DayDreamToyCompany—Acasestudy

Backgroundinformation

TheDayDreamToyCompanyhasaworkforceofover1,000basedinthreedifferentsitesintheUK.Thecompanywasestablishedintheearly1990sanditsmarketingactivitiesareco-ordinatedfromitsheadquartersinChester.

Theoriginalcompanyproducedalimitedrangeofwoodentoysaimedatthepre-schoolmarket.Itsrangeofproductswasoriginallylimitedtowoodenbuildingbricks,simplewoodenjigsawsandalimitedselectionofwoodenanimals.Asthecompanybecamemoreestablished,theproductrangewasexpandedtoincludedolls’housesandwoodentrainsets.

Intheearlydaysthecompanysoldthroughsmall,independenttoysshops,butdespitenumerousattempts,itwasunabletopersuadeanyofthelargechainstorestostockitsproducts.Despitethis,thecompanymaintainedareasonableturnover,anditslowlyexpandeditsproductportfoliotoincludearangeforthe5–8yearoldmarket.

Disenchantedbyitsinabilitytobecomeacceptedbyanyofthelargerchains,thecompanytoyedwiththeideaofmailorderselling.AcataloguewasproducedanddistributedthroughsomeoftheleadingSundaynewspapers,andalthoughsalesincreased,thiswasnotaparticularlysuccessfulventure.

Mailordersellingwasdroppedafteronlyayear,butitdidservetobringthecompany’snametotheattentionofthepublic,andmoreimportantlytothetoyindustry.Thecompany’simageofhighqualitytoys,madefromnaturalproducts,appealedtotheincreasinglyvocalenvironmentallobby,andatlast,aleadingdepartmentstorechainagreedtostockDayDream’sproducts.ThisprovedtobealucrativeagreementforDayDream,andithelpedthecompanyexpandduringthelate1990s.

Thecompany’sbigbreak,however,camewhentheWelshlanguageTVchannelSC4introducedananimatedseriesfeaturinganassortmentofanimalcharacterscollectivelyknownasthe‘CountryCousins’.Againstfiercecompetition,DayDreamwonthecontracttomakealimitedrangeofmerchandisefeaturingthecharacters,andthepopularityoftheseriesresultedinsaleswhichwerewaybeyondDayDreamsmostoptimisticexpectations.

Followingthesuccessof‘CountryCousins’,ITVdecidedtogivetheseriesnationalairing,andintheleaduptothenationallaunch,DayDreamexpandedanddevelopeditsrangeofmerchandise.Atthesametime,thecompanyalsointroduced‘CountryCousins’booksandtothisend,itacquiredanailingpublishingcompanyinExeter.

ThiswasDayDream’sfirstventureintopublishing,butbyretainingtheexistingexpertisewithinthenewlyacquiredcompany,andthroughitsownestablisheddistributionnetwork,thisbecameahighlyprofitablepartofthecompany’sportfolio.

Thebooksweresoldprincipallythroughtoyshopsanddepartmentstoresaspartoftheoverall‘CountryCousins’package,andbyconcentratingonitsestablishedtoyretailersratherthanbookshops,DayDreamdidnotneedtoemployanyadditionalsalesrepresentatives.Thisprovedtobeasuccessfulandcosteffectiveapproach,whichisstillemployedatthemoment.

Asthebusinesscontinuedtoexpand,DayDreamboughtoverasofttoymanufacturerwhichwasinitiallydevotedtotheproductionof‘CountryCousins’figures.

The‘CountryCousins’phenomenonreacheditspeakinthelate1990s,andalthoughthecompanyisstillturninginreasonableprofits,therearegrowingconcernsforitsfuturesecurity.Thesuccessof‘CountryCousins’,however,hasgivenDayDreamafootholdinthemarket,andhavingfirmlyestablisheditsbrandnameandidentity,DayDreamproductsarestillstockedbysomeofthemajortoyretailers.

Althoughthesalesof‘CountryCousins’merchandisearedeclining,therangeisstillanimportantpartofDayDream’sbusiness.Therangecurrentlyincludeswoodenfigures,cuddlyfigures,woodenplayhousesandscenery,aseriesofthirty‘CountryCousins’storybooks,a‘CountryCousins’Annualwhichhasbeenproducedeachyearsince1996,‘CountryCousins’stationery,pencilcases,notepads,cards,etcand‘CountryCousins’toiletries,includingsoap,shampoos,sponges,bathsalts,etc.

Inadditiontothe‘CountryCousins’range,DayDreamstillproducesitstraditionalwoodenjigsaws,woodenanimals,woodenbuildingblocksandvariousotherwoodentoysaimedatthepre-schoolmarket.

Amajorturningpointinthepopularityofthe‘CountryCousins’rangecamein2008whenITVdecidedtodroptheprogrammefromitsschedules.Thepopularityoftheserieshadbeenwaningforanumberofyears,anditsdemisehadbeeninevitableforsometime.Intheyearfollowingtheprogramme’swithdrawal,salesof‘CountryCousins’merchandisefellto40%ofthe2002peak.

