Competitive Strategies

Questions.

1. Analyze Crayola’s problem. What management, organization, and technology factors contributed to the problem?

2. What competitive strategies is Crayola pursuing? How does digital technology support those strategies?

3. What people issues did Crayola have to address in designing its new technology-based products?

4. How has digital technology changed Crayola’s business model and the way it runs its business?

Case.

Crayola is one of the world’s most beloved brands for children and their parents. The Easton, Pennsylvania–based company has been noted for highquality, non-toxic crayons, markers, pencils, modeling clay, creative toys, and innovative art tools that have inspired artistic creativity in children for more than one hundred years. You can find Crayola products nearly everywhere, including schools, offices, supermarkets, drug stores, hospitals, theme parks, airports, gas stations, and restaurants.

The Crayola crayon box became part of the collective history and experiences of generations of Americans, and a symbol of the color and fun of childhood. But today, that Crayola crayon box is not as iconic as in the past. The popularity of Crayola crayons is under assault—not by Crayola’s traditional competitors (Faber-Castelli, DixonTiconderoga, and MEGA Brands), but by changing times.

There has been a profound technological and cultural shift in how children play. Children and their families are being bombarded with increasingly sophisticated forms of entertainment, many of them digitally based. Digital products are starting to supplant physical ones in the world of children’s play as well as in other areas of work and everyday life.

With the advent of computers and web-based learning, children are leaving behind hand-held art supplies at an increasingly younger age. The phenomenon is called KGOY, standing for “Kids Growing Older Younger.” As children reach the age of 4 or 5, when they become old enough to play with a computer, they become less interested in toys and crayons and prefer electronics such as video games and digital tablets and smart- phones. Crayola is not immune to this problem.

Will Crayola become a dinosaur from a different era? Not likely, thanks to the company’s forward- looking management, which embarked over a decade ago on far-reaching changes in leadership, organizational culture, and the product development function. The organization restructured around consumer insights and needs rather than specific product lines.

Vicky Lozano, Crayola’s VP of Corporate Strategy and her team recognized that Crayola’s purpose has always been to nourish originality and to help parents and teachers raise creative and inspired children. Crayola’s broader mission is not just to put crayons and art materials in children’s hands but to help children learn and play in colorful ways. The question they asked was not, how can we sell more crayons? Instead they asked, what kinds of experiences and technologies should Crayola embrace?

Crayola has reframed its business model, introduced a new innovation process for product development, and created new products and revenue streams. The company has been transformed from a manufacturer of crayons and art tools into a trusted source of tools and experiences for creative play. Crayola is using digital technology, but not to replace its core crayon business. Instead, it’s integrating the old and the new. The company now offers a new range of products like the iMarker, an all-in-one digital pen, crayon, and pencil, designed for use with the Color Studio HD iPad app. It’s like a traditional coloring book, but includes new interactive sounds and motion. Lights, Camera, Color! is another digital application that allows kids to turn their favorite photos into digital coloring book pages.

Tech toys such as the Digital Light Designer, a 360-degree domed drawing surface, encourage imaginations to run wild with colored LED lights. Children can play updated versions of their favorite games or animate and save up to 50 pieces of their own artwork. Crayola found that parents are looking for toys that are less messy than traditional markers or fingerpaints. These digital toys are “100 percent mess-proof,” and technology has helped Crayola make its other products less messy as well.

In designing new digital products and experiences, Crayola has drawn on its extensive knowledge of child development. It understands how digital technology can play a part at different ages. For instance, the My First Crayola line is targeted specifically at one-year-olds; while Crayola Catwalk Creations is designed for “tween” girls who like expressing them- selves through fashion.

Crayola also understood that it had to change the way it markets its products as well as the products themselves and has been investing more and more in digital marketing. These initiatives include online advertising, promotions, social media pushes, and other digital activation programs that allow Crayola to connect with parents and educators invested in raising children’s creativity level. Social media has proven especially effective and Crayola has a presence on Facebook, YouTube, Pinterest, Twitter, and Instagram.

Crayola’s YouTube channel features colorful videos on Crayola products and instructions for creative projects where they can be used. The company’s Facebook presence features a live chat series with experts and creative celebrities called “Inside the Crayon Box.” Crayola wants to stimulate conversations around creativity so parents can learn from each other and understand how to build creativity in their children.

Crayola’s core parent audience is turning to the web for gift and usage ideas, comparing prices, and reading reviews before making purchases. Crayola wants to be first in mind as a source of $20 artsy toys and mess-proof gifts. The company focuses heavily on search, social media, and digital display, to help parents find the Crayola products needed for their children’s school supplies or gifts. Crayola closely tracks activity on its online channels through Google Analytics to make sure it is getting the most out of its marketing and ad campaigns.

Crayola’s website has been thoughtfully designed for children, parents, and educators. It features free ideas for crafts, printable coloring pages, and even advice on how to remove stains. The website also can be used for ordering Crayola products online. Thanks to its new array of products and services, Crayola has experienced better growth, and its future looks as bright as the vibrant colors of its iconic crayons.