Toy Prices Skyrocket, So Do Sales

This article reveals that toy companies are selling toys for big bucks and consumers are taking the bait. At first, this observation might seem to go against the economical belief that markets move toward equilibrium. Why would a consumer spend $300 on Hasbro Inc.’s robotic Butterscotch pony when they could purchase a similar product at Wal*Mart for a fraction of the cost? Wouldn’t they be better off buying from Wal*Mart? Maybe not. Toy consumers must be taking opportunity costs into account. Yes, they could buy an off-brand robotic pony for less, but that saved money comes at a price. That price is value. In the article, Boire understands this when he states “This game is about better quality.” Consumers believe a more reliable, long-lasting product will be produced by stores that specialize. High-quality toys, therefore, come from toy stores, not super stores. In this way, buyers of toys are considering not just the explicit, but the implicit cost of purchasing from the toy store at a higher price. The toy might cost more now, but if one of lesser quality is bought, breaks, and must be replaced before the toy store product wears out, the Wal*Mart version could end up costing just as much if not more. Through consumers’ willingness to splurge on toys, it is evident that the choice has been made. The value of quality outweighs the extra cost of high class toys.