Fisher-Price

I. PROBLEM

This case study is a microcosm of the many concepts of marketing, many of them far removed from what appears to be a simple price-point problem. That price-point problem is stated in the beginning – a mold price for a projected toy can't be made for a budgeted price, thereby resulting in the need for a higher price. This was a strong point of departure for the Fisher-Price company, since few of its items had sold for more than $5. Hence Fisher-Price must decide whether it should go head with the production the ATV Explorer for the launch of the ATV explorer in its 1971-72 line of products.

II. SITUATIONAL ANALYSIS

Strengths (Internal)

• Fisher-Price is a leading toy manufacturer, producing a wide range of quality toys at moderate prices. It has a reputation for intrinsic play value, good value for money, ingenuity, strong construction and action.

• Fisher-Price has relatively good market for specialty toys. It has grown substantially over recent years due to product and pricing strategy.

• Fisher-Price is the best know brand for toys and has a larger market share (64.7%) than any other company and is the brand being brought most often (82.7%).

• Fisher-Price ranks first in brand loyalty - it has a good brand loyalty (60.5%).

• The company is a well-run organization and has acquired professional management expertise from diverse industries.

• The number of children under six years of age, who plays with toys, is on the rise in the near foreseeable future.

• Fisher-Price has an excellent sales history and it has increased every year during the last 10 years.

• The core competence of the company includes very effective product testing and marketing programs to support its internal toy design capabilities.

• A focused strategy is in place for advertisement and promotion of its differentiated range and group of products.

• Aggressive marketing strategies to increase the market reach and improve sales.

• Fisher-Price produced toys which were safe, durable and educational.

• Fisher-price has been launching innovative new products

• Fisher-Price has a sound financial condition.

Weaknesses (Internal)

• High price of its products.

• Low margin and profitability

• The launch of ATV toys requires a high initial investment of $161,000.

• Selling the newly launched ATV in the discount store could erode brand value.

• Lack of flexibility in the decision making process.

• Too much dependence on US market with little or no presence overseas

• Too much dependence on toy retailers for sales volume.

• High fixed production markup on direct cost for all its toys.

Opportunities (External)

• To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe.

• Open its own franchise to exploit market development. The company should reduce dependence on toy retailers.

• Cost-cutting effort to reducing overhead and direct cost of manufacturing.

Threats (External)

• Adverse economic condition.

• Seasonal nature of the business.

• Being a premier toy manufacturer, means that the company is the target of competition, locally and globally.

• Increase in corporate tax structure, thereby reducing the company bottom line, reducing toy development activity.

• Low-cost small manufacturers could penetrate the market by introducing cheap low quality products – foreign manufacturer flooding the US market with cheap products.

• Patents on toy design is difficult to enforce leading to copy-cat from low cost manufacturers

• Intense Price competition, resulting in price deflation in some ranges.

• Technological