Fisher-Price, Inc.

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Fisher-Price, Inc.

founded: 1930

Contact Information:

headquarters: 636 girard ave. east aurora, ny 14052 phone: (716)687-3000 fax: (716)687-3508 toll free: (800)828-4000 url: http://www.fisher-price.com

OVERVIEW

Fisher-Price, Inc. is one of the foremost companies in the highly competitive market of toys and furnishings for infants and young children and the world's leading manufacturer of infant and preschool toys. From modest beginnings in 1930 as a manufacturer of simple wood and metal pull toys, Fisher-Price grew into a major corporation with about $1 billion in sales in 1996 and accounting for about 16 percent of Mattel's total revenues (about $770 million) in 1997. The company has endured repeated changes of ownership. In 1969 it was purchased by the Quaker Oats Company; in 1991, when it was an independent public company; and then in 1993, when it became a wholly owned subsidiary of Mattel Inc., thereby making Mattel the largest U.S. toy company.

After several disappointing forays into manufacturing toys for other age groups, in the mid-1990s Fisher-Price refocused on the market that had made it famous and successful: toys and games for children ages five and under. Some of its new products include educational software programs for pre-kindergarten aged children and a line of action figures for preschoolers based on characters that intended to be positive role models.

HISTORY

Fisher-Price began in 1930 in East Aurora, New York, 20 miles southeast of Buffalo, as a joint effort by three partners: Irving L. Price and Helen M. Schelle, who had worked in retail businesses that sold toys among other products, and Herman G. Fisher, who had advertised and sold games. Though none of the partners knew anything about toy manufacturing, they shared an enthusiasm and a common belief that the public would value high quality toys; "gay, cheerful, friendly toys with amusing action, toys that do something new and surprising and funny!" as they wrote in their first catalogue. During its first year in operation, Fisher-Price produced 16 toys, including two quacking wooden pull toys, Granny Doodle and Doctor Doodle. The Doodles were made of splinter-resistant Ponderosa pine and decorated with non-toxic finishes. Even though the Doodles were popular toys, the young company struggled through the Depression years, losing about two-thirds of its capital in the first four years of operation. The company did not actually start to make a profit until after it introduced a new toy, Snoopy Sniffer, in the late 1930s. During World War II, the Fisher-Price plant was temporarily converted to manufacture medicine chests and other war-related goods.

In the early 1950s, plastic was a relatively new material gaining in popularity and Fisher-Price decided to try using it to manufacture toys. Plastic had the advantage of retaining color and decorations longer than wood or metal, and by the end of the decade over half of the toys Fisher-Price was producing were composed at least in part of plastic. Through the 1950s and 1960s, Fisher-Price expanded rapidly, focusing on pre-school toys and introducing new concepts such as musical toys shaped like radios and televisions. In 1966, Herman Fisher retired as president of the company and was replaced by Henry Coords who had been recruited from Western Electric. After Herman Fisher retired and the Little People series of toys was introduced, the Quaker Oats Company acquired Fisher-Price in 1969. In 1970, Quaker Oats' advertising agency, Waring and LaRosa, launched the largest advertising campaign in Fisher-Price's history, spending upward of $1.25 million on television and print advertisements for Fisher-Price toys. By 1976, the company diversified into three areas: products for children 18 months to 4 years (its largest unit), toys for children ages 4 to 9, and a line of products for infants less than 18 month old. Although Quaker Oats consistently increased Fisher-Price's advertising budget—in 1975, for example, it spent almost $2.15 million on network advertising for the toy company—it allocated far less than its top competitors like Hasbro and (then competitor) Mattel. In 1993 Quaker Oats decided to sell Fisher-Price and it was eagerly grabbed by Mattel Inc. Under Mattel's ownership, Fisher-Price refocused on the infant and pre-school market that had made it a leader in the toy industry.

STRATEGY

From its inception in 1930, Fisher-Price's strategy was to make toys with "intrinsic play value, ingenuity, strong construction, good value for the money," as stated in the company's first catalogue. Sixty-six years later, the overall strategy of Fisher-Price's parent Mattel as expressed in its annual report for 1996, was "to focus on those brands which have fundamental play patterns and worldwide appeal, are sustainable, and will deliver consistent profitability." For Fisher-Price, this has led to an abandonment of its earlier efforts to expand into manufacturing toys and furnishings for older children, in favor of concentrating on its product lines for infants and pre-school children.

FAST FACTS: About Fisher-Price, Inc.

Ownership: Fisher-Price Inc. is a wholly owned subsidiary of Mattel Inc., a publicly traded company listed on the New York Stock Exchange.

Ticker symbol: Fisher-Price's parent Mattel Inc.'s ticker symbol is MAT.

Officers: Gary Baughman, Pres.; Gerald V. Cleary, Exec. VP of Sales, Fisher-Price & Tyco Preschool; Jerry Perez, Exec. VP of Marketing; Kevin Curran, Sr. VP Research & Development

Employees: 800

Principal Subsidiary Companies: Fisher-Price is a wholly owned subsidiary of Mattel, Inc., the largest toy maker in the United States.

