gaged in a hectic business with more to worry about than just your inquiry, so grab their attention early and fast by highlighting cool products you have, relevant sales figures (which should look impressive, as your home market is somewhere from 3 to 20 times the size of theirs in most instances), and other salient information.
Dating Potential New Partners
You wouldn’t marry someone you only just met, so why would you jump straight into a long-term commitment with someone you know nothing about? A thorough dating process can save pain on messy divorces later on.
Visit/Meeting
We always recommend a visit to potential key partners— or at least a face-to-face meeting—to maximize your understanding of their business, market, and competence.
Analyze
Review potential partners you looked at and all the information you received from them, then identify preferred partners.
Negotiate
Negotiate a good deal. Are you willing to offer auto renewal rights if they sell enough product? How will you contractually manage which territories they can sell in? What’s the right pricing?
Start
Make it happen! But remember to take an active approach to managing distributors, don’t leave them to do it. There’s a whole world of opportunity out there, but just remember—it pays to look before you leap! ■
Steve Reece runs a leading toy and game industry consultancy offering product and concept representation into Europe and beyond; strategic consultancy; reliable cost-saving sourcing services; and consumer insight. For more details, visit www.stevenreece.com.
MAY/JUNE 2014
continued from page 101 of it, so a manufacturer may find itself in a position where it has built a large part of its business around a license that then gets taken away. In short, the licensor is in the driver’s seat and the licensees pay for it. There are two exceptions to this rule: Lego, in the construction toy category, and Hasbro, in board games. Both have such a dominant position in their markets that they are in the driver’s seat and it is the licensors that come calling. As a result, these companies can pick and choose, and the terms under which they accept a license are much less onerous than what would otherwise be the case. With these two exceptions, toy licenses based either on TV or movie series may have whiskers on them, and there is little doubt that some toy companies are actively working on lessening their dependence on them. Mattel is a case in point. The toy manufacturer bought HIT Entertainment, a move that not only brought Thomas the Tank Engine, previously licensed by Mattel, into its portfolio, but also added a slew of characters such as Bob the Builder, Mike the Knight, and Sam the Fireman, which will allow future product developments without the need for in-bound licensing. Mattel also created the successful Monster High brand, followed by the Ever After High line extender, which again lessens its dependence on outside licenses. Mattel also bought Mega Bloks, which will allow it to roll all of its own brands into the rapidly growing construction toy category. With American Girl, Mattel went one step further—it not only created the brand, but built its own stores in which to sell the products. Some companies, such as Melissa & Doug and MGA Entertainment, do not enter into any licensing relationships at all. In essence, while licenses have a place in toy marketing and will not go away, they may often be a Trojan Horse gift to be treated with great care and circumspection. ■
Lutz Muller has been active in the global toy and video game market since 1984. He has lived and worked in Europe, Asia, Latin America, Australia, and the U.S. His insights are based on his daily contacts with toy buyers at big-box stores in the U.S. and Europe, his proprietary retailer panel in the U.S., and his third-party manufacturing contacts in China.
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