Leading industry journal covering the global toy industry including practical 'how to' articles, research, industry reports and insights.

06 March 2017 ~ 0 Comments

Indian Toy Manufacturing: 2017 Update


Steven Reece

It has been a little while since I last wrote on Indian toy manufacturing. In the meantime I have travelled to/in India numerous times viewing major toy factories, speaking to indian toy factory owners/management teams & touring toy companies around some of these facilities.

This increasingly important toy manufacturing hub has only grown in importance, stature & scope of activity since my last article on this. I now also have personal experience to reflect on. While not every product will be cheaper from Indian factories, I would say that around 60% of products I have seen costed have been cheaper than existing vendors in other countries. Moreover, I have seen first hand on these products toy companies saving anywhere from a few percent up to as much as 15% on some products.

I previously outlined why I believe only India can offer a true long term alternative to China in terms of being a major global toy manufacturing hub. As China looks to evolve it’s economy over the next decade, and as it’s increasingly affluent population move further away from low end production line jobs, India appears to be the only country set to take up the slack. With a near identical population to China, India is the only other country with anything like the scale/population to fill capacity for the toy industry (& other consumer product industries).

India also has a vast wealth of highly educated, experienced engineers, product designers and process managers, with expertise in injection moulded plastic & other core toy manufacturing competencies due to the strength of India’s automotive manufacturing sector.

Back around 2015, Hasbro hit the headlines via a Wall Street Journal article announcing they had shifted a significant amount of plastic toy production to India. But clearly that was just the beginning of the current trend towards Indian toy manufacturing. It was also the beginning of my own exploratory adventure.

Two years on, and there are some clear learning and updates which you may find interesting:

