6 Reasons Why Toy Testing Is Money Well Spent
The Toy industry invests $billions every year in new product launches (inc. marketing, inventory & R&D costs).
Between 2.3rds & 3/4s, or 66.67% to 75% of Toy skus offered to retail each year are new. Not all are completely new, some are refreshes, tweaks or reintroductions, but nevertheless, a huge amount of what we do is about creating & selling new products. We can logically conclude then that as much as 75% of our output doesn’t work, or at least only works once despite all that work & investment.
There appear to be 2 opposite conclusions we can take from this: Firstly that as so much doesn’t hang around we can just chuck what we like at the wall and see what sticks, knowing full well that we get another chance to start afresh for the next selling cycle. (N.B. this is the approach followed by companies representing in excess of half of the total industry turnover in our opinion/based on our analysis). This approach is not necessarily doomed to failure either by the way, there are plenty of successful companies who do this.
However, there is a 2nd conclusion, and a 2nd approach, which is followed (mostly) by the mighty corporate companies, and less so by the rest. That being that where risk of failure is so high, and where launch risk/investment is so high, reasonable steps should be taken to maximise the chances of success/reduce the risk of launch failure.
Let’s do some quick math(s) here. Let’s presume an R&D/tooling investment of c. $50,000. Let’s factor in reasonable distribution in a couple of markets globally – let’s say 100,000 units for easy math. We’re then looking at c. $200,000 manufacturing cost. Plus let’s presume we have TV advertising to kids in 2 markets in Europe c. $200,000 (min). Plus let’s add in a License advance to the tune of $50,000.
We now have total launch risk of $500,000, on what represents a comparatively small launch versus many out there!
So how many of us would lightly risk throwing away $500,000 in other circumstances – not likely right?!
One of the most obvious ways to reduce launch risk, and to maximise the chances of that $500k+ investment paying back is to test the new products with kids via an expert market researcher & Toy tester (whether our good selves or another company).
Costs for testing toy concepts in a single country begin from as little as $5-10k.
Now at this stage there is no intention to start putting you to sleep with detailed description of Toy testing methodologies, but just as a general point, how does $5-10k invested in reducing launch risk compare with an untested $500k launch investment/risk?
Let’s know look at the ways in which Toy testing with Kids can reduce your risk/increase your chances of success:
1. Toy Testing Normally Identifies Massive Product Mistakes – Our consumers i.e. kids, are rarely that helpful in terms of coming up with practical, usable new ideas. However, they are brilliant at explaining why a product would be readily dismissed as ‘rubbish’ or ‘uncool’ or why it has a fundamental flaw. If your entire product concept is flawed, would you rather than know that before you ship 100,000 units to retailers whose good faith pays your bills, and before you blow the price of a family house on advertising, or are you happy to take the risk!?
2. Tweak, Tweak, Tweak – it’s often the small refinements & changes which make good products great, and give you the chance of a). Building long term Brand equity and b). Selling exactly the same product again next year for much higher profit as you already paid R&D costs!
3. Dexterity Is Key – it astounds us how often Toys which are literally not usable by the target audience are sold into retail in high quantities. If you haven’t tested it, you don’t know for sure, you’re just guessing. And testing with little Johnny whose Dad runs R&D, and who probably has highly developed Toy dexterity due to all the free stuff dad brings home, is not robust enough to test whether the majority of your target market can actually functionally use the product. Can you imagine selling a Vacuum cleaner or Toaster that didn’t suck up dirt or cook toast? Sounds completely ridiculous of course, but you would be surprised how many Toys are just not fit for purpose in some way. Testing dexterity fit pre-launch vastly reduces the risk of wasting the $500k launch investment.
4. A Kids Eye View of the Competition – advertising message & competitive positioning is critical in a very crowded market. Most Toy companies get this, but comparatively few actually test their observations & presumptions with the people whose opinion really matters – the target consumer who you want to buy and use the product.
We have tested adverts which ran on a global basis, whose message literally positioned the product as completely unappealing for the target market i.e. the mesage created by the purportedly ‘Youth’ focused agency was perfect for a teen audience, but totally wrong for 5-7 year old kids who it needed to influence. In that particular instance, the investment in ad production & media spend was in excess of $1 million. If we’d tested it before the spend for a cost of c. $5-10k we could have saved a completely wasted $1m…and that’s before inventory/retail good faith impact.
5. Identifying Opportunity – when we conduct Toy research projects, we do it as Toy industry folk and professional Researchers in equal measure. A great research supplier should be able to identify opportunity for you, but not just pie in the sky stuff like if you increased the spec by 100 times kids would think this was really cool…er really?! Having developed & launched hundreds of Toy products ourselves, we know the trade offs which have to be made, and we know in a practical commercial sense in which direction the opportunities lie. So useful and actionable insight can & will open up completely new opportunities.
6. Increase The Faith – let’s face it, those of us who sell stuff, have products we are really into, and products we ourselves are less convinced by, and of course the people we’re selling to can normally tell how much we believe in what we’re selling. Products which have been validated and improved via research are normally sold with more ‘ooomph’, because everyone within the organisation knows consumers get it, like it & that the product formula has been improved to maximise potential.
Clearly part of this article has been a thinly disguised sales pitch for our own Toy testing services (!), however, whether you choose to work with us, or another research supplier, you really should review your current development process, and the place that Toy testing could play within it!
As outlined above, research projects normally start at $5-10k. If you want to work with us, and are genuinely willing to invest those kind of amounts to reduce your product risk, please feel free to get in touch…
All the best
Steve & team
P.S. We just launched a new service – Toy Industry Consultancy insight via Skype at a rate of £250 / $400 per call. For more details, go to www.stevenreece.com/services