Vermont teddy bear

Vermont teddy bear offer three separately manages brands: Vermont teddy bear (VTB), PajamaGrams, Calyx flowers though four different channel (retail, mail, phone, web).The receive high demand on Valentine’s day, Christmas and mother’s day. Their primary target is men in the age group of 18-54 who order last minute gifts to their girlfriends, wives, or mothers. VTB seeks to differentiate from other gift delivery services by offering a top quality customized product which can be delivered at their schedule. To increase sales to women and generate orders even at the other time of the year they came up with different ideas like offering collectibles ,promoting complementary accessories and signing licensing deals with TV and movie studios, game makes ,etc. VTB enjoyed increased revenue year on year owing to its brand Image (made in America, superior quality, handmade) and its unique marketing idea (Bear-Gram). To better understand VTB’s current business model, let’s map it with the Michael Porter’s five force model in USA plush toy industry.

1.Bargaining power of suppliers: All the bears were cut, sewn, stuffed, and stitched in the USA except for some categories where the raw materials were purchased from all over the world. But since the USA’s strict consumer laws, the supplier had to provide best quality material to match up with the demand.

2.Bargaining power of buyers: The product was unique in terms of customization and customer service. The ability to buyers personalize a bear, dress it according to customer’s desire and deliver overnight was very appealing to buyers. So the power of the buyers was not so high

3.Threat of new entrants: USA plush toy market was saturated with big box discounters, specialty retailers and the internet. Establishing brand identity was a tough. Due to the down economy, the industry growth rate was not impressive.

4.Threat of substitute products/services: The substitutes were stuffed toys and personalized gift giving services. Customers seeking stuffed toys were plenty and the personalized gift delivering services like 1-800-FLOWERS had dominated the market. But VTB differentiated itself from its competitors by offering bears made in USA with personalized delivery service through Bear-Gram.

5.Rivalry among the existing competitors: The rivals were plentiful and the competition was high to attract and retain the customers.