Essentials of Marketing and Ethics in Global Business: Hasbro, Inc.

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Table of Contents

Introduction
Background of the Organisation
Discussion and Analysis of the Global Environment of the Organisation
Discussion and Analysis of the Organisation’s Current Marketing Activity
Conclusion
Reference List

Introduction

Hasbro, Inc. (Hasbro) is an American multinational conglomerate that operates in the toy, board games, and media assets. It is one of the largest toy companies in the USA, and the company made over 5 billion USD of revenues in 2020, despite the pandemic events (Hasbro 2020 Annual Report, 2020, p. 3). The conglomerate focuses on brand recognition among customers, as well as the quality of their toys, but it also aims to absorb other entertainment companies to expand its brand portfolio of products. While Hasbro has established a strong position in the toy-making business and it is one of the leading toy-making companies in the USA, it is relatively new to some other areas.

This work will examine Hasbro’s marketing strategies and how it approaches ethical and environmental issues. As a large product-making conglomerate, Hasbro can have a positive impact if it pays attention to social and environmental issues or negative if it does not. This work will also analyse how successful Hasbro’s strategies are and if their approach to the evolving digital media and online sales regions is effective. The conclusion will summarize the analysis’s central points and whether Hasbro as a conglomerate is reaching its full potential.

Background of the Organisation

Aims and Objectives

The conglomerate aims to create family-friendly and profitable products and media. Hasbro often absorbs other businesses to expand its brand portfolio. It uses films, video games, and other forms of media to promote its products.

Brief History of the Organisation

Hasbro was originally founded by the Hassenfeld brothers in 1923 and became a primarily toy-making company in the 1940s (Investor Fact Sheet, 2021, p. 2; Hasbro Inc Company History, para. 5). Hasbro’s first toy hit was Mr Potato Head in 1952 (Investor Fact Sheet, 2021, p. 2). The conglomerate eventually partnered up with other companies, including Disney, and later absorbed Entertainment One (eOne) in 2019 to expand its brand portfolio (Investor Fact Sheet, 2021, p. 2).

Description of Its Area of Activity

Hasbro’s primarily operates in toy making, marketing, and distribution area. It has two divisions: Hasbro Consumer Products US and International. These divisions are based in North American countries and the rest of the world, respectively.

Identification of Its Core Capabilities/Strengths

Hasbro’s primary strength is a library of strong toy brands. It acquires toy production rights to partner brands as well. As a company with a long history, Hasbro has demonstrated resiliency and the ability to innovate.

Discussion and Analysis of the Global Environment of the Organisation

Key Threats

While the North American region is stable in its profit and accessibility, the global areas are more prone to disturbances. It is demonstrated with Hasbro’s International net revenue falling by 14% in 2020 when the pandemic happened (Full-Year 2020 Financial Results, 2020, para. 10). In comparison, North American net income rose by 4% the same year (Full-Year 2020 Financial Results, 2020, pp. 1-9). The COVID pandemic, like any major crisis, was one of the most significant negative factors for Hasbro in 2020 (Rollins, Nickell and Ennis, 2014, pp. 2727–2731). The revenue from retail sales fell in the fiscal first quarter of 2021, but it was not the first year to do so (First Quarter 2021 Financial Results, 2021, p. 1-9). In a 2018 annual report, Hasbro highlighted that the company’s retail shops aimed to reduce their inventory (Hasbro 2018 Annual Report, 2018, p. 4). The conglomerate’s retail chains continuously struggle to adapt to the rapid changes in consumer habits in the global retail environment (Hasbro 2017 Annual Report, 2017, p. 5).

