The inevitable failure of the majority of new products results into an ongoing product churn. As much as 75 per cent of the products in market each year are new. This can lead toy companies to fall into the trap of failing to perform proper diligence in selecting which product concepts to develop and launch. The prevailing thought is that so many products fail that we may as well just throw out as many probably potential products as we can afford to launch and then see which products perform well enough to carry forward.
Carry forward product is the “holy grail” of the toy business
Products which are in their second or subsequent years in market do not need the same tooling, product development and resource investment as new products. They also tend to need somewhat less marketing, because the products are already partly known to consumers, and retailers already trust them enough if they have already enjoyed success. For these reasons, carry forward products are usually significantly more profitable than new products. The goal, therefore, of product selection processes in toy companies should be to increase the number of product launches which stay in the market for longer. Of course, we need ‘new news’ alongside these existing products. However, long established toys and games such as Rubiks Cube, Scrabble and Frisbee sell year after year. Only a few toy companies are actively structuring their product selection and development processes to give them chance of creating the next iconic toy which stays in the market for decades or more.
Effective product selection process
Clearly a product cannot be a success in subsequent years if the launch year is not successful. Toy companies need to bring to market products which can achieve both launch year success and carry forward business. There are some tried and tested methods that toy companies can increase their chances of success:
1. Formal product development process and stages
Larger toy companies tend to have fixed processes and key stages of product review and management signoffs. This is one major learning for smaller and medium sized companies. Clearly too much process can slow things down and prevent innovation and speed to market, which are often significant advantages for smaller companies versus major corporate companies. However, product launch failure tends to be a bigger problem and risk for smaller companies, because they don’t have the financial resources that major companies have. By formalizing product development processes and sign offs, and by making a key staff member responsible for managing the process, smaller companies can increase the likelihood of products working, and bad products not slipping through the net. This type of process should capture obvious issues with the basic product characteristics i.e. is the price point right? Do indicative manufacturing quotes suggest the product can be launched at a viable price point? Are there any legal or other risks which need to be evaluated before launch? Is there a clear consumer target? Is there an obvious selling point to retailers? Without a formal process asking basic questions, it is surprising how frequently more chaotic product development processes miss these critical essential factors.
2. Consumer research testing
The toy business overall conducts nowhere near enough consumer testing. Children are so different to adults in terms of physical characteristics like hand size, dexterity, motor skills, cognition and more. Therefore, adults developing toys for children without testing them with children is sheer craziness! At the very least, toy prototypes should be tested with children before committing to tooling. Conducting over 1300 focus groups on toys with children and parents, and not one of those research sessions failed to show something interesting or unexpected. If your target consumer cannot actually use your product then it is very unlikely to enjoy success in the market beyond the initial marketing push.
3. Market analysis
There is always a lot going on in the toy market. So many companies are competing, and retailers are often developing and sourcing their own products in addition. Therefore, in order to have success with new products you really need to analyze and understand the competitive position of your products. This is not just a dry academic exercise. If you can’t explain to retail buyers where your product fits within the product category, and why it is better or different than all the other products they have to choose from, you will be lucky to get your product listed.
4. Trend analysis and spotting
Trends are a big thing in the toy business. Fidget toys, Yo-Yo’s, Loom Bands, all these massive sales drivers come about based on trends. By monitoring what is going on in other spaces and in social spaces online toy companies can identify hot new trends and drive big sales.
5. Post launch evaluation
Consultants rather conduct celebratory post launch analysis than conduct a post mortem help toy and game companies understand why a key launch failed to live up to expectations! Both successful and failed product launches can reveal important key learnings. If your product worked, did it work for the reasons you anticipated or was it other factors? If it failed, and you do not properly analyze why, you are clearly far more likely to repeat the failings on future product launches.
In conclusion, successful toy companies continuously develop more products which succeed than unsuccessful companies. They also manage the downside of products failing better than other companies. In principle, it is recommended that toy and game manufacturers continuously review and re-evaluate their product selection process.