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Step2 Portfolio Plan
Kristy Scovel
ID521 - Introduction to Portfolio Planning
Matt Mayfield
Fall 2006
Durable, American-made products for children and your home
The Step2 Company, LLC is a multinational The Step2 Company is privately held and
manufacturer and marketer of high quality began operations in 1991 with five employees
products for children and for the home and and now has approximately more than 1,000
garden. Step2 products are sold by selected full-time employees. In 2006, Step2 was
retailers throughout the United States, Canada, acquired by Liberty Partners, a private equity
and more than 70 foreign countries. firm in New York, NY.
Background Awards: Oppenheim Toy Tips, CBS Toy Test,
Thomas G. Murdough, Jr., founder and former Parents, Child, Sesame Street, Today Parent.
president of The Little Tikes Company (1969-
1989) launched Step2 in 1991. He built Step2 Product Focus
on a basic philosophy of quality, value and Step2 focuses mainly on manufacturing
service backed by a commitment to customer sturdy, colorful toys and furniture for
satisfaction. Going “A Step Beyond” in the http://www.step2.com/about/?stp2ssid=55B73043-
preschool age children. They encourage 1143-E489-2DD92FCF7F3618DE
development and manufacturing of innovative creativity, physical activity and socialization. http://www.peachcounty.net/step2.cfm
products for the family and home is the http://www.hoovers.com
company’s mission. http://www.shareholder.com/mattel/downloads/2005_
Position Annual.pdf
Most Step2 products are made using rotational Step2 is a follower in the toys and games
molding, a process that Tom Murdough industry ($67mil annual sales), dwarfed by
pioneered for use in the consumer products industry giants like Mattel ($5,179mil annual
market. Step2 is one of the largest rotational sales) and direct competitors such as Little
molding companies in the world. Tikes ($300mil annual sales). The recently
established toy and furniture manufacturer
The Step2 Company has strategic global has leveraged its size to present a more
placement of its facilities to better service the personal face to consumers through its
growing customer demand for Step2 products. web presence, providing half of a friendly
Currently, four Step2 plants exist within the dialogue and a quirky blogger named Andy.
United States. A licensing agreement between
Step2 and The Gunica Company, Korea
provides additional manufacturing capability
to supply customers throughout Asia. Step2
products are available at thousands of stores.
Step2: Company Information
Scovel | Fall 2006 | Portfolio Planning
children’s toys
creative play
Mailmaster Easel for Two Real Projects Art Master Activity Delux Canyon Road Train
Junior Mailbox $39.99 Workshop Desk and Track Table
$19.99 $59.99 $69.99 $99.99
Creative Art Center
with Chair
$69.99
riding toys Push Around
Scramble Peddle Coup
$59.99
Classy Cruiser Buggy Rumble Wagon Luxury Up and Down Cross Country Thunderbolt Music in
$29.99 $39.99 $59.99 Zip and Zoom Pedal Car Sports Coupe Roller Coaster Cargo Wagon Racer Motion
$59.99 $69.99 $99.99 $99.99 $139.99 Roller Coaster
Naturally Playful Wagon for Two Plus $179.99
Motorcycle Teeter Totter $59.99 Fire Engine
$24.99 $39.99 Choo Choo Pink Power
for Two Wagon Racer
Angel Fish Pedal Farm Tractor $69.99 $99.99 $139.99
Rocker $59.99
$39.99 Toddle Tune Coupe
$59.99
active play
Waterwheel Ladybug Fold and Frog Sandbox Crabbie Sandbox Naturally Playful Naturally Playful Naturally Playful Naturally Playful
Play Table Sandbox Store Slide $50-$60 $70-$80 Up & Away Big and Kangaroo Climber Summertime
$29.99 $34.99 $39.99 Sand Table Folding Slide $119.99 Play Center
$99.99 $80-$100 $130-$150
Naturally Playful Naturally Playful Naturally Playful
Sand Table Sand and Water Sandbox Naturally Playful
$49.99 Activity Center $79.99 Sprinkler Spa
$69.99 $100-$120
home accessories
storage
Spin and Store Boot Bench Outdoor Lifescapes Lifescapes Vertical
Video Table $49.99 Storage Bench Storage Building Storage Shed
$29.99 $119.99 $299.99 $299.99
Lifescapes Highboy
Storage Shed
$299.99
furniture
Rock and Fold LX Delux Video Center
$79.99 $129.99
garden accessories
Garden Kneeler Stone Hill
and Seat Tranquility Pond
$19.99 $149.99
Garden Hopper Stone Hill
$19.99 Rock Pond
$149.99
$1 $50 $100 $150+
Step2: Current Product Portfolio
Scovel | Fall 2006 | Portfolio Planning
Budget Alternate Experiences
Generic Facilitating Creativity
Category Outdoor Playscape
Form Similar Products
Princess 200 Piece
Frog Sandbox Castle Bouncer Bubble Mower Tub Tunes
Sandbox Art Case beach playground
Step2 Wal Mart Fischer-Price Water Xylophone
Disney Binney & Smith
Alex
Hidden
Treasure
Crabbie Sandbox Jump-O-Lene Extendable Eyewitness Kit:
Sandbox Basic Doodle Pro science museum farm
Little Tikes WalMart See-Saw Sharks
Step2 Fischer-Price
Feber Skullduggery
Nat. Playful 6 Sided Sbox Slalom with Kid Tough Star Stage
Sandbox One Step Disc Swing climbing tower Digital Camera outdoor sports
with Microphone media
Step2 Ahead Little Tikes Feber Fischer-Price Moose Mountain
Nat. Playful Cedar
Maverick Tracker IV Exo-Force
Sand Table Sandbox Super Soaker pet
Pogo Stick Metal Detector Supernova theme park
Step2 Childlife Hasbro
Toys ‘R Us Bounty Hunter Lego
Step2: Competitive Landscape - Ladybug Sandbox
Scovel | Fall 2006 | Portfolio Planning
Emerging Consumer
Segmentation
In recent years, there has been a
tremendous reaction from new
parents against the shortcomings
of a dual income family. Many
couples are opting to forego the
material benefits of having two
incomes so that one parent (either
father or mother) may remain in
the home during the early years in
their child’s development.
