Fischer Price

Christopher James Grossmann

Umass Amherst Isenberg Online MBA

FisherFisherFisher -Price Toys Price ToysPrice ToysPrice Toys Price ToysPrice Toys Case Study Case Study Case Study

SCH-MGMT 660 Marketing Strategy

238 Webster St. East Boston Ma

Christopher Grossmann

p. 617-777-1973

Cgrossmann35@gmail.com.com

6/13/15

Fisher-Price Toys Case Study  June 2016 1

Table of Contents

I. Problem Statement ................................................................................................. 1

II. Situational Analysis ................................................................................................ 1

III. Alternatives Analysis.............................................................................................. 3

IV. Reccomendation .................................................................................................... 3

Fisher-Price Toys Case Study  June 2016 2

1 Problem Statement

Fisher-Price Toys has to decide whether or not to release a new riding toy, the ATV Explorer, into the market for the holiday season. Initial costs for the toy have risen due to increase cost of the mold, which in turn has increased the cost above a self-imposed $5 limit backed by many of the executives. With the production drop dead date approaching Fisher-Price management needs to decide if they want to proceed with the manufacturing and release of the new toy.

2 Situational Analysis

Strengths:

 Strong Reputation for manufacturing and selling quality toys.

 Corporate Creed, five qualities (culture): intrinsic play value, ingenuity, strong construction, good value for the money, and action.

 Toy ideas are developed internally.

 Unique on site nursery for testing toys (R&D).

 Strategy of promoting whole line of toys, instead of a single toy.

 Financially stable and consistent growth.

 Most recognized toy brand.

 Large Marketing budget, $1.1 million.

Weakness:

 Conservative approach to new toys.

 Legacy Management inflexible and unwilling to change/adapt to current market.

 Internal resistance to releasing premium priced toys.

 Late adopters to new advertising mediums.

 Minimum toys selection in riding toys, which makes up the largest percentage of sales in the retail market, 22%.

 Lack of product in the premium toy segment, $10 and greater make up 46% of dollar sales %.

 Out of date pricing policy.

Opportunities:

 Youth Population growth, 27% gain projected until late 1970’s.

 Prestige items higher margin, 40-60% to retailers.

 American income growth and increasing levels of disposable income, personal income growth was 72% between 1960-1968.

 TV advertising budget, 1.1 million and (assuming) increasing number of household TV’s and programming.

 New Blow molding processes that reduce costs of riding toys to as $3-$4.

 Riding toy market, makes up 22% of the total $ sales.

 New toy only retailers in the market looking to sell toys year round, with promotions year round (year round demand).

Threats:

 Large discounter growth may reduce margins.

 Fierce competition in the riding toy market.

Fisher-Price Toys Case Study  June 2016 3

 Foreign toy producers, manufacturers of low priced products/alternatives.

 Seasonal nature of toy selling.

 Fisher price used hire priced molds ($161,000) and an investment of 2 molds needed, which leads to hire cost vs competition.

 Moon theme was seen as being outdated

 If Explorer bombs, fear that retailers will be stuck with a lot of inventory to carry and they will lose the trust of the retailers for years to come.

3 Alternatives Analysis

Alternative 1: Scrap the ATV Explorer – Because of the increased cost and the lack of time to make a decision Fisher-Price should cancel the ATV Explorer until they could further investigate pricing/cost strategies.

Reasoning – Due to the increased cost of the molds and special tooling the cost of the toy has increased to $18.50