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.

Toy Stockpiling: The Reality Of Kids & Toys In The Current Age…

Posted in Uncategorized on 06 January 2014

Toy Stockpiling: The Reality Of Kids & Toys In The Current Age…

Going back in time, toys were like gold to children – each individual toy was to be savored, treasured and protected from the grabbing hands of siblings and friends. Because in those days the majority of children were lucky to get more than a handful of toys given to them at Christmas, birthdays and throughout the year.

One of the major shifts I’ve seen in my time in the toy industry (based on conducting research with kids in the late 1990s through to today) is the huge proliferation of children owning dozens, or often literally hundreds of toys. This isn’t by the way subjective or just my opinion – during the course of dozens of research projects, we’ve visited parents and kids in their homes, and had the parents tour us through the toy chests and bedrooms of their children. Typically, by the time a child reaches the point of transition from child to ‘tween’, they have accumulated at least a dozen or more ‘major’ toys as presents from birthdays and Christmas, plus a staggering amount of smaller toy products.

For instance, to give you a couple of examples, one consumer home we visited had a number of major feature Toys inc. car racing sets, train sets, electronic devices, vast construction toy displays, plus an entire wardrobe stacked from top to bottom with toys – there must literally have been hundreds of individual toys in that wardrobe – and that isn’t untypical of what we see.

One of the major observations our company points out to those outsiders who try to understand the toy industry is that price points for each distinct spec/category of toys have not increased dramatically in a couple of decades. I have written here before about seeing an advert from the 1980′s for a popular board game which had more or less the same retail price as the current day version does, despite nearly 30 years of inflation!

The reality is our industry has become extremely efficient at bashing out great products at a really sharp price, and as such over time we have moved the consumer paradigm from being primarily about toys to be cherished and valued to products at an impulse cost which encourages gifting, collecting and increasingly stretched focus for play time on each individual toy.

This clearly doesn’t apply to the higher priced products such as kids tablets, interactive toys such as Furby, and high end construction/hobby sets, which still have hero level status…but the reality outside of those heroes is that to spend $€£ 5-10 on a gift these days is nothing – regardless of recessions and austerity – thus the phenomena of toy stockpiling has gathered pace.

The obvious implication of this is that inevitably the amount of time that kids are actually playing with each secondary (non hero) toy has to be significantly less). In fact many are played with at the point of receiving, and then forgotten. Ask any parent what happens when they re-organise/move round their child’s bedroom – normally parents tell us that their kids suddenly find toys they’d forgotten they owned, which then become the focus of a brief intensive play period before the toy in question falls back into obscurity.

The ultimate and over riding implication of this though is hugely positive for the toy industry – it’s very unlikely that we can actually saturate our market from a macro perspective. Children will continue to receive toys throughout their childhoods, with their level of ownership based more on occasion driven gifting than on the capacity of their toy storage!

Even better, because children comparatively quickly move through toy category preferences as they age, they will often clear out their younger or ‘baby-ish’ toys to make room for the new stuff which is more appealing at their current age.

Moreover, while we may see continuing competitive pressure over time from hot electronic gadgets and gimmicks from outside the toy industry, this really only impacts the hero level toy products, not those products at $£€20 or less!

So while toy stockpiling may not be leading to increased playing with our products, it is nevertheless a trend which leads to ongoing sales opportunity if we get the right products, brands, marketing and retail listings in place!

P.S. Final caveat – this article refers to ‘stocking fillers’, birthday party gifts and supplementary products only – we’re actually seeing increasing signs of focused play time with hero presents at much higher price points  i.e. kids tablets etc., more on this in future articles…

 

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Toys: The Consumer Insight Advantage

Posted in Uncategorized on 02 January 2014

Toys: The Consumer Insight Advantage

The toy industry is a highly process driven industry. We have processes for creating product, managing brands, manufacturing and more.

However, the toy industry as a whole is terrible at inserting meaningful, actionable consumer insight into the overall process.

For sure every company has the ‘I took this home and my kids think…’ approach to consumer insight, but that’s hardly scientific.

Bearing in mind new toy ranges cost from $100k-$several millions to launch, and that an entire year can be a write off if products fail, it would seem obviously rational to try to minimise the risk of toy launch failure by rigorously testing new products with the target audience before the bulk of cost has been incurred surely i.e. before manufacturing begins and before media is bought.

Please understand as with most things, there is good research and bad research. There is actionable, practical insight versus fluffy so what. But still in an ever more cut throat market we must take reasonable, affordable steps to reduce risk. Consumer insight is a proven risk reducer – whether due to highlighting deeply flawed/likely to fail toy lines, or due to the numerous small, but impactful tweaks made based on consumer research findings!

When we begin working with a toy company on an advisory basis, after asking to see relevant sales and profit data, the next thing we ask for is the relevant consumer insight the client company has. Around 9/10 of them produce no meaningful consumer insight, and of the remainder, less than half have anything robust on which to base business decisions with huge implications!

