About Us

Steven Reece We are a leading Consultancy to kids entertainment brands including TV, toys & games. Our services include cutting edge qualitative consumer insight and consulting with entertainment brands to maximise their merchandising potential.

Carving Out A Niche For Your Company In The Toy Biz

Posted in Uncategorized on 13 November 2013

Carving Out A Niche For Your Company In The Toy Trade

Unless your company is an established huge global conglomerate with thousands of staff, forget about trying to do everything at once in the Toy industry.

The most successful and sustainable companies in this business carve out a niche, or a few niches which fit well together, and only when they are fully established and reached maturity in those niched areas do they look to diversify into more categories of Toys, alternative retail channels, new markets etc.

In my opinion, the word ‘focus’ is very over used, but clearly there are advantages in focusing in one or a just a few areas, establishing reputation, reliable supply history, brands, carry forward evergreen products and more. Your company will benefit hugely from being one of THE players in a space much more so than just chucking a load of random stuff out there and seeing what sells.

Trying to go full on into everything is a recipe for chaos and setbacks. The key drawbacks are lack of differentiation and competitive advantage. If you’re basically doing the same as dozens of other companies, the reasons for retailers and consumers backing your product offering become more random and arbitrary, which doesn’t create strong foundations for your company’s future growth prospects.

If you imagine a scenic back road, with not too much traffic and a fair chance of having at least part of the road to yourself, and compare that to the freeway, where it’s bedlam with juggernauts bearing down on you from behind if you don’t get up to speed and get out of their way – this is a fair comparison with what happens when you try to do everything in this business versus specialising and carving out a reliable niche.

Take over the whole world later, start by carving out and protecting your own little defendable island…where you have innate advantages and a ‘moat’ around your business.

…then you can think about everything else, but even then carving out your own space will bear fruit.

Or you could take the risk and become juggernaut roadkill!

 

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Selling Toys: Farming Versus Hunting

Posted in Uncategorized on 03 November 2013

Selling Toys: Farming Versus Hunting

There are 2 different approaches to selling:

HUNTING – whereby the sales person targets the sale itself, and relies on natural regeneration / depth of targets to find the next victim.

FARMING – whereby the sales person nurtures their supply of opportunity, just like a farmer tends a field so that it can keep on producing year after year.

This analogy can actually be applied to nearly any type of selling, but in our industry where there is definitely a finite choice of targets, and where retail buyers have long memories, we literally can’t afford to dump and run.

Nurturing relationships and doing our utmost to deliver value and solutions to our customers is the only way to go.

Even where a buyer/distributor represents a comparatively minor account, burn them at your peril, because buyers move around, and one year’s victim is likely to become another year’s problem.

All this is not to suggest that we ignore commercially prudent trading terms, or that we bend over and let our retail partners shaft us. There is clearly a point in the sand beyond which we should not go…

…But nevertheless, in this industry of all, a successful sales career depends on farming and cultivating.

 

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The Toy Biz: How To Know When You’re Ready For International Distribution…

Posted in Uncategorized on 01 November 2013

The Toy Biz: How To Know When You’re Ready For International Distribution…

Lately we’ve received many enquiries from companies wanting us to help them get international distribution.

This by the way is completely fine, we do offer this service, BUT, only for Brands which are ready for it! if you just launched a new one product company two months back, you need to focus on building in your home market first, before we or anyone else is likely to be able to deliver international distribution for you!

Here’s a list of factors in Toy and Game products which are ready for International Distribution:

1. Successful Sales In Home Market

This seems blindingly obvious (but perhaps not obvious enough!), but the first question any potential distributor/overseas retailer will ask you about your product is ‘How has it sold in your market’? if you don’t have an impressive answer to this question, save your time, effort and money, and get one first, before you even consider distribution elsewhere!

2. Proven / Integrated / Ready To Go Sales/Marketing Model

The reason why distributors distribute other people’s products versus sourcing their own is so that they can have products to sell with a ready to go formula. If they have to create / plan all marketing, then they can go one step further and create their own product to not need you. How & why is your product going to get on the shelf versus all the other thousands of products competing for that shelf space? How & why is the consumer going to take the product off the shelf and purchase? Answers including ‘Because it’s a great product’ indicate something not ready for international distribution in the vast majority of instances.

