Mega Brands America Inc. in Irvine is looking to pivot off of its art and stationery products to claim ground in the higher-margin toy market.
The company’s core RoseArt line has stiff competition on paper products, pencils, markers and crayons. A chief competitor is Easton, Pa.-based Crayola LLC, famed for the crayons it has sold for 109 years and now a subsidiary of Hallmark Cards Inc., which has $4.1 billion in annual revenue.
The market for stationary and arts products is “very competitive and presents a high-volume, low-margin scenario,” said Shantelle Taylor, marketing manager for Mega Brands, a subsidiary of Montreal-based Mega Brands Inc., which has about $370 million in annual sales.
“The only way we can build our brand is to come up with never-before-seen, innovative products,” Taylor said.
Enter Scraps and Goo Hu—two new toys that Mega Brands sees as a bridge between arts, crafts and toys.
Scraps is a line of 12 original, interchangeable plush-toy characters that kids create by looping and buttoning together multiple pieces and parts onto a core body. All Scraps parts can be mixed, matched and reattached, giving kids the option invent their own characters.
Goo Hu is a moldable, bouncy toy made from two silicone-based modeling compounds that remain gooey until they are combined. Then kids get a rubbery, bouncy, flexible matter to shape into various playthings. Various Goo Hu sets contain molds that let kids create cars, bugs, bouncy balls and pencil toppers in a variety of colors designed to appeal to both boys and girls.
Scraps and Goo Hu made their U.S. debut at national retailers, including Kmart, Target and Toys R Us, last month. Both sell for about $10. Typical RoseArt art products range from $1 to $20.
“We wanted RoseArt to be known as more than just a value player, so we hired some innovative product development specialists to come up with something new and different in the arts industry,” Taylor said. “We came up with the idea to mix and match and collect. Scraps is like our own version of [the collection-themed animal character] Beanie Babies.”
The Scraps characters were developed in-house, and a second line of characters is now under development. Mega Brands also works with inventors; Goo Hu’s silicone material came from an inventor submission.
“A lot of inventors find us; they go to shows, have been in the business for decades,” Taylor said. “I sometimes get calls from people that have a brilliant idea they want to pitch. Sometimes our vendors or engineers know what we’re looking for, and we build a concept around that and pitch it.”
Focus Groups
Mega Brands also relies heavily on research and trends once a product is developed.
“We bring in moms and kids for focus groups to test ideas, or we’ll do an online survey for moms,” Taylor said.
The company also subscribes to trend reports to gauge what will be popular in the future, and then runs the ideas past the focus groups. It works with retailers as well.
“Target does their own studies, and they give us insight as to what they think will be a huge hit, or tell us when they think something is a terrible idea,” Taylor said.
The company began pushing its all-new line of dry-erase learning books and flash-cards earlier this year through a licensing deal with Emeryville-based educational entertainment company LeapFrog Enterprises Inc. It launched these products under the LeapFrog name for the back-to-school season.
LeapFrog specializes in electronic-based learning toys that tend to be more expensive.
The licensing deal allows Mega Brands to use the LeapFrog name on its dry-erase products, which appeal to price-conscious moms with prices ranging from $5 to $12.
“LeapFrog gets in the office and craft aisles, and we get to tap into a new segment of LeapFrog buyers,” Taylor said.
Mega Brands has 65 employees in Orange County and about 350 throughout the U.S. at sales offices and distribution centers throughout the U.S., including a factory in Lewisburg, Tenn., that makes its line of pencils. It does the rest of its manufacturing in Canada and Asia.
Mega Brands created its U.S. subsidiary after acquiring RoseArt in New Jersey. It relocated the headquarters to Irvine in 2008.
