4
Competitors Analysis.........................................................................................................6
SWOT Analysis..................................................................................................................8
Conclusion.........................................................................................................................9
References.......................................................................................................................11
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Introduction
The analysis of marketing strategy is one of the most critical aspects of the study of
consumer behaviour. The instant report deals with the analysis of consumer buying
patterns and competitive landscape of UGEARS, one of the most prominent companies
across the world in the toy industry segment.
At the very beginning of the paper, the researcher provides a concise introduction and
background of the paper followed by a brief discussion about the company and its
operation. In the subsequent sections of the paper, the researcher provides consumer
analysis by identifying the primary and secondary target segment for the products. In
addition, the market is analyzed with respect to the competition and the landscape
covering other market players and their offerings along with the growth potential of the
industry for the future. In the last, SWOT analysis has been conducted to identify the
factors affecting the business and prospect in the given segment of the market. Finally,
the researcher concludes the paper through an ending note.
Company Overview
UGEARS is a toy manufacturing company based in Ukraine. The company designs and
sells self-propelled mechanical wooden models and toys for the kids. The models are
highly lucrative in terms of design and aesthetics and involve efficient mechanical
knowledge which may be of high interest among the kids. The company started its
operations in the year 2014 and presently the company has a number of stores across
the world (ugearsmodels.com online store, 2020). In less than three years, the company
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has been able to develop 20 unique models designed for self-assembly without the use
of glue. These models are inspired by real-life examples and events making them more
realistic and attractive\among the kids. The company has its operations in almost 80
countries across 5 continents worldwide (UGears US | Ukidz LLC, 2020).
Consumer Analysis
Customer segmentation is a process of dividing the customer base of a particular
product or service on the basis of certain parameters and characteristics. Such action is
performed so that the companies can effectively handle the customer groups and reach
out to them with their value offering in the most efficient manner.
Such segmentation is performed with reference to the demographic characteristics of
the population base including age, marital status, gender or location of the customers
etc. In the considerations of Gao and Jiang (2017, December), the process of such
segmentation may also be undertaken from an economic viewpoint. For example, the
income level of the probable customer base may be construed to be determining factor
of segregating customers and target them with proportionate price offering of the
products or services.
In the opinion of Fuentes, Nápoles, Arco and Vanhoof (2018, September), such
segmentation is performed through various methods like an interview, survey,
secondary research or through focus groups as well (Gao and Jiang, 2017, December).
Customers of a product or service may be identified by way of market segmentation.
The market segment may be of two types namely primary and secondary. The primary
market segment denotes the section of consumers who are primarily targeted by the
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management of a company to attract and promote the products and convert them into a
loyal base of future customers as well (Fuentes, Nápoles, Arco and Vanhoof, 2018,
September).
On the other hand, the company may focus on a separate set of customers who may
not be the primary target segment but also fall within the holistic offering landscape of
the company and therefore may also be targeted as a secondary segment.
Customer Segment
Primary Segment Secondary Segment
Table 1: Customer Segment: Primary and Secondary
(Source: Created by author)
For the chosen product the consumers are generally children and kids who love to play
with toys. Therefore the primary market segment may consist of kids and children. On
the other hand, they are young people also who love to play with such innovative
models with a high level of engineering knowledge. Hence the parents and engineering
students may also so be conceived to be the part of the secondary market segment for
the product.
In this context, it is important to note that the people with the creative mindset and
inclination towards craft may be targeted for the products made by the company.
Globally UGEARS is a prominent and brand name in the toy industry with its market
disruptive value offering.
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Competitors Analysis
The toy industry is a billion-dollar industry across the world with acute competition
among big players like Lego, Hasbro, Mattel etc. Lego is considered to be the industry
leader with revenue of almost 5.49 billion dollars in the year 2016. Some of the key
statistics of the toy market it may be shown herein (www.statista.com, 2020).
Figure 1: Toy Market Key Statistics
(Source: www.statista.com, 2020)
The figure below shows the worldwide revenue of the major toy industry in the year
2018 is quite high in terms of total market size. Though UGEARS does not fall within the
top 5 players in the industry worldwide, the market share of UGEARS may not be
undermined as the products of the company are well received and widely used by the
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kids across the globe. However, the top players hold a significant amount of market
share in the toy segment.
