Demand Forecasting for Star Wars VII Merchandise – Use the Force

One year from today (December 18, 2015) the seventh episode of the Star Wars saga will be released into movie theaters around the world. The movie will only last two hours, but kids will relive the movie for years afterwards with the Star Wars action figures and other new toys that will accompany the film. Forecasting demand for toys and merchandise associated with a major movie release can be quite challenging. When the original Star Wars action figures were released in late 1977 there was a huge supply shortage the following Christmas.

A small toy company named Kenner had licensed the rights to produce toys for the original Star Wars film.  With numerous production delays and budget overruns, few associated with the film expected Star Wars to be a success before its release.  Consequently, Kenner had not bothered to manufacture any merchandise in time for the release.  Needless to say, the film was a smashing success breaking box office sales records and creating a loyal fan based of millions seemingly overnight.

As a result, Kenner had to develop a merchandising strategy to capitalize on the film’s widespread popularity.   But the development of plastic toys required over a year.  The action figures needed to be designed, sculpted and tested.  Expensive and time consuming steel molds were needed to support the manufacturing activities.   Starting in mid-summer, Kenner would not be able to get the products to market in time for the all-important Christmas holiday season.  Although Kenner held the license rights to the biggest movie in history, it could not capitalize on the opportunity because it get its merchandise to market fast enough.

Star Wars Cast Debating the Demand Forecast

Toy manufacturers won’t make the same mistake with Episode VII. With filming already completed in Iceland and Abu Dhabi earlier this year, I suspect design has already started on action figures, replica ships and other merchandise in preparation for launch day. Manufacturing on the toys will need to start four to six months in advance (July-September 2015) to allow adequate time for product to be shipped from China via ocean freight to stores around the world.

Forecasting demand for toys will require the usual guesswork. Which action figures will be the most popular? Will it be the older versions of Princess Leia, Luke Skywalker and Han Solo or will it be new additions Poe Dameron and Kylo Ren? Only the force could be used to accurately make these predictions.

Episode VII’s release seven days before the Christmas holiday will complicate matters even further. Millions of kids will view the movie in the first few days then make last minute additions to their holiday wish lists. Santa and his elves will have to work quickly to respond to changing demand patterns up until Christmas Eve.

I think the best way to launch the toys would be not to mass manufacture them in China, but instead to produce them on-demand in retail stores with 3D printers. In my next post I will explain how it could work..

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