  1. There are a limited number of very high end toy factories in India – at the time of writing this (Feb 2017) there are around half a dozen or so toy factories in India at the top end. These factories are supplying the major corporate toy companies and their retail customers. Needless to say, these companies are in the perhaps envious position of having more demand than they can immediately supply. If we compare China where there are an estimated 5,000-10,000 toy factories, we can see that India still has a long way to go to even secure a fraction of market share versus China toy production. However, a success story will always attract others, and I would be surprised if the number of high end toy factories in India doesn’t start to grow from 2017 onwards.
  2. Indian toy factories can more easily pass ethical audits etc – due to local labour laws which favour/protect the employee more than in some countries, Indian toy factories tend to pass ethical/retailer/licensor audits without too much trouble.
  3. The standard/level of engineering & lean manufacturing processes is very high – you may be surprised to hear that India is a MAJOR automotive manufacturing/engineering hub. India was recently estimated to manufacture c. 24m vehicles per year. This puts India in the world’s Top 5 biggest automotive manufacturing countries by units produced. Moreover, these cars are not all being made for the Indian domestic market – they are also being exported – with $1.2bn dollars of car exports to the USA for instance, Indian manufactured cars have over 8% market share in the USA. Brands with manufacturing plants in India include: JCB, Isuzu, Honda, Harley Davidson, John Deere, Honda, Toyota, Volvo, Ford, Mitsubishi, Mercedes, BMW etc. These major global companies employ cutting edge engineering in order to profitably & safely engineer & produce vehicles – which may have over ten thousand individual components per model. With c. 25m people employed in the automotive sector in India, there is a plethora of highly trained engineering & production people. Cars feature injection moulded plastic parts, simple & complex electronics, lights, sounds, switches etc. – all competencies important to the toy industry. India already has the capability to manufacture toys, the only question is how many of those currently producing cars/car parts will turn to toy manufacturing in the next few years.
  4. India is the only toy manufacturing country in the world with enough trained people to compare with China – India & China have a similar total population i.e. c. 1.3-1.4bn people. Whereas the toy industry has looked to countries such as Vietnam & Thailand for cheaper labour, these markets have nowhere near the scale of workforce as India does.
  5. Other consumer product categories are already manufacturing at large scale in India – other product categories such as textiles & pharmaceuticals already manufacture & ship on a large scale from India. Walmart for instance have surprisingly established infrastructure already in India, and so it is not such a leap for them to also purchase toys from India. In fact I know of several toy companies shipping large quantities of toys direct to Walmart, Target, Carrefour, Argos etc from Indian toy factories.
  6. Other toy companies have been through the learning curve already – undoubtedly there is a learning curve when factories start working with new product categories/standards/customer types. However, at this point, 2 years after Hasbro’s big move to India was made public knowledge, pretty much anything that needs to be learned/problem solved has been resolved. For sure, there are always problems/challenges to resolve in manufacturing, but at this stage these are no more in India then they would be anywhere else based on my experience.
  7. The infrastructure in India is more effective than might be thought – there is no doubt that India has a long way to go to create infrastructure to rival other major economies. In fact while talking to toy companies about India I have heard all kinds of horror stories, most of whichthough could not be traced back to an individual or company who had actually experienced the mishap in question. One of the ICTI audited factories I have worked with in India has shipped thousands of containers of toy products without any significant issue/hold up. The reality is that the automotive, textile & pharmaceutical sectors all have their own commercial deadlines and operations that would not work if things never arrived from India. In fact, for that matter, Hasbro who manufacture large quantities of Nerf products in India, have the same promotional/retail windows as any other toy companies, and due to their global distribution base/media planning have even less tolerance for delays/slippages than other toy companies. So based on my own experience I believe the concerns about the infrastructure in India to be hugely exaggerated. There are numerous bureaucratic hoops to jump through in India, Indian officials tend to be sticklers for documentation/ticking all the boxes, but this is not that different to many other countries out there. A further point to understand is that India is not a single homogenous entity – as recently as partition in the 1940’s there were dozens of separate states/regions/’principalities’. So you don’t get the same standards/infrastructure everywhere. However, if you find a toy factory near major manufacturing hubs used by global companies in other industries & near major ports, my experience to date would suggest you won’t encounter any more issues in India vs anywhere else. That being said if you find a factory 5oo miles into the middle of nowhere with no roads & a 20 hour drive to the port, don’t be surprised if that one has less reliable delivery!
  8. You can find top level packaging for toys in India – I have toured round several packaging factories in India (in different states/regions of the country), and have been very pleasantly surprised by the high quality of production, machinery & personnel – leading to really good quality packaging. Two plants in particular I visited are as good as any print/packaging factory I have been to – these plants, aside from supplying the toy industry also supply major FMCG brands such as Nestle, Cadbury, liquor brands, Procter & Gamble etc.
  9. India is nearer/takes less shipping time to Europe & the East Coast of the USA – sourcing from India saves shipping time for companies who ship to Europe and/or the East coast of the USA, although it does take a little longer to West coast USA.
  10. Indian business people/engineers are routinely fluent in English – English is the international language of business, and due to the British history in India, English language is taught to a high level in India. Most professional Indian people will speak fairly good English…albeit with a strong Indian accent sometimes! Generally though, communication with Indian toy factories is good because nearly everyone you would encounter on the customer facing side will have good English.

Before ending this article, I must declare a couple of points which don’t exactly make me impartial on this topic: 1. I have introduced over 40 toy companies to Indian toy factories & in some way my company has been compensated for this work, so you could say I have a vested interest 2. I love India…! What I haven’t captured above is the vibrancy of India, it is an exciting & exotic place to visit.

Hopefully you find this relook at Indian toy manufacturers interesting & useful, if you would like to find out more about the toy factories we work with in India, please just drop us a line via the website address below…

by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy companies around the world, which helps companies with product reviews & awards, find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world

29 November 2016 ~ 0 Comments

A To Z Of The Toy Industry – G Is For Games!


Steven Reece

The board games category is a longstanding pillar of the toy industry. In fact, board games go back millennia – ancient civilisations were found to have played table based games.

This category delivers a disproportionate amount of longevity & stability to toy aisles across retail. While you might find most toys on shelf are new in any particular year, board game shelves usually feature more carry forward products than new launches. So while retailers every so often feel the need to cut shelf space for board games, it typically returns over time as it is such a solid, stable component of a toy department.

