“They’re not crayons, they’re entertainment sticks” *

Crayola has always been a color company. Initially formed as a partnership in 1885 when cousins Edwin Binney and Harold Smith took over Edwin’s father’s pigment business. Binney & Smith incorporated in 1902 and in 1963 the corporation became a publicity-traded company under the symbol BYS. Now, more than 120 years later Crayola has grown and with color, creativity, learning, fun and a lot of new products.

Marketing Analysis

1) Company’s corporate name

The corporate name is “Crayola LLC”. On January 1, 2007, the "Binney & Smith" name was retired and they started using the “Crayola LLC” corporate name, since it was the company's well-known brand. This name and brand is in use in more than 80 countries and had 99% name recognition in U.S. consumer households.

2) Company’s corporate headquarters

Crayola has called Easton, Pennsylvania its home since the early 1900s. Today, the company’s world headquarters and major manufacturing facilities are located there. The location is:

1100 Church Lane Easton, Pennsylvania
18044-0431

They also have manufacturing facilities in:

• Bathlehem, Pennsylvania • Mexico City, Mexico

And International Sales and Marketing Facilities in:

• Canada • Engalnd • Australia • France • Mexico • Italy • Spain

3) Parent company

In 1984, Crayola became a wholly-owned subsidiary of Hallmark Cards and has since played the lead role in Hallmark’s personal development strategies.

4) Subsidiaries

Since Crayola is owned by Hallmark Cards, the subsidiaries listed below are Hallmark’s.

a. Crayola LLC

Founded in 1903 and acquired by Hallmark in 1984. The headquarters are in Easton, PA. Its major products/brands are: Crayola art products, Silly Putty, Portfolio Series art materials, Crayola FACTORY.

[pic]

b. Crown Center Redevelopment Corp.

Founded in 1968. The headquarters are in Kansas City, MO. Its business is: regional attraction offering a variety of shopping, dining and entertainment options. It is the key player in Kansas City’s meeting and tourism industry and a premier office address for businesses.

[pic]

c. DaySpring Cards, Inc.

Founded in 1971 and acquired by Hallmark Cards in 1999. The headquarters are in Siloam Springs, ARK. It is a leading supplier of Christian greeting cards and gifts, features non-denominational Christian messages and it is available in most retail stores in the US and in different countries.

[pic]

d. Hallmark Business Solutions

Established in 2009 and acquired by Hallmark in 1988 (Irresistible Ink) and in 2000 (Halmark Insights). The headquarters are in Minneapolis, MIN. It is a business-to-business division that specializes in helping companies build and grow relationships with employees, customers and prospects.

e. Halls Merchandising, Inc.

Founded in 1913. The headquarters are in Kansas City, MO. It operates two specialty department stores in Kansas City featuring fine men’s and women’s clothing, china, crystal and home accessories, as well as Hallmark products.

[pic]

f. Litho-Krome Co.

Founded in 1933 and acquired by Hallmark in 1979. The headquarters are in Midland, Ga. It is the leader in high-quality color separation and lithography. Produces limited-edition prints for art publishers and artists and provides the latest printing capabilities in art reproduction, greeting cards and other products.

[pic]

g. Sunrise Greetings

Founded in 1974 and acquired by Hallmark in 1998. The headquarters are in Bloomington, Ind. It has sophisticated greeting cards for everyday and seasonal sending. The products/brands are: Sunrise Greetings and Weiner Dog.

[pic]

h. William Arthur

Founded in 1949 and acquired by Hallmark in 1997. The headquarters are in West Kennebunk, Maine. It specializes in distinctive luxury stationery; it’s one of the finest makers of customized luxury wedding invitations, baby announcements and social stationery. It sells Vera Wang and Rita Renning brands.

[pic]

5) Mission Statement

Crayola belongs to Hallmark, so they're under Hallmark's mission statement, which is:

WE BELIEVE:

– That our products and services must enrich people's lives.

– That creativity and quality – in our products, services and all that we do – are essential to our success.