To be blunt, if you don’t have either/both a). impressive sales record and b). Ready to go TVC, then you are not likely to be ready for international expansion!

3. Toy Fair Testing

Often times, you know your product/s are ready because international distributors tell you so. If you exhibit at Toy Fairs in your home country, a significant portion of the attendees will be overseas distributors looking for new products. If you do exhibit and get no credible enquiries, that is not a promising sign!

To a degree the question of international (or any) distribution becomes chicken and egg – i.e. we could TV advertise if we had the sales, but how do you get the sales without the advertising.

The reality though is that international distributors know how this works, and frankly won’t care that you’re finding it hard. If you look at those who’ve got beyond this point, they tend to have a large degree of faith, persuasiveness, determination and a massive battle chest of war stories.

So, we suggest you build your own domestic business first…and when you’ve done that, feel free to get in touch & we may be able to open up international markets for you.

We have toy company and game company clients -looking for successful sales track record and ready to go marketing – in the following markets:

  • USA
  • Canada
  • Mexico
  • Brazil
  • UK
  • France
  • Germany
  • Spain
  • Benelux
  • Scandinavia
  • Eastern Europe & Russia
  • Australia/New Zealand
  • Japan
  • China
  • Others

So if you feel you have a truly compelling proposition, and need distribution into any of these markets, feel free to drop us a line, and we’ll see if we can help…

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Toy Industry Brand Managers Academy Day

Posted in Uncategorized on 01 November 2013

Toy Industry Brand Managers Academy Day

We’re running a one day training course for Toy industry Brand Managers on Friday December 6th in Central London (England).

This intensive all day training program covers the fundamentals of brand management, including:

  • Toy industry fundamentals.
  • Brand building tools and processes.
  • Product development processes.
  • Marketing strategy & execution.
  • What brand managers need to know about Licensing.
  • Consumer research – understanding the target consumer.
  • Concise reporting/sign off inputs to senior management.

The format of the day is informal and interactive, with a combination of presented content and interactive exercises.

Suitable for brand and product managers of all levels of experience, the level of content goes through from basics to advanced level.

For further details and to buy tickets, please follow this link:

https://www.eventbrite.com/event/9107078517 

 

To see the announcement regarding the course on the UK’s leading Toy trade magazine – Toy News, please click here:

http://www.toynews-online.biz/news/read/toy-brand-product-managers-academy-day-to-launch-in-december/041221

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Thoughts On Toy (Retail) Pricing Inflation

Posted in Uncategorized on 18 October 2013

Thoughts On Toy (Retail) Pricing Inflation

This week I had cause to search out some Toy adverts from the 1980s for a project we’re working on.

You Tube is a marvelous bank of old Toy TVCs, so I fairly quickly found what I was looking for.

The advert in question featured a recommended retail price of £13.95. Which aside from not really being a true price point based on modern day pricing structures, was also just £1 less than the modern day RSP of £14.99.

Yet this TVC dated from 1985, in fact I remember watching the TVC as a scruffy 10 year old back in those days!

The point of this meandering trip down memory lane is to compare pricing differences separated by 28 years of Inflation.

According to my calculations, UK price inflation over that period (according to the Bank of England’s price inflation calculator) would mean a retail price of c. £35.79, versus the mere £14.99 it is in reality.

This one example seems to be indicative of the broader macro trend…the Toy industry is delivering signficantly better consumer value than it has done historically, and so we’ve either created huge efficiencies along the way or taken a massive margin hit – take your pick!

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China’s Perennial Role In Toy Manufacturing

Posted in Uncategorized on 18 October 2013

Toy Manufacturing Trends

Clearly one of the major trends in Toy manufacturing in the past few years is the ever increasing labour costs, and therefore overall manufacturing costs out of China. And bearing in mind that cost of goods makes up by far the largest single expense item on Toy company P&L’s, any upward trend is a legitimate concern for the Toy industry.

