Little Tykes Case

Little Tykes competes in the highly competitive toy industry, an industry which has experienced flat sales in recent years. The industry is characterized by a high level of new technology, much of it electronic, as well as by "traditional" toys, such as dolls. Recent years have also seen a consolidation among toy makers as companies such as Quaker Oats have sold off their toy units (Fisher Price, in the case of the cereal manufacturer) and large toy companies have purchased smaller companies. The method of distribution has also changed in recent years as companies such as Toys "R" Us have made inroads in the toyonly store; department stores have become less important as sources of revenue for large toy companies.

In the early 1990s, the largest toy manufacturer (Nintendo) had sales which were nearly double that of the nearest competitor (Hasbro). Mattel, the number three toy maker, had sales which were nearly that of the number four manufacturer, Tonka. The companies were more closely grouped for the next four spots, but Tonka had nearly double the sales of the eighth-largest manufacturer, Tyco. At this point, Little Tykes was the ninthlargest manufacturer with sales of $300 million.

Part of Little Tykes success came from the market that it targeted. Where other toy manufacturers went after a variety of age groups, Little Tykes concentrated in infants and preschool children. These children were less receptive to television advertisements than their older co

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ogans and repeat them to parents, thus influencing the purchase decision. This strategy has a financial as well as a marketing impact, and would require a substantial investment both in initial production and in maintaining the ongoing campaign. Once television advertising is begun, new commercial must be brought out in support of new products, and the cessation of television commercials may result in the perception by consumers that the company is not doing well. Little Tykes could also expand its catalog operations so that it produces a full-fledged catalog instead of just a minicatalog, and so that it sends the catalog out on a regular basis (perhaps four times per year) to its established mailing list. In addition, the company could purchase mailing lists of new parents and households with children in order to augment its mailing list. This strategy has the advantage of being less expensive than television advertising, but it requires more investment than the current strategy. As with television advertising, this strategy also requires that the company maintain the program once it is started in order to capture sales on a regular basis. However, since customers are already preconditioned to purchasing Little Tykes' pro

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