How do the model train companies choose what to build?

Based on experience, I would even say there is a underlying demand for "dim-bulb" managers in many industries, or as we used to call them, "wind-ups".

My supervisor can't get a promotion because he won't submit to having half his brain removed -- a prerequisite for mid-level management.

Matt,

All Lionel would have to do is offer it up in Pennsy or NYC cigar or lightning band schemes and it would sell, there's enough loopy people in the hobby that would take 'em in that scheme even if it wasn't run or painted up that way in real life.   After all, look at what they did to the poor Cab Forward, dressing it up in that prototypically undignified Daylight scheme for those loonies. 

I think Revell of Germany has come up with a great way to see what their customers are interested in...

http://ideas.revell.de/ideas/

They always ask me what I want in the way of Milwaukee Road. Then they make it ASAP. For example this little engine is being offered by Lionel, MTH and Atlas. All are waiting my OK. Don

well in the old days JL used to call me up and asked what I thought he should be making.....

In your dreams !!  Josh called me !!

Not sure how other companies do it but Bachmann/Williams seems to be focusing on just the top four railroads for diesel engines. As for their caboose line of N5C's, how many N5C's can you collect before it looks like monotony?

They need a new caboose design!!  That I feel would help Bachmann/Williams a whole lot!

Lee Fritz

The manufacturers need to develop new customers and listen better to the hobbyist with shallow pockets.  Focusing on just their current customer is a mistake.  A company needs to grow to survive.

Originally Posted by Jim Pastorious:

In your dreams !!  Josh called me !!

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You are both full of it.  Josh didn't have a phone.  I know because he lived next door to my Grandpa, who by the way gave him plenty of ideas.  

Here is what perplexes me on how they decide to sell what.  This should be the perfect set for me.  A Lackawanna RR steam set.  However, with all the tooling they could have used, they went with a Berkshire.  Lackawanna didn't have them.  (Erie did).  There is a generic Lackawanna reefer instead of a Phoebe Snow boxcar. The hopper is D&H Blue Coal, which is colorful, but no Blue Coal cars existed in real life.  Black is beautiful, and they could have made a DL&W "Road of Anthracite" hopper. The animal car says Lackawanna County Wildlife Reserve in Erie Lackawanna (diesel era railroad).  If it said Nay Aug Park Zoo I would have been sold.  Even the wide vision caboose is wrong.  I have a scale Weaver DL&W caboose, but even a wooden center cupola caboose would have been fine.  

Even when they try.  They miss the mark by so much.

well naturally JL didn't make his own phone calls...he had Larry do it for him!

Is that so? 

Posted by  BucksCo:  I think Revell of Germany has come up with a great way to see what their customers are interested in...

That makes too much sense, its to practical. Its, its...its to innovated.

quote:

The manufacturers need to develop new customers and listen better to the hobbyist with shallow pockets.  Focusing on just their current customer is a mistake.  A company needs to grow to survive.

I assume that's the reason Lionel got into Nascar die cast cars.

Probably because the Chinese company die casting their engines also die casts the cars. Could we see a race car with the War Bonnet paint scheme ??  "Run it past marketing, Ed" 

But that is a mistake thinking that slapping a Nascar logo on something will promote toy trains.  They have to go back to the 1950's strategy of selling a few trains to many people instead of a few high-priced items to a few older hobbyists.

...And that MTH got into the European O3R market...and Large Scale...and S scale...and HO scale...and Tinplate.......among other additions to their products portfolio!

Let me be more specific.  Manufactures need to develop new customers for O27 toy trains, like around the Christmas tree, not branch out into other products or scales. They need to re-develop  the tradition of an O27 Lionel-type train (a 3 rail train) under the Christmas tree or a SMALL seasonal O27 Christmas layout.  The other strategies just won't work, in my very humble opinion.

Take care, Joe.

Not diversifying enough is exactly what got the Lionel Corporation into trouble when toy train sales started declining by the mid-1960s, and leading to bankruptcy.  Thanks in no small part from poor management, they day-lated & dollar-shorted themselves almost into oblivion by not reacting quickly enough to remain viable to where toy trains could still be sold to the market as it was while still keeping the company itself profitable.

Lionel could have kept themselves relevant if they either maintained their OO product line after the war or got into HO earlier than they did, and bolstered their government contracts more, but they didn't.

Lionel trains during the 1970s to the mid-1980s was possible because they were part of General Mills, which was a huge conglomerate with their own core product (cereals) which was immensely more profitable than the Lionel line ever was, but those profits from their core product is what enabled them to invest more money in Lionel's growth with lower risk compared to if Lionel was the only product they had.

MTH wisely diversified into the European market & HO & S scales when the economy went south, and that diversification is what is helping to sustain them while continuing to produce O gauge trains.

So no, in today's economy and market, it would be unwise not to diversify if it means keeping your business viable.

Fastrack also helps keep grease off of Mom's nice living room carpet.

I think cheaper trains sets that are easier to use and remote control is a great idea for attracting new folks to the O gauge market (think Lion Chief). Lionel is definitely on to something here, a great step in the right direction of promoting the hobby to new comers. I always thought MTH starter sets offered the best value (I still do), but new and first time buyers are a totally different market. Maybe MTH needs to think about this as well, if they are not already thinking about it.

The MTH starter sets ARE the best value for me, hands down, but I am not the young parent just starting out with a young child that wants a train set and has no idea whether they will be expanding the set, this will be their only set or if the child will even like it after the newness wears off. I am a totally different market, I know I will be expanding, adding DCS and more trains, track and other things too my layout. The new folks with small children usually don't know much about all this, it's all guess work until they see what the kids really like.

That's still a sore spot with me. I'm not even an SP modeler and I felt violated.