In our experience, and based on stories and press releases in the trade press, there are definitely more North American and European companies who have moved manufacturing back to their home regions or are seriously considering it.

However, those who call this the death knell of Chinese Toy manufacturing are dreaming! Because while thing’s have changed for certain, there are still some HUGE factors in favour of Chinese Toy production. Cheap labour costs historically has been an important advantage, but there are other factors to consider. Here are a few of them:

1. Capacity - the reality is that if Chinese Toy production was shut off tomorrow, there would be literally no way of delivering the c. $70-90 billion of Toys (at retail value) we sell each year. if we do some quick math/s, presuming a total global retail market value of $80 billion, total net selling value for Toy suppliers will be roughly $50 billion. Manufacturing cost should normally be c. 15-25% of net selling price, so let’s call it 20% – that’s $10 billion of manufacturing spending. If we presume an average cost per unit of $3, that means (very approximately) 3 billion Toys manufactured every year globally.

You can’t just switch on new manufacturing to deliver that kind of capacity. It took China decades to get to current capacity levels, it will take any other country the same.

So in a sense, the reality is the Toy industry en masse actually has no option but to keep producing in China to fulfil the current level of demand.

2. Expertise and Talent Pool – way back in time, China may have been preferred primarily on a price/costing advantage basis, but over time the depth, breadth and scale of expertise developed has been mightily impressive, and again means that a massive proportion of the Toy industry’s human capital when it comes to engineering, design, tooling, manufacturing, innovation, R&D etc. rests with the Chinese Toy production industry.

3. Geographic location - the Asian Toy markets are growing overall. So while many European and some North American countries see China’s location as a disadvantage due to cashflow tied up in boats on the water, the upward trend for Asian Toy sales is a definite positive in China’s favour. With over 4 billion of the 7 billion people on the planet living in Asia, clearly China is well placed to benefit from fulfilling ever increasing Toy demand in Asia.

4. Efficiencies of Scale - clearly we expect scale of demand to drive serious reductions in manufacturing costs. So because of factors listed above, while labour cost advantages may equalise over time, the scale of production and component sourcing itself can drive cost advantage for China.

There are more factors in addition to these, but the point is, to those harbingers of doom – you’re dreaming if you think China Toy production is over!

P.S. A significant part of our business is based on helping Toy companies to work with reliable, cost effective factories who pass the toughest ethical factory standards/audits to keep your licensors and retailers satisfied. One of our guiding principles is to perform our own due diligence based on reputation and customer satisfaction…we validate for certain that each factory delivers reliable service, consistent quality and strong customer service over time. We won’t work with factories who don’t deliver on this, because their delivery = our hard earnt reputation.

We work with facilities in China, other regions of Asia, North America, Europe and beyond.

If you’ve been let down, or need additional trustworthy capacity, please feel free to get in touch…

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8 Characteristics Of Toy Companies That Stand The Test Of Time

Posted in Uncategorized on 08 October 2013

8 Characteristics Of Toy Companies That Stand The Test Of Time

If we look at those Toy companies that have been around for a long time, we can observe several points.

Firstly, there are a surprising number of companies in the Toy industry that have been in existence for a whole generation or more.

Secondly, there are certain critical factors these companies have in common.

Finally, we can also observe that those companies that don’t stand the test of time have usually failed to follow one of the critical principles their more longstanding counterparts have adhered to.

Here we outline these key factors:

1. Longevity Of Key Management

A ship on a long journey will make more direct and successful progress to it’s destination if it has the same skipper charting the course. In other words, this is an industry which works on extended timescales. We sell primarily in 2 windows per year, with a bias towards one of those windows, and it takes multiple cycles to make progress. Therefore it takes years to get anywhere in this industry. Consistent management, ethos and approach is a key criteria for success.

Take a look at the 3 biggest Toy companies – Mattel, Hasbro & Lego – all began as family businesses, built up product by product over an extended period of time. There are few examples (bar the exceptions that prove the rule!) of VC backed Toy companies lasting the test of time with investors looking for 3-5 year pay back.

