WHEN THE GOING GETS TOUGH: 5 PRODUCT TYPES WHICH SELL DURING TOUGH TIMES…

WHEN THE GOING GETS TOUGH: 5 PRODUCT TYPES WHICH SELL DURING TOUGH TIMES…

After a buoyant couple of years in which the toy & game business soared, despite, or perhaps because of a global pandemic, 2022 is turning into a tough year for many businesses and for the industry as a whole.

Cost of living crises are rolling around the world caused by higher inflation than we have seen in most western economies since the 1970s. As a result, we seem to be heading into unknown territory whereby even toy sales have a tough time. This is something most of us haven’t really experienced. Even during the global financial crisis, things were more difficult than before in our business, but more for reasons of finance and the general pressure our retailers were under. Retail sell through was not catastrophic during the financial crisis of the late noughties. Global toy sales stayed more or less the same throughout this period and returned back to single digit growth by 2010 based on some old reports I dug out of my archives recently.

Normally the toy business is famously recession resistant, but that’s based on recession i.e. an economic contraction. But most of us haven’t worked in an environment where inflation erodes consumer disposable spending in a stealthy way like is happening right now. It’s one thing to be buying toys for your children when things are tight financially speaking, but when the more fundamental human needs are so much more costly than we are used to, if a parent has to decide between keeping their children warm, feeding them or buying them toys, then the toys will come a distant 3rd. This is why I believe that we could see the first major regression in the value of the global toy market (in real terms) of most of our working lifetime in 2022.

So, the question is where should we be focusing our efforts in the light of the tough times we are living through? Which products should we proceed with for 2023 and beyond? Which products should get more of our marketing spend and sales team focus?

Clearly, it’s difficult to answer that product specifically for every toy & game business, but there are some key factors to consider based on what happened during the global financial crisis when toy companies battened down the hatches:

1. Lower price points – there is a clear risk of consumers ‘trading down’ i.e. buying toys for their kids still but buying cheaper lower spec products instead of the more expensive ones they may have bought previously. The one fundamental decision to make for toy & games companies now is do we have the correct balance of price points in our product portfolio for these difficult times? One positive feature that came out of the global financial crisis was that the major toy companies who had generally paid less attention to lower priced toys really embraced the collectibles categories which have been some of the most vibrant over the last 10 to 15 years. It could well be time to focus on some lower cost toys & games for the next couple of sales cycles.

2. Consider cancelling any speculative products in development – most toy & game businesses have been through tough cycles before and understand what type of products to develop in general perfectly well. This though may not be the best time to launch that new really out there concept that your creative team are really keen on. This is more a time to focus on stable, dependable product formulae…unless you are so sure of your major new initiative and have the ‘minerals’ to put your money where your mouth is and to invest heavily in marketing to drive sales at a time when many companies will cut marketing spend.

3. Focus marketing spend on sure bets – retailers don’t normally like taking inventory risks, but in a climate like this when inventory is hanging around retail like a stale old sandwich, your customers will need persuasion to make stock commitments. Regardless of where you are spending, if you spend (comparatively big) to drive retail sell through despite considerable consumer resistance then you are more likely to sell in and to maintain sales revenues as close to previous as possible. In these tough times, marketing can really work and give you competitive advantage versus competitors who reduce their marketing budgets.

4. Known brands – another reality we need to face in the current climate is that struggling consumers and struggling retailers buy known brands that they trust. This may be licensed products, it may be your own already established brands, but this may not be a prudent time to launch completely new IP.

5. Brilliantly compelling products can sell regardless of the above rules! – Hasbro launched various new iterations of Furby during the tail end of the financial crisis last time around at prices above $50 and topped the charts. The boom in kids’ tablets launched by Vtech, Leapfrog & KD Group also happened towards the tail end of the financial crisis. The reality though of course is that Hasbro & the tablet companies invested heavily in marketing to get these more expensive products to sell.

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm

Have you listened to our Playing At Business podcast? We have more than 80 episodes live covering many different topics relating to the business of toys & games, find out more here: https://playingatbusiness.libsyn.com

UNDERSTANDING THE RELATIVE IMPORTANCE OF TOYS & GAMES TO PARENTS & KIDS

When you work in the toy & game business all day, every day, you can get somewhat removed from the reality of how our end consumers (i.e. parents & their kids) regard and interact with our product output.

The consumer reality today is that most toys represent in effect a ‘throwaway’ purchase…despite, or maybe because of all the retailer pressure on keeping prices low, toys & games don’t represent a purchase of much significance in most cases. Something really high end like a $700 Lego Millennium Falcon toy would be a very considerable purchase, but the vast majority of toy sales are $30 retail price or less.

Children can form strong emotional bonds with toys, and these bonds can remain for life. Often classic toy brands get passed on from one generation to the next because of this strong emotional attachment and nostalgia. But the vast majority of toys are forgotten by the child quite soon after receipt.

I have written often before about the concept of ‘Toy Stockpiling’ whereby children collect literally hundreds of toys through their childhood, and by the time they are getting to the age of moving past toys, they probably have a bedroom full of toys and games, they may also have a playroom in the house also full of toys & games.

So we have to be realistic about our expectations of consumers when it comes to our products. You may give a child some valuable developmental support. You may help them to learn how to interpret and interact with the world around them, and you should also bring a child at least a fleeting moment of joy and entertainment. But you are unlikely to be delivering anything truly earth shattering, and as such we should focus on delivering compelling concepts and properly functional toys which are safe to use instead of trying to be too clever and intellectual.

