“Wait, you get your kids presents for Easter?” He shook his head and continued, “Aside from some candy, I never got anything for Easter! Presents? C’mon!”

I went on to describe my Easter gift purchases, which included Super Soakers, yo-yo’s, bubbles, moon balls, Barnes & Noble gift cards, and of course, candy. While I sympathize with my younger colleague’s youth of deprived Easters, I will not be following in his mother’s footsteps. Along with staging an over-the-top Easter egg hunt, filling an Easter basket with an assortment of goodies is one of my favorite holiday traditions, and, according to one of our most recent surveys from our Kids Industry Data Service (KIDS), a wide variety of gifts were being purchased for Easter.

These are the results from the survey that was fielded the weeks of April 11 and April 18 for the open-ended question: Besides Easter eggs and chocolate, what’s in your child’s Easter basket this year? Among the 1,200+ items mentioned, here’s how the responses stack up:

33% Toys and Games
18% Books
12% Arts and Crafts
8% Candy
5% Apparel
4% Stationary
4% Movies
3% Gift Cards

For Toys and Games, there were two main items that combined to form a large share of its responses. Games and Puzzles comprised 27 percent of the Toys and Games related responses while mentions of Plush stuffed animals contributed 23 percent.

The high placement of books doesn’t just reflect the seasonality of Easter occurring during the school year, but also the nature of purchases that occur particularly for Easter. To compare to another gift-giving holiday that occurs during the school year, books were at just 3 percent on the Christmas wish list. Why the discrepancy between the two? Easter is a more parent-directed purchase occasion, and parents tend to value books/reading, while Christmas is a child-directed purchase occasion. According to our Toys Consumer Tracking Service, purchases made on behalf of Easter comprise about 2 percent of annual Toy Industry sales, or about half a billion dollars each year. KIDS now allows us to provide insight into what is competing with toys for those Easter purchase dollars.

Easter is certainly a gift giving holiday (as many lucky kids just found out). Now, can somebody tell that to my not-so-lucky colleague?

NPD is passionate about covering kids and the market for kids products and services. We recently released our newest study examining how kids spend their free time, who they spend it with, and the time-share various activities command. One of the more fascinating findings to me from Kids Leisure Time 2011 was this blurring of entertainment and socializing catalyzed by the newer forms of communications available to kids. Are social network sites an entertainment activity or a social activity? What about gaming while chatting via OnLive, or IMing a friend a link to a cool Web site - are these activities “entertainment” or “socializing?”

A growing body of leisure time activities spans both entertainment and socializing, with the division of these two categories becoming obsolete. Arguably, activities like chatting on the phone with a friend have always had an intrinsic entertainment value, but this has become even more pronounced in light of the many ways in which one can communicate – from texting and skyping to chatting in a massive multiplayer online game. This translates into more ways to reach kids from both a product/content standpoint as well as in marketing and messaging; and knowing how to do so effectively and efficiently is more critical than ever given the rapid pace of change in this area.

Another of our services is dedicated to consistently monitoring what is hot with kids. Our Kids Industry Data Service (KIDS) provides monthly insights into cross-category spending on behalf of kids, noting top brands and licenses as well as how spending changes with important retail periods like back-to-school and the holidays. Each month we also ask a different open-ended question covering a variety of topics. In February, we asked parents, “What is the newest/hot thing your child is into?” Since the question is completely unaided, the responses represent what is truly top of mind with respondents. The results surprised me. I figured Bieber fever had peaked or started to decline but I couldn’t have been more wrong. Out of more than 3,000 mentions, Bieber received 14% of those responses (okay so he did have a movie release in theaters in February that is the 6th highest grossing movie of 2011 so far - but still!). The top 10 “What’s Hot” mentions were: Justin Bieber, Xbox 360, Nintendo Wii, Toy Story, Nintendo DS, LEGO, iPad, Dora The Explorer, Facebook, and video games. Again, as an unaided question the responses could be whatever was top of mind with the parent, and the mentions spanned licensed properties, celebrities, sports, movies, consumer electronics, apparel…they run the gamet. What is on the horizon that might become the next hot thing with kids? While these did not receive as many responses, some of the mentions that we think we are worth watching include: Big Time Rush Band, Victorious/Victoria Justice, Vibram Five Fingers shoes and skateboard themes (Zumiez, Zeke & Luther). Keep an eye out here for future insights into “What’s Hot” with kids.