Chief Competitors: Fisher-Price's main competitors include: Century Products Company, manufacturer of baby furniture and accessories; Galoob Toys, Inc., the third-ranked U.S. toy maker; Gerry Baby Products Company, maker of infant and toddler furniture and accessories; and Hasbro, Inc., the second-ranked U.S. toy manufacturer and maker of Playskool toys.

In 1998, Fisher-Price launched a new advertising campaign for its spring line of toys, which it called the "Its a Great Age" campaign aimed at parents, with 85 percent of its television advertising in "parent time." The strategy behind the campaign is to get parents to view Fisher-Price toys as more accessible, as represented not by an authoritative figure, but by someone "right there with Mom as kind of the voice of an experienced Mom helping her through raising her children and getting them developed and out to school," according to Fisher-Price Executive Vice President of Marketing, Jerry Perez.

INFLUENCES

After weathering the Great Depression of the 1930s and the temporary rerouting of its plants into wartime production in the 1940s, Fisher-Price shared in the huge growth of the toy industry during the 1950s and 1960s. By the time Quaker Oats bought the company in 1969, Fisher-Price had reached annual sales of over $30 million.

In the 1970s, declines in the birth rate led to stagnant preschool toy sales and Fisher-Price broadened its focus to include manufacturing toys for older children. In 1974, the company introduced a line of dolls and in 1975, it presented its Adventure Series line of toys, including Adventure People for early elementary school aged children. It also obtained the highly profitable license for Sesame Street characters.

In the mid-1980s, a shift in demographics included a rise in the birth rate and a revival of the preschool market, and Fisher-Price suddenly found its position as leader challenged. While established toy companies like Kenner Products, Hasbro, and Mattel expanded into the rejuvenated market, other companies like Matchbox Toys Ltd., Panosh Place, and Schaper Mfg. Co., entered the market with new lines of products including baby exercise tapes and washable vinyl plush toys. In the face of this competition, in 1986 Fisher-Price increased its advertising budget by 90 percent and changed its advertising strategy to include year-round (not just Christmas-seasonal) promotion of at least 75 of its new toys. At this time, Fisher-Price's new line included its Gummi Bear toys, based on a popular Walt Disney Productions cartoon series. The mid-1980s also saw the introduction of what would become the most successful new product in Fisher-Price's history, a line of toys called Puffalumps, exceedingly soft stuffed animals, which in its first year brought the company sales of about $25 million and helped Fisher-Price to sustain itself in what was becoming a much more competitive industry. However, in 1986, the company overextended itself by expanding production of toys in its four-year-old audiovisual toy division, which included a tape recorder, a phonograph, and a highly popular AM-FM radio with a sing- along microphone. The following year, Fisher-Price introduced its $200 video camcorder for children, which was well received at the American International Toy Fair. Although the camcorder and other (so-called) "promotional products" like a battery-powered sports car enjoyed initial success, by 1988, the company had to divert resources from its infant, preschool, and juvenile lines to support them and by the end of the decade, Fisher-Price was losing money.

In the early 1990s, Fisher-Price discontinued its line of products for older children, hired a new president, Ronald Jackson, and began efforts to recover from record losses of 1990 and early 1991. The company closed 4 of its 13 plants and 2 of its distribution centers, cut its work force by more than 3,000, moved production of some of its lines abroad, and reduced advertising and selling costs by about $17 million. By the end of 1991, Fisher-Price was again making a profit. Earlier that year, Quaker Oats had decided to spin off Fisher-Price and in June 1991, Fisher-Price became an independent publicly traded company listed on the New York Stock Exchange. Meantime, Fisher-Price refocused on infant and preschool products and began to expand its international markets. In November 1993, the stockholders of Fisher-Price and Mattel approved a merger plan under which Fisher-Price became a wholly owned subsidiary of Mattel, making Mattel the largest U.S. toy company.

CHRONOLOGY: Key Dates for Fisher-Price, Inc.

1930:: Founded
1938:: Company starts to show a profit
1952:: Begins fashioning new toys out of plastic instead of wood
1966:: Herman Price retires as president
1968:: Little People are introduced
1969:: Company is purchased by Quaker Oats Co.
1972:: Opens plants in Texas and Mexico
1975:: Introduces the Adventure Series
1987:: Founded Toy Town Museum
1991:: Becomes an independently traded company
1993:: Mattel Inc. buys company
1998:: Introduces Rescue Heroes

James A. Eskridge replaced Jackson as president of Fisher-Price in 1993 and, while keeping the company's focus on infant and preschool products, in 1994 he pushed the company into the production of games, dolls, and electronic toys. Eskridge also was in charge when Fisher-Price began to achieve new sales records and became the first toy company to be awarded the Vendor of the Year Award by Discount Store News magazine in 1993. In the spring of 1997, Mattel merged with Tyco Toys, Inc. By mid-1997, under Eskridge's successor Byron Davis, Fisher-Price began suffering a decline in sales; within a year, Gary Baughman replaced Davis as president of Fisher-Price.

