Fisher Price Case Analysis Essay

1427 Words Nov 10th, 2012 6 Pages
FISHER-PRICE CASE ANALYSIS

I. PROBLEM

The main problem facing Jack Asthalter, Fisher-Price’s marketing vice president is whether or not to move forward with the production of a new ATV Explorer toy. The extensive market research that Fisher-Price performed with children and their parents was very positive in favor of producing the ATV Explorer. Unfortunately, the production costs were going to exceed initial estimates of $12.00 retail and instead require a wholesale price of $9.20 per unit and retail price of $18.50. Typical Fisher-Price toys were under $5 retail and similar competitor products to the ATV Explorer were in the $12 retail range. Retailers and consumers may not support the higher priced product.

II.
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If the ATV Explorer does well in the market it may still be profitable, but if it fails Fisher-Price may not be able to recoup the costs.
 Management is concerned the decreased margins will send a message to production to relax its cost cutting efforts.
• Move forward and increase price o Pro –
 The increase of .50 cents or $1.00 in costs will create a greater profitability overall.
 The additional revenues would allow for an increased promotion budget.

o Con
 There are a few retail buyers that are not interested in the ATV Explorer based on the existing price, a higher price may lose even more esteem for the product.

V. RECOMMENDATION My recommendation to Jack Asthalter, Fisher-Price’s marketing vice president would be to move forward with producing the ATV Explorer with its existing options. The wholesale price should remain at $9.20 per unit and retail price of $18.50. The product should be promoted through television as a single product with the Fisher-Price brand. The ATV Explorer is a higher priced product and should enjoy the exclusivity and prestige that comes with a higher quality item. The ATV should be packaged and placed with the entire Fisher-Price line and still carry a catalog of other products. A second mold should be purchased to guarantee that there will be enough inventory to satisfy demand.

My recommendation is based on several factors; one is that the

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