From a consumer view, if you ask consumers what they think of board games (which I have done – at least 60 or 70 focus groups with kids, families and adults asking them about board games), you tend to get an overwhelmingly positive response. Adults remember the board games they played when they were kids with a rosy glow of nostalgia. Kids tend to relish the opportunity to show off, compete and hook some of mum and dads attention and precious time.

Business wise, board games have a couple of major advantages versus some other toy categories. Firstly, as the major component tends to be cardboard based components, which derive from trees/wood which are comparatively cheap, board games tend to offer healthy margins to publishers, retailers and factories alike. Secondly, there is usually less tooling investment overall for a board games company versus a toy company which significantly reduces product launch risk. Thirdly, because good board games tend to grow year on year due to word of mouth & recommendation, they require less marketing expenditure (overall as a category) and tend to carry forward year on year if they are any good meaning they tend to be higher profit than many toy categories.

In recent times, the board games category has become somewhat trendy again, due in part to the effect of crowd funding platforms like Kickstarter which encourage more original and risque games versus the traditional route to market.

One prediction I can make with very little risk of being wrong is that regardless of what new technology lies round the corner, the board games category will be here forever!


by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy companies around the world, which helps companies with product reviews & awards, find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.

23 November 2016 ~ 0 Comments

A To Z Of The Toy Industry – F Is For Fun!


There are probably more lucrative industries out there.

There are probably quicker moving, more exciting, ever changing industries out there.

But there aren’t many other industries which are as much fun as the toy business!

This is a product driven industry – it’s all about the next new product launches or those classic carry forward products. And these products are great fun! While we might no longer be children ourselves, many people in the toy industry retain a strong ‘inner child’ which makes the industry continuously enjoyable to be a part of.

Of course we have our fair share of grind – retailer terms negotiations, financing, factory visits etc. But spare a thought for those poor souls in more mundane industries – imagine being the product development manager or marketing manager on tea bags, plastic tupperware or matchsticks!

The reality is that fun is a major driver of the toy industry. We piggy back the natural instinct of children to play – that is right at the heart of stimulating demand for our products.


18 November 2016 ~ 0 Comments

A To Z of The Toy Industry – E Is For Export


It’s very rare to come across a toy company, or any company for that matter which is satisfied with it’s level of sales. The home market rarely suffices, even if it’s the vast North American market. Export business is an important part of the strategy of most toy companies we have seen.

Here are some benefits of Export sales:

  1. Reduced reliance on the health of your home market/major domestic customers
  2. Protection against extreme currency fluctuations affecting your domestic currency
  3. Incremental sales opportunity
  4. Opportunity to justify overseas trips to source new products to sell at home by financing via Export sales business


However, it isn’t all plain sailing – we’ve seen plenty of companies go bust due to problems/disasters in their Export sales business. Here’s a few key pitfalls to look out for:

  1. Payment risk – it’s much harder to chase someone on the far side of the world for payment. LC/payment in advance etc should be considered/insisted upon to reduce risk of bad debt.
  2. Legal/regulatory risk – be aware that different countries have different laws & regulatory compliance frameworks, if you go waltzing in to a country in a cavalier fashion, expect to get the odd bloody nose!
  3. Trans border shipment – be aware that once you ship a container of product you lose control of it, and lose control of the ability to prevent it finding its way back across your border, so choose good partners/customers and monitor them closely.
  4. Lack of focus/opportunity cost – we’ve seen many companies chase the ‘shiny object’ of Export sales, when a few more phone calls to domestic customers would return equal return with less investment & distraction.

Via our Consultancy company – www.KidsBrandInsight.com we regularly advise companies on how to grow Export business.

11 November 2016 ~ 0 Comments

A To Z Of The Toy Industry – D Is For Disney


Steven Reece

If you had to objectively pick one licensor who has the biggest impact on/is most important to the toy industry, Disney would have to be top of the list by quite a long way!

