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Therefore, to maintain profits we should discontinue all our action toys and focus exclusively
on a new line of educational toys. Several other toy companies have already begun marketing
educational toys and report sales increases last year of 200 percent. And since the average
family income is growing, sales of new Hyper-Go toys should also increase."
In this memo the president of Hyper-Go Toy Company (HG) argues that in order to maintain
profitability the company should discontinue its complete line of action toys and focus
exclusively on a new line of educational toys. To support this argument the president cites the
dramatic decline in sales of HG's Fierce Fighter (FF) toy airplane, which during the previous
three years had been a top seller, and an HG customer survey indicating increasing concern
among parents about youth violence and for improving their children's education. The
president also points out that several other toy companies have begun marketing educational
toys and report a 200% increase in overall sales, and that the average family income is
growing. The president's argument relies on several doubtful assumptions and is therefore
unpersuasive.
First, the president's assumption that parental concern about youth violence is the cause of
declining FF sales might be unwarranted. The decline might have been caused by one or more
other factors--such as supply or distribution problems, new competing products from other toy
companies, or a waning of interest in FF among children. Without ruling out these and other
possible reasons for the decline, the president's argument seems ill-conceived.
Secondly, the results of HG's customer survey are not necessarily representative of the
overall population of toy-buying parents. Perhaps HG's current customers are more concerned
about youth violence and education than most parents. If so, then the president has
overlooked the possibility that a substantial portion of HG's target market would not react
favorably to the proposed changes.
Thirdly, perhaps sales of HG's other action toys remained stable or even increased last year.
In fact, it is entirely possible that some of riG's other toys are becoming very popular and will
soon replace FF as top sellers. If so, then discontinuing the entire line would be ill-advised
indeed.
Fourth, assuming the toy companies that saw a 200% sales increase last year are
statistically representative of toy companies in general, that increase might be due to
action-toy sales rather than to educational-toy sales. If so, then the statistic would amount to
scant support for the proposed course of action.
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