Fischer Price

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which is a large increase over the projected $12 cost. Fisher-Price strategy has been to have fair priced products with a self-imposed limit of $5 dollars, generally staying out of the premium priced toy market. If they chose to rush this toy to market for the Christmas season they would need to put a significant investment (they would need to buy two molds) into the product without clear evidence of its acceptance of buyers.

Pros of decision – Stay with their proven strategy for success, avoid losing trust of buyers, focus resources on the core competencies, safe/low risk decision.

Cons of decision – Missed market opportunity (premium toys/riding toys), large demand for riding toys, not taken advantage of brand name recognition.

Alternative 2: Reduce cost of ATV Explorer – Fischer-Price management could reduce the cost of the toy by, 1. Using new blown molds 2. Cheapen the product by removing action add-ons (horn, secret compartment) 3. Amortizing investment over 2-3 years.

Reasoning – By reducing the cost structure of the toy Fisher-price would be able to introduce another product into the riding toy line. They would be able to get to the original price of $12 and compete with Playskool for market share. Now having 2 toys in the line they could use their marketing strategy of selling a whole line of toys and gain the advantage over their competition.

Pros of decision – gain market share in a large market, have a competitive edge (multiple toys in the riding toy line), minimum investment into molds.

Cons of decision – sacrificing toy quality, going away from their 5 qualities and corporate culture, may lose reputation from consumers’ standpoint.

Alternative 3: Market ATV Explorer as a Premium Toy – By marketing the toy as a premium well-built toy Fisher-Price could gain entry into a higher margin market. Utilizing their marketing budget they would be able to showcase the toy as a great value that would last for years and be passed down to future generations.

Reasoning – Since the toy molding are higher cost and toy is going to take a large initial investment, Fischer-Price could market it towards the new American culture who has more disposable income to spend. In Exhibit 8 it shows that while the consumers think toys are overpriced they also think that toy quality is declining. Fischer-Price could use their reputation and brand recognition to take advantage of this and market it as a premium toy.

Pros of decision – They are already considered the best brand, consumers would be accepting of the new toy, test results have been positive, could demand .50 -$1 more for the toy.

Cons of decision – Larger long term investment, lot more risk, some buyers would not order toy till they saw demand, moon theme may be outdated, deviating from corporate strategy of $5 toys limit.

Fisher-Price Toys Case Study  June 2016 4

4 Recommendation

I believe that Fisher-Price management should move ahead on the manufacturing of the ATV Explorer and use a direct marketing campaign for the riding toy product line. I believe this strategy will bring success by marketing to the consumer not which brand (toy manufacturer) riding toy to purchase but which Fischer-Price riding toy they should buy. This still meets many of the company’s cultural beliefs of developing toys of good value, strong construction and also marketing a line of toys. The line of riding toys would consist of a less expensive entry level toy, the Creative Coaster at $6.95 retail, and a higher end “Premium Toy”, the ATV Explorer at $18.99 retail.

There are several factors that I believe support my decision;

1. Youth population growth of 27% with the growth of personal income of 72%. Because of this dual growth there will be enough children to support both products and enough income to purchase them.

2. Premium toy market ($10 and up) spend makes up 46% of total spend (dollar sales %) and mid-priced toys ($3-$9.99) make up another 36% of spend. By targeting these areas they are marketing to a total of 79% of total dollar spend. *note, I understand that this doesn’t break out for where riding toys specifically fall in these percentages but instead I’m assuming spend in riding toys will be distributed the same.

3. Riding toys make up 22% of approximate dollar sales at retail. By targeting this area with two toys they are making the option for the consumer not which brand to buy but which Fisher-Price toy to buy.

4. Brand reputation of Fisher-Price toys will allow them introduce premium toys and be accepted. Because of their core values and the adherence to them I believe that the consumer will be more accepting to pay more for a toy that last longer, again back to the example of Exhibit 8. Only 33% of people questioned believe that toys are a good value for the money, Fischer Price should Market top this need.

5. Success of TV Marketing and $1.1 million dollar budget. With past success of the TV marketing they will be able to showcase the ATV Explorer as the newest entry to the toy line. Taking advantage of the needs of the consumer to have a quality toy that will last longer than the competitions.

Based on the factors above my recommendation for Fisher-Price’s decision should be to move forward on the manufacturing of the toy and a marketing campaign that will address needs of the consumers. The decision will be guided by focusing on entering the ATV Explorer as a premium toy that will be supported by TV Ads and store shelf displays. Specifically these Ads should be designed to gain the attention of the consumers’ needs for quality toys that last while strengthening the Fisher-Price