2. Clear Positioning In The Market

As human beings we like to put things in boxes/affix easy labels to aid our own understanding. Having a clear positioning allows buyers, suppliers, partners to know what we stand for, what to bring us, what to expect us to bring to them and more. Clear positioning also allows us to assemble expert knowledge, strong carry forward product lines and easier re-listings with buyers who know we will be back to see them this time next year, and thus have a vested interest in supporting their business should our product not sell through.

3. Commitment To Brand Building

Again, if we look at the big 3 Toy companies globally, we can see that Mattel report their own brands accounting for c. 75% of total sales. Hasbro’s corporate strategy throughout the ‘noughties was core brand focus, and Lego is in effect both a company and a hugely powerful brand.

Brands deliver more long term security than nearly anything else because known performers get re-listed by retail, own brands are higher margin due to not having to pay 3rd party licensor or distributor %ages and because brand extensions are a much easier/less risky way to launch new product lines.

And of course brands have huge value within themselves, as intellectual property, and can drive additional revenue via licensing out brands to other companies in different product categories.

4. Retaining Key Staff Members While Being Open To New Ideas

Note there are two parts to this factor – retaining key staff over the long haul, while still maintaining an openness to fresh ideas and ways of doing things. The human capital which is needlessly and sometimes thoughtlessly lost by many Toy companies for petty reasons or for reasons of neglect is a huge asset that disappears down the swannee.

Speaking as someone who has made massive, glaring errors, I’m reminded of the Thomas J. Watson (founder of IBM) quote:

“Recently, I was asked if I was going to fire an employee who made a mistake that cost the company $600,000. No, I replied, I just spent $600,000 training him. Why would I want somebody to hire his experience?”

The reality is that those staff who have been in situ longest inevitably hold the most knowledge, and in this business knowledge very often is money saved or money earnt i.e. reliable, cost effective factories, knowing which QA tests to do, how to deliver the shipment on time etc.

Now having said that, under performing staff don’t remain in situ for that length of time in the most long lasting companies.

Experience and tenure are also no excuses for being closed to new approaches/ways of doing things.

So the companies that get the right balance on this factor tend to be the one’s with most longevity.

5. Excellent And Enduring Product Pipeline

This is a product and feature driven business, innovation is key – but note it doesn’t necessarily need to be your company’s innovation, there are hundreds of long established, successful companies bringing proven products to their market from other company’s R&D investment.

6. Excellent And Enduring Customer Relationships and Effective Sales Team

Let’s be frank, retailers are a hard nosed bunch on the whole, and rightly so, retail is a cut throat business. The strong and very demanding are more likely to survive in their game.

So in reality strong relationships depend on the performance of the products you ship into them as much as any other factor, but customer service and maintaining maximal supply at key times are also important. Inter personal relationships can play a critical role though, with some buyers more than others of course, but nevertheless it’s a given that bad relationships with customers won’t deliver success in the short term, never mind the long term!

7. Reliable Supply Chain

We’ve all nickel and dime’d our way to shaving a few cents off our manufacturing spend. And who wouldn’t, it would be crazy not to, especially as THE biggest expenditure toy companies have is manufacturing cost. However, a few cents less pails into comparison with the carnage that unreliable supply and / or suppliers can wreak on your business.

The companies with most longevity in this business tend to be those who focus on reliability, in essence, risk reduction, from their supply chain, at the same time as seeking competitive costings.

(Feel free to try our Toy Sourcing service to find reliable, cost effective suppliers!).

8. Eggs In Baskets

Why would you ever allow one customer, one supplier, one staff member, one product, one brand one anything for that matter to have the ability to terminally injure your business if you lost it/them? One person departments are all well and good until the one person leaves. Smash hit products are all well and good until the hangover sets in when the hero fades away. Huge numbers via one retailer may be a great bonus, but it should be treated as the icing on the cake – not the basis on which overhead is fixed or expectations are set.

The reality is in this business, and life in general, people move on, products and brands move in cycles, retail buyers move on.

A fundamental factor in companies with longevity in this industry is the ability to survive or even thrive, regardless of the loss of any one ‘basket full of eggs.’

