Wild Planet.

Before that, he was the founder and

Case 2. Green Toys, Inc.: a manufacturer of
managing director of Starter Fluid, a seed-stage
eco-friendly toys goes international
venture capital fund backed by institutional and
In 2006, Robert von Goeben, a venture capitalist corporate investors, including Compaq
and an electronic toy designer in San Francisco, computers and the University of Chicago. Von
contemplated shifting course again. Instead of Goeben’s career began in the entertainment
making more toys that required electricity and industry where he started and managed the online
intricate parts, he listened to his wife and created division of Geffen Records. He has an MBA from
a simpler line that would appeal to parents who the University of Southern California and a BA in
identified with the green movement. More and Mathematics from the State University of New
more parents are starting to look at toys like they York. He holds two US patents in the field of toys
look at food. A toy used to be a plastic thing and and games.
parents did not question what was in it. Now
• Laurie Hyman used to work as a marketing
green has gone mainstream, and parents want to
executive for several online consumer- marketing
know what is in their toys.
companies, including, most recently, Ingenio, a
In August 2006, Mattel Inc. recalled more than 10 pioneer in combining the power of the internet
million Chinese-made toys, including the popular and phone to connect buyers and sellers. Before
Barbie and Polly Pocket toys, because of lead- that, she was the first member of the marketing
paint hazards and tiny magnets that could be team at Webvan, where she managed
swallowed. The US government warned parents relationships with some of the world’s largest
to make sure that children would not play with consumer packaged goods companies, including
any of the recalled toys. P&G, Nestlé, Coca-Cola, Kraft, General Mills
As questions about toy safety made more and Pillsbury. Hyman also served as the director
of marketing at Goodcompany.com, one of the
headlines in 2007 with recall of more than 17
million Chinese-made toys, von Goeben internet’s first online social networks.
partnered with former marketing executive She has an MBA from the University of Southern
Laurie Hyman, a business acquaintance. Green California and a BA in Business from Indiana
Toys Inc. was profitable from its first year on. University.
Together Robert von Goeben and Laurie Hyman Green Toys Inc. today
founded Green Toys Inc. and started right away
Green Toys Inc. makes a line of classic children’s
with manufacturing of eco toys from recycled
toys constructed from recycled plastic and other
plastic milk jugs.
environmentally friendly materials. This helps
In November 2013 the private investment firm, reduce fossil fuel use and greenhouse gas
The Friend Group (represented by the emissions, improving the overall health of the
businessman Howard Friend), bought a majority planet. In 2018, the company had a turnover of
stake in Green Toys Inc. but Von Goeben and approximately US$8 million. The average
Hyman continued their duties. number of employees was 20.
The founders of Green Toys Inc. Unlike its half-dozen eco-friendly competitors
that manufacture or buy raw materials for their
The two co-founders of Green Toys – Robert von
Goeben (responsible for product) and Laurie toys overseas, Green Toys contracts only with
companies in California. Sourcing locally means
Hyman (responsible for marketing) – have
different backgrounds and competences: burning less fossil fuel and creating or
maintaining more US jobs. Green Toys can also
• Robert von Goeben was the founder of track the chemical content of toys better than its
Propellerhead Studios, a leading Silicon Valley counterparts.
design studio specializing in electronic toys and
games. At Propellerhead Studios, he worked with
many major toy companies, including Mattel and

