The Toy Industry

The Toy Industry

The toy industry is risky. If companies bet right, they make a lot of money. If not, they lose a lot of money. Toys are also big business. The Toy Manufacturers'

Association estimated that the European toy market produced sales of ccu22 bil­ lion in 1996. The US toy market is even larger at over eeu23 billion. US manufac­

turers invent, engineer and market about two­thirds of all the toys in the world. Analysts attribute toy industry growth to three factors. First, although birth rates in developed countries are declining, parents tend to buy more toys and more expensive toys for their children. Second, the increased number of divorced or separated parents often means the children have many adult relatives to give them toys. Also, many women are waiting later to have children, meaning they and their families may have higher disposable incomes,

Mattel's Top Speed

Mattel is one of the key players in the toy industry. With annual sales of S3 billion, it owns the 38­year­old Barbie and 28­year­old Hot Wheels brands. Barbie alone accounts for 35 per cent of Mattel's sales. Barbie's success, however, has created problems. In the mid­1990s, Mattel needed to lessen its dependence on the Barbie line. It also wanted to reverse a string of recent failures in its boys' division,

including the Masters of the Universe and Demolition Man action figures. As a result, Mattel prepared to launch its new line of Top Speed racers, the first Hot Wheels made from lightweight plastic rather than die­cast metal. The lighter­weight cars could zip around faster. The translucent plastic also allowed Mattel lo give the 6 cm cars iridescent body colours that it believed would appeal

to 7 to 10­year­old boys.

Further, Top Speed cars, unlike traditional Hot Wheels models, did not resem­ ble real ears. They had a futuristic design, more like Indianapolis­style racing cars. The cars featured detailed engines; a floating front axle to improve perform­ ance on the track; stylish moulded mag wheels; and a front­mounted launching hook. Special rubber bands contained in a launcher powered the lightweight cars, allowing them to be hurled along tracks and through clear plastic tubes at amaz­ ing speeds, Mattel planned to offer Top Speed ears in six different models, each

with its own exciting name: Cryo Pump, Road Vac, Corkscrew, Shock Rod, Sting Shot and Back Burner.

Mattel planned to package the cars in pairs, including a tube and launcher, with each pair selling for about 85 at retail. This price compared favourably with a §2 per car retail price for traditional Hot Wheels models. Kids could also buy

Overview Case Four: Mattel • 675

special tracks to run their cars on, priced in the S25­30 range. Or they could make their own obstacle courses or drag races with their friends.

As they prepared to launch the new product, Top Speed's brand managers knew how easy it is to underestimate or overestimate market demand for the new product and they did not relish explaining the resulting nightmare to top manage­ ment, Not only did they have to decide how many Top Speed cars to produce; they needed to develop a marketing programme that would drive the product for­ ward. And retailers had also to be convinced that it would be a winner. They knew that toy marketing would not be child's play.