– That innovation in all areas of our business is essential to attaining and sustaining leadership.

– That the people of Hallmark are our company's most valuable resource.

– That distinguished financial performance is imperative to accomplish our broader purpose.

– That our private ownership must be preserved.

WE VALUE AND ARE COMMITTED TO:

– Excellence in all we do.

– High standards of ethics and integrity.

– Caring and responsible corporate citizenship for Kansas City and for each community in which we operate.

These beliefs and values guide our business strategies, our corporate behavior, and our relationships with business partners, suppliers, customers, communities and each other.

Besides these beliefs and values of Hallmark, Crayola LLC has the “Crayola Desired Culture”, which specifies the difference that this company has between the others and their vision. These statements were obtained from Crayola’s webpage:

Obsessed With Consumer Needs

– Be passionate about meeting consumer needs

– Constantly ask: What are the implications for the consumer?

– Take the initiative to learn about our consumers and competitors

– Make decisions based on insights about the consumer

– Proudly represent our brands when talking to others

– Remind each other about the importance of the consumer

Biased For Action

– Be impatient and unsatisfied with the status quo

– Move faster internally than the external world

– Develop and implement impactful solutions

– Exploit ideas and opportunities quickly

– Take ownership and accountability for action and results

– Act, learn, and make changes as needed

Respectful Of People And Ideas

– Respect and value the diversity of people and their ideas

– Trust others - assume positive intent

– Act with honesty and integrity

– Uphold your commitments

– Honestly and constructively tell people how they are doing

– Make the communities in which we work and live better places

Innovative And Risk-Oriented

– Encourage innovation from everyone and in everything we do

– Generate and share creative ideas

– Experiment, experiment, experiment

– Create positive change that allows us to improve

– Take enough chances that you sometimes fail

– Be informed and take intelligent risks

Think And Act Like Winners

– Approach every task with a competitive spirit to win in the marketplace

– Hate to lose

– Deliver exceptional business and financial results to be the marketplace leader

– Look for ways to win, not excuses for failing

– Continually build your skills and capabilities

– Be proud of others' successes

– Have some fun everyday!

Collaborative And Team-Based

– Proactively engage those outside your work area

– Seek the opinions and feedback of others

– Share knowledge to help others succeed

– Communicate, communicate, communicate

– Work with others to achieve business results

– Be inclusive

6) Core competency

Crayola’s core competency is innovative children’s entertainment. This factor is central to the way Crayola works and it provides consumer benefits, it is not easy for competitors to imitate and it can be leveraged widely too many products and markets.

7) Identify major product

Crayola’s major product are the crayons. They began with this product and they are well known for this product. There are over a hundred different types of Crayola crayons, in different varieties including washable crayons, glitter crayons, fragrant crayons and more.

8) Identify target market

There are three target markets for Crayola. Crayola’s main target market is children between 2 and 10 years old. These are the children that still use crayons for fun, children that want to play with colorful and unique toys. Crayola estimates that the average U.S child wears down 730 crayons by age ten. This is the main target market because they are the ones that are going to use the product, but there is another target market that is more important, these children’s parents. They are the ones who are going to buy the products and also the ones who will see the improvements and the convenience of each product of Crayola. A good example of this is the new mess-proof products that are being developed. These products are oriented to attract parents, not children. These parents of children between 2 and 10 are in the middle and lower upper class.

The last target market are schools and educators because crayola has a lot of resources and products available to teach and to make this process more fun an easy. These schools are more private than public and the teachers are in the middle and lower upper class.

Since the company’s products are packed in many languages and are sold worldwide, their target market is not affected by country or language spoken.