KIDS provides the only holistic view of purchases made for kids from birth through age 14 focusing on licensing, brands, and retailers, across 19 product categories. KIDS displays detailed information on different age groups within the categories tracked as well as clearly defining the difference in purchase habits for boys versus girls. KIDS provides consumer demographics and purchasing information that complements data from other industries tracked by NPD.

We recently released our fourth quarter 2010 KIDS report which found that apparel & accessories captured the greatest share of spending against kids during this critical retail timeframe. And while toys, video games, and DVD/Blu-ray sales were some of the categories that were the most reliant on licensed sales, other such as footwear, and health and beauty sales were much less impacted by licensed properties.

KIDS also presents a glimpse into what is hot and trending for kids. During the holidays, I wrote a blog about what parents said was top on their kids’ wish lists. Toy items were the most frequently mentioned category after four weeks of surveys leading up to Christmas at 39 percent of all items cited. How does this compare to actual purchases? Well, toys & board games captured a bigger share of unit sales than it did dollar sales, a nod to the lower average selling price compared to items like apparel or consumer electronics. But its share of unit sales was a far cry from the 39 percent of mentions. The difference? Not all purchases during the fourth quarter were for Christmas/Chanukah. Purchase occasion by category is another area covered by KIDS.

Another phenomenon changing the way purchase decisions are made: the growth of social media. Moms are the family’s key purchase decision-maker, and the exponential growth of their involvement in social media affects the purchases they make for their children and themselves. NPD looked at these behaviors in the recently released report Social Media Mom’s: How Networking Impacts Purchase Behaviors. Facebook, Twitter, YouTube as well as various blogs and other social media outlets have come to the forefront of informing mother’s purchasing decisions. Nearly eight-in-ten (79 percent) moms who know about social media are using one of these sites and about one-in-four (27 percent) of these moms are using social media to get promotions, offers, or discounts on products and services. Social media allows access to the consumer at a personal level and provides a forum to build a relationship with the customer and deliver value at that level. Marketers are just starting to scratch the surface with how they use digital marketing and social network sources to deliver messages and promotions to audiences that are specifically targeted based on their interests.

Our new Kids Industry Data Service (KIDS) is a monthly, syndicated tracking service that provides users with a holistic view of purchases made for kids ages 0 - 14 across categories and retailers. Each month, along with the standard survey, we are asking respondents an open-ended question aimed at getting to what is hot with kids at that moment of time. The November and December surveys ask the question, “What is on your child’s wish-list for the upcoming holiday season?” and the results reflect what is truly top of mind with kids and parents as the question is purely unaided.

Out of the 4,600+ items captured so far, 38% are toys, 15% are in the video game category, 10% fashion-related (apparel, accessories & footwear), 9% are consumer electronics, and 6% are sporting goods. Other categories mentioned include books, entertainment (movies & music), juvenile products and cold hard cash in the form of both actual cash and gift cards. Hot toys include LEGO, Barbie, Toy Story 3, Pillow Pets, American Girl, and Zhu Zhu Pets among many others mentioned. One of the more interesting is “Teacup Pigs.” Whether this refers to the actual pig (a pet) or the new toy line, are small cute pigs the new hamsters? In video games, content (games) are the most frequently cited wish-list items with Black Ops, Halo: Reach, Super Scribblenauts, Rock Band 3, and Just Dance called out specifically, while in hardware, kids are asking for the Wii and the Nintendo DS. New specialty controllers, specifically the Kinect and the Move, also make the list. Most of the fashion responses were fairly generic e.g. “clothes” “jewelry” or “shoes” but in a few cases specific brands were mentioned like Uggs for footwear or Juicy Couture for clothing. In consumer electronics, laptops are the hot kids’ wish list item, and I can personally attest that a laptop made it onto the wish-list of three of my four boys. When specific items were mentioned within the CE category, “i” products dominated with iPods leading among those. E-readers didn’t show up at all in the first two weeks but in week 3, they made an appearance with the Kindle being specifically mentioned. In music, Taylor Swift and Justin Bieber are what kids are looking for the most and in books, Diary of a Wimpy Kids gets the most specific mentions. All in all, it’s fascinating stuff, and as we get closer to the Christmas holiday, the number of responses is increasing each week and the variety of the items mentioned expanding.