Critically we should also understand that as much as we complicate things, our end consumer is in the end much simpler than we are, and their interaction with our products is often fleeting and shallow. Many times I have seen through the power of consumer playtesting that it is more important to get kids to react to your products both conceptually and in terms of functionality than it is to sit in our ‘ivory tower’ offices pontificating about features, what our retail customers think of the product and where we can afford to cut costs to get the product to market. The answers to so many of our product development and sales conundrums can be answered by testing the toys with the end consumer.

As we enter a period where we see more pressure on consumer spending through the holiday season than we have been used to we may well find that the secret to developing commercially successful products is to ensure they are validated in advance of mass manufacturing by our end consumer on their own terms.

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm

Have you listened to our Playing At Business podcast? We have more than 80 episodes live covering many different topics relating to the business of toys & games, find out more here: https://playingatbusiness.libsyn.com

THE 3 RECURRING FINDINGS FROM CONSUMER PLAYTESTING RESEARCH WHICH MAKE TOY COMPANIES MORE SUCCESSFUL

I have been conducting qualitative focus groups (& other qualitative methodologies) with kids since 1998. In that time, I estimate I have conducted in the region of 1300 focus groups with kids & parents. Out of those 1300 research groups, nearly all delivered some kind of critically important finding for the toy or games company. Over time I have observed that the helpful & usable findings which recur most often fall into these 3 areas:

1. DEXTERITY FIT OR MISMATCH & PRODUCT FUNCTIONALITY

Most toy designers are in their twenties or thirties, which means that toys are designed by people who have not been children for a long time. They can often forget about how children see the world, about their (lower) dexterity and motor skills and about the size of children at different ages. One of the first products I tested in the toy business was a toy with a 4+ target age. The product had never been playtested with kids, so the brand team were very interested to see what the research feedback was. I discovered almost immediately in the 1st group that the product was better suited to a 40-year-old physics professor than a 4-year-old child! There was no way whatsoever that a 4-year-old, or even a 6-year-old could have used the product as it was. This was a global leading toy brand with a product in market which was a horrible mismatch between the capabilities of the core target consumer and the reality of the toy. I could give dozens of examples of research projects I have conducted which revealed some type of fundamental issue of this type. The reality is that companies who release products into market which have never been near a child are most likely to get returns and bad reviews and are more likely to see problems with sell through of inventory as consumers reject a product which has clearly not been properly designed and tested with the target consumer in mind.

2. CONCEPTUAL APPEAL

Fundamentally you need your core target market to find your products appealing on a conceptual level i.e., they need to ‘get it’. If they can’t understand what it is, what it’s supposed to do and how that is relevant to them then you could have a big flop on your hands. By way of example, I worked on a major new product range some time back which featured a range of racing snails. The concept was that snails are really slow in reality, and wouldn’t it be really funny if there were toy snails which were really fast. This sounds like a reasonable premise for a toy line, but the issue is that kids of core toy target age i.e., 4 to 7 years of age don’t tend to appreciate that kind of irony – humour tends to need to be blunter and more obvious than this for this key toy demographic.

By the time I was asked to test this range the product was almost shipping into retail already, which meant that when the product proved to be completely unsuitable for the target market at a conceptual level it was hard to know what the best option was. My recommendation was that at the very least the toy company should have a strong exit plan ready and be ready to markdown inventory and switch media to more successful products fairly early in the products on shelf life. The product as expected died a death on shelves around the world and was soon only to be found in clearance channels. When DreamWorks produced a movie called ‘Turbo’ based on a very similar premise years later, I suspected it would not achieve commercial success at the box office or in terms of toy merchandising, and lo and behold I was right, with Turbo disappointing commercially despite DreamWorks usual high standards in terms of animation, production and marketing.

The moral of the story here is that it is normally best to test the conceptual appeal of a toy or game & the fit of the concept premise with the target market before investing $hundreds of thousands or even $millions in a product which could be very likely to bomb.

3. GUIDANCE ON CORE MARKETING HOOKS

One thing which has surprised me many times over the years is that children often respond to different features and/or benefits of a product versus those intended by the toy company. Qualitative playtesting groups can really help to focus marketing spend and messaging on the key areas which children will respond to. You may have sat in an office with your colleagues & suggested that the marketing hook was a particular element of your product, but research often suggests that the most appealing features are not quite what you expected. One example which springs to mind is a product I tested some 7 or 8 years ago, which is still in market & selling well today. Originally the expectation was that the overall play pattern itself was the most appealing thing, but it turned out that kids responded most to one particular feature of the product which was quite understated at the point of the research. We recommended that the company exacerbate and enhance the obvious key driver for the children we tested with, and the final product became so compelling that the product stayed in market for years beyond the original expectations.

We could discuss at great lengths the shortcomings and limitations to the type of focus groups with kids I have described here. Sometimes clients find the methodology to be a bit ‘fluffy’, sometimes findings on key questions can be less conclusive than desired and sometimes it is flawed in some way. However, nearly every time I have run groups on toys & games, my clients have discovered something fairly fundamental which they didn’t know, and in many cases has lead them to vastly improve the product and the eventual commercial success and longevity of the product.

From my side, this type of work is very helpful in keeping thinking really grounded. Like with many of you reading this, I sit in a lot of meetings, some of which are quite highfalutin! But when you regularly see what happens with our products at the ‘sharp end’ with kids & families, you inevitably develop products which are more rooted in reality and less driven by ivory tower management speak, which in turn tends to deliver to market products with greater potential for success.

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/ For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm Have you listened to our PLAYING AT BUSINESS podcast? Click here to listen or click on the image below: