The NPD Group ABOUT THE NPD GROUP, INC. 2 FUN FACTS
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1 FUN FACTS
2 The NPD Group ABOUT THE NPD GROUP, INC. Since 1967, The NPD Group has provided the most reliable and comprehensive sales and marketing information available for a wide range of industries. As the gold-standard for market information in each industry we track, NPD provides critical knowledge on what is selling in order to help our clients make more successful, fact-based decisions. Today, more than 1,300 manufacturers and retailers rely on NPD to help them better understand their customers, product categories, distribution channels, and competition in order to help guide their business and build their bottom line. 2004, The NPD Group, Inc. All Rights Reserved 2 FUN FACTS
3 NPD FUNWORLD ABOUT NPD FUNWORLD NPD Funworld is the premier source of market information for the toys, PC games and video games industries. We provide the reliable data you need to make fact-based decisions that will help your company grow. The NPD Group has been on the vanguard of toys and games tracking for more than 25 years. We have long been recognized as the leading source of information about who is buying, where and why they re buying these products, and what they re paying. That s why today s toys and games market leaders rely on NPD Funworld for all of their foundational market information. TOYS: A COMPREHENSIVE MARKET VIEW NPD Funworld s Track, Plan and Pitch offerings use NPD s online panel of 2.5 million consumers to track consumer purchasing in 14 major categories, ranging from action figures, building sets, learning & exploration toys, to dolls and plush toys, and much more. This information delivers a comprehensive view of the total retail landscape, including all channels and stores. FUN FACTS 3
4 INDUSTRY TRACKING: The traditional toy industry declined slightly in 2003: Sales dropped 3%, from $21.3B to $20.7B. Use NPD Funworld information to get a high-level view of the entire industry and a host of in-depth views on retailers, specific categories and target markets to determine what s happening in the market overall and relate it to your segment or niche. TRADITIONAL TOY INDUSTRY Dollar Sales (Billions) $21.3 $20.7-3% Annual 2002 Annual FUN FACTS
5 CATEGORY SUCCESS: Nine out of 11 supercategories exceeded $1 billion in revenue in In addition, five supercategories increased their revenues in relation to Use NPD Funworld data to track the momentum of your category as it compares to the rest of the toy industry. With the help of this information, you will discover the reasons behind a particular category s relative strength or weakness. Plus, you ll gain valuable insights about product categories you may be thinking of entering, so you can determine the best time to do so. TRADITIONAL TOY SUPERCATEGORIES Annual 2003 (Billions) Dolls Infant/Preschool Games/Puzzles Arts & Crafts Outdoor & Sports Toys Vehicles $2.8B $2.6B $2.4B $2.4B $2.4B $2.0B Plush $1.4B Action Figures & Accessories Building Sets $0.6B $1.2B Categories that grew vs Learning & Exploration $0.5B All Other Toys $2.5B FUN FACTS 5
6 THE LIFE CYCLE OF TOYS: Toys introduced in the past three years comprised over 55% of total dollar sales in 2003, while toys that came to market in 2002 accounted for the highest percentage of toy sales overall. Turn to NPD Funworld to learn more about the product lifecycle of toys and use this in-depth data to benchmark your products against industry averages. % OF DOLLAR SALES BY PRODUCT INTRODUCTION YEAR Annual 2003 BEFORE % 3% 9% 12% % 9% % 11% FUN FACTS
7 TRENDING MARKET CHANGES: The trend to revive "classic" franchises in various ways continued through 2003 and into The Hulk, leveraging the movie released in 2003, posted the biggest absolute dollar growth of all revived properties. No trend lasts forever, but NPD s monthly survey of consumers gives you a pulse on the latest market happenings, helping you to understand how change impacts your business. OLD BECOMES NEW: THE REVIVAL OF PREVIOUS HIT PROPERTIES Absolute Dollar Growth (Millions) Annual 2003 vs The Hulk Care Bears $136 $156 Disney Princess $81 Strawberry Shortcake Ninja Turtles My Little Pony Polly Pocket Transformers My Scene Barbie $60 $58 $56 $56 $50 $43 FUN FACTS 7
8 PRICING STRATEGY: How do product decisions affect price? As the below chart illustrates, media licensed products had the best success of withstanding price pressures in Use NPD Funworld to determine if your product strategy provides proper protection against price erosion. In addition, compare your prices to those of your competitors to make sure you are not priced out of the market or leaving dollars on the table. AVERAGE PRICE TRENDS Annual 2003 vs (Billions) $9.49 $9.03 $7.75 $7.52 $5.44 $5.03 Branded Media Licensed Not Branded or Media Licensed FUN FACTS
9 SHIFTING MARKET PLAYERS: Even with a strong year of sales, the Yu-Gi-Oh phenomenon did not spur significant growth in overall dollars spent on toys for boys in the 6- to 11-year-old age group. Because this target s market size was essentially the same versus year-ago, one brand's gain was another brand's loss. NPD Funworld helps you identify the winners and losers within a given toy category or targeted market segment and whether a market or segment is growing or declining arming you with the knowledge you need to make the most profitable business decisions. TOP SELLING PROPERTIES Male Recipients, Ages 6-11 Annual YU-GI-OH! BEYBLADE LEGO HOT WHEELS NIKKO FUN FACTS 9
10 TIMING THE SALE: With nearly two-thirds of all toy sales the result of a planned purchase, reaching customers outside of the store is the key to cementing their commitment to spend before they enter the store. NPD Funworld can help you understand the many why s behind the buys, giving you insight to support key product, promotion and distribution decisions. % OF DOLLAR SALES FROM PLANNED PURCHASES BY MAJOR RETAILER Annual 2003 Total Toy Industry 65% Wal-Mart 67% Toys R Us 73% Target 66% Kmart 62% KB Toys 59% All Other Retailers 62% 10 FUN FACTS
11 TARGET DEMOGRAPHICS: Grandparents continued to exercise their buying power in 2003 by spending over $3.3 billion on toys. Kmart did the best job of attracting this segment. Use NPD Funworld to learn the demographic profiles of your retail partners and fine-tune your promotion and product strategy to maximize your sales potential. % OF DOLLARS SPENT BY GRANDPARENTS AT MAJOR RETAILERS Annual % 16% 15% 17% 18% 13% 15% Total Toy Industry Wal-Mart Toys 'R Us Target Kmart KB Toys All Other Retailers FUN FACTS 11
12 PLANNING FOR SEASONAL SALES: For the first time in three years, the average retail price of a toy did not peak in November and decline in December. However, the average price was lower in Q versus the previous two years. The exception was late December when increased sales of high ticket gift items boosted the industry s average price per toy. Use NPD Funworld to gauge all aspects of your seasonal marketing strategy including pricing, distribution and promotional plans. AVERAGE RETAIL PRICE OF A TRADITIONAL TOY 4th Quarter $10.00 $9.00 $8.00 $7.00 $ October November December 12 FUN FACTS
13 BROAD AND DEEP CATEGORY COVERAGE NPD Funworld tracks consumer insights for the toy industry in these key market segments: - Action Figures & Accessories - Models & Accessories - Arts & Crafts - Plush - Building Sets - Pretend Play - Dolls - Ride-Ons - Games & Puzzles - Sport Toys - Infant/Preschool - Vehicles - Learning & Exploration - All Other Toys For more information about NPD Funworld, visit or send an to @npdfunworld.com
14 The NPD Group, Inc. 900 West Shore Road Port Washington, NY GROUP
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