Why is it important to know what is resonating with kids? NPD’s latest report, Toy Purchase Decisions, finds that the majority of toy purchases are planned purchases (62%) and if the buyer gets to the store and doesn’t find the item he or she is looking for, by and large they do not substitute another item, rather they leave to find the item they’re looking for elsewhere. Not only that, but the purchases that were made because the buyer knew what he or she was going to be in advance generated the highest average price paid among all types of purchases. What this says to me that generating those specific wish-list item mentions through savvy marketing is critical as is managing product selection and inventory at retail. When 40% of annual toy sales generally occur during November and December, there simply isn’t room to make mistakes. Retailers are increasingly realizing that they’ve got to nail the holiday season and are getting creative with finding additional shelf space for toys during the holiday season via temporary pop-up stores or temporarily converting other shelf space to toys.

As I dreamily browsed through the displays of Turkey Brining seasoning and Pumpkin Butter, I came to a sudden stop in front of some Yoda-shaped pancakes. Star Wars in Williams Sonoma? Now this was something wholly unexpected. The display held a variety of licensed Star Wars goods including cookie cutters, aprons, lunch boxes, and yes, pancake batter molds. For someone who spent years working in the Licensing industry, perhaps I should have been a little less startled by my discovery, yet I examined the merchandise with a fair degree of curiosity.

In fact, Star Wars was one of the top licenses across myriad product categories during a portion of the 2010 Back-to-School shopping season, as NPD’s newest report, Understanding Cross Category Purchasing, July 2010, finds. The report is the third in a series of topicals that examines how dollars are spent against kids during important retail seasons, with the first two covering Holiday 2009 and 2010. Upon hearing input and feedback from our clients, NPD will soon launch an ongoing tracker of this type of information, endearingly titled KIDS (Kids Industry Data Service).

Licensors have long hungered for more comprehensive insight into the performance of their properties but have had limited data available to them to do so. While they may have had insight into how their property was performing in a particular category, such as toys, apparel or video games for example, now with KIDS, they can see how their property is performing across categories with a particular retailer or consumer demographic.

We will have more information to share on this new service soon, but for now, I’ve got to bake me some R2-D2 and C-3PO cookies to bake.

What’s very apparent in this report is that as kids get older their influence over what is purchased for them increases. As kids mature their exposure to what’s available in the marketplace increases as does their sense of style and entertainment options. By the time kids reach 3-5 years old, almost half (47 percent) of dollars spent on them are for items requested by the child. By the time kids reach age 12-14 years old, two-thirds (66 percent) of dollars spent are on items they’ve requested. And this makes sense. As parents, we are very interested in making our children happy, particularly around gift-giving occasions. What could make them happier than getting the items that they put on their wish-lists? So marketers of products for kids must always strike a balance between becoming well-known to kids so that kids are asking for their products, and acceptable to the parents who ultimately control the dollars.

So how, if at all, has the economic situation impacted the toy industry?  At a very top-line view, NPD’s monthly consumer tracking service of the toy industry indicates that this year, so far, a greater percentage of toy sales are being purchased via a “store deal” or a “price reduction.”  Conversely, for the 12-month period ending September ‘09, the percentage of toy purchases made which utilized “no special offer” declined 2 percentage points over the previous 12-month time frame.  While there was little increase in the use of a manufacturer rebate or a manufacturer coupon over these periods, there was an up-tick in purchases made using either a store promotion or store coupon.  The promotional vehicle seeing the greatest increase by far was with purchases made via a store sale.  From this it would appear that consumers are actively seeking price discounts when making their purchase decisions.

