What has eight arms, looks slimy, sticks to walls, and has helped make a Washington entrepreneur a millionaire?
The answer is Wacky WallWalker -- a toy that was a best seller two years ago and now is being offered as a "premium" with products as diverse as Wendy's hamburgers and Kellogg's Fruit Loops cereal.
By the end of the year, more than 75 million WallWalkers will be adorning walls and windows in the United States, and Ken Hakuta, the man behind the toy, believes the end is not in sight.
It all started in the fall of 1982 when Hakuta's 3 1/2-year-old son Kenzo received a present from his grandparents in Tokyo -- a WallWalker. Kenzo's father, a Harvard Business School grad, saw "a once in a lifetime" opportunity in the gummy toy -- a sort of small plastic octopus that sticks briefly to a wall and then oozes and twitches toward the floor.
Hakuta began selling the sticky creatures after he learned that no one had bought the North American rights to the WallWalker, one of Japan's most popular toys. Following newspaper stories and brief coverage of the WallWalker on the "CBS Evening News," "the phone rang for 2 1/2 months," Hakuta says. "People came to my house in limos looking for WallWalkers, and they made emergency calls, breaking into our phone conversations trying to order them.
"I first committed myself to buy 300,000" in December 1982, he said. "That was a six-digit commitment, a lot for a small business." But almost immediately, he had orders for 7 million. "These are solid orders, from the major chains -- Woolworth's, K mart, Revco and Thrifty Drugstores," he said. "By January 15th 1983 , the orders were up to 15 million."
Hakuta used Tradex, his small company that occupies an office near the Watergate complex, to market the WallWalker. Until then, Tradex had dealt in other toys and karate uniforms.
Hakuta's first major problem was meeting his orders, he said. Initially, he had 15 million orders and a capacity to deliver only 200,000 a week. "And as they say in fad marketing -- every day is a year," he said. "It was a real problem."
The answer was to increase production to 5 million per week by creating new molds. Last summer, a year and a half after the WallWalker fad began, Hakuta set up a factory in Korea to control costs and quality.
The factory was part of a plan to prolong the life cycle of the WallWalker well beyond the usual 90-day life of a fad product. "My strategy was to make it a premium product," Hakuta said. A premium product is one that you get for free or at low cost when you buy another product, like the prizes in Crackerjacks. The WallWalker "is the quintessential premium item," Hakuta said.
By making the WallWalker a premium, Hakuta was on his way to achieving his main goal -- institutionalizing the toy. "I wanted something that would last for a while -- for the next 10 years. From day one I wanted never to milk the product."
Hakuta said he has had offers to license the name, "but that is very dangerous once done," he said. "I had 30 to 40 offers to license." He resisted, however, from fear that licensing might result in a shorter life for the toy and, ultimately, less money.
Hakuta said he sometimes thinks of the story of the WallWalker in terms of a marketing case study. Following initial media coverage of the product, the WallWalker went through a phase that was normal development of a fad product. Sales were fast and furious, enduring through 1983 for a total of 27 million sold. At the end of 1983, sales stabilized, dropping off from the crush early in the year without disappearing completely. Then came the Wendy's hamburger chain promotion, which offered a WallWalker for 99 cents with any purchase. Wendy's promotion campaign exposed national television audiences to the WallWalker's goofy charm.
Although retail sales in 1984 were well below those of 1983, Hakuta said he is unconcerned because of the item's potential as a premium. "It can be a classic premium item," he said. The WallWalker is now ending a three-month stint during which it was offered as a premium in four Kellogg's children's cereals. "There are, in the United States, 43 million children under the age of 13. This promotion will distribute about one to every child," Hakuta said.
Hakuta said he is negotiating with other firms for use of the WallWalker as a premium with their products or services, but would not identify the companies.