With huge heritage, parental trust and an awe inspiring back catalogue of iconic characters/movies, Disney has played a huge role in the toy industry over the years. With the acquisition in recent years of movie behemoths Marvel & Lucasfilm (Star Wars), Disney catapulted even further ahead of any other kids licensor.

The market size of the toy industry has traditionally ebbed and flowed with the strength of the annual movie slate. When Disney, Lucasfilm & Marvel were separate entities we saw ‘fallow’ years, where the movie slate was considerably weaker than in previous years. One of the clear benefits to the toy industry has been the better alignment/balancing by year of blockbuster family entertainment movies, which has been enough to significantly increase stability in the toy business.

In terms of individual movie titles, Disney has introduced some of the biggest toy & merchandise selling brands of all time. From the gigantic success of Toy Story (in conjunction with Pixar), which lead to massive shortages of hot toys at Christmas (who’d have thought a movie about toys would be such a huge driver of toy sales!) through to the more recent sparkly juggernaut that is Frozen.

Disney corp brands are prevalent in all product categories, with different Disney brands often offering the strongest competition to other Disney corp brands! A quick web search on Amazon reveals an almost endless list of Disney toys: http://amzn.to/2fpQbIO

I’m not able to find any robust public domain data identifying Disney’s market share of the toy market, however, it is clearly a very significant player, and looks set to continue the leading role in toy entertainment brand franchises.


by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy companies around the world, which helps companies with product reviews & awards, find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.

31 October 2016 ~ 0 Comments

A-Z Of The Toy Industry – C is for Children

A-Z Of The Toy Industry – C is for Children

Steven Reece

Without children there wouldn’t be a toy industry.

However, you might be surprised at how few toy industry executives ever get anywhere near their end consumer interacting with their products. There are so many must do’s in the toy industry and so many functions that sometimes consumer research/interaction falls by the wayside because you absolutely must speak to retailers, you must hit marketing deadlines & stock ordering deadlines, QA standards etc. But none of that guarantees you have a product that your end consumer will actually want/buy.

It is not coincidence that the largest toy companies in the world i.e. Mattel, Lego & Hasbro spend significant time, money and resources on consumer testing.

Aside from children being crucial to our achieving our sales targets & ongoing success, we also have a burden of responsibility as our products can play a massive role in the development of the next generation of people. Having conducted over 1,000 focus groups with children and parents, and seen how precious children are and how much of a role our industry plays in their childhoods, I hold strongly the feeling of childhood being sacrosanct.

This is one of the reasons why I continue to conduct consumer research for toy companies (big and small), because it works for toy companies & it helps to avoid disappointed kids on Christmas morning. There is little more satisfying than making a failing product work.

Of course play patterns have changed over time, as has the living conditions of children. As research for this article I visited the museum of childhood at Sudbury manor in the North of England. This glorious display of play artifacts and the lives of children reminded me that children of my great grandparents generation may have been too busy working to spend too much time playing with toys.


My parents generation had a lot of freedom to roam as well as the beginnings of mass produced toys to play with.

Today’s kids lack physical freedom due to health and safety and ‘stranger danger’, and so instead they have online/virtual freedom instead from quite a young age. This is why I believe Minecraft has been so successful – because children are free to roam the unformed world, much like past generations roamed the real world.

Such ramblings aside, the reality is that our industry is entirely dependent on children – our end consumer, best not to forget this!

by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy companies around the world, which helps companies with product reviews & awards, find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.

20 October 2016 ~ 0 Comments

A-Z Of The Toy Industry – B is for Brands!

A-Z Of The Toy Industry – B is for Brands!

Steven Reece

The number one factor in the long term success of many toy industry heavyweights is BRANDS!

And more’s the point, not just any brands, but brands which are self owned/controlled i.e. not 3rd party license brands. Although 3rd party licenses are a huge part of the toy industry, self owned brands deliver stability, profitability, equity, extendabilty and security for toy companies.