So we then show them how to ‘take a snapshot’ of their brand and products, and the categories which they are in…all from a consumer perspective. In every case where we have done this there has been significant insight with a clear and obvious benefit in terms of understanding and direction for future developments. New products can then be tested against the snapshot as well as in their own right.

Here are the key steps to taking a consumer snapshot – perhaps readers of this article can implement some or all of these:

1. Online retail audit – in this day and age, consumer reviews are a powerful factor in either encouraging/prompting purchase or inhibiting it. The obvious example for the major markets here is Amazon. By reviewing Amazon listings for a toy company’s products, one can see a live sales ranking versus other products in the same category, consumer ratings, consumer feedback comments and more. Clearly there are many other online retailers we can review as part of our desk based research.

This is the absolute bare minimum you should be doing on a regular basis.

2. ‘Qualitative’ Brand and concept testing with children and parents via focus groups. This is our preferred method, which normally offers huge insight into the factors influencing purchase, play and gifting. This also gives the opportunity to gauge comparative competitive appeal, and advantages and disadvantages against the competition.

3. ‘Quantitative’ surveys. This type of research provides hard numbers to guide insight. In our experience, this method can be very insightful, and can deliver compelling numbers to sales teams to aid sell in. However, this method is limited in terms of the depth it can explore, and so it normally comes second to focus groups in terms of value delivered based on our previous experience.

4. Play-testing research – this is in essence similar to focus groups, except that the focus is less on brand and marketing issues, and more about testing the functionality and play experience the product offers. On average, we find that around 1 in 2, or 1 in 3 toys tested have some kind of fundamental (normally fixable) drawback which acts to reduce the success and longevity of the product. Such drawbacks are normally quickly found via play-testing research. Common findings relate to the dexterity of children at a particular age versus the functionality of a toy…often the toy worked fine for the adult product designer! This can be conducted informally with any children  i.e. Staff children, nieces, nephews, schools, activity groups for children, or via a specialist playtesting/research service.

There are more variations and methodologies, but in essence the main options are covered here.

So, now there are no excuses for not engaging with the most important link in the chain!

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What Toy Companies Can Learn From The X Factor…!

Posted in Uncategorized on 26 November 2013

What Toy Companies Can Learn From The X Factor…!

This weekend just gone, the smash hit TV show The X Factor celebrated it’s 10 year anniversary.

It’s also likely to celebrate it’s umpteenth UK Christmas No. 1 when the eventual winner releases their single.

Which is all very nice, but actually there is a really important point of learning in that for Toy companies…

…integrating marketing messages into media content is a highly effective sales driver.

The X Factor hugely empowers the public to vote en masse for and pick their favoured mass appeal pop stars.  So in a sense The X Factor is a champion for consumer choice!

It’s also though fantastic artist launch testing and integrated marketing for those involved in the music business side of the output of the show. There’s a reason why Simon Cowell is always smiling!

It isn’t just the music industry though that has taken this alternative and highly effective approach to engaging a media audience to promote a product. This weekend I read Mark Burnett’s book – if you haven’t heard of him, he created the hit reality TV shows ‘Survivor’, ‘The Apprentice’, ‘The Contender’ and others. he entered the TV world almost accidentally, as he was setting up a massive scale eco/endurance challenge, and needed financial backing which he partially found via TV companies. Where he really got his business model to fly though was when he integrated advertising messages directly into the programming to prove his programming would return for the TV networks and himself.

The point of all this comparison with other industries is that most Toy companies could do an awful lot more to follow this approach. Now don’t get me wrong – there are significant regulatory and ethical hurdles to consider and overcome, because we are selling to children, but in the end, there is always an ethical way of getting things done.

Two examples from our industry – a massively capable colleague of mine once negotiated for a difficult puzzle product to be placed into a famous TV reality show as part of a challenge/exercise. Total media value c. $300,000. Total cost – a standard licensee royalty %, no advance, nothing paid until success was achieved.

The other example I would use is a major Games company which placed giant versions of their games into a kids physical challenge TV show, and saw massive sales uplift…not surprising when the show effectively demonstrated the products to the target audience while keeping them highly entertained.

These are just 2 examples from my own experience, but there are many more out there.

The challenge is that many companies and marketing teams become lazy, and get caught in the TV advertising addiction i.e. let’s just place it on TV. This is fine as an overall strategy, but sometimes to achieve exceptional results we need to take exceptional steps. It’s hard work negotiating an integrated media campaign. It takes more work and effort to make it work sometimes also, but as the X Factor proves – it can really, really work in commercial terms…

So, how can you implement this in your business…?

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Wakey, Wakey Toy Industry – Next Gen Consoles Are Upon Us…

Posted in Uncategorized on 15 November 2013

Next Gen Consoles & The Toy Industry

Video Game console cycles have historically been one of the greatest competitive threats to the Toy trade.

