Blog Post: Market Trends and Challenges

MARKET TRENDS AND CHALLENGES

The Nuremberg-Spielwarenmesse 2013 Toy Fair is the world’s largest Toy trade show; in this toy fair a series of research reports and market trends analyses were presented. In order to get an overview of the current trends and Challenges in Toy Industry an analysis of the outcomes has been performed. According to this information, the main challenges and trends are the following:

  • Short lifecycle of toys
  • High failure rates of new toys
  • High market risks and difficulty to predict trends
  • Highly fragmented markets and difficulty to enter new markets
  • User-centric products & Maker movement
  • Virtual and augmented reality as main technological trend

Out of those points which represent the main challenges that every Toy manufacturer faces or is going to face, the added value of ToyLabs gets clearer. The participation of an SME in the ToyLabs network can provide significant benefits regarding those challenges, this benefits are explained below.

Concerning the first challenge, short lifecycle of toys, ToyLabs offers a new methodology that will minimise time to market for new products. By making all the process collaborative and getting early feedback on different stages the process becomes more agile and allows faster innovation.

Two other identified challenges are the high failure rates of new toy and high market risks and difficulty to predict trends. In these cases, ToyLabs offers very valuable tools that could significantly reduce these risks. Market analytics and market trends analysis component of ToyLabs and the continuous user- feedback during the toy creation and development process reduces significantly the chances of taking to the market a product with low potential to succeed. On a first step the manufacturer can analyse the trends and market so they can create a new product that matches them, later on the process it is possible to validate and test the product easily with end-users to make sure it adapt to their needs and expectations.

Something interesting that leads to the next challenge is that ToyLabs makes it easy to produce prototypes and do the testing in different countries with local experts from TSIG. The problem is toy market is highly fragmented and entering new markets is difficult. While of course ToyLabs cannot change the nature of the markets, the establishment of the ToyLabs network can support SMEs entering new, even high fragmented, markets through the open innovation process proposed. Even at later stage, taking advantage of the network of ToyLabs stakeholders per country may also refer to implement indirect marketing activities based on the ToyLabs communities.

The fifth Toy market challenge which refers to the maker movement and the production of user-centric products is partially covered by ToyLabs. Undoubtedly in ToyLabs end-customers play an important role both directly by providing feedback during the phases of the toy development process and indirectly through their opinions expressed in the web and the social media (respectfully analysed by the relevant component of the ToyLabs platform. On the other hand, the scope of ToyLabs is far from fully covering the maker movement trend in terms of having the end-customer actually designing the product. ToyLabs considers that the participation of the end-customers in the Toy creation process is very important but apart from specific cases it can be efficient only if it is combined with toy experts providing in a structured way their support and professional services.

Finally, regarding the sixth challenge, ToyLabs incorporates in the product co-creation process Augmented Reality techniques and tools for acquiring a more complete end-customer feedback and related recommendations for improving new product designs. Whether the Toy itself will utilise AR or VR characteristics is not a fact depending on ToyLabs, however the utilisation of such emerging and trending technologies within the toy development framework is expected to further increase the interest of the end-customers to become members of the ToyLabs network focus groups.

As seen above, ToyLabs and the enhanced toy development process proposed help to deal with most of the challenges that the toy manufacturers have to face resulting in more effective and innovative products.

All the above mentioned responds to an analysis of the market and how ToyLabs will give solution to many of the problems the Toy MArket faces but is also very important to analyse ToyLabs itself internally and in relation with the market. For this purpose the SWOT analysis below show a clear picture of the real situation of ToyLabs and help to plan a strategy.