Fisher Price

Basic information

Company: Fisher-Price Toys, Inc. (Industry: Child toys)

Business dilemma: a rash marketing decision has to be made on carrying out whether a new quality product (product name: ATV Explorer) at exceptional high price or a new less-quality product at moderate price

Business dilemma

Key problem:

price-point: Cost for a projected toy can't be made within budget, resulting in a much higher price ($18.5) than planned. High price disobeys the traditional brand image of the Fisher-Price company –less-than-$5 convention.

Marketing strategy: launch the ATV explorer whether as an independent product or as a new product in an existing product line, and corresponding advertising/promotion strategy

Fisher-Price must decide quickly before August to catch the sale peak:

trade-off between product quality and price;

Independence of the product

Case analysis

Current Market strategy (“4P” / “4C”)

Product → Commodity: innovative products / safe, durable and educational

Price → Cost: moderate price / good value for money

Place → Channel: Aggressive to increase the market reach and improve sales

Promotion → Communication: focused strategies for advertisement and promotion of differentiated range and group of products

SWOT analysis

Strengths (Internal)

Internal operation

well-run

established professional management expertise from diverse industries

excellent sales history (continuous sales increase during the last 10 years)

effective product testing and marketing programs facilitate internal toy design

sound financial condition

Market positioning

A leading toy manufacturer with a wide range of quality toys at moderate prices.

has relatively good market for specialty toys, which has grown substantially over recent years

Brand & Reputation

the best know brand for toys, has the largest market share (64.7%), and is brought most often (82.7%)

Enjoys a reputation for intrinsic play value, good value for money, ingenuity, strong construction and action.

ranks first in brand loyalty (60.5%)

Weaknesses (Internal)

Internal operation

Reluctance of change / comparatively conservative management teams

Inflexibility in the decision making process

Irreducible escalating cost

a high initial investment of $161,000

additional special tooling costs of $18,000

High selling price disobeyed its conventional price image

Low margin and profitability

Channel

highly dependent on US market with little or no presence overseas

Limited sales channels (trade only)

Channel of discount stores could jeopardize brand image

Opportunities (External)

Market potential: Foreseeably the size of potential consumer (children under 6-year-old) is expanding

Merges: horizontal (M&A competitors), vertical (franchise or strategic alliances with supplier and traders) , and conglomerate

Market explore

Cost-cutting effort: operation re-construction or innovation.

Threats (External)

Macro-environment:

Adverse economic condition.

Seasonal nature of the business

Micro-environment

As a premier toy manufacturer, receives most attention and faces most fierce competition

Product similarity leads to homogeneous competition (product concept)

Intense Price competition

Directly challenge from foreign manufacturer on cheap low quality products

Technological

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