How To Validate The Appeal Of New Toys Before Launch
Anyone who has been in the toy business for more than a few years will have launched products that seemed like a good idea and which garnered strong retail listings, but which died an agonising death on the shelf. Some products just don’t sell and have to be marked down to ever greater levels to get rid of them so that the next round of new products can have space on shelf.
If we could routinely predict which products would fail as badly as this, we obviously wouldn’t launch them, and every toy company would be a roaring success going from strength to strength. In reality though, for every 10 products that a toy company launches, one or two are likely to fail badly.
One of the key success factors for the toy business then is raising the hit rate of successful new products versus unsuccessful products, as well as being well prepared to deal with the downside when a product doesn’t work.
There are four primary ways in which successful toy companies seek to validate the appeal of new toys to reduce the risk of launch failure:
1. Test the product with the target consumer – this should be blindingly obvious, but if we had to estimate the percentage of new toy products which have not been anywhere near children at any stage before launch, we would estimate at least 95% of toys won’t have been consumer playtested with children. That seems like a ridiculously high number, but aside from the top 5 toy companies, where consumer playtesting is integrated to varying degrees in the product development process, for most toy companies it is an afterthought or only an occasional consideration. Formal consumer research with an established research agency can be expensive (although not in comparison with the tooling, marketing and inventory costs of a new product, and not in comparison with lost sales and margin from failed products!), but anyone can conduct rudimentary testing with the children of office staff or via local schools, after school clubs or via directly recruited research participants. Unless you actually want your products to fail why wouldn’t you test them with children?
2. Benchmark against other products – other products have undoubtedly been launched in a similar space to the one you are trying to inhabit. How did they perform? Did they sell into retail well but then fail to sell out of retail again? To what extent were they a quick sales win versus a carry forward item? What was their marketing message and which marketing media did they focus on? Did the products sell better in some retail channels or markets versus others? There are a whole host of questions that should be asked by way of due diligence before significant expenditure is committed to a new product.
3. Milestone product reviews – because large companies tend to be run under strict financial protocols, they tend to have a formal process for evaluating new products ahead of launch as a matter of financial risk management. Depending on the company these product evaluation milestones allow the company to evaluate and if needed redirect product development to ensure the end product is more likely to succeed. Smaller companies tend to lack the formal disciplines and structure to implement the same type of process, but strong management teams often do periodically review products in development to keep things on track. Companies that routinely throw stuff out there with little evaluation are less likely to achieve launch success.
4. Retail input – if the first time you preview a toy to your customers is when you have already made it, then you take massive risks. It is quite common for new product initiatives to be cut from product lines if they do not preview well. There is though an art to managing retail feedback. Retailers are not always right on products, but if enough of them won’t list your product whether they are correct or not you can’t make much progress.
We run a Consultancy business for toy companies. Sourcing and factory finding is one of our primary specialisms. We have worked with hundreds of toy & game companies to support their Sourcing efforts. We have saved our clients more than $10m. We are considered by many to be the leading Consultancy for toy manufacturing in India and other toy manufacturing hubs. From plush to plastics, from dolls to play dough we have worked on nearly every toy category. To find out more: www.KidsBrandInsight.com/services
You can also find out about our work with Indian toy factories here: http://www.ToyTeamIndia.com
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