CNN reports the prototype for the original GI Joe is going on the auction block. Bids will begin at $600K. In addition to expensive toys, this news story reviews some classic strategies.
First off is the classic razor/razor blade strategy. Companies sell the razor/primary product at a low price to gain market share. The companies make money from the volume sales of the razor blades/related product—the blades are bought frequently on an ongoing basis.
GI Joe's creator realized Barbie makes most of its money off the accessories. The razor/razor blade strategy has worked well for many companies, but not most dotcoms. Appropriately enough, the now defunct Industry Standard discusses razor/razor blades as it applies to dotcom business models trying to build an install base.
The other strategy I'll call "What's in a name." While Barbie is a doll, it was clear boys would not play with dolls—especially back in the early 60s. This realization transformed GI Joe from a doll into the first action figure. He created a brand new product category in the process. The rest is history. You can point to similar examples, starting with cologne and perfume, and they all point to the power of naming.
Hard to believe there is so much story behind a doll, er, action figure. Well, now you know. And remember, GI Joe always says, "knowing is half the battle."
Comments