Hasbro’s toys can suffer from accessibility issues, as they can be rather costly. The company explain the pricing by bringing up the high quality of products, but another large component of it is branding and advertising. Hasbro invests a large amount of its budget into advertising. The conglomerate reported that it invested around 100 million USD in the first quarter of 2021 on advertising, and on average, spends above 400 million USD annually from 2013 to 2020 (First Quarter 2021 Financial Results, 2021, pp. 1-9; Full-Year 2013 Financial Results, 2013, pp. 1-9; Full-Year 2015 Financial Results, 2015, pp. 1-9; Full-Year 2017 Financial Results, 2017, pp. 1-9; Full-Year 2018 Financial Results, 2018, pp. 1-9; Full-Year 2019 Financial Results, 2019, pp. 1-9; Full-Year 2020 Financial Results, 2020, pp. 1-9). As Hasbro’s brand portfolio is very strong, toys made for their brands are high in price (Mahnert and Torres, 2009, pp. 54-63). It makes Hasbro products less optimal for lower-middle-class families, especially in developing countries.

Although Hasbro’s overall revenues have been on a decrease in 2020, the conglomerate stays financially stable due to a vast number of products, recognisable brands, and products’ diversity, as well as its international market position. On the other hand, this stability can turn into an issue in the future. Even before 2020, the company’s revenue growth has been slow over the last few years, especially when compared to the 2013-2015 years. The company went through a considerable boost in franchise brand revenues back then but slowed down after. The 2013s to 2015s success could be attributed to an overhaul of many older IPs that Hasbro attempted. The franchise brands growth at the time went up by 15-31%, and the conglomerate has not experienced a similar boost since then (Full-Year 2013 Financial Results, 2013, pp. 1-9; Full-Year 2015 Financial Results, 2015, pp. 1-9). Hasbro has not attempted overhauls of similar types in recent years, rather focusing on the most successful of its brands. It can be a sign of future stagnation, as the company is playing safe rather than trying new things to improve its performance.

Opportunities

Hasbro’s most significant sales numbers come from North America, but it has a large international market as well. With a growing global market, the conglomerate has an opportunity to set up its kids-oriented products as high-quality and popular entertainment through advertising and branding (Wind, Douglas and Perlmutter, 1973, pp. 14-16). The power of Hasbro’s brands remains one of the conglomerate’s most vital points: branding is responsible for a significant part of its success (Blythe, 2009, p. 168). Due to this, Hasbro puts a substantial effort into advertising its brands, which can often pay off (Grönroos, 1994, pp. 4-20). The franchise brands form the majority of gains in Hasbro’s annual brand portfolios, amassing 600-700 million USD in revenue on average between 2017 and 2020 (Full-Year 2017 Financial Results, 2017, pp. 1-9; Full-Year 2018 Financial Results, 2018, pp. 1-9; Full-Year 2020 Financial Results, 2020, pp. 1-9). At the same time, the success of emerging, gaming, and other brands keep fluctuating by year. Nevertheless, these avenues provide Hasbro with brand recognition which remains essential (Fill and Turnbull, 2016, p. 487). The company is aware of that, and it steadily invests resources in these areas, especially partner brands.

Hasbro’s partner brands have driven a significant portion of its growth in 2019. Partner brands were responsible for over a billion USD profit in Hasbro’s 2019 full-year report, up by 24% from 2018 (Hasbro 2019 Annual Report, 2019). Hasbro acquired eOne in 2019 (the fiscal year 2020) for a 3.8 billion USD deal and thus gained rights to its brands (Hasbro 2020 Annual Report). The eOne company deals in family-friendly media and entertainment, with its most successful brands being Peppa Pig and PJ Masks. As these brands are family-oriented, their merchandise varies from toys and entertainment media to school supplies and food, which coincides with Hasbro’s specialisation in the toy and media-making business. By the end of 2020, eOne brought in 956.5 million USD in net revenue just a year after being bought out, and it can further strengthen the conglomerate (First Quarter 2021 Financial Results, 2021, pp. 1-9). It provides Hasbro with an opportunity to add new brands to its collection of toy products.