But don’t just take my word for it…just take a look at the biggest players in the toy company. My ex-employer Hasbro has a weighty brand portfolio, including Transformers, My Little Pony, Play-doh, Monopoly, Trivial Pursuit etc. Mattel has Barbie, Hot Wheels, Fisher Price, Thomas & Friends etc.

And you don’t get bigger in toy brand terms than Lego – the ultimate toy brand. In fact, lego is probably the best example of a brand management driven company I can think of. If you look at Lego’s website, they have no fewer than 34 Lego sub-brands or co-brands, driving huge global toy sales in excess of $6billion – all from the foundation of a small plastic brick! The sheer brand extendability of Lego should be a case study for anyone serious about the toy business.

Smaller companies won’t have such brand behemoths in their portfolio, but critically they won’t ever get them if they just keep chasing the next hot license ad infinitum. Building brands can be slow, hard work – a fledgeling brand is a much harder sell than a proven hit license, but the long term bounty that established brands can deliver is priceless…

by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy companies around the world, which helps companies with product reviews & awards, find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.

05 October 2016 ~ 0 Comments

Toy Industry A-Z – A is for Action Man

Toy Industry A-Z – A is for Action Man

Steven Reece

For those of my generation in the European toy industry, especially those who worked for Hasbro, Action Man is a huge iconic action figure brand.

Action Man was officially launched in 1966 by Palitoy, as a spin off under license from Hasbro’s G.I. Joe.

Image result for hasbro action man logo

Over time, Action Man moved with the times, from being a primarily military figure to being more of a modern day hero/adventurer.

The accessories and features were always much talked about in the playgrounds of Europe, with older generations referring to ‘Eagle eye’ Action Man and more recently accessories like blowpipes or karate weapons etc.



I was fortunate enough to market research/playtest many Action Man products and adverts (albeit 15 years ago), and while I won’t be giving away any trade secrets, it will be no surprise to anyone if I highlight just how much kids loved Action Man.

While Action Man is not commercially available any more, it remains a huge and iconic part of European toy history.

For more information on the history of Action Man, the Wikipedia page is quite revealing: https://en.wikipedia.org/wiki/Action_Man

To see reviews of some of today’s top action figures, check out this page on The Toy Verdict website: http://www.thetoyverdict.com/category/action-figures/

by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy companies around the world, which helps companies with product reviews & awards, find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.

26 May 2016 ~ 0 Comments

How To Turnaround Failing Toy Companies


Steven Reece

The nature of our industry is such that one bad selling cycle can adversely affect our ongoing stability and even threaten the survival of our businesses. Anyone who has had the experience of working in, with or even owning a failing business can tell you just how quickly the rails can come off. However, there are usually certain underlying issues that have a negative effect which builds over time. Poor stock management, betting the house on product launches (when we know more products fail than work!), failing to hire & motivate good people etc.

The most important thing about a failing business though is to recognise how much emotion and inertia play their part. Logically it is obvious that if certain practises got you into a great deal of trouble, then a significant change is likely to be needed to turn things round. Easier said than done perhaps, but critical nevertheless.

Here’s some suggestions to help if you happen to end up in a failing toy company headed for the wall:


Cut Your Cloth Accordingly – one of the things which struck me most about the comparatively recent change in management at Tesco in the UK was that the new broom coming in got rid of the company jets…if there was ever a symbol of a bloated corporation it’s a whole separate company owning the corporate jet fleet! But it isn’t just massive companies that allow themselves to get soft around the edges over time. So the first thing I advise struggling toy companies to do is to actively reassess what’s critically important and what can be cut.