I can think of 3 or 4 Toy companies who disappeared during the difficult times we’ve experienced over the last few years, and they went almost entirely because they relied on one person/entity/thing too much.

So there you have it, 8 Factors common to Toy companies of long term tenure.

 

 

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Board Game Manufacturing – Tips & Pitfalls To Avoid

Posted in Uncategorized on 24 September 2013

Board Game Production – Tips & Pitfalls To Avoid

Recently we’ve had an upsurge in enquiries relating to board game manufacturing and how to find the right board game factory from people/companies looking to manufacture their own games.

No doubt the paradigm smashing impact of Kickstarter has had an impact in this case. Because now there is an option for Game designers/creators to go direct to the consumer without board game publishers as gateway to retail and therefore the end player/purchaser.

However, inexperienced people and board game production can often be an expensive car crash waiting to happen. Here’s some tips & pitfalls to avoid:

1. Think Long & Hard before you press that button & commission manufacturing – the moment you confirm production start/pay upfront manufacturing fees is the moment you are stuck with whatever comes off the production line! So be certain you want to take on the risk before you start. And do everything you can to test demand/interest. We’ve often been asked to look at games where the client has tens of thousands of units sitting in the warehouse because they can’t get anyone to buy them…not a lot we can do at that point apart from hand over the contact details of clearance dealers!

2. Reduce the risk as far as you can – i.e. playtest the game and the game instructions until you can’t bear to play it any more, pre-sell as many copies as you can ideally 100% of your shipment, but if not, the prudent operator would look to pre-sell enough copies of the game to breakeven before even manufacturing. And check for typo’s, spec issues to the most minute detail you and several other people can bear.

Just to emphasise the importance of this point – in the past we’ve worked on Board Games selling tens of millions of copies…and there is no worse feeling than having to eat up margin/delay shipments to customers or having to dump your newly delivered stock due to errors/issues. In the past we’ve gone to such lengths as flying to the board game factory to watch the game on the production line to ensure print bleeds and other factors were as we wanted them. The unsupervised game that makes it into and out of the factory with little vigilance is often the one that causes all the problems!

3. Work with professionals who can fill in your knowledge gaps – there are numerous factors involved in board game production that go beyond what you can expect to pick up as you go along. And the reality is why would you want to take such a slapdash approach when you can employ qualified, experienced expertise to reduce the risk of getting it wrong? You can easily find top quality board game graphic designers who don’t cost the earth, for sure you can find someone else who can make an image look good, but that’s only the glossy part of the process - experienced people can help deliver artwork on spec to the factory die-lines to reduce the risk of errors which will cause you stock obsolescence/money down the drain. You need to find the right factory to manufacture your board game as well…

…so now we’ll look at how you can go about that.

4. What you need to look for in a board game factory –

a). Hunger for your business – there is nothing more dispiriting than trying to spend huge amounts of money with suppliers who aren’t that interested in your business.

b). Fit between your forecast and their overall business – the bottom line on this is there are dozens of good board games factories we could recommend, but not all of them would actually want your business, or even more importantly, be able to fulfil it to the standards we would want. For instance if you want to manufacture 2,000 games for Kickstarter or some other purpose, there are giant conglomerates churning out millions of games who just wouldn’t give your order that much focus, whereas there are smaller factories who are not set up to manufacture millions of board games. Getting the right fit between your order size and factory is normally a key start point.

c). Customer service/communication is key – regardless of what else a board games factory has going for it, if the customer service is poor or absent you will eventually pay the price by way of costly mistakes. A hungry supplier should respond to all your communications within 24 hours unless there are mitigating circumstances i.e. for china board game manufacturing Chinese new year, for USA board game manufacturing labor day, thanksgiving etc.