While the COVID pandemic has hurt retail sales, it also boosted online sales: online shopping became massively popular due to the pandemic. It is an opportunity for many companies, including Hasbro, to establish their online presence. When analysing Hasbro’s chances of success using Porter’s model, it is apparent the conglomerate has low chances of being replaced by competitors. However, it still needs to use this knowledge to improve its services. Supply must meet the demand but also not overstep it. Lastly, it is also essential that the prices do not break customers’ buying ability to choose online shopping over retail. With a well-calculated approach, Hasbro can further establish its position in the toy-making market.

Discussion and Analysis of the Organisation’s Current Marketing Activity

As a large conglomerate with subdivisions that work in many countries worldwide, Hasbro has many resources and opportunities for growth. Its primary strategy is to establish brands, make them stronger through advertising, media, and merchandise, or to partner up with other large companies and produce toys for their brands (Jobber and Ellis-Chadwick, 2021, pp. 245-250). Hasbro’s brands are story-led, and their content spans across many media platforms, digital experiences, toys, games, music, publishing, and location-based entertainment. To maximize the content’s power and profitability, Hasbro designed a blueprint framework for developing their brands, titled Hasbro Brand Blueprint (HBB) (Investor Fact Sheet, 2021, p. 1). HBB can be divided into three parts:

Primary element – branding and concepts created by the company;
Secondary element – consumer insight and global customer relationships;
Tertiary element – production, distribution, and marketing of the content.

This approach correlates in many ways with the 7Ps marketing mix theory, despite having fewer elements. The primary element coincides with the product and promotion element of the 7Ps, specifically the branding and image aspects of it. The secondary element, the customer’s relationships, correlates with the 7Ps’ people, price, and promotion elements, as it focuses on relations between the company and the customers. The tertiary element of HBB is vast, as it focuses both on the physical and digital aspects of content making: quality, distribution, and publishing. The digital forms of the content contain music, e-sports, TV, and films. The tertiary aspect correlates with several elements of 7Ps: physical evidence, place, and promotion. The only aspect that the HBB model does not include is pricing. However, it can be argued it is incorporated into the secondary or tertiary elements, consumer insight or distribution.

As HBB considers many factors, the company uses it in a unified fashion across the globe. Therefore when judged by the EPRG (Ethnocentric, Polycentric, Regiocentric, and Geocentric) model, HBB falls into an ethnocentric category: the HBB model was designed first for the North American areas and then applied to other regions. This is due to Hasbro considering its product to be of high quality and therefore increased value. It promotes its classic and partner brands worldwide instead of adapting local ones or making new ones for the global regions as it lacks a proper analysis of other countries’ differences (Matusitz, 2010, pp. 223-237; Matusitz, 2011, pp. 667-681). While this is an issue as the company does not take other countries’ cultural aspects into consideration, it does consider global ethical and environmental factors in production.

Hasbro positions itself as a company that values community, diversity, and the environment. The company’s Corporate Social Responsibility (CSR) web page asserts that “treating people with fairness, dignity, and respect and operating ethically in the supply chain are core values at Hasbro” (Corporate Social Responsibility, para. 7). It claims to use recycled materials, renewable energy, and packaging to reduce environmental damage (Environmental Sustainability, para. 3). It also officially promotes diversity within its company: the conglomerate highlighted that they plan to increase the percentage of women in director and above roles globally to 50% and expand ethnically and racially diverse employee representation by 25% by 2025 (Hasbro 2020 Annual Report, 2020, p. 5). Hasbro makes donations to various children-oriented charities, for example, “Save the Children” and “No Kid Hungry” initiatives (Hasbro Children’s Fund, para. 4; Our Strategic Partners, para. 7). The conglomerate took an active role in the 2020’s COVID crisis as well by partnering up with World Health Organization (Hasbro 2020 Annual Report, 2020, p. 4). The company also helped by converting third-party facilities to PPE operations to produce plastic face shields for front-line health workers (Hasbro 2020 Annual Report, 2020, p. 4). While Hasbro takes a positive stance on ethical issues in their business, it has been a target of some criticism.