9) SWOT analysis

a. Strengths

– Crayola is a recognized and highly trusted brand name and logo, 98% of Americans recognize it. – Kids between 2 and 10 love Crayola products and have a selective demand for it, influencing their parents to purchase them. – Crayola’s brand image is synonymous with quality and high loyalty. – Crayola is a global company and it operates all over the world. – It has a successful distribution system and their products are available everywhere including grocery stores, pharmacies, hotels, theme parks, restaurants, schools, etc. – They sell retail and in bulk to organizational buyers at a lower cost. – Schools in the US and in other countries (UK, Canada, Australia, Mexico) use Crayola art materials for their classes. – Their website is appropriate for children, parents and educators. – They provide free ideas for crafts and projects using Crayola products. – The website is very complete, provides information of the company, it is used for booking, ordering, promoting, marketing, etc. – It has a lot of innovation in products and services based in the needs of the consumer. – It is constantly building new products to expand their market including products that emphasize international diversity to promote the respect between different groups. – Crayola has green products, so they help the environment. – Crayola’s price range is adequate to their core target market. – Their products are priced competitively with the competition but the price also reflects the quality of the brand. – It uses all non-toxic, child-safe materials that are efficient. – They have scented products and easy grip products for sensory and motor skills. – Crayola has licensing deals with children’s characters from Disney and Nickelodeon which increases the appeal to their target market. – Their promotion consist of television, magazine and point of purchase displays. This impacts children and parents to purchase.

b. Weaknesses

– Crayola has a line for the professional market, Portfolio Series and inkTank but, since they are known for having children’s products, they don’t have a large market share with the art professionals. – They are trying to expand their market but they have done it in wrong ways like a line of children’s clothing and bottled water, both were unsuccessful because it wasn’t a natural expansion of the brand. – Sales are sometimes declining due to increased competition and the company began to slip into saturating. – They wanted to build a solar power plant but they have run into problems finding partners to make it a reality. – Crayola ranks behind in sales and market share in their marker product line.

c. Opportunities

– They introduced two innovative lines of products for babies and toddlers which allows them to explore colors before they can use crayons. – They launched a school social media campaign on Twitter and Facebook geared towards moms and features innovative ways to be creative and save money during back to school shopping. – They are developing new innovative products to expand their market and have more children using their products. – They have a department of innovation that develops new products and this will allow the company to increase their sales and the company’s value. – Crayola has a whole line of toys that will increase their profits since crayons are not as popular as they were before, but toys are getting more popular. – They can still grow their market share by promoting their line for professionals.

d. Threats

– Sales of crayons are projected to decrease since the computers and web based learning is increasing. – Hand held art is going to be left behind at a younger age. – The target market can change because children start using other technologies earlier instead of using crayons to entertain. – Parents and schools are spending less on school supplies every year. – Competition is getting stronger, like in the marker market.

10) Discuss the company’s marketing mix in reference to the 4 P’s

a. Product

Crayola is very product oriented; this is because they are always trying to improve their products to make them more attractive and innovative so they keep selling. This company has had a very drastic change in their products, they started with only crayons and now they even have toys, water, keyboards, clothing, etc. They have made all this changes but still they have tried to keep all the products in the same line, since Crayola has been a color company, they develop the new products based on the company’s core.

The product could be categorized as convenience and specialty, the first one because children need some products for school and the second one because other products of Crayola are rare and unique and are more wants than needs.

b. Place

Crayola has a very efficient way of distribution and selling. They are in most grocery stores, pharmacies, gas stations, art stores, theme parks, etc. They have direct and indirect channels of distribution since they sell to final customers but also to retail companies.

Another important point to mention is that Crayola’s headquarters started and continues to be in the same place. Also that they have expanded and now they have different plants where they produce in different countries which makes the distribution easier.

c. Pricing

The products of Crayola are very well priced because they go along with their target market, they are affordable but also they aren’t too low since the price has to reflect the quality of the product. For most people Crayola is synonymous of quality and they have a strong loyalty to the brand, so they can raise their prices and still have the same demand.

The prices are competitive with others in most products but their main goal is to make products that only they can make, and if they do this the competition doesn’t matter and they can set the price they want based only in their costs, image and target market.

Their pricing strategy is based more on customer, compatibility and by making the relationship that quality means high price.

d. Promotion

Crayola’s promotion is based on television commercials, magazines, web advertising and in-store advertising. This is a very strong promotional mix because they have face to face, no face to face and trade sales promotion; the last one refers to encourage stores to buy and sell their product by advertising in the store. They also have public relations since they have a lot of events and activities to promote their products. They reach their target market in every way.

