Fisher Price

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1.Problem

Fisher Price set itself a head of the competition by focusing on the quality of the toys that were introduced to the market, and of course the reasonable prices of the toys. Fisher Price was successful in building the reputation of quality of their products. In 1970 the company was faced with the difficult situation of whether to price this product higher than the usual price for Fisher-Price products. The company was unsure that customers would be interested in the product at a higher than usual price. The mold cost for the new ATV explorer would make it impossible to maintain the 12 dollars retail price proposed. The suggested new price was an 18.50 dollars retail price after markups. The company has to decide on weather to go through the production with the new price or not before the high season.

(SWOT) Situational Analysis

Strengths (Internal):

a.Brand image was high quality and moderate prices.
b.Fisher price
c.Fisher price was able to maintain competitive pricing below 5 dollars. d.The whole line was advertised as one family under Fisher Price targeting parents and grandparents since they purchase majority of the toys. e.After Quaker bought the firm, there were good resources available to provide substantial growth rate. Quaker increased the advertising budget. 1970 the advertising budget was twice the budget of 1960. f.Fisher Price operated a licensed on-premise nursery school at which toy prototypes could be tested. g.Good sales history with the Creative Coaster according to exhibit 13. h.New factory in Medina, New York, and New shipping facility was built to accommodate increased demand. i.Advertisements targeted the right customers. Focusing on women’s magazines, since research shows that mothers and grandmothers purchase three quarters of the all pre-school toys. j.ATV Explorer was very successful in the Fisher Price nursery school, with 20 minutes attention span time and high level of repeats.

Weakness (Internal):

a.Mold cost is expensive making it impossible to meet the 12$ retail price for the ATV Explorer b.Toys industry has a seasonal nature. Placing substantial pressure on Fisher Price to decide, and to start production before high season. c.Advertisement philosophy focus was on the family line rather than single products, which has positives and negatives side of it. Difficulty in highlighting one product. d.Unwritten rule in the firm that any toy over 5$ retail will not sell. Executives resisted increasing the price. e.To afford more advertising for specific line the price must go up more and up to 19.5$ retail. f.Fierce competition in the riding toys area.

g.Uncertainty that failure may harm the relations with retailers, leading to lack trust in the following years. h. Reducing the prices would mean reducing the quality by removing parts of the toy, which was inconsistent with Fisher Price policy.

Opportunities (External)
a.Riding toys has the biggest portion of sales with 22%.
b.According to exhibit 16 in the article Fisher Price toys are the most often bought toys with an 87.7% responding in favor. c.Competition at that time was limited to 20 largest firms that have 58% of the sales. d.The brand image was clear and correlated with competitive prices. The data showed that Fisher Price has the highest product awareness and many consumers prefer buying their brand. e. Advertisement growth and targeting mothers and grandparents f.Numbers of first birth are increasing exponentially according to exhibit 18. g.Highest sale percentage in November and December with around 60% of the sales around that time. Refer to exhibit 19. h.High customer loyalty to one brand of preschool toys, (Exhibit 15). Supported by high number of consumers who buy most often Fisher Price (Exhibit 16). i.In the best known brand assessment Fisher Price was the highest with 64.7%. (Exhibit 9) j.Availability of stores and distributors...
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