How to judge whether a toy is a short-term explosion or a long-term trend?

The most popular consumer product in the 2015 US shopping season is the suspension skateboard. This is reported by various news stories. Everyone wants to use this product as a holiday gift. However, after six months, the suspension skateboard was left unattended and the sales situation was also sluggish.

Sweeping robots such as iRobotRoomba often don't become hot items for shopping seasons or other festivals, at least not when they are on the market. However, these products have been selling stably for many years and have entered more and more families. In other words, the hoverboard is just a short-lived explosion, and the sweeping robot is a long-term trend. Understanding the difference between the two is critical to smart decisions in investment, mergers and acquisitions and project development.

Every year, some consumer products that don't know where to pop out are being popular, and are popular among traditional media and social media. The market is in short supply, retailers are almost always out of stock, and sales revenue is skyrocketing.

One or two years, or two or three years, even four years of lively. Then the heat disappeared without a trace. Sometimes even the producers have closed down. Or they can survive, but their sales revenue, profitability and market attention are not as good as before.

There are many examples of stone pets, peas, peas, akins, single-row skating, and paintballs. PokémonGo is one of them. Maybe you can find these products in 20 years, and the annual shipments are small and stable; or simply become an occasional sentiment.

But they are not a lasting business myth.

For each of these products, we can think of another very different kind of product - debut, stand firm, and then get more profits year after year. Lego, yoga and natural shampoos, some of which caused a sensation on the launch day, some unknown, but can effectively cultivate a market that continues to expand. Its income stream is predictable, and the future trend is also very impressive. The former category represents short-term hot spots, while the latter category represents long-term trends. The difference between the two is very important. But it is not easy to distinguish between these two types of products. The difficulty for investors or decision makers is how to see who might be short-lived in the product development phase. This is critical for a company's investment strategy and revenue forecasting.

Short-lived explosions and long-term trends

How to distinguish between short-lived explosions and long-term trends? The first step is to define it strictly.

Short-lived explosions are widely sought after in the short term, but such hotspots are not affirmation of product quality, and the duration is usually shorter. Its sales revenue has risen sharply in 2-4 years, and the price in the secondary market will usually soar, and once the "bubble" bursts, the price will fall rapidly.

The long-term trend is the general direction of market development or change. Long-term trends in sales revenues have shown steady growth – it indicates the path to the target market and generates high returns and steady growth in revenue.

There is nothing wrong with the short-term explosion itself. They can also generate significant revenue and return on investment. If this is the result of the expectations of companies and investors, then they are all happy. If this result is beyond their expectations, then there is a problem - thinking that it is a long-term trend, the result of investing in a short-lived explosion, and ultimately no preparation for the product sales plummeted.

In Table 1, we outline a systematic approach to reviewing your project and investment targets and identifying which ones may be short-lived. This method is divided into three major aspects, each of which consists of one or more factors.

This framework is not unconditionally universal. In different situations, the importance of each factor is not exactly equal. Some products may not work at all - they may have certain attributes of short-lived models, such as celebrity endorsements, but they form a long-term trend. It's best to take the elements in this framework as a series of questions to seriously consider. Specific considerations may vary from product to product - for beauty products, you may want to measure the role of celebrity endorsements in increasing product popularity; for toy products, you need to see if you will be on a second-hand trading site due to creative novelty. Can be resold several times the high price. You may need to jump out of a certain aspect and make a judgment from a global perspective.

Factors to consider include:

The product itself. The characteristics of the short-lived product are:

Limited use: Long-term trending products address a customer's needs (such as sportswear or "free hands" home cleaning robots). The purchase of short-lived explosions like pet stone and beanie is out of irrational reason - subjectively perceived product value, scarcity, or future turnover value, or possession is a symbol of identity.

Product adaptability is limited: long-term trend products can adapt to market needs and expectations. After the new form of sports has become popular, the styles of sportswear can also be updated accordingly. Can you adapt to pet stone?

Consumer segmentation. A warning sign was found in the consumer community.

For niche market products, and can not be followed to the broader mass market: short-lived models are often targeted at niche markets, but can trigger the popularity of the mass market in a short period of time, or can not afford the mass market Satisfied expectations. There is nothing wrong with the niche product itself - there will always be people who like to play paintball or laser qiang. But the huge sales that exceeded the niche market level at the beginning may indicate that this is the short-lived explosion of the future - an unsustainable bubble. Or the original expectations of the mass market are not realistic. The computing power provided by Google Glass can attract a handful of people who admire technology. The media and the market originally expected the product to become the darling of the public, but the result was a big surprise. The benefits offered by Google Glass are not of interest to others, let alone the high price of the product, and alternatives such as smartphones can satisfy similar customer needs.

Hype. After the listing, it is immediately possible to judge whether a product is a short-lived explosion from the market reaction. The main points of observation are:

Media and celebrity hype: media hype and celebrity endorsement can drive demand. The media's obsession with PokémonGo in the summer of 2016 is a good example - media reports have caused the number of users of the app to soar, but when consumers quickly lose interest, the number of daily actives has fallen sharply. Celebrities such as Madonna have also played a role in stimulating the user's heat for oxygen rejuvenation therapy, but the effect lasts for a short time. Demand fluctuations and sharp changes in prices: Hype can pull demand to an extreme level (and therefore affect prices). But neither the demand nor the pricing can see that the market has long-term interest. Both aspects are not sustainable.

Hone your cognitive skills

The verification of the framework is to see how it works in the real world. See how it helps us think and analyze real-world problems.

Let's look at a case - Doudou and Lego (see Table 2): the difference between the two is obvious. The sales of Beanie Baby were initially high, and then they dipped. This is a typical short-lived cycle: after the speculation, the secondary market price is so high that it leads to overproduction and then the bubble bursts. Adult collectors who have been the main consumers of the past have now left. Lego is a highly adaptable toy that can evoke imagination and be used in a variety of scenes.

Adaptability is also a hallmark of LEGO's corporate strategy - one of the key drivers of LEGO's growth is the Star Wars, Lord of the Rings, Harry Potter and Batman series that the company has partnered with copyright owners to make Lego profitable. . These projects not only broaden the reach of the product, but also bring sustainable growth to the company. They also create their own intellectual property rights for LEGO - the LEGO video game series and the popular Lego movie. The ability to absorb other IPs and continually innovate helps LEGO maintain a high level of growth and sustainability.

The original text is licensed from the article "FadorTrendWhySomeProductsAreaFlashinthePanandOthersaSuccessiveSuccess" by MariaSteingoltz and Robert Haslehurst on February 7, 2017 in Executive Insights, Vol. 19, No. 10. Ai Kaikai Consulting registered the copyright in 2017.

Maria Steingoltz is an executive director of Ai Kaikai's Chicago office. She is primarily responsible for the retail and consumer products business and has extensive experience in the food and beverage sector. She was named a newcomer to the consulting industry in 2014 by Consulting magazine. Robert Haslehurst is an executive director and partner of Ai Kai Kai Consulting's Boston office, which is responsible for the retail and consumer goods businesses.