Above all you need a factory with a proactive, responsive and customer centric approach. There are factories out there who are very production focused i.e. they deal well with the challenges of producing your games, but not so well with interfacing with you.

d). Reliability – this often becomes THE most critical factor, because the bigger your company gets, the more demanding your customer becomes. For instance if you are supplying major grocery stores i.e. Carrefour, Tesco, etc., or US mass market accounts i.e. Walmart, reliability of supply becomes a huge factor for them due to the nature and complexity of their business/supply chain.

e). Competitive costings – many companies we work with focus almost entirely on costings. There is of course no doubt that you need to get competitive manufacturing costs for your board game manufacturing…however, in this day and age the difference between the credible suppliers is not so great as it perhaps once was, and so we find that often while it’s a given that every board games company wants the best price possible, other factors can outweight this concern.

f). No skeletons in the cupboard – your board games factory of choice needs to be capable of meeting the most stringent of ethical and QA audits if you want to build/keep business with major retailers. The reality is that there are companies who can crank out good products at a good price, but in a way which would send a shiver up the spine of most ethical people in the West. Look for appropriate certifications as a start point.

5. Sourcing Agents can save you money and reduce your risk – sometimes even comparatively large board games companies work with sourcing agents to find the right factories in China and other countries. The reason being that the legwork involved can be prohibitive. But perhaps more importantly, a good sourcing agency will pull together a strong credentials deck for any factory they recommend, in effect handing to you on a plate a credible and comparatively more reliable option. Don’t ever pay upfront fees to Sourcing Agents though, their upfront advice should normally be free, with their remuneration coming as a fee based on amount spent i.e. a percentage. This normally works in your best interests because you only buy if the pricing package is competitive, regardless of the agency fees.

We offer a sourcing agency service, so if you have any questions on how to get your board game manufactured, if you are an existing company looking for new reliable suppliers who already supply well known board game companies or if you’d like assistance securing quotes from the right factories, please feel free to get in touch.

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A Glimpse At Future Toy Tech…?

Posted in Uncategorized on 20 September 2013

Future Toy Tech In Action…?

This has to be one of the best portrayals yet of how Technology is going to change to fit around how the user needs it to work versus how it comes out of the box/off the factory production line the easiest.

The mind boggling part of this is that the Toy industry has always been brilliant at taking consumer electronics technology and speccing it to a hot price and hot functionality for kids…just imagine what we can do with this kind of Tech in terms of Toys and the interaction of Toys with the world around the child.

Very exciting times ahead…if you’d like to understand more how the Toy industry is going to change based on Technological advancements, feel free to drop us a line. But in the meantime, enjoy this fantastic look into the not too distant future:

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The Myth Of Cannibalisation – Why Toy Brand Cannibalisation Is An Exaggerated Threat

Posted in Uncategorized on 15 September 2013

Why Most Toy Shouldn’t Worry About Cannibalising Their Own Brands

Most toy companies labour under the misapprehension that their products can’t exist alongside competing products in their own portfolio.

This perspective is true in one sense, but false in another.

The reality is that demand is limited, and consumers will only buy so many Toys. So therefore anything else vying for consumer spend in the same space can be seen as a competitive threat. However, it’s faulty logic to presume therefore that a company shouldn’t have competing products in it’s portfolio.

To give you two huge examples:

1. Monopoly board game - how many versions of Monopoly does the average family need? I can’t answer that question, but I can identify that of the hundreds of versions of Monopoly each has a different positioning/motivation to purchase. And so therefore multiple Monopoly games are sold to the same people…often year after year.

2. Monster High / Barbie – Monster High sits in the adjacent space on shelf to Barbie in numerous stores. It definitely sits in the same category, and yet Mattel’s bright young thing has grown exponentially in a short space of time despite this, with a massive incremental sales boost. For sure Barbie will continue to have it’s ups and downs, but then competition is inevitable…

…so the key point is that by having 2 brands/products on the shelf instead of one your market share improves, and you deliver another competitive threat for the other toy companies in your space to deal with.

None of which means that anybody should aspire to running ‘also-ran’ brands, far from it, in our opinion, you either have ‘heroes’ or ‘zero’s', there’s no place for in betweens any more.

But the reality is that someone or something will compete with your products & brands, so why not let it be you? Because the more shelf space you have the more leverage you get, and perhaps you might even move towards a category management position with some of your retailers eventually where you control/heavily influence what is listed.

 

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