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Converting Online Fans to Offline Customers: A Children’s Book Publishing Case Study

An Interview with Wei Wei, CEO, Tinman Arts (Chengdu) Co Ltd

Tinman Arts (Chengdu) Co Ltd has released more than 500 original children’s titles, with more than 25 million copies released on an international basis between 2006 and 2011. In 2011, Tinman began drawing on its extensive back catalogue as a means of developing children’s reading apps on the iOS platform. A number of its titles, notably its highly popular Chicken Jo Jo series, have transformed Tinman from a book publisher into a mobile apps developer, specialising in children’s toys and education applications. The company has also capitalised on its eight million-strong online community in order to access the physical store market. Wei Wei, Tinman’s Chief Executive, recently outlined the burgeoning children’s toys and early education market in China, how to make the best use of online-to-offline (O2O) applications and the sales strategies that have proved most effective on the mainland.

From Children’s Books to Early Education Apps

Photo: Smart Jo Jo: One of Tinman’s original creations.
Smart Jo Jo: One of Tinman’s original creations.
Photo: Smart Jo Jo: One of Tinman’s original creations.
Smart Jo Jo: One of Tinman’s original creations.

Prior to turning its attention to the internet, Tinman had spent more than ten years as a traditional publishing house. As such, the firm is vastly experienced in content production, selection and the consolidation of resources. In 2012, in order to better exploit its rich library of original titles, Tinman began to develop children’s reading apps for the iOS system. Capitalising on its popular Chicken Jo Jo character, the company has since launched more than 100 children’s early education apps for animated books and interactive educational games. The Chicken Jo Jo brand now enjoys wide popularity and is much loved by its eight million online fanbase. In 2012, Tinman secured funding from a number of investment institutions in order to complete its transformation into a specialised developer of mobile apps on in the children’s recreation and education sectors.

Before entering the toy industry, Tinman researched the related market and the existing suppliers. It then began developing the Smart Jo Jo series of children’s smart toys in January 2014. A year later this proprietary design toy was officially launched. Smart Jo Jo is an early educational tool that works on a Linux-based cloud operating system, while the toy version of Smart Jo Jo can be used as a child’s plaything, as well as a family social media tool.

Tinman now plans to market various spin-off Smart Jo Jo products in a number of the mainland’s first- and second-tier cities. This will proceed via a number of online sales channels (including Tmall, Taobao, JD.com and WeChat) as well through offline distributors. Its target customers are young post-80s generation parents, while its target users are children aged 2-7 years.

China’s Toy Makers: From OEM to OBM

Photo: Smart Jo Jo: A smart internet buddy for kids.
Smart Jo Jo: A smart internet buddy for kids.
Photo: Smart Jo Jo: A smart internet buddy for kids.
Smart Jo Jo: A smart internet buddy for kids.

Assessing two of the major changes in the mainland toys market, Wei said: “First, there has been a change in the wider environment. Along with the mainland’s economic growth has come a significant rise in young parents’ consumption power. Parents’ priorities, when buying toys for their children, have shifted from price to brand. As online shopping becomes more popular, it is providing consumers with even cheaper and more convenient services. Secondly, there is the change in the manufacturing base. China is now the world’s largest toy maker, but its output has largely been focused on export and has been short of original brands. More recently, however, a number of sizable manufacturers in China have started to look at the added value and brand equity of their toy products.”

Recent years have also seen the mainland’s toy makers upgrading their output from original equipment manufacturing (OEM) to original brand manufacturing (OBM). Wei believes that “branding” represents the future for China’s toy industry. As toy enterprises actively combine technology, intellectual property, original design and creation, and manufacturing activities, more and more domestic brands will emerge. He said: “In about five years’ time, a number of home-grown Chinese brands will be on the cusp of becoming global brands. Over the next 10 years, the mainland toy industry’s will be completely overhauled.”

According to Wei, young parents now pay considerable attention to the brand, specialisation, safety and innovativeness of toys. As such, while demand for low- to mid-end toys has not changed significantly, the demand for electronic and interactive toys has continued to rise. At the same time, parents’ demands have become more diversified, largely in the hope that their children will learn while playing with their toys. In light of this, an increasing number of toys are designed to be fun, but also conducive to children’s intellectual growth. Despite the higher prices of such items, this category of toys still enjoys good market prospects, largely thanks to parents’ higher levels of disposable income.