Figure 2: Revenue of Top Market Players in Toy Industry (2018)
(Source: Statista, 2020)
The market is highly demanding and hence the manufacturer's focus on disruptive
technologies and creative ideas in order to develop a child's psychological and
emotional growth along with entertainment offer. Presently the market is influenced by
the video elements, console and computer games in 3D format.
It is worth to note that the toy and games industry is sized at 39,269 million US dollar in
2020 and the market is expected to grow annually at the rate of 8.7 % CAGR till 2023 in
India, world’s second highest populated country and one of the most growing
economies in the globe (Statista, 2020).
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In nutshell, it is considered that the market is highly competitive with large players
offering their products with the quality value proposition. The interlocking plastic bricks
model offered by Lego is widely known for its simplicity, creativity and usefulness
(Lego.com, 2020). Hence the management of UGEARS may need to be efficient and
innovative enough to be able to sustain in the competitive market in the long run.
SWOT Analysis
SWOT analysis is a theoretical model that provides an analysis of both internal as well
as external factors affecting the business operation's marketing strategies and
sustainability as a whole. The section below briefly shows the SWOT analysis of the
chosen company.
Strength  UGEARS is a prominent brand in the toy market across the world
(Indiegogo, 2020).
 The company has a highly innovative, motivated and enthusiastic
team of employees.
 The entrepreneurship and the governance of the organisation have
been efficient.
Weakness  Comparatively newly setup companies may not be able to cope up
with large market players competing in the industry for long years.
 The prices of the models are relatively high and targeted among
the higher income groups.
Opportunity  Since the market demands disruptive technologies and new ideas
for new generation kids, there remains a considerable amount of
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scope to reinvent and technological progress in the manufacturing
segment.
 The company may promote its product in China which happens to
be one of the largest countries for toy industries in the world.
Threat  The global toy industry is full of competition with a price war and
differentiated products.
 Low market share in the global toy market may pose to be a
considerable threat in terms of liquidity in the future.
Table 2: SWOT Analysis of UGEARS
(Source: Created by author)
Conclusion
On the basis of the discussion and analysis as performed in this paper, the researcher
may conclude that the toy industry has been successfully operating across the world for
years with a large number of the customer base. The chosen company UGEARS is a
prominent brand name in the segment with its potential scope for future development.
the market is highly competitive and the management of the company may need to
concentrate on value offering and innovate product modelling so that new generation
kids may get enthusiastic and inclined towards the value of the models. Therefore, it
may be concluded that a well designed and market disruptive selling proposition may
significantly help the company to achieve its corporate goal of long term sustainability in
the competitive market in most time and cost efficient manner.
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References
Fuentes, I., Nápoles, G., Arco, L. and Vanhoof, K., (2018, September). Customer
Segmentation Using Multiple Instance Clustering and Purchasing Behaviors.
In International Workshop on Artificial Intelligence and Pattern Recognition (pp. 193-
200). Springer, Cham.
Gao, S. and Jiang, C., 2017, December. Customer Segmentation of Third Party Review
Website Based on Cluster Analysis. In 2017 2nd International Seminar on Education
Innovation and Economic Management (SEIEM 2017). Atlantis Press.
Indiegogo. (2020). UGEARS: self-propelled mechanical wooden models. [online]
Available at: https://www.indiegogo.com/projects/ugears-self-propelled-mechanical-
wooden-models#/ [Accessed 2 Jan. 2020].
Lego.com. (2020). LEGO Mixed zone Games - LEGO.com for kids - US. [online]
Available at: https://www.lego.com/en-us/kids/games [Accessed 2 Jan. 2020].
Statista. (2020). Largest toy companies worldwide | Statista. [online] Available at:
https://www.statista.com/statistics/241241/revenue-of-major-toy-companies-worldwide/
[Accessed 2 Jan. 2020].
Statista. (2020). Toys & Games - India | Statista Market Forecast. [online] Available at:
https://www.statista.com/outlook/14000000/119/toys-games/india [Accessed 2 Jan.
2020].
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UGears US | Ukidz LLC. (2020). UGears USA - Ukidz Toys About Us. [online] Available
at: https://ugears.us/pages/about-us [Accessed 2 Jan. 2020].
ugearsmodels.com online store. (2020). History Ugears. [online] Available at:
https://ugearsmodels.com/about-us.html [Accessed 2 Jan. 2020].
www.statista.com. (2020). Topic: Toy Industry. [online] Available at:
https://www.statista.com/topics/1108/toy-industry/ [Accessed 2 Jan. 2020].
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