Alongwiththedeclineindemand,thecompanyhashadtochangeitspricingpolicies.

Duringtheboomperiodoftheearly2000s,thepriceofthe‘CountryCousins’rangewassetatapremium,butinordertomaintainsales,thecompanywasforcedtoreducepricetoamuchmorecompetitivelevel.Retailersandothermiddlemen,realisingthestrengthoftheirnegotiatingposition,havebeenabletoforceDayDreamtoaccepttheirtermsandprices,andwiththedeclineindemand,DayDreamhashadlittlealternativebuttoaccept.

Thecompany’s30-strongsalesteamhasbeenchargedwiththeresponsibilityofmaintaininggoodrelationswithexistingoutletstoensuretheircontinuedpatronage.Onoccasionsthispatronagehasbeenhardwon,andinrecentyearshasinvolvedmoreandmoreprice-cuttingtoensurethattheexistingstorescontinuetostockDayDream’srange.

Theindustryisbecomingevermorecompetitive,andwithoutaleadingproductrange,DayDreamisbeingforcedtocutpricestoretainitsdistributors,andtomaintainitspositioninthemarketplace.

Thereducedpricetotheretailer,however,isnotalwaysreflectedinthepricechargedtothefinalconsumer.AlthoughDayDreamissellingtothemiddlemenataconsiderablyreducedprice,theretailersaretendingtosellatpricesonaparwiththosechargedduringtheheightofthe‘CountryCousins’boom.

Assalesofitstraditionalrangehasdeclined,thecompanyhasbecomeinvolvedinthe‘ownlabel’business,and10%ofitsoutputisnowsuppliedtothe‘ForToys’retailchainwhichsellstheproductsunderitsownname.TheassociationwithForToyshasbeengoodforDayDream,andthereisthepossibilitythatthisrelationshipwillbefurtherdevelopedinthefuture.

ForToysisanexpandingcompany,andalthoughthisrelationshiphasbeenvitaltoDayDream,ForToyshasforcedthemanufacturertoproduceatlowerandlowerpricesovertheyears,andbecauseofalackofordersfromothercustomers,DayDreamhasbeenforcedtoaccedetothesedemands.Atthesametime,theproductionof‘ownlabel’merchandisemayhavecontributedtothereduceddemandforDayDreambrandedproducts.

Thedecliningdemandfor‘CountryCousins’hasalsonecessitatedotherchanges.Cuddlytoys’production,whichwaspreviouslyexclusivelydevotedto‘CountryCousins’figures,hasnowbeenadaptedtoproducearangeofmorethanfortydifferentstylesandtypesofbearsandothercreatures.Manyoftheseare‘ownlabel’productsforToysstores.

Otheralterationstotheproductmixincludetheintroductionoflargertoyssuchasplayhouses,climbingframesandslides.DayDreamislookingtofindawayofgainingaccesstopotentialbuyerssuchasplaygroups,nurseriesandevenlocalauthoritiesaswellasitsestablishedconsumermarket.

Thepublishingsideofthebusinesshasalsohadtoadapttothepost‘CountryCousins’boom.Arangeofchildren’sstationeryisavailableinanumberofdifferentstyles,andthisisbeingcontinuallyupdatedtomeetthechangingneedsofthemarket.Anewseriesofpre-schoolbookshasbeenproduced,includingarangecalled‘DollytheDolphin’forwhichthecompanyhashighexpectations.Thecompanyalsohasplansfor‘DollytheDolphin’cuddlytoys.

Anewrangeofself-readingbookshasalsobeendeveloped,andthecompanyhasbeentryingtoencouragelocalauthoritiestobuythemfortheirschoolsandlibraries.

Duringtheearly2000sthecompanydidnotneedtoinvesttooheavilyinadvertisingandpromotionasthepublicitygeneratedbythe‘CountryCousins’TVserieswassufficienttokeepthecompany’smerchandiseinthepubliceye.

Inadditiontothispublicity,thecompany’spromotionalefforthadbeenprincipallyaimedatretailersandothermiddlemen,andthishadprimarilyinvolvedpersonalsellingthroughthesalesteammakingregularvisitstoestablishedclients.Itwasbelievedthatbytargetingthemiddlemen,andbygettingtheproductsintoasmanystoresaspossible,saleswouldinevitablybegenerated.Theemphasisonthesalesteamhasbeenmaintained,butinrecentyearsthishasbeensupplementedbyadvertisinginchildren’scomicsandmagazines,andbyalimitedamountofadvertisingonChildren’sTV,particularlyintherunuptoChristmaseachyear.

DayDreammustnowadjusttothepost‘CountryCousins’boom,andalthoughsomechangeshavealreadybeenmade,furtherdevelopmentsarerequired.Todothis,itisnecessarytodevelopthecompany’smarketingmix,butbeforethisispossible,thecompanymustcarryoutsomeresearchtodiscoverthemostappropriatecourseofaction.

Todate,thecompanyhasnotfelttheneedtocarryoutextensi