And in the year of a new console launch, and the following year, there has usually been a demonstrable negative effect on Toy sales.

Yet this time around, our industry appears to be (rightly) focused on embracing the new opportunities technology has offered up in terms of fusing technology driven play and traditional toy play patterns. There is no questioning the massive juggernaut success of Skylanders for instance.

However, we have to look at multiple threats/opportunities at once in this day and age, and it’s been surprising how little ‘noise’ there has been in our industry about this looming iceberg of a threat.

Historically, new Xbox or Playstation consoles have been must have items for many kids. So the question is will this be the case this time around…?

Well, when we’ve conducted focus groups with kids this year, we’ve consistently and resoundingly heard about aspirations to getting highly desirable tablet devices for Christmas – in the same reverent tones as we heard about the PS2 over a decade ago.  The historical truth has been that the cannibalistic effect on Toy sales has been strongest at the crossover age ranges where kids can be expected to be moving on from Toys to other interests i.e. anywhere from 6-9 years, with the majority at 7-8.

This time round however, even kids as young as 4 or 5 are already aspiring to owning their own iPads and other tablets, so what place is there for the new Consoles, and will this increase the competition for the headline, show stopping, major Xmas gift this year and next (bearing in mind that in the vast majority of cases there is one main/hero product per child each festive season).

Inevitably the new Console cycle WILL increase competition and have an effect, not least because of the huge marketing budgets that come behind the launches. The only uncertainty is over the size and longevity of that impact.

One thing’s for sure – ignore the next Console cycle at your peril Toy companies!

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5 Tips For Toy Company Owners Who Want To Sell Up

Posted in Uncategorized on 13 November 2013

5 Tips For Toy Company Owners Who Want To Sell Up

It’s hard to miss the fact that owner managed firms abound in our business. even where the original founders pass on or retire, there is often a retained family management team. The 3 biggest companies in the industry all started as family firms.

Not every Toy company owner wants to pass their business on though. The allure of a big cash-out to sail off into the sunset can be compelling. However, anyone who has actually tried to sell their business, or actually succeeded will tell you it’s not always a walk in the park.

We’ve worked on around half a dozen company disposals in recent times, and while the end result was rewarding, the process itself left exhausted and frustrated people behind!

It doesn’t have to be that hard, our service aims to streamline the experience so that you don;t have to go through the entire A-Z process with no previous experience/expectation to guide you.

As a taster, here’s some tips to help those aspiring to selling up:

1. Prepare Thorough, Professional Company/Due Diligence Presentations

You wouldn’t try to sell your products from a hand scrawled sales sheet (at least I hope you wouldn’t!). So why would you expect to be able to sell your company with a random selection of documents presented as if they’ve been thrown together with no thought or focus on what the potential purchaser will care about.

We’ve worked with companies who created hundreds of pages of tailored, insightful information, insight and analysis.

We’ve also worked with companies who printed off sales and stock reports and not a great deal more…

…guess which company successfully sold up?

2. Have A Clear Target Purchaser In Mind

Maybe you want to sell out to competitors, or to other companies who want to enter the space you’re in.

Maybe you’re in a good place to be bought out by venture capital/hedge fund/investment firm money.

The point is though, that you need to have an idea of which kind of companies might find your business attractive. For example, a company which will clearly gain ‘synergies’ from buying you out and bolting on your business to theirs may be a good target.

3. Have A (sane) Sale Price In Mind, Factor In All The Assets

Forget your emotional investment in the company, sorry, but nobody cares! look instead at objectively valuing your company.

The process of selling a company is a grinding process. So be ready for the grind – have an idea on what value you expect/can justify/you think the other party may pay for each asset type.

4. Plan For Management Transition In Advance

The more pivotal you are to the running of your business, the more difficult and lengthy will be the process of extricating yourself after sale. It’s normal for owner managers to be tied into their businesses for upto 2 years, or even more, with payments split between initial and staged milestones over time.

However, if you are selling a business with existing management structures which don’t need you, then clearly you are more likely to be able to sell and move on more quickly.

So before doing anything, we suggest planning for transition, hiring a CEO/MD, and you may need a couple of appointments before you get that right. You then also need to manage the management you put in place through the process to ensure they are motivated/incentivised to stay on & deliver after you depart.

5. Prepare For The Rest of Your Life

This is less a business tip than a tip to aid your transition into a different life. Those who have been working in/on a Toy business for years have invariably had a highly immersive, challenging full time (or more!) occupation. The day that stops is going to present you with different challenges.

For sure you may be looking forward to that cruise, or more time on the golf course, but the reality can often be dull and unfulfilling, so plan in advance how to manage that / keep stimulated…

…and in the meantime, keep building your business, because selling a company doesn’t happen overnight in the vast majority of cases.

 

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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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