American Toy Industry

Name: Xiaoran Sun

Strategy: THE U.S. TOY INDUSTRY CASE

Business Plan

Target Segment

As a small toy manufacturer in the market, we decide to position our product in the high end infant/preschool segment in which half of the revenues comes from consumers who want to buy toys as gifts for infants or preschool kids. The main reasons are: First of all, consumers in this segment are willing to pay a high premium on price, so they are not very sensitive to price. Second, this is a fast growing segment. According to demographic statistics, Lifestyle changes increase the demand. Grandparents are living longer and have more purchase power. Working parents tend to spend more money instead of time on kids. Single mothers are trying to buy better toys for babies to avoid letting them feel lack of love. Targeting this segment gives us the potential to make higher profits. Lastly, since these children are not old enough to choose their own toys and are not aware of brands, we can save a large sum of money on license.

Product Choice

Since our consumers favor higher priced items, we could afford to offer high-end products with higher quality and better design which differentiate our products from others’ and the small kitchen set is a good choice. To this end, our product will be made from ABS plastic which is a premium raw material often used in high end market, allowing our products to be more good looking and durable. Also, with the help with our creative design team, the kitchen set comprises of more than ten kinds of cooking tools applied to reality of different color and patterns. Besides these “hardware,” we also offer some “software” simultaneously. For example, kids can use cooking powder to make jellies or noodles, which is certified to be edible. These designs will stimulate their interest and develop their intelligence.

Positioning Statement

For infant/preschool toy products, our brand provides high play value and long durability, because compared to other toy manufacturers, we use premium materials and apply good design.

Manufacturing

We will use rotational molding process to produce our kitchen sets because compared to high volume injection molding, this process will offer us higher degree of flexibility and experimentation of new ideas and is easy for us to switchover the molds since the kitchen sets include a variety of tools. Although the unit cost is higher, we are still likely to be profitable given that the specialty stores are willing to pay more for unique offerings.

Buyers & Distribution

We decide to choose local specialty stores as a main channel because first they are looking for unique items and more likely to carry unbranded products. Second, they have trained sales people in the stores who can offer expertise and advice, which helps consumers pay more attention to our unbranded but unique products. Third, since they avoid discounting, they are less likely to negotiate on price and leave us higher profitability. Furthermore, we will find two or three national wholesalers to distribute our products to those specialty stores and chains because first this is the fastest way to spread out products all over the country and seize the market, which is our current top priority, and second it costs less than doing it by ourselves.

To sum up, we position our product in the high end infant/preschool toy segment with higher quality and better designs. It will be produced in a relatively low volume and sold at a higher price, which will compensates the high unit cost due to the rotational molding process we choose in manufacturing. The market potential of this target segment is promising because of the growing number of gift givers, including grandparents, working parents, single mothers and so on. Although the fickle nature of children makes it hard to predict their preference, we can solve this problem by changing our design and manufacturing quickly because of the high flexibility and easy switchovers of the nature of rotational molding.