Slash the red pen – the next level after cutting the cloth is to start slashing. if your company is in real trouble and it’s very survival is in the balance, then you are best to cut hard and fast. What can you cut? People, premises, products, marketing, stock. All of which leads to very difficult decisions, none more so than looking at headcount & potentially letting some valued and/or long standing staff go. For some companies, the hardest decisions relate to stock. Let’s be really clear – nothing kills toy companies more than excess inventory. Over stocks tie up cash, incur warehousing costs, reduce efficiency and cause sales teams to lose focus on selling good products. The major global players in the toy industry have stock holding targets for every month of the year, and above all for year end. If you ever wondered how on earth a really strong product ended up in clearance channels, it’s probably because the executives in charge didn’t want to lose their annual bonus due to being over the year end stock level budgeted. All the excuses will come out – the customers won’t like it (they won’t, but in practise all retailers accept it as part of the game, and their number one focus is their own stock levels), that’s good product we can sell again (maybe, maybe not, but you can always manufacture it again…if you can clear out at close to cost, do it!) and the best one of all – “but I really like that product” (sounds ridiculous, but is the reality in many cases with smaller owner managed companies!). Take those tough decisions now, or else the administrator will soon be along to make them for you as you’re shuffled out the door with nothing!


Introduce robust processes for everything involving spending money – when you work in a global corporate company you find that everything is driven by process, when you work for a smaller company, often you find very little is driven by process. And frankly it isn’t that process is fun, it isn’t – it can be very boring, repetitive & can sometimes stifle the life and energy of a company if taken to excess…BUT if your company is in trouble, then either you didn’t have enough process or you had ineffective processes. Investment decisions (yes, launching a new product is in essence an investment decision) should be scrutinised. If you don’t have the structure to scrutinise in house, it’s not too hard or costly to buy in some expertise to add an outside voice/provide some devils advocate to ensure the product or marketing plan has been well thought through/considered (my company can help, email for more details!). Moreover, if you are ordering stock (the biggest cost item a toy company has by far), you had better have stringent processes…have you analysed/considered last years ordering pattern? How firm are those retail commitments? How soon can you get a read on EPOS data etc.


Skilful cashflow management – this is one of those things you have to learn the hard way – a sale is not a sale until the money is in the bank, so make sure your accounts receivable is up to date and aggressively but constructively managed/chased. For creditors, every business has come across customers in tough times who aren’t paying on time. The trick is to negotiate payment delays versus just not paying anything. A dose of honesty, humility and a later payment date met will create good faith you can take forward versus constantly screaming creditors taking up management time ongoing.


Lowest hanging fruit product lines – this is not the time to bet on a major new risky product category. A consolidation year with potentially dull ‘bankable’ products is the way to go. Speak to your retailers and ask them what they want, then deliver it. Relaunch old favourites left in the vaults for a while, or extend an existing proven product range/brand, as getting it listed is going to be easier/less risky. Bottom line – play it safe for a year or two to rebuild the foundations and security.


These few tips may help to a degree, although they don’t go anywhere near recognising how traumatic business failure can be, but the bottom line is that facing reality and taking (often tough) action accordingly is the only way proven to work.


by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy companies around the world, which helps companies with product reviews & awards, find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.

28 April 2016 ~ 0 Comments

How To Grow Toy Companies


Steven Reece

The number one topic we get approached by toy companies to help with is GROWTH.

How can we grow our business? Only the fortunate few see ongoing sales growth ahead. In a mature industry, many companies stagnate in sales terms, even though they are working harder and harder. There are of course a few companies where (possibly very sensibly) owners want stability more than growth, but overwhelmingly we encounter companies looking to grow one way or another. So here’s some quick points:


1. Sell more! Yes, it’s completely obvious, but actually asking the question ‘how can we sell more’ leads companies to review their presumptions, structure, focus, employee incentivisation etc. An effective growth plan needs a fundamental commitment to sell more, it won’t just happen. It might mean selling more to existing customers, opening up new channels in existing markets, distribution partnerships, export sales, overseas offices etc., but in the end it comes down to an organisational commitment (not wish, but commitment) to sell more. It will likely involve investment, and it will almost certainly involve increased overhead (which needs careful risk management), but your business won’t grow unless you confirm a growth plan.


