Research Proposal on "Learning From Leapfrog Creating Educational and Business Value"

Research Proposal 4 pages (1501 words) Sources: 10 Style: APA

[EXCERPT] . . . .

Learning from LeapFrog: Creating educational and business value

Case summary

LeapFrog is a respected and beloved company that makes products that look like toys, but with an educational purpose. This is its core company identity, as it has suffered through many fads in both the toy industry and the educational industry since its birth as a major competitive market 'player' in the 1990s. However, it remains to be seen whether LeapFrog can balance its identity as a toy company focused on delighting young children with its identity as an educational company that satisfies the demands of parents and school administrators.

LeapFrog's first simple technological products reinforced children's phonetic awareness of small groups of sounds. This was designed to encourage children to become readers more quickly than they might on their own, using traditional 'whole language' methods (Bennett et al., 2009, p.140). LeapFrog's founder Michael Wood used focus groups to determine if parents would be willing to purchase his prospective products -- all of which had to reflect a fundamental learning need -- at the necessary price point required to produce a profit for his company. Then, Wood paired with educational professionals to refine Leapfrog's pedagogical approach. He was excited at the idea that a lifetime of research on how children learned to read would be on the shelves at Wal-Mart, at the $50 price point specified by the early focus groups.

To keep the new product line at a relatively low price point, China was selected as the site for manufacturing the 'Phonics Desk,' despite the air freight costs. This is typical of toy companies. The creation of toys is very labor-intensive. Most profitable toy companies are really marketing companies. They outsource their manufacturing to cut costs in the physical creation of their intellectual property. This can, however, leave toy companies vulnerable to delays and external market conditions (Bennett et al., 2009, p.147). It is also why supply chain management is particularly critical in the toy industry (Bennett et al., 2009, p.148).

Demand from parents, however, exceeded LeapFrog's ability to supply their product to retailers and consumers. During LeapFrog's second year, an already-established educational company, Knowledge Universe, acquired 87% of LeapFrog and gave it an important infusion of capital. LeapFrog's acquisition of Explore Technologies enabled it to introduce the platform model created by Explore, whereby parents would buy the core product, and then purchase separate programs to use on the unit. This made it easier to reinforce different educational concepts over the child's development, generated sustained consumer demand and interest, and also enable the machine to grow with the child (Bennett et al., 2009, p.143).

The 'razor and blades' purchasing model expanded LeapFrog's market share considerably and eventually schools began to take notice and show an interest in incorporating its approach into their classrooms (Bennett et al., 2009, p.144). LeapFrog's School House division offered LeapTrack, a system which would allow teachers, principals, and school administrators to keep track of student performance on standards-based materials (Bennett et al., 2009, p.152). LeapFrog stock eventually 'went public' and despite shaky economic times, the company was proclaimed recession-proof, given the importance parents gave to scholastic learning devices and toys in general. LeapFrog had fully capitalized upon all favorable trends in the educational industry and catapulted itself to stratospheric early success (Bennett et al., 2009, p.146).

While the seasonal nature and faddish nature of the toy industry has thwarted many companies in the past, it seemed as if all external market and regulatory forces in the field of education had conspired to favor LeapFrog. Although parents were having fewer children, they were more willing to spend money on technologically-related toys, to ensure that their children would be able to 'keep up' with their peers in school. LeapFrog was also a happy beneficiary of age compression, or the marketing of toys usually focused upon an older audience, such as computer software, to younger and younger children (Bennett et al., 2009, p.149). Internet retailing proved less successful than anticipated, but overall the cultural trends of the first decade of the 21st century seemed to bolster LeapFrog, from No Child Left Behind's obsession with standardized testing to a renewed focus on phonics over the more intuitive 'whole language' method as the best way to teach children to read (Bennett et al., 2009, p.150-151). LeapFrog was even able to capitalize upon the growing population of ESL students in America as schools used its technology to bring students up 'to standard' (Bennett et al., 2009, p.152).

Expanding the brand and expanding its retail channels, and carefully tailoring the product to parents' desires remained at the heart of the company's success. Leapfrog did test its products extensively, but R&D costs were not overwhelming, because it stayed true to its basic educational, technological, and marketing approach. It won many awards from educational organizations (Bennett et al., 2009, p.156). But the question remained if it could sustain its success, embracing two business models, that of an educational company and a toy company.

SWOT

Strengths

The continued emphasis on No Child Left Behind and standardized testing has made both parents and educators increasingly focused on children's mastery of basic skills at younger and younger ages. Parents who are within the market demographic of LeapFrog's core, middle-class audience are anxious that children learn such skills as soon as possible, and become comfortable with computers. Educators find LeapFrog's standard-based materials helpful in keeping track of student achievement. LeapFrog has created a trusted brand name, and has reasonable control over its supply chain and cost model, as research and development costs are not allowed to spiral out of control.

Weaknesses

LeapFrog's relatively concentrated corporate headquarters made space a premium for employees and could limit its ability to attract top talent. It has also had difficulty balancing the need for business growth while generating new creative products. Finally, there is a chance that the hyper-digitalization of the current environment, and the falling-out of favor of other technological educational products, such as Baby Einstein and its over-inflated claims, might cause consumers to go back to more traditional learning toys for young children.

Opportunities

The burgeoning ESL market might be one way for LeapFrog to create a new market for its products, both within schools and amongst parents. Amongst schools in particular, helping ESL children catch up with their peers, when there are few resources to give the students additional tutoring, could be one way for LeapFrog to become further integrated into the classroom. Expanding its materials geared to helping students meet state standards would give it a reliable, steady market base.

Threats

Other companies are capitalizing upon LeapFrog's success. Specifically, Mattel/Fisher Price's PowerTouch preschool educational device could eat into some of LeapFrog's market share.

TOWS

SO: Using a firm's internal strengths to take advantage of external opportunities (SWOT or TOWS analysis, 2010, Quick MBA).

LeapFrog's low research costs, trusted brand name, and popular phonics-based educational approach allows it to take advantage of external favorable conditions such as No Child Left Behind, the focus on making children more technologically literate at an earlier age, and the burgeoning ESL population of young children.

WO: Improving internal weaknesses by allowing LeapFrog to take advantage of external opportunities (SWOT or TOWS analysis, 2010, Quick MBA).

LeapFrog's divided company focus allows it to 'cover' itself using two markets. Even during a recession, it can still grow its direct-to-schools brands.

ST: Using the firm's strengths reduce the impact of external threats (SWOT or TOWS analysis, 2010, Quick MBA).

The threat of competition from Mattel can be mitigated by LeapFrog's core brand image as an educational rather than as a fun, disposable toy company.

WT: Using defensive tactics to reduce internal weaknesses and avoid external threats (SWOT or TOWS analysis, 2010, Quick MBA).

LeapFrog can strategically reposition its core devices as the 'real' educational products, versus… READ MORE

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