March 6 th , 2002 S356- Entrepreneurial Ventures Ann Monroe Steve Boord Sarah Elk Nancy Daniels
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Transcript of March 6 th , 2002 S356- Entrepreneurial Ventures Ann Monroe Steve Boord Sarah Elk Nancy Daniels
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March 6th, 2002S356- Entrepreneurial Ventures
Ann MonroeSteve Boord
Sarah ElkNancy DanielsElizabeth Kline
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Roadmap
Business Opportunity Product Development Business Analysis Economic Model Risks
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Roadmap
Business Opportunity Product Development Business Analysis Economic Model Risks
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Girls’ Toy Market
Girls 6 – 8 traditional toy market is almost $2 billion
Girls doll market is dominated by Mattel
Mattel has 65% of U.S. doll market
Characterized by seasonal buying Easter, Back-to-school, Christmas
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Our Customer: Girls 6-8
Active-physical Busy– many activities Like to collect things Most interested in
relationships/communication Barbie is not “cool” Frequent use of computers Enjoy TV programs and books about
older girls
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Girls 6-8 Buying Habits
Observations that there is a paucity of products to buy
Girl makes the buying decision with parent approval
Frequent purchasing of birthday party presents
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Girls’ Play PatternsFive types of Play
Gross Motor/Active Constructive Creative Cognitive Imaginative
Girls’ play is social Practice social roles Establish bonds of friendship Play often gender segregated at ages 6-8
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Business Opportunity
Barbie losing market share To other dolls developed for older
girls To products with electronic
components
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Industry StructureMost companies operate within industry silos; Spark!’s strategy is to build a brand in toys, then focus on our target customer across all core product segments
Spark!Spark!Girls 6-8
BooksToys Media Apparel Other
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Business Opportunity
(part 2) Lack of market focus
Products for girls 6-8 Incorporating multi-play patterns Lifestyle focus Capturing community movement Affordable price point
Internet component Girls use computers as much as boys Use is increasing every year
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Roadmap
Business Opportunity Product Development Business Analysis Economic Model Risks
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Our Product Offering
Vertical World Behind every door is another adventure
Modular Environments Stackable, portable and fun!
DollsWebsite
Enhances play pattern Different monthly theme Daily news updates Continuous world story
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The CharactersKara Violet Julie Ana
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The Characters
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Initial House and World Concepts
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Market Research
Girls want the Spark! World Research to date confirms our
concept Characters World
Relationships we have established Girl Scout School groups
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Testimonials
“I want them all!” Korie, Chatsworth
“I would definitely ask my parents to buy it for me” Leila, Orinda
“It’s so cool!” Kara, Simi Valley
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Launch Schedule
February 2003 – Toy Fair Smaller plastic dolls – 16 designs
With accessories for some packages Targeted for Toys R Us and mass market
Houses for plastic dolls – 4 designs Targeted for mass market
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Roadmap
Business Opportunity Product Development Business Analysis Economic Model Risks
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Our Competition
Age
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The Spark Advantage
Superior market research Knowing girls ages 6 - 8
Relationships with girl organizations Established connection with Girl Scouts
Adaptation to market trends Not limited by existing product focus (e.g.
Barbie for Mattel) Flexible and nimble
Integration of technology
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Marketing Plan
Targeted to the girls Event-based marketing
In-store With girl organizations
Website Cartoon
Targeted to Retailers Media: $2.5M ad budget Toy Fair, Product Catalog
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Sales & Distribution Plan
Year 1* – Toys R UsYear 2 – Target and Kmart Year 3 – Walmart
*Year of selling product into mass retail
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Retail Pricing Plan
5” Plastic (w/accessories) $9 5” Plastic $5 6-7” Houses $17 - $40
Typical retail margins are 25-30%Specialties will demand 55%.
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Manufacturing
Outsource manufacturing in Asia
Use of manufacturers’ agents (3–8%)
Plastic has higher fixed cost because of tooling
High packaging costs for retail placement
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LicensingWhen sufficient brand awareness has
been achieved, we foresee the following as potential product extensions: Apparel Back-to-School items (supplies, backpacks) Fashion accessories Publishing Candy/Food Furniture/Bedroom decor
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Roadmap
Business Opportunity Product Development Business Analysis Economic Model Risks
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Revenue ModelProduct revenue
Plastic dolls in 2003 Houses in 2003
Licensing revenue High margin, but requires recognizable
brand or franchiseNew product introduction
Opportunities for brand expansion No visibility to quantify financial impact
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Financing StrategyBoot-strap financing
Unfavorable terms in purchasing contracts prevent using purchase orders as collateral for bridge loans
Insufficient capital for tooling for plastic toys; significant advertising spend requirements
Venture capital Highly dilutive with little strategic benefit Business risks make securing capital difficult
Social venture capital Minimum return to management or employees
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Roadmap
Business Opportunity Product Development Business Analysis Economic Model Risks
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Risks
Gaining access to distribution Securing capital Recruitment of key human resources Product or concept failure Unforeseen new competitors Ability to defend against competitors
hoping to copy our concept Limited licensing opportunities
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Forces Against Spark!
Fierce Competitive EnvironmentSuppliers Buyers
Substitutes
New Entrants
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Forces Against Spark!
Buyers Force inventory risk on Spark! Significant pricing pressure
Suppliers Small initial manufacturing batches give us
little leverage over outsource manufacturersCompetitive Environment
Fierce competition kills new entrantsSubstitutes
Threat looms of Mattel copying basic idea
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R.I.P. Polly Pockets Purple Moon Galoob
Hanging on… Get Real Girls Hasbro Girls