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Hispanic Market Weekly - November 16, 2006

Industry Snapshot: Toy Manufacturers
Gearing up for the holiday season, toy manufacturers zero in on the Hispanic consumer. While some have increased their ad spending, others have cut back.

Often described as child-centric, Hispanics have a higher birth rate than non-Hispanic whites. One in five children under 18 in the U.S. is Hispanic, according to Census figures. Growth in the population of Hispanic kids younger than nine is expected to outpace non-Hispanics by 23 percent by 2010.

With the holiday shopping season fast approaching, it makes senses that the $20 billion toy industry recognize the Hispanic economic clout, a growing demographic with a buying power of almost $800 billion a year.

But despite their economic power, Hispanics as a consumer group did not capture the attention of the toy industry until very recently, when toy companies began - albeit very modestly - vying to grab a piece of the Latino pie.

According to the Simmons Market Research Bureau, Latinos are 33 percent more likely than other ethnic groups to be toy customers. Yet, in 2005 toymakers invested $2,702,389.00, just over $1.5 million dollars more than the $1,176,444 they spent in 2004 on Hispanic-targeted advertising. The bulk of the investment came from a handful entering the market, while companies like RadioShack and The Maya Group, maker of the popular developmental toy brand Tiny Love, actually decreased their Hispanic ad budgets last year.

Six years ago, it was "Dora la Exploradora" who unleashed the wave of mass-market Hispanic-themed toys. In 2000, the Nick Jr. show about a young Latina heroine who lives inside a computer defeated Barney to become the top-rated show among 3- to 5-year-olds. Since 2002, Dora-themed toys and accessories have generated roughly $4 billion in sales.

Toy-manufacturers haven't felt the need to target Hispanics as a separate market, claiming many Hispanic children are bilingual and watch English-language television where they are exposed to advertising for new toys. Dana Bonkowski, media director of Tapestry, recently told Reed's Multichannel News, that Spanish-language kids programming does not deliver high viewership numbers. "The vast majority of media consumption by Hispanic kids is actually English-language media," said Bonkowski. "However, the ones we do connect with in Spanish-language media we do feel strongly will experience it in a positive way." Tapestry places ads for clients such as restaurant chain Chuck E. Cheese's and Kellogg Co. on Sorpresa!

But with Latino parents being the decision-makers when it comes to shopping for their kids, it makes business sense to target them in their language of choice, which for at least half would be en español.

Already hitting store shelves this year are more offerings based on the PBS series "Maya & Miguel," which showcases the adventures of the Santos twins, whose Mexican family lives in the U.S. Also in the lineup: A Spanish-speaking version of T.M.X. Elmo; a Hispanic, bilingual Little Mommy doll; Hola Amigo Care Bear, which speaks in English and Spanish; and Talking Chou Chou, a bilingual doll.

Trends And Success Stories. - Bilingual toys and games were all the rage over the holiday season in 2005, and it is expected that this trend will continue during this year's holidays. Toy manufacturers began changing the faces of their most popular toys, like the Latino Barbie and G.I. Joe, to appeal to the growing number of Hispanic children. Today there are also new characters being created specifically to appeal to Hispanic kids.

Baby Abuelita dolls, created by Miami-based Baby Abuelita Productions, have been singing success for this Hispanic-owned start-up. The Spanish-lullaby singing dolls' uniqueness - they resemble grandparents, complete with guayaberas, batas de casa and specs - impressed Wal-Mart, which put the dolls on the short-list of new products to be introduced at its stores.

After initial sales results at select Wal-Mart stores, Baby Abuelita in August signed a contract to make the dolls available in 335 stores nationwide. Additionally, the dolls are available in roughly 380 Toys R Us and Target locations. Executives anticipate that more than 50,000 dolls will be sold this year.

During Hispanic Heritage Month, Wal-Mart promoted the dolls, placing them on the highly coveted end-cap displays in selected stores across the country. Additionally, store greeters who welcomed shoppers with Baby Abuelita stickers and staff in the toy departments wore special Baby Abuelita buttons.

In the span of one year, Baby Abuelita's success has gone beyond the retail aisles. The independently owned business won second place in the Miami Herald Business Plan Challenge and has been featured at the New York Licensing Fair, Cuba Nostalgia in Miami and the Edward James Olmos Latino Book and Family Festival in Houston. According to company executives, Baby Abuelita's rapid growth and acceptance by both Hispanic and non-Latino consumers, is a result of the company's interest for preserving Hispanic traditions among young children and a shared vision for creating a product that promotes appreciation and love for the Latino culture.

The company introduced the Baby Abuelita in May of 2005 and by the end of the year sold more than 10,000 dolls. This year, co-founder Carol Fenster says, the company anticipates tripling their sales. In addition to Abuelita Rosa and Abuelito Pancho, which retail for $24.99, the company recently launched a granddaughter doll called Baby Andrea. She too sings lullabies in Spanish. Other products are in the works, including the book "Sing Along with Abuelita Rosa," due out by Christmas time.

Baby Abuelita currently does not advertise its products in either Spanish or English. "We are not advertising yet because we are a new company, and we don't have the budget to spend on advertising," says Tim Dugan Birrittella, Baby Abuelita's senior vice president of marketing. "We decided on a different strategy - to go directly to our consumers and do more of a grassroots campaign."

