Marketing
Supply and Demand Activity
Part I: Using your knowledge of the Law of Supply and the Law of Demand and the Hula Hoops Case Study, review the below news article and two video clips on the market for Silly Bandz.
Silly Bandz stretch into a trend as copycat rivals hop on board
By Bruce Horovitz, USA TODAY
TOLEDO, Ohio — For all the kids who live to have Silly Bandz dangling from their wrists — and for all the grown-ups befuddled by the rubber-band bracelets that have taken over pop culture — here's the news: It's only the beginning.
Silly Bandz and its gaggle of copycat rivals aren't taking a summer vacation.
Instead, they're spending the summer rolling out related products — such as Silly Necklaces that can hold gobs of the bands and Silly Bandz that change colors in the sun. That's even as Silly Bandz and competitors Logo Bandz, Crazy Bands and Zanybandz prepare for a back-to-school onslaught.
No one is more blown away by Silly Bandz mania than Robert Croak, 47, the Silly Bandz man and CEO of BCP Imports. He talked and hawked with USA TODAY in his first substantive interview about the serious business of Silly Bandz.
"My dream was to be a pro baseball player — or an inventor," says the quasi-punk-haired, bespectacled Croak, who thrives on acting zany — much like aCurious Georgewith business savvy.
He says his clearest memory of his childhood here is taking apart toasters to see how they work. Now, he's taking apart Toyland with a $4.95-a-24-pack fad some retail experts say will leave Beanie Babies and Webkinz in the kid-trend dust. Bandz and imitators are estimated to now be a $200 million-a-year business — with $1 billion a future possibility.
Silly Bandz are basically rubber bands that hold shapes such as a cat, fairy princess or — coming soon — SpongeBob. Annual sales of the Silly Bandz brand alone are north of $100 million, Croak says, vs. $10,000 just two years ago.
"All of this came from one guy, not some major corporation with huge teams of designers," says Croak, who has three designers on staff. "It's me — and my toys."
His toys have become an unlikely national hit, and for the past year, Croak, a bachelor, has worked 14- to 17-hour days — seven days a week. "Would you close if you were me?"
So immersed is Croak in his business that he recently sold his home to move into a loft he carved out above his company headquarters, which take up the better part of two city blocks. "I have to put the company first right now — and put my own life on hold."
It's no more just kids. Some college bookstores are stocking them for back-to-school.
Even celebs have become Silly Bandz trend-feeders.Sarah Jessica ParkerandMary-Kate Olsenhave been seen in them (and, no, they weren't paid to be). There's talk a Justin Bieber-endorsed Silly Bandz is coming, but the company won't confirm.
There has been some pushback on the fad that's caught up boys and girls alike: Silly Bandz have been banned at some schools, summer camps and pools. But that only adds to their cachet with kids, who don't really give a hoot if the bands occasionally distract them from lessons, challenge blood circulation or clog pool filters.
What matters is they're cool.
"This is the American Dream," says Croak, who has snubbed a $10 million offer for the brand — which he says isn't for sale. "This is way too much fun for me to take the money and run."
'Keeping the fad alive'
His dream has made him a multimillionaire, though he's hardly had the time to spend any money. He pulls a thick wad of cash out of one pocket and smiles as he displays the Silly Bandz he uses as a money clip. His favorite outfit is a pair of tattered jeans and T-shirt with a smiling face that simply says "Mr. Happy." Is he ever?
One year ago, the company had eight phone lines. Today, it has 48. One year ago, the company had 20 U.S. employees. Today, it has 400 in the USA and 3,000 in China, where Silly Bandz are made. One year ago, it was selling 100 packs of Silly Bandz a week. Today, it's selling 1 million.
Other marketers are trying to ride the wave:Quiznoshas a Silly Bandz kids meal on tap.Toys R Ushas a big Silly Bandz back-to-school promo in the works.Marvel Comicsand Nickelodeon recently signed licensing deals. Silly Bandz books and board games are being considered. There's discussion of a Silly Bandz watch. And there are plans for Silly Bandz sales globally.
"All the stars have lined up for this one," says Paul Kurnit, founder of the youth marketing consultants KidShop. "The big question is: When will it drop dead?"
It may be sooner than Silly Bandz plans, says Jim Silver, editor-in-chief of TimetoPlayMag.com, a toy-rating website. "When you have something that is available everywhere, the problem is keeping the fad alive."
While versions of the rubber bands have been sold for years, Croak's novelty company, which also makes custom silicone bracelets similar to the popular LiveStrong bracelet, started to make Silly Bandz in 2008. Croak had seen animal bands made by a Japanese designer at a trade show. He got lucky. His caught on.
