Fisher-Price Toys, Inc.

Case: F isher-Price Toys, Inc.
1.

Basic information
1)

Company: F isher-Price Toys, Inc. (Industry: Child toys)

2)

Business dilemma: a rash marketing decision has to be made on carrying out whether a new quality
product

(product name: ATV Explorer) at exceptional high price or a new less-quality product at

moderate price
2.

Business dilemma
1)

Key problem:
(1)price-point: Cost for a projected toy can't be made within budget, resulting in a much higher
price ($18.5) than planned. High price disobeys the traditional brand image of the Fisher-Price
company –less-than-$5 convention.

(2)

Marketing strategy: launch the ATV explorer whether as an independent product or as a new
product in an existing product line, and corresponding advertising/promotionstrategy

2)

F isher-Price must decide quickly before August to catch the sale peak:
(1)
(2)

3.

trade-off between product quality and price;
Independence of the product

Case analysis
1)

Current Market strategy (“4P” / “4C”)
(1)

Product → Commodity: innovative products / safe, durable and educational

(2)

Price → Cost: moderate price / good value for money

(3)Place → Channel: Aggressive to increase the market reach and improve sales

(4)

Promotion → Communication: focused strategies for advertisement and promotion of
differentiated range and group of products

2)

SWOT analysis
(1)

Strengths (Internal)
1-

Internal operation
­
­

established professional management expertise from diverse industries

­

excellent sales history(continuous sales increase during the last 10 years)

­

effective product testing and marketing programs facilitate internal toy design

­
2-

well-run

sound financial condition

Market positioning
­

A leading toy manufacturer with a wide range of quality toys at moderate prices.

­

has relatively good market for specialty toys, which has grown substantially over
recentyears

3-

Brand & Reputation
­

the best know brand for toys, has the largest market share (64.7%), and is brought
most often (82.7%)

­

Enjoys a reputation for intrinsic play value, good value for money, ingenuity, strong
construction and action.

­
(2)

ranks first in brand loyalty (60.5%)

Weaknesses (Internal)

1-

Internal operation
­
­

2-

Reluctance of change /comparatively conservative management teams
Inflexibility in the decision making process

Irreducible escalating cost
­
­

additional special tooling costs of $18,000

­

High selling price disobeyed its conventional price image

­
3-

a high initial investment of $161,000

Low margin and profitability

Channel
­
­

Limited sales channels (trade only)

­
(3)

highlydependent on US market with little or no presence overseas
Channel of discount stores could jeopardize brand image

Opportunities (External)
1-

Market potential: Foreseeably the size of potential consumer (children under 6-year-old) is
expanding

2-

Merges: horizontal (M&A competitors), vertical (franchise or strategic alliances with
supplier and traders) , and conglomerate

3(4)Market explore

4-

Cost-cutting effort: operation re-construction or innovation.

Threats (External)
1-

Macro-environment:
­
­

2-

Adverse economic condition.
Seasonal nature of the business

Micro-environment
­

As a premier toy manufacturer, receives most attention and faces most fierce
competition

­
­

Intense Price competition

­

Directly challenge fromforeign manufacturer on cheap low quality products

­
3)

Product similarity leads to homogeneous competition (product concept)

Technological advancement gadgets including toys

Main Considerations
(1)

Commodity:
1-

(2)

Adverse economic condition where people would not be willing to buy premium products

Cost:
1-

Initial investment on molds (A single mold is sufficient...