1
 Green Toys’ customers and marketing strategy and developing markets. Regionally, Eastern
Europe has seen the largest decrease in the child
Green Toys’ key customer segment consists of
population, at an annual average rate of 2 per cent
parents between the ages of 25 and 40, and they
between 2000 and 2020, which is partly due to
are predominantly female. The largest part of
large-scale migration to Western Europe.
these mothers is well-educated and online. The
whole world of bloggers, especially parents who
are blogging and searching online about products
and trends for their children, is huge.
Green Toys’ products are about 30 per cent more
expensive than similar toys from major players.
Green Toys should be able to narrow that price
difference by at least two-thirds as the company
grows and it can utilize ‘economies of scale’,
though it is unclear how popular its market
segment will become. In 2018 eco-friendly toys However, many of the world’s developing
generated just US$60 million in sales, a fraction countries still have sizeable and rising child
of the US$25 billion for the US toy industry as a populations. The child population in some
whole. developed countries is also rising.
Green Toys’ products are sold in 3,000 US stores, The overall downturn in the child population
including Pottery Barn, Barnes & Noble, Whole globally has meant smaller household sizes and
Food and Buy Buy Baby. Some of the biggest greater consumer expenditure per child, which
Green Toys retailers are also selling online. has created more allowance for discretionary
Consequently, the majority of the Green Toys’ spending on non-essentials for children. This has
marketing budget is spent online. important implications for toys and games
companies targeting parents of 0–14-year-olds.
Green Toys’ internationalization strategy The number of 65+ year-olds rose so this group
Green Toys also has distributors in 25 countries, is forecast to account for 10 per cent of the global
but until now 90 per cent of Green Toys’ sales population.
have been from the US market. Until now Green In absolute terms, Asia-Pacific and the Middle
Toys has had no plans to move production out of East and Africa are the biggest regions in terms
the US. However, in the future it does not exclude of 0–14-year-olds, followed by Latin America.
the possibility of manufacturing abroad with local By contrast, in the ageing developed markets of
sourcing of materials. EU, USA, China and Japan, the birth rate is low,
The following report explains current and future at just 8–12 births per 1,000 inhabitants in 2018.
trends in the global toy industry. The global toy For a number of years, birth rates have been
industry In 2018 the size of the global toy market falling around the world, as women wait longer
was US$ 88 billion. before having children. Young adults can now
Development of Green Toys’ end-customers: afford interests and lifestyles that are not
the world’s children compatible with large families, not only in more
affluent countries, but also in a number of
The global child population has been declining
developing countries. They often choose to
due to falling family sizes and birth rates. As of
postpone childbirth, in favour of building a career
2010, 0–14-year-olds made up 26 per cent of the
or simply enjoying their freedom.
global population compared with 35 per cent in
1980 (see Table 1). This is expected to fall to 24 The oldest mothers at first childbirth in the world
per cent in 2020. are in Western Europe, specifically the UK,
Germany, Switzerland and the Netherlands. By
This trend reflects cultural and social changes
contrast, the average age of women at first
towards smaller family sizes in both developed
childbirth in the US is relatively low, at 26 years

2
in 2018. This is partly due to the importance of manufacturers to develop a plethora of toys for
the Hispanic population, which tends to have the pre-school age group.
larger families from an earlier age.
China is the most fragmented traditional toys and
Spending on Green Toys’ target end- games market in the world. Although overall unit
consumers: the world’s 0–3-year-olds prices recorded a decline in 2014, thanks to the
‘little emperors’, more expensive toys have been
The distribution of total spending on 0–3-year-
gaining ground. Almost all multinational players,
olds (baby care, infant clothing, baby food,
including Mattel, Namco Bandai, LEGO and
nappies/diapers and toys) is shown in Table 2.
Hasbro, enjoyed very high growth in their sales
in China.
In countries where the average number of
children per household is higher than one,
spending on traditional toys and games per child
does not exceed US$50 in a given year.
Overall, the older the average age of a woman at
childbirth, the higher the spend on traditional toys
and games per child. As modern mothers
continue to work, for various reasons, the limits
on parental time require products that can fill this
There are ‘two worlds’ of spending: the markets gap.
of Western Europe, North America and Japan
Single-parent households tend to be among the
where, despite low birth rates, spending is high, poorest, creating a need for cheaper products.
and the fast-growing markets of Asia-Pacific,
Low-priced, high-volume toys tend to find
Latin America and Middle East and Africa, where success in markets where single-parent
children are plentiful, and spending is much
households are more common.
lower. The top five countries (Germany, UK,
France, Japan and US) all recorded over Distribution of toys
US$1,500 per-capita spending on 0–3- year-olds. Supermarkets/hypermarkets have continued to
When fewer babies are born into a family, they expand their toy and game offerings and their
are often more cherished, with more money spent private label portfolios. However, sales of toys
on them by both parents and grandparents alike. and games through store-based retailers are being
One of the best examples of this is the so-called affected by the growing popularity of new
‘little emperor’ syndrome in China. Children in distribution channels, such as the internet
China tend to get spoiled with toys and clothing retailing and TV home shopping.
when they are young (according to Table 2, toys In North America, the strength of retail giants
for 0–3-year-olds represent 26 per cent of total Walmart and Target greatly contributed to the
spending for this age group). As they get older, large share held by mixed retailers in 2018. The
they are spoilt in different ways, including with increase in Walmart’s market share slowed in
mobile phones, education and leisure activities. 2018 as supermarkets, drug stores, hardware
That said, there are many, especially in rural retailers and online outlets expanded their
areas, who are not spoilt at all. Many parents in offerings of traditional toys and games.
Asia believe that pre-school toys can increase a
child’s intelligence and improve cognitive ability, Store-based retailers are increasingly backing up
benefiting the child at school later on. Most their brick-and-mortar sales efforts by offering
parents in cities pay much more attention to the online shopping. They have found that online
role of toys and games in supporting their sites help them to promote niche brands and gain
children’s education and stimulating their wider market exposure. Online sites also help
intellectual development, encouraging consumers compare prices and features of new
toys and games. In Japan, the rapid growth of

