Naturally Playful Sandbox by ChevarBryson


									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                                                   
                                                    preschool age children. They encourage             1143-E489-2DD92FCF7F3618DE
development and manufacturing of innovative         creativity, physical activity and socialization.
products for the family and home is the                                                      
company’s mission.                                                                           
                                                    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

riding toys                                         Push Around
                                                                                                              Scramble Peddle Coup
                 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
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

              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

                                                                                           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

                               $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

              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

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

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

                                                                                                                       Assembly Required: A series of forts and

                                                                                                                       treehouses that are designed to allow parents



                                                                                                                       and their children to create together

















                                                                                                                       Strategy 5










                                                                                                                       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

                                                                                                                       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

                                                                                   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

              riding toys
              active play
              creative play

                                     head of the class

                                                                rockin’ it!

                   Q1           Q2   Q3         Q4       Q1       Q2          Q3      Q4           Q1          Q2           Q3          Q4
                              2007                       2008                                      2009

Step2: Recommendations
Scovel | Fall 2006 | Portfolio Planning

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