O2O Sales Strategies: “Try Offline, Buy Online”

There are, currently, two main toy distribution channels operating on the mainland: bricks-and-mortar retail stores (including department stores, supermarkets, specialised toyshops and children’s goods stores) and e-commerce trading platforms. Toys, though, are very much experiential products, with children keen to see, touch and even play with such items prior to purchase. As a result, toy sales are mostly made through physical channels.

Wei believes that offline sales channel allows parents and children to experience and understand a toy’s unique features in situ. On many occasions, a key element is whether the appearance and function of a toy appeals to both the child and the parents, thus triggering the buying impulses as they tour the toy department. With online sales, purchasing decisions are usually made by the parents. In this case, companies therefore need to attract parents’ attention by virtue of the toys’ brand, product features, quality and price.

Due to their more extensive overheads, physical stores usually set prices at a higher level than their online counterparts. However, the former have the advantage of allowing parents and children to physically examine and play with a toy, while parents can also instantly satisfy a child’s desire to own the item. In terms of customer service, staff at physical stores can offer assistance prior to (and after) a sale, a compelling selling point compared to online shops. Such service quality, however, may fluctuate subject to the performance of individual staff members. Online sales channels can usually provide more unified and consistent service through standardised product descriptions, buyers’ reviews and agency ratings.

In light of greater internet penetration, increasing numbers of mainland consumers are now shopping via mobile apps and devices. As online shopping offers obvious price advantages and greater convenience, its likely future impact on physical stores cannot be ignored. In the case of the toy industry, “try offline, buy online” will definitely be the trend of the future.

Fan Marketing via O2O Interaction

In terms of its O2O model, Tinman runs its own online shop, as well as using other online channels. Within a year, though, it also plans to open its own experiential shop. Wei said: “The model we are following is similar to that of Shimajiro, a Japanese brand. This sees most purchasers learn about and try products offline and then buy online.” As part of this model, Tinman will draw on its eight million-strong user community, all registered via mobile apps. Activities will be organised to allow this pool of users to experience the company’s products, while also reinforcing the brand. Moreover, Tinman will make use of Big Data to analyse the industry’s macro trends, market trends, sales volumes, pricing and user data, such as user profile, traffic and conversion. Such information will help the company devise pricing, marketing, rebates and promotional strategies for its products.

In terms of brand promotion, as user traffic is essential for online shops, the advertising and promotional focus will be geared towards driving visits and the rate of conversion per ad click. On the social media front, Tinman has been “pushing” the free version of its original picture books to users through its WeChat public account in order to better connect with its fanbase. User data from the Tinman apps and from other sources is then collated and analysed by the company’s customer relationship management system. This system is designed to help the company boost sales by carrying out targeted marketing to both active users and general users. Wei said: “Building a management framework that is suited to your business goals is the key to success.”

In the digital age, in-app purchases have become hugely important. All along, Tinman has successfully captured target users by developing hundreds of apps, and converting general users into fans thanks to its provision of attractive, original content. Fans are kept well informed of the Tinman brand and its toy products, while their support of the brand makes them the ideal channels to build word-of-mouth endorsement.

Consumer Preference-led Brand Positioning

Parents on the Chinese mainland are increasingly looking to improve their children’s prospects and have high expectations from the toys they purchase. Good quality, imported toys can more easily attract these parents, many of whom are willing to pay higher prices. According to Wei, the three crucial elements in today’s fiercely competitive toy market are “brand, product and channel”. In the initial stages of building a brand, excellent product quality is the best tool for boosting sales, while it also helps build word-of-mouth.

Ever since its launch, Tinman has always focused on the notion that “content is king”. Thanks to its positive word-of-mouth endorsement, the company has built widespread recognition, admiration and trust for the brand. The Chicken Jo Jo bilingual interactive picture book app, for instance, ranked highly in the North America digital download listing within just three days of it being available via the iTunes Store. The main reason for this, according to Wei, was its excellent content and high product quality. Compared with other toy companies, he sees Tinman’s biggest advantages as its extensive archive of original children’s content and its product development expertise.

In Wei’s opinion, the competitive edge of Hong Kong toy companies lies in their product quality. As with other toy makers, however, its core competitiveness still hinges on brand positioning, product function, pricing and a sound grasp of the target consumers’ psychological needs. Hong Kong toy companies also need to address the online shopping habits of mainland consumers when managing their online-offline channel mix.

Content provided by Picture: Alice Tsang
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