2. Clear financial targets – a general plan to grow won’t inspire your teams in the same way as a solid clear sales figure will. Whether it’s $1m, $10m or $100m, pick a figure, work out a plan to get there & then make it a clear organisational goal. I once worked on a project where the company struggled to know where it was going on a product category, the plan was frankly a little vague and ‘floaty’. We confirmed a fixed $amount, and by way of almost bragging that we were going to hit that target incessantly we got there eventually. The target was completely arbitrarily selected for being a nice round number – $50m, a previously inconceivable amount. And so $50m became the battle cry (from $0m at the start), and we got there. There were many reasons for that success, but a major reason was the drive to hit that specific sales figure. (isn’t human psychology a remarkable thing!)


3. Diversify (low hanging fruit) – my company consults with toy companies in various different product categories, and so we see how similar most toy products/categories are. Yes, there are some differences, but they typically aren’t that great and the barriers to breaking out into other categories are not usually so great! Yet routinely when asked to help toy companies grow, my company has encountered companies struggling to expand product line for no particular reason beyond a kind of habit of working on a particular type of product. Off the top of my head, I can think of 6-8 companies we have Consulted with who need or want growth, but who have struggled to get their collective heads around this concept. The reality is this – if you are working on plastic toys of one kind, what stops you from expanding your offering to another kind of plastic toy? The customers will be largely the same (although the Buyer may change, but that’s hardly a major roadblock), the marketing channels will be the same, the manufacturing processes/QA will be the same or at least similar, so why wouldn’t you? The same applies to puzzle companies who don’t do many board games or fashion doll companies who don’t do action figures etc. Yes, there is a degree of positioning/being indentifiable as a player in a particular niche, but a). that positioning advantage is probably over rated in terms of importance/impact and b). once you are supplying retail they have an innate organisational impetus to take more product from you to reduce their number of suppliers as per standard purchasing efficiency models. Typically, companies have to get over their own mental baggage of past failed attempts to launch new products in new categories…erm, well most new toy launches do fail – let’s look at the stats: between 2/3rds and 3/4 of all toy skus on sale each year are new products! And, even more remarkably, the c. 1/3 of products which carry forward each year deliver c. 2/3rds of the sales! So in effect we are stuck in a kind of illogical new product development & launch cycle, it’s hit and miss, so don’t expect everything to work – in existing categories or new ones! Product launch failure is a natural part of a toy company growth cycle. So, are there any similar product categories you can expand into?


4. Acquisition – if you look at some of the biggest players in the industry, they are relentless acquirers of brands & companies. Some acquisitions deliver more long term benefit than others, but regardless, if you look at the brand portfolios of Hasbro, Mattel, Spin Master & others, acquiring other companies is a major part of their growth. This may seem unhelpful for smaller companies, who may perceive that they don’t have hundreds of millions sat in the bank waiting for a company to buy. However, this is potentially ‘small thinking’, because it’s about growth as a strategy, not about massive scale. Maybe there’s a ‘one man band’ who has established a niche position which would bolt on nicely to your company and who would take a few hundred thousand to sell up. Maybe there are financing options you haven’t considered. Don’t get me wrong, you should never acquire for the sake of it, and a bad acquisition can be very very risky, so it needs to be managed/ringfenced with prudence and caution, but nevertheless this is a proven growth strategy.


5. Build on a stable platform – regular readers of my articles may roll their eyes here, but yes, a strong stable proprietary brand portfolio gives you a strong growth platform. Stepping aside from the roller coaster/hamster wheel of selling licensed products, building your own brands is THE long term growth driver. Brands are great, because they can be extended, co-branded with licenses, licensed into other forms of merchandise, turned into standalone content iterations etc. Even more importantly – the number one point we make when Consulting with toy companies is that we shouldn’t only look at growth in terms of SALES, it’s critical that we also look at EQUITY value i.e. we may have added to our sales by introducing a new licensed product range, but is our company actually worth any more when we will just lose their rights in 3 years or so? The answer is most probably not! Brands are THE major driver of toy company equity value. Distribution can be bought, hired in or otherwise accessed. Great people are essential, but they don’t and never will ‘belong’ to the company. It all comes down to brands!


by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy companies around the world, which helps companies with product reviews & awards, find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.