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Rob-PorterAnalyst Insight by Robert Porter – Toys and Games Analyst

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Crowdsourcing has been a growing trend across industries, enabling consumer to have their say in the direction a company is going, whilst offering ideas and front of mind marketing in exchange. One of the factors that underpins the success of crowdsourcing is the speed at which an idea from the public can be implemented by a manufacturer. This is because consumers are prone to changing their minds quickly and so the speed at converting this idea is essential in capturing the demands of consumers. Therefore, it could be argued that crowdsourcing is better suited to companies in FMCG markets. But are toy companies capable of turning around ideas this quickly or do they use crowdsourcing for different reasons?

Global Company Value Sales for PepsiCo Inc, Activision Blizzard Inc and LEGO Group: 2008-2012

Source: Euromonitor International

Some Toy Companies Mirror Traditional FMCG Companies

In 2008, PepsiCo launched the “Do Us A Flavor” campaign for the Walkers brand, offering the public a chance to take part in choosing new crisp flavours. When the six winning flavours were announced, they were put into production and made available for five months, so that consumers could choose their favourite. What helped PepsiCo achieve these deadlines with Walkers was the fact that implementing a new flavour of crisps is a relatively fast-moving process. In 2014, Activision Blizzard’s Skylanders and PepsiCo’s Frito-Lay teamed up in a crowdsourcing initiative, offering consumers buying Frito-Lay crisps the opportunity to choose and name a new character that will appear on Skylanders packaging and in the next Skylanders game, due for release later this year. Again, in this example, the ability to create a video gaming character is relatively quick, so holding a competition under such tight deadlines can be achieved.

LEGO Cuusoo, which means “wish” in Japanese, is a website which allows users to submit ideas to LEGO for them to be voted on and, if successful, turned into LEGO sets. Once an idea has 10,000 votes, it is reviewed by LEGO and, if brought into production, the user who came up with the idea will receive 1% of the total net sales of the product. Unlike many of its traditional toys and games competitors, LEGO has an important edge that is its ability to get products from idea conception to store shelf quickly because of the nature of manufacturing LEGO. With its sophisticated manufacturing plants and template brick design using plastic resin, LEGO bricks can be manufactured at a phenomenal rate, and many play set specifications can be modified very easily. Examples from LEGO based on crowdsourcing include Mincraft, Ghostbusters, and Jules Verne Train, and the Modular Apple store has also been approved. This perhaps makes LEGO more of a FMCG company than its toy competitors, allowing it to benefit from crowdsourcing more effectively.

Toys and Games Split Between Fmcg and Non-FMCG

Crowdsourcing can be used effectively by a variety of different companies operating in different industries. Huge benefits can be derived from it, such as the engagement with consumers in offering them a say in the direction of future products. In turn, this offers the company free market insights directly from the consumer rather than having to conduct expensive surveys. These insights can be particularly useful if a company wants to penetrate foreign markets, helping it understand what products different demographics want. The process of crowdsourcing also produces huge PR activity, assisting with marketing and adding to the brand equity of the company.

However, for a company to truly benefit from crowdsourcing, a tangible output has to be developed that reflects the consumer’s initial wishes, as testament to the validity of the process. This is where fmcg companies have the edge and where some toy companies, such as LEGO, Mega Brands and Playmobil, are involved. It could be argued that not all toy companies are fmcg businesses due to the time it takes for products to get onto shelves. For example, Mattel’s Barbie range and Hasbro’s NERF brand have more components to them and so would take longer to manufacture. Therefore, within the toy industry, another battle exists between companies that can produce items very quickly and companies that take a little longer. In this battle, crowdsourcing has the potential to offer significant artillery to companies that can achieve the former. At the time this opinion piece was written, Doctor Who, Warsaw City Bus and X-Men had 9,614, 6,185 and 6,077 supporters respectively on www.lego.cuusoo.com.

 

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