Crayola draws on new ideas

1. What are their market demographics and psychographics?

The main market demographics are: children between 2 and 10 years old, both genders, with a medium to high income, who study mainly in private schools and whose parents have certain level of education (at least college) and want their children to have the same or more education. They are from all over the world and from different nationalities.

The main market psychographics are: children and parents who live in the city, from the upper and middle class. These parents care about their children and are sensitive to advertising, they want their children to have fun while they learn and also they don’t want their toys to be messy.

2. Crayola is in what state of the PLC?

Maturity, because their sales curve is starting to flatten out, the profit was falling but their marketing goals are to maximize the market share and profit. They are trying to diversify the products to attract new customers and extend life cycle. They want to maximize distribution and have a lower price and in promotion they are using mass communications and want to build brand preference.

3. How can we define their move from crayon to toys?

Since Crayola wants to grow they need to reinvent and make innovative and different products. If they sell only crayons their market is limited to the school needs and they don’t sell through the whole year. Crayola is changing its image and with this change they need to be more creative, following always their orientation. This is why they thought about doing toys because children are using crayons less every day because of the computers and technologies so they have to follow their core and reinvent the brand. Now children will think of Crayola not only as a crayon box but as a fun brand of a lot of different products.

4. Does this create a whole new stage of development?

Yes, they are creating a whole different brand image so this leads to a new stage of development. Tthey’re just not focusing on the niche concept of crayons and markers, but viewing their core competence as entertaining children, where art is simply their medium.

5. Why the move from brand Binney&Smith to Crayola?

Crayola was a world-known brand and since they are having an image change, the change in the name is symbolic of an image revamp. Crayola doesn’t want to be a box of crayons or a boring brand anymore; they want to become a fun brand, innovative and differentiated company.

6. Does crayola have brand equity?

Yes, Crayola has a very strong image and this influences customer behavior. This influence enhances the company’s position in the marketplace and attaches to the promise of the brand. As seen in the article “Crayola draws on new ideas” it is evident that people have a high image of Crayola, they think it is expensive, it is a good quality product and it is innovative. This brand equity leads to loyalty, commitment and customer equity from the customers to Crayola brand.

It is necessary, as Crayola did, to have brand equity studies often so that the loyalty and all of the other factors mentioned before doesn’t end, causing loses to the firm.

7. Why do you think Crayola moved from school supplies to toys?

Because if they only sale school supplies they can only earn a higher amount of money during the start of the schools. By having toys and other products they sell all year long.

8. How have their 4 P’s changed?

The product is definitely the P that has changed the most. They have changed from crayons to school supplies to toys and innovative art products for children, educators and parents.

The place has changed also, at first they only had the main headquarter and, after the company grew, they opened more and they are selling now all over the world.

The price has also changed to reach their target market but without losing their brand image, which attaches price to high quality.

Promotion has also changed, now is more oriented to toys, to parents and educators and it is not only school products promotion.

Initially a crayon maker, the company has extended their brand into all kinds of arts and crafts capturing the imagination of kids and grownups. First they had the most obvious extensions but now they are going further into very different product lines. They know their position in the market so they have to make that image stringer and keep making fun, safe, high quality and innovative products.

References

– Binney & Smith. http://www.binney-smith.com/. Retrieved 2010-01-28

– Crayola. http://www.crayola.com/corporate/index.cfm. Retrieved 2009-06-26.

– Hallmark. http://corporate.hallmark.com/Company/Hallmarks-Beliefs-And-Values

– Electic Blog. http://theeclecticblog.blogspot.com/

– Marketing teacher. http://www.marketingteacher.com/SWOT/crayola_swot.html

– About toys. http://toys.about.com/od/crayola/tp/crayolacrayons.htm

– LIB. http://www.lib.washington.edu/business/tlc/archive/crayola.html