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#1 Guest_General Veers_*

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Posted 22 September 2009 - 12:40 PM

I am working on a write-up about the poster offer on the 28-pack. One of the things that surprised me was Mattel's disclaimer of:

Limit one poster per household or organization.

Without re-writing the entire article I assumed Mattel set the limit to help ensure profitability. So here's my question, what is the easiest way to show this rationale in a math formula?

My simple example feels like it is turning into a SAT story problem.

This seems to be a very strange restriction for a non-contest promotion. Many similar promotions of the day (i.e., mail-away figures) did not have this same restriction. This decision was likely a cost cutting decision. Mattel had likely allotted a certain budget for the promotion. By placing a limit on the number of posters a household could receive, this helped to control the number of poster sent out.

Mattel may have had a complex equation that included all of the fixed and variable costs regarding the promotion. The scenario below is only meant to be a simple example of what Mattel may have been considering with limiting the poster to one per household.

A standard retailer box of 4-packs contained 72 4-packs. Considering that the individual 4-packs sold for approximately $1 each, the wholesale cost for each 4-pack may have been $0.50 to $0.60 (assuming a 40% to 50% markup). Based on these assumptions a case of 4-packs likely cost a retailer approximately $42.

Mattel was willing to mail a poster if 2 4-packs had been purchased. While Mattel would have already earned their money from the wholesaler, the logic suggests that the $1.20 had allowed for enough net income to send out the promotion poster.

$1.20 (wholesale cost + fixed and variable expenses) - $0.50 per poster (promotional costs [printing, shipping, etc.]) = $0.70 Total Net

I feel like the idea makes sense, but does it?

I'm not suggesting the numbers are perfect, rather close enough to make the example work.
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#2 Guest_General Veers_*

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Posted 23 September 2009 - 11:06 AM

Nothing? URS? Soupie? Guys? :lol:
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#3 Universal Ruler Supreme

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Posted 23 September 2009 - 12:56 PM

I'm really not sure what your driving at, but my first impression is that your looking at the information the wrong way.

Firstly, you have to remember that Mattel knew how many figures there were, however the casual buyer didn't really concern themselves with it if they were buying a few packs for their kids. Mattel had a tactic in place with the poster. If they sold a couple of packs to a kid, the kid would see the poster offer, and get their parents to send away for it. Now the kid has a poster that shows him all the different figures! The kid is more than likely going to try to get his folks to buy more packs, however probably never attempt to order another poster. The more packs sold ensures the wholesaler will order more cases. Toy companies make money off of toys by the case not the unit.

Also how many kids who bought muscles actually ordered a poster? I know I didn't. The Limit one per Household shtick was probably nothing more than a money saving attempt. The posters were essentially free when you sent in the UPCs, order form, and purchase receipt. If they didn't stipulate the one per household, then you could essentially have free reign with the offer. If you bought 10 4 packs you could have ordered 5 posters at one time. Not cost effective for Mattel, and they would only send you 1 poster despite how many forms or upcs you sent all at once. However I can guarantee you that they didn't keep track of who ordered a poster. So you could probably order 1 poster at a time, and still get 5 posters or more. They don't care about the offer as much as they make the paragraph believe. They already made an initial profit after selling the cases, if they made $42 bucks a case, how much did it cost them to have the figures made and shipped to their warehouse? $20 bucks if not less, more than likely per case. Essentially about a nickel per figure

Another point. They had the offer in mind before distribution, thus I can most assuredly say that Mattel covered the cost of the posters in the wholesale prices of the muscle figures. It was a foreseeable expense, just like the commercials, and they needed to estimate the value of that expense into the product price.

Of course this is all no more than hypothesis, but it sounds feasible to me. In fact, there were a number of Mail-Away offers I recall as a kid, where my parents sent 2 order forms out at the same time, and received two different orders...though I can't recall the stipulations of the order form.

Really though, these orders go to the guy at the desk in the distribution office, he copies the addresses onto the packages and then fills the order, probably throwing away all the UPCs and receipts, and at the most only filing the actual order form. The order forms are all they need to estimate increased interest in a product. I bet they removed the offer only because people weren't ordering the things anymore, or wholesalers weren't buying as many cases. They probably had a local printer produce them in bulk quantities for pennies a piece. I'd be willing to bet that eventually somebody is gonna find a case of Muscle Posters somewhere. :lol:

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Edited by Universal Ruler Supreme, 23 September 2009 - 01:00 PM.

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#4 Strontium Dog

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Posted 23 September 2009 - 01:12 PM

With offers like these, firms have a certain formula based on the percentage of likely respondents; I guess Mattel would be no different. So newspapers are able to offer those "Get a three course meal for $1!" deals or similar; if every reader takes up the offer, it's going to cost them big, but from past experience they know only a small percentage will take advantage.

Usually they forecast demand correctly, but when they misjudge demand, they really get it wrong.

Edited by Strontium Dog, 23 September 2009 - 01:13 PM.

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#5 Guest_General Veers_*

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Posted 23 September 2009 - 01:14 PM

Hmmm, I'm going to disagree on some stuff.

