Ateneo de Davao University
School of Business and Governance
School Year 2016-2017
2nd Semester
CASE ANALYSIS:
Toy Retailers Limited
in partial fulfillment of the requirements for
BA908 – Marketing Management
Submitted to:
Prof. Jessie Singson
Professor
Submitted by:
Amanon, Jules Ryan
Repolledo, Japhet
Ferraris, Althea
Umambat, Michael
February 24, 2018
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T A B L E O F C O N T E N T S
Background of the Case ……………………………………………………….. 1
Statement of the Problem ……………………………………………………… 5
Areas of Consideration ………………………………………………………… 5
Alternative Courses of Action …………………………………………………. 12
Implementation / Recommendation ……….…………………………………. 13
Conclusion ………………………………………………………………………. 18
1
BACKGROUND OF THE CASE
Playing with toys is important when it comes to growing up and learning about the
world around us. Younger children use toys to discover their identity, help their bodies
grow strong, learn cause and effect, explore relationships, and practice skills they will
need as adults. Adults on occasion use toys to form and strengthen social bonds, teach,
help in therapy, and to remember and reinforce lessons from their youth.
In the Philippines, there is a growing market for the toy retailing in the 1990s. Toy
Retailers Limited (TRL) is one of the key players in the imported toy retailing industry.
In 1997, TRL entered into an exclusive concession operation agreement with the state
owned duty free shop, Duty Free Philippines (DFP). In this agreement, TRL became the
exclusive supplier of DFP for Toys, Infants Line & Juvenile Furniture and took over the
retail operations of the Toys, Infants Line & Juvenile Furniture department of the new
DFP Fiesta Mall.
The Company
TRL was incorporated in June 1997 for the purpose of operating the Toys, Infants
Line and Juvenile furniture concession at DFP. In this arrangement, TRL is the exclusive
supplier of these merchandise and has been allowed tax free import privileges provided
that all the goods imported tax free are sold only at DFP stores. Otherwise, the products
will be subject to taxes.
TRL provides manpower, fixtures and everything necessary to operate the store.
As part of the concession agreement, TRL pays DFP 30% of its gross sales. It is the first
time that the directors of TRL will directly handle such duty free line of business and
second time that such concession arrangement was awarded.
DFP was organized as part of the government’s goal to establish and operate a
tax and duty-free merchandising system in the country. After several years, DFP was
successful in serving its purpose and in catering its target market. DFP is part of the
Department of Tourism’s major programs. It provides over 60% of the government’s
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tourism infrastructure budget. It is DFP’s belief that shopping is an essential component
in the promotion of tourism.
The Customers
DFP caters to the Filipino and Foreign traveler. The Fiesta Mall where TRL’s store
is located is geared towards the arriving shopper. Arrival Shopping may be availed by
the following:
a. Balikbayans – Filipino’s who have lived abroad for more than 12 months or
foreigners of Filipino ancestry who have also lived abroad for more than 12
months. These customers are entitled to tax and duty free shopping up to
US$2,000. They can bring their entire family to shop with them and they have the
exclusive privilege to purchase appliances and electronics.
b. International Travelers – Filipinos who have lived / travelled abroad for less than
12 consecutive months. These customers are entitled to tax and duty free
shopping of up to US$1,000. They can bring their entire family to shop with them.
The yearly customer count shows the following:
–
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
1990 1991 1992 1993 1994 1995 1996 1997
No. of Pax
Year
Customer Count
YEAR
No. of
Pax
1991
216,084
1992
468,925
117.01%
1993
553,499
18.04%
1994
606,471
9.57%
1995
673,995
11.13%
1996
631,229
-6.35%
The Industry: Duty Free Retailing
• Growing leaps and bounds due to increased spending power of the new Tiger
economies
• The largest visitors come from EAST ASIA amounting to 952,777 arrivals in 1997
• Second largest visitors come from NORTH AMERICA totaling 491,523 in 1997
• These foreign tourists account only for 15% of DFP’s total sales
• Bulk of DFP’s sales come from Overseas Contract Workers (OCW’s)/ Overseas
Filipino Workers (OFW’s)/ Balikbayans who are obliged to bring home a gift or
pasalubong for every member of the family once they return home.
• It is estimated that there about 1.3 million OCW’s working in the Middle East and
East Asia
• In June 1997, the Asian Economic crisis began. DFP sales were reduced by 35%