I am talking about marketing the old-fashioned toy train to younger women, in the old tradition, at Christmas.   Nothing more complicated than that.  Spreading yourself too thin and not understanding the product you're making is a pitfall of diversification.  But I am not a businessman.

Take care, Joe. 

Isn't that what these things are supposed to do?

Even these are MSRP at $175.00.  Add another 15 bucks and you can get a Thomas set.

Even in way back in 1953, the least expensive Lionel set was $19.95.  The buck was worth a lot more back then.

If your looking for the 50 buck Lionel or MTH O gauge train set, it's not gonna happen.  There's been some $20.00 HO sets over the past couple of years, but they aren't worth the effort to take out of the packaging.

Rusty

JL- "AC...JL...where do you want to meet for lunch today?"

AC-"I'd say since it's Louis's turn to pay we make it someplace expensive"

Marketing the operating systems is one thing: running trains with smartphones, tablets or any kind of remote is definitely the way to go, like, say LionChief. Give the kid a remote or a phone app, that will succeed. 

As to what actual models to build is a tough call. Filling a model market niche for what's on the rails now, like GE Evos and double-stack box trains is fine, but how do you get a marketable starter set sold at a good price for hobby beginners and family Christmas trees? That's where the Polar Express and Thomas the Tank Engine come in, from children's stories. 

Older hobbyists are catered to with their memories, or their parents' memories. The plethora of North-Eastern U.S. prototypes is marketing to a high population density that lives around and still rides passenger trains to some extent. Did the Santa Fe Warbonnet F-unit cater to denser populations in the West, maybe? Stretching the tooling and color schemes over as many railroads as possible helps re-coup tooling costs further.

Right now, the high dollar niches are the money-makers, but I don't see hobby continuity being good without lower cost items that appeal to mass markets.

What's the answer? Lower cost Marx-like sets based loosely on the many preservation/tourist railroads of today, the high dollar niche model market, the RailKings of the world? Operators or collectors? All I know is that I would have permanent headaches figuring out what would sell to such a fussy bunch as us!

Diversification of your product line is not a cure all by any means. A lot of businesses had big problems after WW II. Autos, railroads, steel to name some of them. Lionel lost some of their best management after the War for various reasons and didn't replace them. When you are sitting there with a plant to run, a payroll to met and only X number of $$-not easy.

Are these being marketed to young women for under the Christmas tree?  Where?  I'd like to see the ads!

Ever heard of the Girls' Train from the postwar period?  Lionel marketing figured that selling a train set catered to young girls would increase their customer base and increase sales. 

Abysmal flop.

Didn't work then, what makes you think it would work now?

No, not for girls, and not for female children, but for young women (30ish) for their up-scale holiday decorating in the old tradition, in their living rooms.

These women want the "black locomotive" with smoke and air whistle, like their grandfather, uncle, or father had. 

"How do the model train companies choose what to build?"

They ask me what I would like!

Then, they build something completely different!!!

Seriously though, I like the 3rd Rail approach.  They tell you what they are thinking about building and then ask for input into what should be built.  They also keep their customers apprised about the number of units pre-ordered and if there are sufficient reservations to go ahead with an item.  If there are insufficient reservations, this gives anyone who is interested in an item the chance to reserve it.

Jim

According to the consumer price index calculator, $19.95 in 1953 dollars equals $178.31 in 2015 dollars. That's a pretty stable price point.

http://data.bls.gov/cgi-bin/cp...=1953&year2=2015

Do you have any evidence of that particular demographic being large enough that it would be marketable?

Those type of trains already exist and have been for years.  They've been available in Target, Home Depot, and more traditionally, Sears & JC Penney's and have been advertised in the stores' respective catalogs. So the exposure's been there, but that demographic you mention hasn't been biting; and the majority of women that do buy them are parents that are getting them for their own children, not for themselves.

Perhaps you are suggesting that the O gauge manufacturers advertise on national TV on the major networks as a solution?  Do you have any idea how much a single 30 second slot costs, even if it's not during prime time?  Advertising in major publications isn't cheap either, and the success rate would amount to throwing a dart while blindfolded.  There's local advertisements which comparatively is relatively inexpensive, but that doesn't provide national exposure and is more effective for stores & hobby shops that cater within that geographic area, which will depend on their own advertising budget. 

The women I have talked to in person and those who contact me through my web site voice the concerns that the product is too expensive, hard to set up and troubleshoot, and they don't know where to start, what to buy, or how to do it.  And my own sister remarked to me a few years ago that she didn't know Lionel trains were still being made.  You would be surprised, if you'd talk to non-hobbyists, what they haven't seen and what they don't know.

So instead of a noisy fastrack display on Good-morning America or whatever morning show is on NBC (free advertising, by-the-way), how about a very traditional, under the tree set-up, running at a reasonable slower pace, with Plasticville buildings.  

The general public feels that toy trains are for eccentric, old, wealthy men, and they can't relate to them, especially when they see a $2500 locomotive for sale.  Show them how to do something for about $200, and perhaps you could change things. 

Take care, Joe.

P.S.  "The hand that rocks the cradle rules the world."  J.

(edited for typos and omissions)

Actually, that isn't true.  I don't make things because of my personal whim.  The real limiting factors are:

1) Keeping within my niche (nothing after 1899)

2) Something which has never been done in 0-gauge, preferably never done by anyone at anytime if possible.

3) Adequate historical data to make an accurate model (harder than you think in an era without blueprints and only b&w photos)

4) I have to have enough positive feedback from my clientele to make sure I can sell enough models to make a modest profit.

My upcoming B&O Grasshopper engine is already 60% reserved and the number of models is fixed.

Dave

I don't know about toy trains but part of marketing is not to compete with your own product with something new. Either replace an item with something that is past its peak or expand your product line to gain new customers.