Our latest toy industry topical report, Toy Purchase Decisions, lends more insight into these findings, and the role that price and promotions play in the toy purchase process.  The biggest impact price plays is in the selection of the retailer.  The majority of toy purchases are planned, and of those planned purchases, for 78% of them, the buyer knew exactly where they wanted to shop.  So where do store sales and discounts come into play?  Well, a shopper could have two or more specific items in mind when they enter the store, and the presence of an in-store price reduction could sway their decision to one over the other.  Also, while a majority of toy purchases are planned in advance, the rest are not, and the study found that those that purchased toys on impulse were more likely to take advantage of an in-store price reduction indicating that price promotions are an important catalyst to unplanned purchases. 

And there is something new at play in this arena that I find particularly fascinating.  The impact of “social shopping” and the retailers and manufacturers use of social sites like Twitter and Facebook to communicate promotions to their fans and followers.  Just the other day, Toys R Us used the power of Twitter to communicate that the first 50 shoppers to their store that day could pick up Zhu Zhu Pets (which for those of you who don’t know is emerging as the hot hard-to-find toy of this holiday season).  The retailer also uses Twitter to promote their “Deal of the Day” which is usually a very compelling price reduction on popular items.  The sheer variety and creativity in the use of social media makes this trend a really fun one to follow, and certainly we’ll see an impact on how purchases are made because of this phenomenon.

While it’s certainly not new for companies to harness the power of the Internet, and specifically YouTube and now social networking sites as part of their overall marketing plans for their products, it might surprise some that they would be part of a marketing program for a product aimed at younger kids. But in truth kids are big users of a lot of these Web sites, and as detailed in our recent report Kids & Cross-Entertainment Behaviors, YouTube.com ranked in the top 5 Web sites used by kids ages 2-12. This same report shows that among purchases made for kids during the past holiday season, 58 percent of dollars spent were spent on entertainment-related product categories. So you can imagine that for companies involved in entertainment, understanding kids and how they’re consuming various types of entertainment is pretty important. But given the power of entertainment in kids lives, any company involved with products for kids in any category needs to understand where kids are spending their time and how they’re participating with and consuming entertainment and media in order to best promote their products and services. After seeing this new Barbie music and dance video it’s clear that Mattel understands just that.

But why promote to kids? Don’t parents make all the purchase decision anyway? Well yes, and no. While some product categories are heavily driven by parental decisions, most entertainment categories (including toys) are heavily driven by the child’s request or influence. Our new Toy Purchase Decisions report takes a deep dive into the mechanics which influence a toy purchase, and dolls is one of the categories in which purchases are most influenced by child request. So using the right media vehicles that kids in your particular target market are using is critically important to catalyzing that kids’ request. While seeing the announcement of the Barbie video got me thinking about this whole subject, in fairness to both genders, let me address boys for a moment. Boys are also big users of YouTube, and in fact our report shows that the Web site is used by boys more than girls. And while gaming content is very popular and consumed by both genders, it’s relatively more important to boys than girls. Our Kids & Cross-Entertainment Behaviors report goes into a lot of detail about how games are acquired and consumed by kids, and the importance it plays in the usage of a multitude of devices from computers to video game systems to phones. As we head into the all-critical holiday time period for many industries, toys and video games included, thinking about these issues and most effectively reaching kids and stimulating that “kid request” could very well be the difference between success and failure for many products.

When I read the news of F.A.O. Schwarz’s acquisition by Toys R Us, I immediately thought back to the movie “Big” and the famous scene where Tom Hanks and Robert Loggia dance on the big piano in F.A.O.’s New York store.  Of course the entire movie is about the magic of creating toys and the giddy feeling many of us, even as adults, feel when walking into a toy store.  Despite greater competition these days from other product categories like video games and consumer electronics, toys remains one of biggest categories for spending on kids, as outlined in our Spotlight on Kids:  Understanding Cross-Category Purchasing report we released about a month ago. 

The magic of the destination toy shopping trip continues.  While it’s true that today the majority of toy purchases are made in the mass market/discount channel, our newest toy report, Toy Market Dynamics, reveals that the annual spend by households that purchase at toy stores is 15% higher than what the average household spends on toys at a mass market/discount retailer. 

Toys remain near and dear to the hearts of young and old alike.  I get a little smile on my face even as I’m still finding little Nerf gun darts behind couch cushions and under my dining room table.