Firstly, you have to remember that Mattel knew how many figures there were, however the casual buyer didn't really concern themselves with it if they were buying a few packs for their kids. Mattel had a tactic in place with the poster. If they sold a couple of packs to a kid, the kid would see the poster offer, and get their parents to send away for it. Now the kid has a poster that shows him all the different figures! The kid is more than likely going to try to get his folks to buy more packs, however probably never attempt to order another poster. The more packs sold ensures the wholesaler will order more cases. Toy companies make money off of toys by the case not the unit.

I agree. The poster increased the "collectibility." However the limit on posters was still likely driven as a way to control costs. Mattel did not have the poster offers on the first MUSCLE packages. The poster offer was added later. I'm not suggesting a kid could throw off the profitability of the figures, but rather could cost the promotion to run over budget. If Mattel had put aside $1000 for printing and shipping and each poster (with mailing and everything) cost $1, then Mattel would rather 1000 kids get the poster instead of 500 because each house ordered two posters. Does that make sense?

Also how many kids who bought muscles actually ordered a poster? I know I didn't. The Limit one per Household shtick was probably nothing more than a money saving attempt. The posters were essentially free when you sent in the UPCs, order form, and purchase receipt. If they didn't stipulate the one per household, then you could essentially have free reign with the offer. If you bought 10 4 packs you could have ordered 5 posters at one time. Not cost effective for Mattel, and they would only send you 1 poster despite how many forms or upcs you sent all at once. However I can guarantee you that they didn't keep track of who ordered a poster. So you could probably order 1 poster at a time, and still get 5 posters or more. They don't care about the offer as much as they make the paragraph believe. They already made an initial profit after selling the cases, if they made $42 bucks a case, how much did it cost them to have the figures made and shipped to their warehouse? $20 bucks if not less, more than likely per case. Essentially about a nickel per figure

I would agree, I doubt they were keeping track. I think the limit simply suggests that Mattel was looking to maximize the potential of the promotion because limited funding was provided. That restriction just doesn't match similar offers of the day.

Another point. They had the offer in mind before distribution, thus I can most assuredly say that Mattel covered the cost of the posters in the wholesale prices of the muscle figures. It was a foreseeable expense, just like the commercials, and they needed to estimate the value of that expense into the product price.

As I understand it, advertising (print, TV, etc.) is always factored into fixed or variable costs. However a promotion ("Buy this and get that!") are often funded separately, which is why many companies don't like to do them.

Of course this is all no more than hypothesis, but it sounds feasible to me. In fact, there were a number of Mail-Away offers I recall as a kid, where my parents sent 2 order forms out at the same time, and received two different orders...though I can't recall the stipulations of the order form.

I agree, as I said before. I think this offer is the outlier.

Really though, these orders go to the guy at the desk in the distribution office, he copies the addresses onto the packages and then fills the order, probably throwing away all the UPCs and receipts, and at the most only filing the actual order form. The oder forms are all they need to estimate increased interest in a product. I bet they removed the offer only because people weren't ordering the things anymore, or wholesalers weren't buying as many cases. They probably had a local printer produce them in bulk quantities for pennies a piece. I'd be willing to bet that eventually somebody is gonna find a case of Muscle Posters somewhere. :notme:

Hmm, it seems like someone should dig into that and post some information about that. Where would be a good place? :lol:
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#6 Guest_General Veers_*

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Posted 23 September 2009 - 01:19 PM

With offers like these, firms have a certain formula based on the percentage of likely respondents; I guess Mattel would be no different. So newspapers are able to offer those "Get a three course meal for $1!" deals or similar; if every reader takes up the offer, it's going to cost them big, but from past experience they know only a small percentage will take advantage.

Usually they forecast demand correctly, but when they misjudge demand, they really get it wrong.

From everything I've been told by toy industry and Mattel employees, the toy industry was not collectible savvy in the mid-80's. Toys like MUSCLE were really where the ideas started to take shape.

I think Mattel had very little idea what to expect, which is likely another reason they wanted a limit. They had X-amount set aside (whether it is money or posters) and they didn't want to get caught totally off guard.
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#7 Universal Ruler Supreme

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Posted 23 September 2009 - 03:45 PM

If Mattel had put aside $1000 for printing and shipping and each poster (with mailing and everything) cost $1, then Mattel would rather 1000 kids get the poster instead of 500 because each house ordered two posters. Does that make sense?


Yes, I think I understand what your saying here. I also thought that it would be best for their overall sales if 1000 different kids in 1000 different locations got a poster. I have to agree, this is very feasible to their possible thinking pattern. It also fits in with what you said about maximizing the potential of the promotion.

As I understand it, advertising (print, TV, etc.) is always factored into fixed or variable costs. However a promotion ("Buy this and get that!") are often funded separately, which is why many companies don't like to do them.


I honestly don't know how they would have gone about it myself, but I know if I had planned on introducing a promotion, I'd factor it in the final cost. However I had forgotten that the poster offer wasn't on the first shipment, so my point is sort of moot.

Edited by Universal Ruler Supreme, 23 September 2009 - 03:45 PM.

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