In tandem with this trend, their
is a rise parental involvement
regarding education. Often this
results in home schooling, an
undertaking which is shared by Parent of the Year Child Wrangler Commander in Chief
many adults within a community.
Demographic Demographic Demographic
These trends point to an over- Males and females, single Males and females, age 30-55, Males and females, age 4-10,
arching theme involving parents and couples, age 25- middle class member of families of all in-
acceptance and embracing of 35, lower to middle class come levels
responsibility and a sense of
empowerment and directional
purpose where children are Psychographic Psychographic Psychographic
concerned. Today’s parents are Adverse to technological Concerned with time tested Impulsive and highly emotional
more aware then ever that their solutions to child rearing. reliability, relies heavily on consumer, knows exactly what
Early adopters, they tend to word of mouth and consults they want, the moment they
children need every advantage rely on advertising and brand several personal sources prior see it on television or at their
they can provide them to succeed recognition to guide their to making a purchase. friend’s house.
and they are ready and excited to purchase.
help ensure their future success.
Behavioral Behavioral Behavioral
New parent, strongly invested Not the child’s primary care Clever and manipulative,
in the development of their giver, but has a sincere understands how to get mom
child. Grew up playing concern for the child’s well and dad to open the purse
outdoors, an experience they being. Often responsible for strings on a regular basis.
feel is important to share. entertaining multiple children. Mom and dad understand the
consequences of failing to
comply.
Step2: Customer Segmentation
Scovel | Fall 2006 | Portfolio Planning
Analysis of Findings
In reviewing the company mission, marketing strategy,
current product portfolio and competition, it seems
clear that it is important for Step2 to continue to focus
on increasing customer intimacy to increase brand
recognition. In addition, they should use their mission
statement to help focus and tailor their offerings. Although
their current portfolio sufficiently extends through the low,
mid and high pricing categories, it does so without any
apparent strategy and with a great amount of overlap.
Portfolio Objective
Currently, Step2’s product portfolio is crowded and
disjointed. Their overall strategy seems to involve the
creation of as many products as possible, using the
rotational molding process. Very little thought seems to
have been given to brand identity, which leaves consumers
wondering if they should look to Step2 to provide them
with children’s toys or lawn care organizers. Step2 should
slim down their offerings to help consumers gain a better
understanding of the company, fostering consumer
trust, intimacy and loyalty. To this end, Step 2 should
also look to extending customer services and developing
partnerships with well known children’s brands.
Generic Strategies
Step2 is currently a distant follower in the highly
competitive and crowded toy industry. In order to gain
market share, Step2 will need to build brand recognition
and customer loyalty by unifying and strengthening its
product story, offering services that increase customer
intimacy, reaching out to untapped markets and
incorporating technology into its offerings.
Step2: Objectives and Strategy
Scovel | Fall 2006 | Portfolio Planning
Strategy 1
Senior Scooter Strategic Focus Product Offerings: Divest product line
Partnerships of offerings that do not fit company mission
Head of the Class statement or brand identity
New Markets
Strategy 2
My Playground: Allow consumers to
customize the products and features of their
outdoor playscapes
Focus Product My Playground
Offerings Assembly Required
Rockin’ It!
Strategy 3
Strategic Partnerships: Partner with
Nickelodeon or the Cartoon Network to offer
products with current themes
Strategy 4
New Products
e
Assembly Required: A series of forts and
ag
treehouses that are designed to allow parents
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and their children to create together
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Strategy 5
an
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Senior Scooter: Allows grandparents to ride
along with child instead of pulling, extends
1 1 2 3 5 5 2 4 2 24 playtime and encourages interaction
2 4 3 3 1 2 3 3 4 22
3 Strategy 6
3 2 2 2 3 5 3 4 24
Head of the Class: A system of classroom
furniture and accessories catering to home
4 3 4 4 4 5 3 3 2 28 schoolers, can be customized to allow for
various educational needs
5 2 3 3 3 3 2 3 2 21
Strategy 7
6 2 4 3 5 5 3 4 3 29 Rockin’ It!: Durable introductory musical
strategies
instruments that interface with software
7 3 4 4 4 3 5 4 4 31 which aids composition and allows recording
Step2: Portfolio Options
Scovel | Fall 2006 | Portfolio Planning
Head of the Class
A system of durable classroom furniture for home school
environments, including tables, chairs, individual and
shared collaboration spaces, shelving units and creative
stations. Components can be purchased individually to
customize learning environments and appeal to all income
levels.
Rockin’ It!
Introductory musical instruments that interface with soft-
ware which aids composition and recording. Instruments
can be purchased individually, but are meant for collab-
orative play. These products will help to expand Step2’s
creative play line into a higher pricing category, which is
currently untapped and begin to incorporate technology
into their products.
Product Lines
home furnishings
existing
riding toys
active play
creative play
head of the class
new
rockin’ it!
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007 2008 2009
Step2: Recommendations
Scovel | Fall 2006 | Portfolio Planning
