Theodore levitt
Innovative Toys Case:
Innovative Toys, a successful toy manufacturing company that manufactured toys for children between ages 6 -10 has decided to manufacture infant toys and distribute through Big Tiger supermarkets. It has two possible products to introduce in the market but can only introduce one of them in the current year and use the net income and value generated by it to introduce the other product. It also needs to generate substantial income for the Big Tiger so that Innovative toys would gain confidence of Big Tiger to introduce another product and have good shelf space. Since Big Tiger would prefer to have 30% of margin on General Merchandise products, we will be considering retail price based on 30% margin. The two products Innovative Toys is planning to introduce are Plush Balls and Teething Toys. Plush Balls are packaged toys that sealed for cleanliness and require shelf space while Teething toys are packaged in plastic and can be displayed on a pegboard.
Below is the table that will compare both the products. Plush Ball
Teething Toy
Manufacturer Price
$3.70
$3.42
Unit Price for Manufacturer
$1.25
$1.50
Shipping 2%
$0.03
$0.03
Retail Price 5%
$0.06
$0.08
Total variable cost
$1.34
$1.61
Margin per unit
$2.36
$1.82
Retail price consider 30% of margin for retailers
$5.29
$4.89
Retailers margin
$1.59
$1.47 Plush Ball will make $0.55 more profit margin than teething toy per unit which is almost 30% of the margin made by Teething Toy. Also Plush Ball would make $0.12 more retailer profit per unit which is approximately 8% more than retail profit made my Teething Toy.
The competing products for Plush balls sell at $5.80 per unit and competing products Teething Toys are sold at $4.50 per unit. Comparing the competitors’ prices with the retail prices of our plush ball and teething toy which are $5.29 and $4.89 respectively plush ball is less priced than its competitors and Teething toy is more priced than its
Innovative Toys, a successful toy manufacturing company that manufactured toys for children between ages 6 -10 has decided to manufacture infant toys and distribute through Big Tiger supermarkets. It has two possible products to introduce in the market but can only introduce one of them in the current year and use the net income and value generated by it to introduce the other product. It also needs to generate substantial income for the Big Tiger so that Innovative toys would gain confidence of Big Tiger to introduce another product and have good shelf space. Since Big Tiger would prefer to have 30% of margin on General Merchandise products, we will be considering retail price based on 30% margin. The two products Innovative Toys is planning to introduce are Plush Balls and Teething Toys. Plush Balls are packaged toys that sealed for cleanliness and require shelf space while Teething toys are packaged in plastic and can be displayed on a pegboard.
Below is the table that will compare both the products. Plush Ball
Teething Toy
Manufacturer Price
$3.70
$3.42
Unit Price for Manufacturer
$1.25
$1.50
Shipping 2%
$0.03
$0.03
Retail Price 5%
$0.06
$0.08
Total variable cost
$1.34
$1.61
Margin per unit
$2.36
$1.82
Retail price consider 30% of margin for retailers
$5.29
$4.89
Retailers margin
$1.59
$1.47 Plush Ball will make $0.55 more profit margin than teething toy per unit which is almost 30% of the margin made by Teething Toy. Also Plush Ball would make $0.12 more retailer profit per unit which is approximately 8% more than retail profit made my Teething Toy.
The competing products for Plush balls sell at $5.80 per unit and competing products Teething Toys are sold at $4.50 per unit. Comparing the competitors’ prices with the retail prices of our plush ball and teething toy which are $5.29 and $4.89 respectively plush ball is less priced than its competitors and Teething toy is more priced than its