Croak insists that Silly Bandz isn't a fad but a trend that he believes has a solid five years to go. He points out that it still hasn't hit much of the West Coast, let alone the rest of the world. "It will," he says.
As he takes a reporter on a tour of the ramshackle headquarters, Croak rattles off the names — even nicknames — of workers. The frenetic activity to move Silly Bandz out the door is non-stop. A UPS truck is loaded by big-shouldered employees with hundreds of cases destined for retailers nationwide. Some order takers multitask, slapping price stickers on Silly Bandz boxes headed for retailers as they work the phones.
From his own cluttered office, Croak doubles as a highly paid security guard, constantly monitoring a screen that displays 32 video camera views of the company's interior and exterior.
It's not that he doesn't trust his workers. But when he travels, which is often, he likes being able to see what's going on in all corners of his company from his computer.
The company's never bought an ad. All Silly Bandz marketing has been word-of-mouth and viral viaFacebook,TwitterandYouTube.
Silly Bandz-infatuated families have sometimes shown up at the company's front door, pleading for a factory tour. But the factory is in China. The headquarters is a design hub, warehouse and shipping center. Sympathetic employees sometimes take visitors on a quick tour and send them off with a pack of the latest bands.
Instead of importing Silly Bandz by boat, Croak pays about five times the price to fly them in. That cuts normal delivery time from the factory to four days from four weeks. He's jetting in hundreds of cases a day, each containing 576 retail packs.
The numbers help feed the trading frenzy. Kids love to trade, and that, says Yale child psychologist Dorothy Singer, is a key to Silly Bandz's success. "Trading is part of the friendship pattern," she says. By wearing them, she says, kids who may think they are acting as individuals are making themselves fit into the group.
Traveling fast
Silly Bandz have quickly gone from schoolyards to summer camps. Parents dash into Auntie Penny's gift shop in Chappaqua, N.Y., to load up on Silly Bandz for surprise gifts in their kids' camp trunks, says Eve Spence, who owns the store.
On Croak's wrist is his favorite Silly Bandz, the crown. "It leads to thoughts of being on top of the food chain."
Toys R Us is convinced the Silly Bandz craze is for real. It's selling "tens of thousands" of packs daily, says Karen Dodge, chief merchandizing officer. "This could be the hottest toy of the year."
And7-Eleven, which sells several rival brands, figures it's sold 1.2 million packs in fewer than five months, and they aren't even in half its stores yet. "I'm not sure I've seen anything of this magnitude," says Kris Nelson, senior director of non-foods.
Not that Croak's done everything right.
Croak concedes that Silly Bandz was slow to get into licensing. Rival Forever Collectibles beat him to that and has Major League Baseball and Disney under contract, with bands sporting shapes fromNew York Yankees logos to Tinker Bell.
"The only thing that sells faster than this stuff is milk," says Michael Lewis, CEO of Forever Collectibles.
By year's end, Disney expects to sell 20 million licensed packs, says Stephen Teglas of Disney consumer products. Disney sellsToy Story, Mickey Mouse and evenHannah Montanabands.
'A safety concern'
Silly Bandz's back-to-school plans include Silly Pails — $19.95 lunch boxes stuffed with 72 Silly Bandz bracelets. While Croak declined to reveal the brand's holiday plans, they may include scented Silly Bandz. And he's talking toMacy's about Silly Bandz boutiques.
So far, kids can't get enough. Allison Kuster, 12, of Mansfield, Texas, is very particular about which Silly Bandz she wears with which swimsuit. When she recently went with friends to the water park, she accessorized her blue swimsuit with a green mermaid Silly Bandz.
Her mom, Cindy, thinks the fad fits the economy: "What I like about them is the price."
But not everyone is on the Bandz-wagon.
Leslie Abrew, principal at Lowell Elementary School in Teaneck, N.J., sent a letter to parents banning them. "These novelty items have created a disturbance during the school day and have become a safety concern," his letter read, noting some students put them around their necks, and some used them as projectiles.
Doris Day, a Troy, N.Y., grandmother, refused to buy them for her 5-year-old twin grandkids despite their pleas. "They are a useless and mindless waste of time and money."
Croak doesn't buy that. He's rolling his profits back into the company to make yet more Silly Bandz. "It's all surreal to me," he says, sitting back in his chair and gazing past a flashing computer screen filled with 300 messages awaiting his response. "I'm the luckiest guy in the world."
Even, he says, after the craze snaps.
Video Clips:
- ABCNews
- USA Today
After reading the article and watching the video clips, complete Part II(handout)