WHDetics: Reinventing with Next Generation Leadership Founded in 1978 by George Baker, WKinetics has successfully established a niche position in the kinetic (involving motion) toy industry. Competitive pressures, though, have made it tough for the rm in recent years and growth in revenues and prots have been disappointing. In 2017, George handed over top management to his daughter Beth who had been with the company since completing her MBA in 2010. Starting as an accounts receivable clerk, Beth rose to be the rm's controller, chief nancial ofcer, and then chief operating ofcer. With nearly two years of transitioning into the top leadership position, Beth is now executing her plan to reposition Slam for greater long-term performance in a much more competitive Wed, on a handful of items George designed and built for his own young children, George started Wwit a small line of wooden blocks and aluminum building sets. The brand evolved in the 1990s to emphasize a broad portfolio of plastic snap-together building sets designed to stimulate curiosity, creativity, and manual dexterity in toddlers aged 3-5. Product and packaging design is performed inhouse at their Baltimore headquarters. Manufacturing and packaging i_s performed through strategic alliances with two factories in Monterrey, Mexico. The core products are made of a mix of recycled plastic resins i_n_c_tr_d; t_o_ keep costs, and prices, low. This supported W historic market position as an affordable option for parents and educators with solid prot margins for specialty retailers who must compete with mass merchants such as Amazon and Walmart. Bulk-packaged products ship from the Monterrey factories directly to the company's six regional distributors located across the continental United States (and one in Ontario, Canada). These distributors account for virtually all pf Elam revenues, with a small portion coming from the rm's direct sales of slightly damaged and discontinued items which are sold through inventory liquidators (who re-sell such items to retail outlets such as Big Lots). The distributors, who handle multiple specialty product lines in the toy market, sell and supply Mproducts to roughly 300 specialty educational and preschool toy and supply retailers throughout North America. 3013551933 relationships with and service to the distributor accounts are handled by three regional sales managers. Support to the retailers is provided by the distributors. Due to the severe competition in the toy industry, from intense price competition at the retail level and pressures from low-cost producers competing directly om Asia, Beth's plan to jump-start the rm's performance involves a great deal of change. She and her father know the risks, but they have decided the rm must change a great deal to survive and succeed. The first move Beth made was to expand the company's product breadth by acquiring HF Games, a small but innovative French manufacturer and distributor of premium quality battery-driven experiential toys for children [toy phones, computers, science kits, etc.). Wnow imported these products from the factory in France and slod them in the US and Canada through the existing sales force and retail accounts. Reversing that, Beth expanded the old HF warehouse in France to take on a signicant portion of Kim product line which would now be sold throughout Europe by HF 's sales and distribution network. The design and manufacturing specications for W core plastic products were revised to improve the quality of the materials to support positioning (and pricing) the products for a higher quality and more attractive aesthetic level than the major mass market competitive brands. Manufacturing was transitioning from the Mexican factories to agreements with state-of-the-art contract molding, assembly, and warehousing/shipping operations in Taiwan. With these material and production changes, 5.168% core products would incur an average 14% net price increase to tetailersbut the changes would improve retailers list retail margins by over 25%. Although near-term unit sales were expected to drop slightly with this premium quality positioning, protability would be much higher for $13.33;, Market share and unit volume were expected to increase over time as the attractive margins gained attention of the channel resellers. To further support the prot margins for both wassic and their retailers, Beth dissolved the rrn's agreements with the regional distributors and began building an in-house, direct sales organization. She recmited two of the leading salespeople from the top distributor thus bringing the W sales team to ve experienced professionals. This team was now responsible for direct sales to the top 80 specialty retailers [who accounted for over 70% of 2018 {gassig brand retail sales). Furthermore, Beth charged the team with gaining distribution through mass merchant retailers with specific attention to Target, Amazon, and Michaels Stores. Mass retail accounts were to be offered a program involving a custom (store) brand and packaging design to dierentiate the products sold in mass retail from the core Wbrand sold through specialty outlets. The sales team operated under a new incentive plan focused on sales growth goals. To support the team and direct retail accounts, two additional customer service representatives were hired. To further attract and support retailers, over 60% of the advertising budget was shifted from trade jotunals and co-op advertising linked with the old distributors to a new consumer branding campaign of full-page placements in two of the leading parenting magazines and their associated websites. To promote and explain this repositioning to retailers, Klassig embarked on an aggressive trade show effort in 2019-2020. They tripled the size of their booth space commitments and increased the number of shows attended from two to seven. A completely revised corporate website was developed and launched as well in $2019. The site highlights the new brand positioning, the new products, and provides a search function for identifying Mproduct retailers [as opposed to the prior site's links to the regional distributors). The new website also was the primary vehicle for introducing the new logo for W a new design better aligned with the rm's new, higher-end image and broader product scope