1. Russian Market Research: Facts and Trends 19 March 2007

2. Russian toy market turnover vs related industries Сopyright © Igroprom MCA 2007

3. Russian share in global market. Just 0.43% of USD 150 billion Сopyright © Igroprom MCA 2007

4. Russian market: financial growth history Сopyright © Igroprom MCA 2007

5. Growth criteria and factors 1. Great potential 2. Improvement of social and economic conditions 3. Demographic improvement 4. General growth in spending for toys 5. Increased focus on development of children aged 0-4 (this is the fastest- growing segment) 6. Minimum state regulation Сopyright © Igroprom MCA 2007

6. Industry trends 1. Rapid market development and niche filling 2. Oligopoly in the wholesale segment, which is controlled by a limited number of suppliers 3. Nationwide expansion of retail chains 4. Global leaders entering the market Сopyright © Igroprom MCA 2007

7. Price segmentation of Russian toy market Сopyright © Igroprom MCA 2007 22% 11,6% 10% 8% 20% 28,4% dollssoft toysconstruction sets video gamesvehiclesboard games & puzzles

8. Soft toy – market leader The soft toy segment (28.4%) is the most fast-growing. Needs thorough research. Russian Soft Toy Market is an independent research conducted by Igroprom Marketing & Communications Agency in September 2006 and is our gift to business program participants. Сopyright © Igroprom MCA 2007

9. Challenges of the market 1. High demand for capital and modernization (extremely low domestic output of multimedia and interactive toys) 2. Shortage of skilled personnel Сopyright © Igroprom MCA 2007

10. Challenges of the market 3. Dependence on Chinese producers 4. The accession to WTO may result in increased competition (there is a risk of aggressive market entry by foreign companies) Сopyright © Igroprom MCA 2007

11. Responses to challenges 1. Improved climate for foreign investment 2. Growth of innovation activities Сopyright © Igroprom MCA 2007

12. Responses to challenges 3. Branding. Development of own trademarks as a competitive advantage 4. National patents 5. Product licensing Сopyright © Igroprom MCA 2007

13. Russian kid product market surveys The market is highly sensitive to demographic factors. Market models should be based on variable birth rate. An important task is to calculate a “demographic wave” in allow companies develop a long-term strategy! Сopyright © Igroprom MCA 2007

14. Demographic marketing Сopyright © Igroprom MCA 2007 Number of children and teenagers in Russian regions (thousand people)

15. Igroprom’s Research Databank 1. Monitoring and classification of all surveys of the Russian market 2. Independent and syndicated research 3. Task-oriented data selection 4. Coming soon: monthly reviews of the children’s goods / toy market. Сopyright © Igroprom MCA 2007

16. Thank you for your time! Vladimir Izotov Head of Information Analysis Department 5/3 Ulitsa Vavilova, Office 116, Moscow 119334 Russia (495) 231-1293 www.igroprom.ru Сopyright © Igroprom MCA 2007