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The battle in India's toy market
Rituparna Chatterjee | January 10, 2006
Towards the end of November 2005, international toymaker Mattel launched toys for men. Priced between Rs 999 and Rs 1,999, the new range features models of premium cars such as Ferrari Scaglietti and BMW 645 Ci in its 'On Road' collection and Renault and Williams in its 'F1 Range' of Hotwheels Collectibles. The company says that it's too early to talk about sales figures. But toy makers targeting adult Indians itself is noteworthy.
In the Indian market, selling branded toys isn't exactly child's play. International toy makers like the $3-billion Hasbro's Indian venture Funskool, and the $5.5-billion Mattel have been in India for more than a decade.
Still they have a small share in the play-pen. According to the Toys Association of India, 90 per cent of the Rs 2,500-crore (Rs 25 billion) toy market is unorganised. That means organised players get to share only Rs 250 crore (Rs 2.5 billion).
Obviously, Mattel and Funskool need a lot more than their super-hero characters He-Man and Batman to save their world. What are their strategies to grow in the Indian market?
In 2005, Mattel knit a partnership with international diaper brand Huggies. Using this window, Mattel targeted its potential audience at their places of birth, or sometimes before they were born -- at maternity homes.
On the first visit to the doctor, prospective mothers are given a book that is a medical file, with a twist. The book doubles up as a ready reckoner on the growth milestones of the child with a not-so-hidden message about which toy from the Fisher Price range fits each growth phase -- crawling, sitting, standing and so on. The book also has slots to store photographs and so on.
Within a year of launch, the Huggies-Mattel tie-up claims to have targetted 600,000 mothers by tying up with 50 gynaecologists and 300 paediatricians, across the top six Indian cities.
Then, Mattel's toy directory in retail outlets educates parents on which toy fits each age group. For instance, a four-year-old needs to be subtly taught competitive play with track sets to race cars. "But competitiveness may be harmful for a three-year-old, he may develop aggression," points out Sanjay Luthra, managing director, Mattel Toys.
If the unorganised sector rules in the smaller toy shops, malls have turned out to be undisguised blessings for toy makers since they offer better shelf space to exhibit products. For instance, in the small format toy shops, only top selling toys from a range get adequate display.
For a range like Mattel's Barbie, that is bad news. Because if Barbie is displayed minus her accessories, chances are that only the doll gets picked up. However, in a mall, the entire range can be displayed and the add-ons in the range also stand a good chance of being picked up.
Then, malls also help in better tracking of sales and allocating the required shelf space. As Mattel found out in Kolkata, different days of the week required different shelf space allocation. For instance, Barbie sales soared on weekends in Kolkata's Pantaloons store.
However, during the week, toys for boys registered higher sales. A closer scrutiny revealed that there were boarding schools for girls in the vicinity. On weekends, parents visited their wards and pampered them with toys.
Using this insight, Mattel increased the space allotted to Barbie and her world on weekends, thus ensuring the display of the entire girls' range. Previously, only the main character was displayed.
Luthra claims that post the reshuffle, weekend sales shot up by 182 per cent at that outlet. Mattel is now introducing a software to track sales at each outlet and get critical customer insights.
Finally, malls, much like He-Man's sword, guard the toy makers from the unorganised sector. "Organised retail outlets don't stock unbranded products or bad quality products. They prefer top quality products and brands," says David Selvaraj, business head, Funskool.
Last year, Mattel opened 1,200 sq ft Barbie stores at two Mumbai malls: the western suburbs (Inorbit mall) in May 2005, followed by another in the central suburbs (Nirmal Lifestyle) in October. "We want to give our customers anything related to Barbie, that they can think of," says Luthra.
Hence, these stores stock apparel, shoes, stationery, laptops, keyboards and a host of accessories, ranging from sunglasses and belts to perfumes. At present, roughly 35 per cent of toy sales for both Mattel and Funskool happen at malls.
In the past six years, Mattel has produced five movies based on popular fairytales like Rapunzel and The Prince and The Pauper, with Barbie as the protagonist. These movies are first premiered on TV channels like Cartoon Network, followed by sales of DVDs and VCDs.
Once the film gets popular, Mattel introduces accessories. For instance, a Rapunzel Barbie doll, Ken her companion dressed as the prince, and the entire set complete with the tower would cost Rs 4,999.
While Mattel extended its toy brands like Barbie into movies, rival Funskool has been doing the converse. For instance, Funskool cornered the licence to convert existing heroes like Batman into toys, since 1996. For a first attempt, Batman contributed 5 per cent of Funskool's Indian sales.
However in 2005, it was a different story. When Cartoon Network premiered the Beyblades series in India in May 2005, the show where people train Beyblades (tops) to fight against each other, was a hit with children in the age group of five years and above.
Along with the television series, even toy sales boomed. For Funskool, which launched Beyblades in the price range of Rs 199-299, they accounted for 50 per cent of sales.
But toy companies still have a long way to go in India. According to industry executives, barring educational games like Scrabble and toys for infants and pre-schoolers, Indian parents perceive toys as wasteful expenditure.
"In India, toys aren't seen as developmental. So pester power of kids works for us and impulse purchase becomes the most important vehicle for us to grow in this market," says Luthra.
"A Die-cast car, guaranteed for life sells at Rs 69 and a Cadbury Temptation chocolate costs Rs 90. So, chocolates are big competition because people may choose it over us." Possibly why Mattel is offering fast cars to tempt its customers.