3
internet retailing has helped drive sales of the format has strengthened the competitive
newest video game releases. environment, encouraged a greater variety in
product offerings and lessened the impact of the
The convenience of home shopping appeals to a
seasonality on sales.
wide range of consumers, especially older
consumers.For distributors this channel is Generally, in Latin America specialist toy
growing in importance, as it helps build brand retailers remain the most important channel,
image. based on their offering a greater variety of
products. Also, they are easy to find as they are
Generally, there is an increasing share of grocery
located in a greater number of retail venues,
retailers in the toys and games sector in many
particularly shopping centres.
countries. Grocery retailing is slowly becoming
the most popular channel in the Western Competition in the toy industry
European retail sector.
The world’s top 10 toys and games companies
Italians still prefer making in-store product accounted for nearly half of the global total
purchases. The only significant development in value of sales from 2010 to 2015. Mattel, LEGO
the country’s distribution channels over the past and Namco Bandai held the top three positions.
ten years has been the rise of grocery retailers,
Summary and future trends
who have increasingly varied their non-grocery
offerings, including toys and games. In France, Infant and pre-school toys will remain recession-
the fastest-growing channel has been leisure and proof as parents continue to invest in their
personal goods retailers, with growth driven by children’s enjoyment and education.
the development of specialized toys and video Environmentally friendly, hazard-free features
games centres. will continue to be among the main selling points
The leading toy distribution channel in Germany of traditional toys and games.
is also leisure and personal goods retailers. Multinational companies will weather the storm
Though online shopping has increased in brought about by the global financial crisis.
Germany, most consumers still prefer to see and onsolidation is expected in the sector, with
feel the products they are buying. In addition, mergers and acquisitions of small and
consumers welcome the opportunity to get independent companies likely.
professional opinions and advice on product
quality and features from in-store staff. Sales via internet retailers are expected to grow
dramatically over the forecast period, particularly
In Russia specialist retailers are developing in light of the demise of small and independent
rapidly. The most popular places to buy toys and toys and games retailers.
games are retail chains, followed by shopping
centres. Specialist distribution channels are more Based on this case and the toy industry trends,
popular in the main cities of Russia where the answer the following questions.
population is generally, 1 million and more. In Questions
smaller cities, non-store distribution is still 1. What are the key success factors in the world
popular. toy industry?
In Latin America, hypermarkets and other 2. What are Green Toys’ key competitive
grocery retailers enjoyed increased toy sales, advantages in the international toy market?
especially during the end-of-the-year holidays 3. Should Green Toys Inc. consider a higher
and Children’s Day, when important advertising degree of international expansion of their
campaigns are conducted and discounts and products?
special deals are increasingly offered. 4. If yes, which countries/regions should they
target and how?
In Brazil, specialist stores control an important
part of the market due to the expansion of toy Source: based on www.greentoys.com and other
stores in large cities. The concentration of this public sources.