Case Study: Hasbro and Collaborating for Profit - ' Site Reading '

Site Reading

The two also dispatched staff researchers to gather as many facts as possible: how much each brand manager was spending, for example, and how much bang they were getting for each buck. Historical and current site traffic also was studied, along with such issues as whether the brand was on the downside or upside of its cycle, whether managers were planning a big new product rollout, or whether the site represented one of the company's core brands.

About a half-dozen customer focus groups also were created to see what customers really wanted in a Hasbro Web site. The answer? Consumers liked to shop by age and product category—preschoolers for action figures, for example. And they also wanted a Hasbro site to provide something very simple: product information, like how to get replacement parts and game instructions, instead of making customers dial the company's toll-free number. Hasbro also learned that consumers didn't care whether or not they purchased from Hasbro online or another retailer. In fact, they didn't particularly want to buy their toys from the site. Rather, they were more interested in the ability to comparison shop online.

Kriete had already suspected that: His research showed that for every dollar spent online, customers typically purchase $2 to $8 more at a brick-and-mortar store. So Kriete came up with the idea of affiliate retail relationships—links to participating retailers through the site. Consumers interested in buying online, or in investigating price information, would be linked to affiliates like Walmart.com or Toysrus.com. Kriete assigned a person from his staff to work full-time with retailers on the program.

On the technology side, meanwhile, Schwinn began looking for places to cut costs—dramatically. He saw that Hasbro was relying on nearly 50 outside Web hosting systems, so he suggested the company bring those services inside, for a savings of as much as 50 percent. Schwinn also figured he could use Web designers at the Seattle offices of Wizards of the Coast Inc., a Seattle-based trading card game company Hasbro bought in 1999, to help create the basic standards and design template, using a Windows-based system (the old patchwork of systems used a mix of Unix, Linux and Windows), along with a small development and design team in Pawtucket.

Eventually, the company would redesign and convert all the Web sites over to a new standard and install a hardware system using Dell servers. The result: Savings on the technology side of at least $1 million a year in Web costs alone. In fact, the Web strategy overhaul promised the economies of scale that the Internet, at its best, offers many companies. "Cutting ongoing maintenance alone reaps big savings," says Richard Villars, vice president of Internet research at International Data Corp. But, more important, he says, instead of providing a service to one small part of the customer base, Kriete and Schwinn saw that service could be made available to everyone simultaneously, for even further savings. "We had to rebuild the house," Kriete recalls, "and ended up cutting spending in half but boosting impact by three or four times."

Action Figures

But Kriete and Schwinn aren't finished yet. Now, they're working together to put the finishing touches on a super-portal for Hasbro, one central site that can push all of Hasbro's brands to visitors in one-stop shopping. This enables the mother looking for the perfect G.I. Joe for her seven-year-old to investigate, say, a Star Wars light saber or the latest Transformers for her preschooler in one-click searching, rather than having to go to those specific sites.

It's the latest facet of the Kriete-Schwinn Web strategy: Customers will be directed to the super-site through information written on product packaging and through mentions on TV ads. Targeted promotions will still be developed from customer information, but they will include offerings from all over the company. For example, the parents of a four-year-old born in July would, sometime in June, receive an e-mail about appropriate Playskool and Tonka toys, along with a promotional coupon to be used at participating retailers. The upshot: "You can better track how deeply your customers are establishing a bond with you," says Villars of IDC. Ultimately, he says, "You know not just how often and for how long they come to you, but you also get a better sense of who may be buying your product. And you also know, for example, that it's the same person who is interested in a light saber and a Transformer, not two separate consumers."

And best of all? The super-site might help Hasbro better nab the "tween" market and keep kids in the Hasbro fold as they outgrow particular categories. "People would be reminded every time they logged onto the site that there are other products they could move to, when they're ready for the next level," says Schwinn.

Kriete is also mulling a move toward tying television commercials to individual Web sites, which research shows boosts site traffic and traffic to stores. Visits to G.I. Joe's toy site spiked recently after a recent TV ad campaign, and continued for several months afterward.

Can it all help Hasbro boost profits? The Web strategy could help. "Given how many late starts there have been in Web strategies in the corporate world, it's probably safe to say that if Hasbro's strategy works, it will be early to the game, not late," says David Leibowitz, managing director of Burnham Securities Inc. in New York.

Win or lose, the guaranteed payoff is the new IT-business relationship Kriete and Schwinn have already put into motion. "It's through this kind of relationship that you can develop realistic goals, work together to get everyone else on your side and, ultimately, bring your plan about," says John Parkinson, chief technologist for Cap Gemini Ernst & Young. "Making these kinds of relationships work is enormously complicated and difficult, but when they happen, they can be golden."