Last time, we presented a set of issues to consider when determining if a product is merely a fad or a solid trend with staying power. This week we put the framework to the test and come away with a series of items to help build a sustainable business.
The test of any framework is how it works in the real world. Let’s look at one case in point: Beanie Babies vs. Lego (see Figure 1).
They’re sharply contrasted. Beanie Babies sales spiked, then plunged. It was a classic fad cycle — hype (in this case, secondary market price surges) led to overproduction, which burst the bubble. Adult collectors, who were a significant part of the market, fled.
In Lego’s case, adaptability is a hallmark of its corporate strategy: One of the key growth drivers was the series of lucrative licensing deals that Lego developed with major film franchises (e.g., Star Wars, Lord of the Rings, Harry Potter, Batman). These initiatives not only created sustainable growth by broadening the product’s appeal, but also led Lego to create its own intellectual property — a video game series and the blockbuster Lego movies. The ability to constantly refresh by co-opting other IP helped drive Lego to high levels of growth and sustainability.
A framework to determine whether a product/service is a fad or part of a trend is a great first step, but what does a business need to do to assure steady performance and develop a solid long-term strategy? In Figure 2, we present potential solutions for transforming a fad into a trend or generating sustainable revenues from a fad product/service with limited staying power.
Fads can be worthwhile. They do happen, and it’s possible to manage them carefully so that they create significant short-term value. But they’re not a path to a steady, predictable stream of revenue or ROI.
Take a hard look at the factors that turn products/services into fads. If you want a short-burst spike, invest in a fad. If not, look elsewhere — or do the hard work needed to transform potential fads into fully realized trends.
This is Part 2 in a series by Rob Haslehurst, Maria Steingoltz and Dan Schechter from L.E.K. Consulting’s Media & Entertainment practice.