Battle to make 'hot toy'

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Somewhere, in a bunker strewn with electronic parts, bright colors, giggling Muppets, glamorous Barbies and googly eyes, toy experts are working on the cool toy for Christmas. Christmas 2007.

This year's "hot toy" sometimes turns out to be next year's bargain-bin resident, but it is not for lack of trying. Manufacturers spend considerable time and money coming up with what they hope will be a big holiday seller, but sometimes they miss the mark on what children want.

For 2006, they may have hit their target perfectly. With TMX Elmo flying off the shelves and consumers resorting to fisticuffs for a chance at a PlayStation 3, 2006 is shaping up to be a successful season.

Some toy industry watchers say there has not been a true holiday toy craze since Furby popped up in 1998. Other winner's circle residents: Cabbage Patch Kids dolls in 1983 and Tickle Me Elmo in 1996.

A toy's popularity begs the classic chicken-and-egg question. Is a toy popular because companies generated PR hype and manufactured a select amount to create a shortage? Or does one well-timed product capture the imaginations of little ones and the wallets of their parents?

A bit of both, says M. Eric Johnson, professor of operations management at Dartmouth College's Tuck School of Business.

"It is an inexact science to create a fad," Mr. Johnson says. "Shortage is certainly part of creating a 'hot' toy. This is one industry where shortage is a good thing. Nothing can be cool if it is readily available.

"It is easy to be cynical and say that is the only reason for a hot toy," he says, "but it is more difficult than that. Every company would love to hype its product, but most of the time, that does not work."

Past hot holiday toys have had several things in common, Mr. Johnson says. They were innovative and captured the imagination. They were at a price point that was not so cheap that the market was saturated but not so expensive that they were out of reach.

"When you look at Cabbage Patch dolls, Furby or Tickle Me Elmo, they each had an element of imagination," he says.