THE MARKETING 100;STEP2 TOM MURDOUGH

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Tom Murdough, who spent two decades building the toy company Little Tikes, literally took things a step further when he left to form Step2 Corp. in 1991.

Applying the rotational plastic molding process he knew so well from making Little Tikes' kid-sized yard toys, he created a line of popular plastic yard and garden equipment for adults.

Along the way, he returned to making plastic kids' toys "in softer colors and with new functions and wider price points," with luxury items like Step2's $400 Welcome Home playhouse for kids and 26 new items under $20 each.

In less than five years, Step2 has become Little Tikes' biggest rival in the estimated $250 million-to-$300 million market for yard toys, reaching 25% market share this year. Sales zoomed from $21 million in 1992 to $85 million last year.

"Ideas are our most important asset," says Mr. Murdough, the company's president. "And we get them from two places: our employees and our customers."

He explains that 10 employees handle a toll-free customer hotline to learn more about what's right and wrong about products. Advertising, handled in-house, consists of print ads in parents' magazines.

Toys now outnumber yard products, but Step2's Yard Hopper wheeled garden chair remains a perennial best-seller.

"We share our success with annual bonuses to our 1,100 employees and we involve them very much in the development process. They're the reason for our success," he says.

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