The main criticism that Hasbro faced in the past is the promotion of racial and gender stereotypes in their products. People have accused Hasbro of promoting sexist and racist images in the past (Sherwin, A, pp. 1-2). It made many changes to their brands to make them more diverse and socially conscious (2019-2020 Corporate Social Responsibility Update, 2020, p. 12; Human Rights and Ethical Sourcing, para. 2). Hasbro changed many of its original toys designs and concepts, making them more gender-neutral and adding kids of both sexes and different ethnical background to their brands and advertisement. Currently, the company aims to make its products diverse for any family to enjoy. This is not the only controversy that Hasbro faced: some of their overseas factories had reports of harassment, child labour, and verbal abuse among employees (Barboza, D, 2007, p. 1). While the company reacted to the reports, it raises a question on how often these events happen and go unnoticed.

Hasbro’s brand and content strategy at the moment has a digital-first orientation, leveraging a diversified portfolio built over the years, multichannel retail, and digital gaming. The conglomerate is creating TV, films, cartoons, and comics to be sold alongside toys. Many modern companies create online-only free digital content such as cartoons, TV series, and games to promote their branding (McCarthy, Shapiro and Perreault, pp. 15-17). Because this content is free to access and family-friendly, it can drastically expand the audience and thus customer numbers, and then it can be monetized by creating merchandise for it. With their newly obtained ownership of eOne, they have a variety of new brands to use, including digital formats, such as music, films, TV, and other forms of media to use as well. No less important is how the company will approach the online market: digital shopping is growing more prominent, and so it is reasonable for Hasbro to capitalize on that. Although before the company can do so, it needs to approach online shopping more thoroughly: by researching its business opponents, rivals, and partners to design a streamlined and efficient online shopping system.

On the other hand, Hasbro must consider an ethical stance on the matter, as many customers think this to be a predatory advertising tactic, especially towards children (Responsible Marketing and Content, para. 5; Crane and Matten, 2010, pp. 338-386). To boost their growth, the conglomerate might also need to expand their products’ accessibility without compromising the quality. Because Hasbro’s overall growth has been slow in the second half of the 2010s, a strategy overhaul and a new direction in the 2020s might be a necessary step for the company to establish a higher position in the toy-making market.

Conclusion

The close analysis of Hasbro, Inc. demonstrates that it established itself as a strong, stable, and resilient company that can thrive in various environments and circumstances. Their business strategy strongly relies on branding and quality toy-making and can be less efficient in pricing and accessibility factors (de Chernatony, 2009, pp. 101-105). The conglomerate has been steadily growing in the 2010s, experiencing a considerable boost in the 2013-2015s due to overhaul of its own brands and partnering up with other companies, including Disney, to create products for their popular franchises. By the end of the decade, Hasbro absorbed eOne in 2019 to further boost its portfolio, adding many more globally popular brands to the list, such as Peppa Pig. The following 2020 was a difficult time for many companies to operate in due to established restrictions on retail and thus smaller sales, including Hasbro. While the year was not as profitable as others, the company nevertheless reacted to the crisis by supporting the community with donations, charity work, and raising social awareness of the situation.

Hasbro faced criticism over their approach to marketing and production in the past, but the company has also made progress in this regard in recent decades. Although many questions about the ethical stance of the company still exist, the conglomerate earned a lot of trust from customers and shareholders (Davies and Miles, 1998, pp. 16-27). The conglomerate’s success can be attributed to its diverse brand portfolio, ability to innovate, adapt to changes, and a positive reputation it has built among customers through social and environmental work.

Nevertheless, it can still improve in many areas, such as online shopping and more affordable prices, to expand its business. The conglomerate is interested in building a global customer base, but it has not reached as same success there as it has in North America. The company has also experienced a near-stagnation in its revenue growth after a sudden boost in the 2013s-2015s, which can be viewed as their strategy avoiding risks. As the new decade started in 2021, Hasbro has an opportunity to further build its success and raise its standing among other toy-making companies in the USA or worldwide.

Reference List

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