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Toy Industry Robert Eckert, who was former president of Krafts Foods, has transformed the worlds largest toy marker. He instilled tight cost controls. He says that innovation and discipline are not mutually exclusive. Eckert is trying to overcome the major problem of the toy industry: the unpredictability of the young audience and persistent lag, when a surprise hits.
Focus groups are now held 18 months ahead of delivery instead of 10 to 12 months and this allows earlier runs of the production lines. Focus in delivery becomes very important issue on the way to the new approach. The reasons we will discuss later in the paper. The approach of Robert Eckert to make toy industry a stable and predictable income business, resembles me a situation at the stock markets. When a young trader comes to the market, he sees a lot of opportunities for extremely high profits. He tries to catch every wave, chasing after those tasty profits.
But it this case, he experiences a lot of stress connected with losses caused by the unforeseen events at the financial markets. Chasing for big income, the same as chasing for the opportunity to make hits in toy production, often leads to total collapse. A good example the this situation is situation with Hasbro. Hasbro, which had star position four years ago, blew out introduction of toys tied to the Stars Wars sequels.
According to the article, licensing fees were costly, sales failed to meet grand expectations, and the company has been struggling with the fallout ever since. Hasbro says it is no longer interested in expensive licensing deals and is now emphasizing its core brands instead. Coming back to our comparison with the trade craft, an experienced trader at the stock market sees a different picture at the charts. He develops his own strategy as to his decision making. He knows the importance of elaborating a specific algorithm for his actions. He makes tremendous efforts on himself follow his trade plan.
This is the only way to success in chaotic and unpredictable circumstances. Our experienced trader is not chasing for the illusionary sky profits. Instead, he is satisfied with his comparatively fixed income, which will allow him to earn more later. I think, Eckert is like this experienced trade. His approach started already paying off. In this case the success appears comparing to the way Hasbro Inc.
dealt with Star Wars items. Mattel produced far fewer items than it had made for past big movie tie-ins. That marketing planning paid off when Mattel sold 30 % more than it had forecasted - $ 160 million worth of Potter toys. Warner Bros. Inc. , the licensor, was so pleased that it recently signed Mattel to a five-year deal for toys keyed to new movie and TV versions of such favorites as Batman. (The Article). Escaping big flotation in the size of income can make toy industry more reliable item for investors.
I agree with his philosophy as a long-term growth strategy for the toy industry. I think it does not mean children will loss having a copy of their favorite film heroes. It will just slow the supply of the toys to the market: children will be able to obtain their favorite toy heroes (if we take film oriented production for example) only in some period of time. But, according to the marketing theory of toy industry, timing is one of the most important factors that identify if the product will be popular and salable. It is connected with fast changeable direction of interest like in fashion: a new cool hero can appear next week.
But nevertheless, I think the inventory control and in house products will assist Mattel to have a stable and predictable growth in future. I agree with the concept that the toy business is about constant search of the next hot thing. But can it be chasing for the wind as the consumer behavior is hardly predictable. Finding the hit can be the same as trying to catch a shadow illusionary and high risk taking. It is enough to read the notions from the article to see it: find hit and not only will kids all over the world be happy but so will shareholders. Guess wrong, and you are left with a pile of unsellable knickknacks.
I think the word guess is the example for that. And this is something that Robert Eckert is trying to escape. As to the competition, I think the toy market might divide into two major parts: smaller toy producers and large toy industry corporations. The first will chase for the hits, trying to catch their profits as fast as possible. The second, will aim their strategy for long-term perspective, affording themselves to follow the concept: the second mouse gets the cheese. But with the new Eckert's delivery system that we mentioned in the beginning, it will be hard for smaller toy producers to compete.
Bibliography: Frederic S. Mishkin. Banking and Financial Markets. New York: Cooper Square Publishers, Inc. , 1989. www.
toy-tma. com www. toy-tia. org
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