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SEPTEMBER 15, 2010
TIMOTHY LUEHRMAN
HEIDE ABELLI
In mid-September of 2010, Emily Harris, vice president of New Heritage Doll Company’s production division, was weighing project proposals for the company’s upcoming capital budgeting meetings in October. Two proposals stood out based on their potential to strengthen the division’s innovative product lines and drive future growth. However, due to constraints on financial and managerial resources, Harris knew it was possible that the firm’s capital budgeting committee would decline to approve both projects. She also knew that New Heritage’s licensing and retail divisions would promote compelling projects of their own. Consequently, Harris had to be prepared to recommend one
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But the popularity of most doll lines waned after a few years.
New Heritage Dolls
By 2009, New Heritage had grown to 450 employees and generated approximately $245 million of revenue1 and $27 million of operating profit from three divisions: production, retailing, and licensing.
The production division, discussed further below, designed and produced dolls and doll accessories.
The retailing division offered a unique “intergenerational experience” for grandmothers, mothers, and daughters, centered upon the character histories and storylines of the company’s dolls and delivered through an online website (42%), a mail-order paper catalog (33%), and a network of retail stores (25%). In fiscal 2009, the retailing division generated roughly $190 million of revenue and $4.8 million of operating profit. The licensing division was started in 1998, and represented the company’s newest and most profitable division. It sought to extend the New Heritage brand and capitalize on high levels of customer loyalty by selectively licensing the company’s doll characters and themes to a variety of media that reached the firm’s target demographic of toddler to pre-teen girls. In fiscal year 2009 the licensing division generated $24.5 million of revenue and $14.5 million in operating profit.
New Heritage’s Production Division
Production
Emily Harris is the Vice president of New Heritage Doll Company’s production division. In mid-September of 2010 she was trying to decide on project proposals for the company’s capital budget meeting in October. Of the proposals presented to her, two of them stood out based on their innovation and ability to strengthen the division’s product lines. The first project, Match My Doll Clothing Line Expansion (MMDC), would extend the warm weather products to an all-weather clothing line. The second project, Design your Own Doll (DYOD), would start with a website where customers would choose the doll’s features, color, etc. and then the dolls will be made to order. The
Their strategy was about customer service rather than profit or revenue. The growth was built on creating new products for the existing target market.
Children’s child play has become a form of an unrealistic world. Although, it is considered for children to begin creating a creative imagination, the mind fascinates children into toys. Some child’s play toys are not ideal for young children, like the one and only “Barbie”. Barbie has become a worldwide toy product for children all over the world, from the North Pole to the South Pole. These dolls have emerged from one ethnicity to another. In Ann DuCille, “Dyes and Dolls: Multicultural Barbie and the Merchandising of Differences” the author talks about the race and gender differences; found in Barbie. She argues; “Is Barbie bad?” her response, was “Barbie is just a piece of plastic” (459). In contrast, this piece of plastic is not just a piece of plastic to young girls; it is much more than that. A piece of plastic that little girls all over the world wish they could be. Even though, it is only a piece of plastic to adults that Barbie significantly means nothing to them. Growing up, I owned a couple of Barbie dolls. The tall, long blond hair, blue-eyed doll was my best friend and my “role model”. I wanted to become exactly like Barbie. As a child, I thought only beautiful people who looked liked Barbie signified beauty. To my little to no knowledge, I soon came to find out no one really looks like Barbie, except people who want to become like Barbie. In my adolescent years, no one taught me Barbie was “unreal”; no one taught me it was just a figure in my imagination.
In 2009, lululemon’s net income generated about 58.3 million dollars. Their earnings have topped the
According to Professor McNamara, children’s television was the “niche television” in that it was the first genre a network branded itself around (McNamara). The first experimentation with branding began in cable television with Nickelodeon. Sarah Banet-Weiser, author of “The Nickelodeon Brand: Buying and Selling the Audience,” states that Nickelodeon successfully branded itself as the network of “kids’ empowerment,” which was crucial to building a loyal audience of children (Banet-Weiser, 235). The channel’s consistent branding was valuable to its success because it allowed Nickelodeon to produce unique content for an audience that had not been recognized, and it allowed advertisers who targeted children to have a more direct reach to their targeted demographic. Since the emergence of Nickelodeon, branding has become prevalent in cable, broadcast and streaming television as a method to develop core audiences, redefine programming strategies, and attract niche sponsors. As Banet-Weiser writes, “Combined with the continued reach of the cable industry into more and more niche channels...the brand identity of channels...have achieved a new economic significance” (Banet-Weiser, 235). The significance of brand identity makes it crucial for networks to establish clear and cohesive
Many toy companies have now made their dolls diverse because of all of the races in America. They have not just changed people with different skin tones or facial hair but also have changed the amount of genders. This is very important because many religions or people don’t look or want the original blonde barbie. Now people want stuff that will make other people and children feel special about themselves.
each channel and the deliveries to each channel. You find that the retail channel accounts for 70%
to be the same as the division’s existing business. However, to enter the clothing industry could be a
With constraints on financial and managerial resources, Emily Harris, vice president of New Heritage Doll Company’s production division, has a strong inclination that the capital budget committee will decline to approve both projects.
However, the number of items was limited. The proposed expansion would create an “All Seasons Collection” of apparel and gear covering all four season of the year. It would expand the number of matching doll and girl clothing items available
New Heritage's dolls and accessories were offered under distinct brands with different price points, targeting girls between the ages of 3 and 12 years. The company's baby dolls were generally priced from $15-$30, and were offered to younger girls in earlier stages of development. These dolls typically came with a "birth certificate" and a short personal history. Dolls in the higher-end of this category incorporated technology that produced a limited amount of speech and motion. For the
The new entity could leverage the core competency and brand recognition in respective market segment.
In Macau the company’s revenue increased from $392.2 million in the fourth quarter of 2008 to $508.4 million in the fourth quarter of 2009.
* We are not looking at which projects may have a positive impact on the company’s other business units. Perhaps one project stimulates the retail of licensing business more than the other.
each channel and the deliveries to each channel. You find that the retail channel accounts for 70%