Leap Frog Case Study

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  • Topic: LeapFrog Enterprises, Educational toys, Retailing
  • Pages : 8 (3333 words )
  • Download(s) : 532
  • Published : October 19, 2009
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Background Information
LeapFrog Enterprises was founded in 1995 by Mike Wood. Origins date back to 1990 when Mike Wood had an epiphany. He was playing with his 3 year old son and trying to help him recognize letters. It was then Wood came up with the idea of phonemic awareness. Wood took $15,000 of his own money to invest in a patent. Upon advice from friend he had 20 mothers test the products marketability. Of the 20 mothers, all 20 loved the concept. In 1995 LeapFrog Enterprises released their first product, the Phonics Desk which integrates technology with research-based learning model for phonics instruction. Toys R Us bought 40,000 units for the upcoming holiday season. This came out to be a $2.4 million order and allowed Wood to leave his law practice. It was then the company was launched. In 1997 Knowledge Universe acquires 85% of LeapFrog Enterprises. KU President, Tom Kalinske joins LeapFrog as CEO and brings 30-plus years experience to the company. Also the acquisition brought $50 million of much needed capital to LeapFrog. In 2002 LeapFrog’s sales soared to $532 million which was an increase of 69 percent from the previous year. This took them to the third spot in U.S. toy company rankings. LeapFrogdominated two product categories: preschool electronic learning aids and nonpreschool electronic learning aids. It was in 2002 when LeapFrog successfully issued 9 million shares in its initial public offering. They were valued at $13 per share which raised $115 million for LeapFrog. It was also the most successful IPO of the year. By 2002 LeapFrog had introduced more than 65 learning products on 6 learning platforms. They had totaled 200 industry awards, with over 40 in 2002 alone. Also as of 2002 there have been over 8 million LeapPads sold worldwide. By 2002 LeapFrog had become available to 30+ international countries. It was also available in 5 different languages. Near the end of 2002, 33 employees were selling the LeapFrog internationally. Sega Toys and Benesse Corporation of Japan began distributing cobranded adaption of LeapPad platforms, and similar content for home and school markets. The next year, LeapFrog gained a partnership with Stadelbauer, a leading German-language distributor. The results for sales internationally in 2002 came out to be around $54 million which is about 10% of total sales. SchoolHouse products had become introduced into 14,000 schoools. There have been a total of over 20 awards given to LeapFrog for SchoolHouse products since the launch of the division. This division targets Pre-K through 5th grade classrooms, teacher supply stores, and catalogs. There are a total of 99 employees in sales, marketing, content development, and operations for the SchoolHouse division. Many of those employees are former teachers or learning and child development specialists. There are over 200 books and 267 skills cards created for the SchoolHouse platforms. The SchoolHouse platform was facing a different decision process for schools than for toys. Buyers can be shown a prototype of the model and they purchase their desired amount upon approval of the product. Schools on the other hand won’t purchase the product until it is completely finished and they will only try one. Problem Statement

Now the problem statement. The “seven-second rule” has been used to determine the likelihood of kids engaging in their product. A child will be placed in front of the new product and if the child is not engaged at the end of 7 seconds the product may not be a success. The can be a major problem because all children have their own personality, there may be that one child that has not interest in the new game and just likes an older version. Some consequences to this is that the product may and could be the next biggest selling item but was not produced due to a child not gaining interest in the product within the 7 seconds. Another problem for the LeapFrog is that they are the leading provider of...
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