CURRENT TRENDS

In 1994, Fisher-Price introduced its new outdoor play yard toys, opening two new factories to produce this line. In the same year it also ventured into three new product lines for its target market: games, dolls, and educational electronic toys. With the explosive growth of the Internet came increasing interest in computers, and in the late 1990s Fisher-Price began developing computer products for children ages 2 through 7, including preschool software like Fisher-Price Ready for School Kindergarten, which was one of the top-selling pieces of home education software in the spring of 1998.

With the greying of the Baby Boomers, many older Fisher-Price toys have become highly desirable as collectibles. Several books, such as A Historical, Rarity, and Value Guide: Fisher-Price 1931-1963, list the toys produced by the company over the years. Fisher-Price has participated in this nostalgic trend, by setting up the Toy Town Museum, Fisher-Price Toystore, and Fisher-Price Resource Library at the company headquarters in East Aurora, New York.

PRODUCTS

In early 1994, Mattel acquired Kransco, manufacturer of Power Wheels battery-operated ride-on vehicles, which were then marketed under the Fisher-Price brand and brought an additional $200 million in sales to the company. In the later 1990s, Fisher-Price continued to refocus on its core market: infants and young children. However, it began to develop a new approach to this market. In 1996, in partnership with software developer Davidson & Associates, Fisher-Price introduced "Ready for Preschool," a CD-ROM set designed to teach children from 2 to 4 years old basic computer skills through a musical circus game. It also teamed up with computer manufacturing giant Compaq to produce the "Wonder Tools" series of computing products for children aged 3 through 7. "Wonder Tools" included CD-ROM software, a keyboard with oversized keys, and interactive software for children and their families to share. Other products released in 1997 included "Little People" accessories, a Little People Roadside Rescue vehicle set, a two-child wagon, and "Hideaway Hollow" playsets with bunny figures. (In May 1997, Fisher-Price had to recall about 17,000 of the toy police cars in its Little People Roadside Rescue vehicle set, sold since February, because of the possibility of choking hazard due to construction.)

In the spring of 1997, Mattel completed a merger with Tyco Toys, Inc., formerly the third-ranked U.S. toy maker and manufacturer of such toys as Matchbox, View-Master, Magna Doodle, and Tickle Me Elmo. As a result of the restructuring of the Mattel, Fisher-Price, and Tyco lines, Tyco's View-Master and Magna-Doodle brands have become part of the Fisher-Price line of products.

In 1998, Fisher-Price introduced more than 125 new products. At the 1998 American International Toy Fair in New York city in February of that year, the company showcased several of its new toys, including a battery-powered car, the Wild Thing, that can spin around and is operated with a foot pedal and two steering levers. Fisher-Price also introduced its Rescue Heroes line of action figures for preschoolers, figures based on everyday people that encourage nonviolent, positive, rescue-themed action. Alliance Communications signed an agreement with Fisher-Price to produce an animated adventure pilot and in-store video based on the central four Rescue Heroes—a firefighter, a construction expert, a scuba diver, and a mountain ranger—scheduled for completion in June 1998. Fisher-Price intended to back the campaign with over $4 million in advertising. The company claimed that during the first month at market, sales of the Rescue Heroes figures skyrocketed.

PLAY IS THE WORK OF CHILDREN

When you think of Fisher-Price, you probably think of brightly colored plastic toys that can withstand a nuclear blast or the day-to-day activities of a two-year old. But Fisher-Price is much, much more than that. While you may have had to make do pushing the classic Corn Popper from room to room, today's youngsters can get a medical kit, cameras, in-line skates, a cash register, clothing, backpacks, and yes, even eyewear. Do you have an especially imaginative youngster running around the house? Why not check out Fisher-Price's many playsets? Makes you wish you were still a toddler, doesn't it?

CORPORATE CITIZENSHIP

In early 1997 Fisher-Price took the initiative on an important child safety issue. The National Highway Traffic Safety Administration (NHTSA) was in the process of devising regulations requiring a universal child car seat design that would eliminate accidents caused by incorrect installation or by seat designs that were incompatible with car hardware. Before the proposed regulations were released, Fisher-Price already had created a new child car seat with built-in clips that eliminated the problem and had already planned to bring the car seat to market later in 1997. John Rhein, Fisher-Price's Director of Product Engineering, explained that it could take 10 years for any new regulations to reach even half the cars on the road, so Fisher-Price had moved ahead to address the problem immediately.

GLOBAL PRESENCE

Due in part to Mattel's strong network of affiliates in Europe, Latin America, and Asia, Fisher-Price's late 1993 merger with Mattel sparked tremendous growth for Fisher-Price in international markets. Fisher-Price's parent company, Mattel, markets products in more than 140 countries, with overseas sales accounting for almost 40 percent of the company's total sales. Mattel maintains offices and manufacturing facilities in 37 countries, including the United States, China, Indonesia, Italy, Malaysia, Mexico, and the United Kingdom. It also hires independent contractors in the United States, Mexico, the Far East, and Australia. As with many large companies, Mattel's primary long-term goal included increasing penetration into emerging markets like those of China, India, and Brazil, as well as augmenting its presence in European countries.

SOURCES OF INFORMATION

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