Question

The Phelps Toy Company was considering the advisability of adding a new product to its line. Ike Barnes was in charge of new product development. Since the founding of the company in 1995, he had seen sales grow from $150,000 a year to almost $40 million in 2015. Although the firm had initially started out manufacturing toy trucks, it had diversified into such items as puzzles, stuffed animals, wall posters, miniature trains, and board games. In 2009, it developed the third most popular board game for the year, based on a popular television quiz show, but the show was canceled two years later. Nevertheless, the firm learned its lesson well and continued to produce board games related not only to quiz shows but to situation comedies and even a popular detective series. However, by January of 2016, the need to generate new products was becoming evident. As can be seen in Figure 1, sales and net income were beginning to level off after the previously cited phenomenal growth. After doing a market analysis of possible products, Mr. Barnes decided that the baseball card market was a good area for potential new sales. Baseball cards were a popular product not only among youngsters but also among adults who were trying to recapture the experience of their youth. A market survey by Ike Barnes indicated that the Topps Chewing Gum Company was the largest competitor in the industry. The company actually had a public distribution of its common stock in 2001. Other major sellers in 2016 were Upper Deck, Fleer, Leaf, and Donruss. All produce millions of baseball cards on an annual basis. The cards can be purchased in packs of 15–20 cards for $3.00–$8.00 at drug or convenience stores* or in boxes of 700-800 cards for $40 and up. These larger quantities of cards were usually purchased from sport card specialty stores or at baseball card conventions (over 1,000 such conventions throughout the country took place a year) In doing his analysis, Mr. Barnes discovered that the appeal of baseball cards was not only in opening a wrapper and finding a favorite player enclosed but also that any baseball cards initially purchased for pennies had gained substantially in value. Once a player achieved star status, his rookie card (first issued) might greatly increase in worth.

Answer 1

Phelps Toy Company is considering a venture into the baseball card market to sustain growth, facing competition and the challenge of product differentiation. This move reflects broader trends in consumer marketing and collective identity formation through sports and collectibles.

Step-by-step explanation:

The Phelps Toy Company, under the guidance of Ike Barnes, is exploring the potential of entering the baseball card market, an area that they have identified to have considerable promise for new sales. This move comes as growth and net income have plateaued, indicating that new product development is crucial for maintaining the company's upward trajectory. Baseball cards represent a staple of American culture and collectible items that not only provide nostalgic value for adults but also hold a significant investment potential as they appreciate in value, especially for cards of players who rise to stardom.

With competitors like the Topps Chewing Gum Company and other major sellers such as Upper Deck, Fleer, Leaf, and Donruss, Phelps Toy Company is contemplating tapping into a market that has had a perennial charm and economic viability. Reflecting on the broader context of national consumer markets and marketing strategies from mail-order retail to national branding, entering the baseball card industry could leverage the historical phenomenon where national sports and collectibles created unifying identities and fueled consumer demand.

Additionally, the trends in monopolistic competition within industries such as golf ball manufacturing hint at the opportunities and challenges Phelps Toy Company would face in differentiating their product in a market with significant incumbents. However, with the proper marketing and leveraging of consumer nostalgia, Phelps Toy Company could effectively position a new line of baseball cards to continue their historical growth.