The company is also looking to launch its own television program targeting Hispanic kids. "We are in discussions with a few major players in the television industry for children," says Dugan Birrittella.

While in the beginning Baby Abuelita was more of a "nostalgia item", with parents and grandparents most driven to purchase the product to pass the culture and traditions on to their kids and grandkids, today, Dugan Birrittella says, as children have become more aware of the product, they have become their main consumer. He adds that in studying the market, the company found that Hispanic kids spoke mostly English, perhaps the reason why parents and grandparents want to buy their dolls - in order to preserve their culture and language.

Who's In? - Some toy manufacturers are tailoring their multicultural marketing outreach to better appeal to Hispanic consumers. Leading companies are hiring Latino executives to oversee some of these strategies. Others, newer in the Hispanic market, are following trends, creating and marketing ethnic version of their most popular characters.

  • In 2003, Mattel Inc.'s Fisher Price hired Brenda Andolina as director of public relations and brand marketing and she was asked to develop a campaign to pitch the company's early childhood toys to Hispanics. Ads for Fisher-Price targeted parents with its tag line "Juegue con ellos. Ríe con ellos. Crece con ellos," debuted on television, radio and billboards. The company also targeted Hispanics through several festival promotions. In 2005, Mattel increased it Latino advertising budget to $ 764,762. Most of the increase went to network and cable television, according to Nielsen Monitor-Plus. Last month, Fisher-Price unveiled its T.M.X. Elmo toy - a revamped version of the wildly successful Tickle Me Elmo which also comes in a Spanish-speaking version. The T.M.X Elmo is a ramped-up version of the wildly successful Tickle Me Elmo that debuted 10 years ago.
  • Poof Products - now called Poof-Slinky -- was one of the few toy companies that in 2005 targeted Hispanic consumers for the first time. According to Nielsen Monitor-Plus, the company allocated $6,343.00 to Hispanic advertisements in 2005, all of which went to spot radio category.
  • DIC Entertainment, licensor for brands such as Strawberry Shortcake, targeted the Hispanic market by introducing ethnic characters and will focus on event marketing - primarily festivals - to connect with its target consumer.
  • Last month American Greetings Corp. introduced the Amigo Bear, a bilingual teddy bear, hitting major retailers nationwide in time for Christmas. The Amigo Bear, which retails between $15 to $20, will also be cast in a Care Bears movie scheduled for release next year by Fox Entertainment.

Who's Out. - Radio Shack, which last year spent more than $500,000 dollars in Latino-targeted advertising, reduced it budget to $3,000 in 2005 - all of which was invested in spot radio.

Another drop - though not as dramatic - was seen by Maya Group, maker of developmental toys Tiny Toys. According to Nielsen Monitor-Plus, the company scaled back on its Hispanic ad investments, from $119,000 in 2004 to $87,000 in 2005, all if which was allocated to Spanish-language magazines.

New Players. - This year, Brand Marketing & Distribution was established to provide a channel for Spanish educational and cultural items to reach high-density Hispanic communities nationwide. The Miami-based company is led by toy industry sales veteran Ted Barbur and operates as a turnkey distribution point of service for manufacturers.

Brand Marketing and Distribution has initially selected four categories of products for distribution:

  • Electronic Learning Aids - with bilingual Spanish/English modes
  • Puzzles - bilingual educational puzzles divided by age groups
  • Dolls - Spanish dolls that maintain and identify the Hispanic culture
  • Books - traditional storybooks in English and Spanish

According to executives, they'll be catering to 6.6 million Hispanics between the ages of three and 10 - 3.2 million girls and 3.4 million boys - most of which will become bilingual.

In July, VTech Electronics North America, a pioneer of electronic learning toys, broadened its offerings to include Spanish-language versions of 12 of its most popular Smartridge educational video games. The products use entertaining, non-violent game play to teach children ages 3 to 8 language, math, vocabulary and problem-solving skills. The new Smartridges are llinois-based V-Tech's first educational games targeting the U.S. Spanish-speaking population.

What Are They Investing? - Despite the potential, toy makers have been slow to recognize the importance of the Hispanic market. Together, the six largest toy manufacturers that advertise to Hispanics in the U.S. spent $1.798 million in marketing their products in 2005, an increase of just $1.5 million over 2004, according to Nielsen Monitor-Plus.

Here's a look at what each one invested on print, network and cable television and spot radio:

Parent Company: 2006: 2005: 2005:
HESS CORP $0 $1,798,625 $0
MATTEL INC $1,406,318 $764,762 $520,000
MAYA GROUP INC $0 $87,325 $119,025
MTH ELECTRIC TRAINS INC $0 $41,892 $0
POOF PRODUCTS INC $0 $6,343 $0
RADIOSHACK CORP $0 $3,442 $528,839


Total: $1,406,318 $2,702,389 $1,167,864
Source and Copyright 2006: Nielsen Monitor-Plus

Who's Got What? - Just a handful of the leading toy manufacturers have tapped Hispanic advertising agencies to reach Latino consumers.

  • Fisher-Price -- Market Vision (San Antonio)
  • Leapfrog -- Dieste Harmel & Partners (Dallas)
  • Toys 'R Us -- Bravo Group (New York)
  • Baby Abuelita Productions -- Conexión PR (Miami)


 
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