Trying to figure out what toys your customers will want to buy in 12 months time is not always an easy task, particularly when these customers are young children, writes John Downes

Yet planning ahead for the Christmas market is what it is all about for toy manufacturers and retailers, who have to decide on their stock well in advance of Christmas in order to be ready in time.

Ms Anne Dermody is national sales manager with Hasbro Ireland, manufacturer of such well-known products as Monopoly, Action Man and My Little Pony.

A large part of her job, she says, entails forecasting which products will be popular in months to come, with around 80 per cent of her company's business taking place in the crucial three months leading up to Christmas.

"I am actually doing my forecast now for Christmas next year," she says. "As our portfolio consists of perennial items - such as board games like Monopoly and Cluedo - sales of these should be around the same every year," she says.

"What I can't always call - and what everybody wants me to do - is what new products kids will want. It is very hard. It's the ones that catch you by surprise... we have finite production facilities and many of our components are ordered months in advance."

As a result, Hasbro tries to work with retailers as much as possible to track the different trends that they have experienced.

Another important area for toy manufacturers is how they market products. Interestingly, this applies to parents as well as children, as educational toys in particular are not always something kids ask their parents for.

Hasbro primarily plans its advertising campaigns around television, cinema and print, as well as tie-ins with restaurant chains and toy retailers

"You have to have a good quality product, make sure the play value is high and subject the toy to a quality test," says Ms Dermody. "Research is also important: just because a kid likes it in Japan, does not necessarily mean they will in Ireland."

Smaller toy manufacturers, however, such as Prince August, a manufacturer of model toys and moulds based in Kilnamartyra in Co Cork, have a slightly different approach to that of Hasbro.

Improvements in technology have undoubtedly made it possible to do much more accurate forecasting than 20 years ago, according to the company's managing director, Mr Lars Edman. Yet deciding on a new product at Prince August, which employs approximately 15 staff, is "probably about 50 per cent science and 50 per cent gut instinct", he says.

As a lot of the company's customers would be adults buying toys for themselves, it would see a 20-30 per cent increase in its business in October and November compared with the rest of the year.

"Launching a new product is a little bit like winning the Lotto - if you're not in, you can't win," he says. "You have to keep launching new products."

Whereas bigger toy companies such as Hasbro and Mattel create demand for their product through their marketing campaigns, Mr Edman believes that smaller companies, such as his own, tend to interpret demand.

As holder of the Irish licence for the original books of the Lord of the Rings, for example, the company sees an upsurge in demand for its models based around the book's characters in the two months after a new film in the series is released.

Another way it seeks to interpret demand is by checking the number of websites on a particular subject. If there is a large number of websites devoted to Vikings, for example, this might indicate a good opportunity to introduce Viking-themed products.

Forecasting which toys will be popular - and unpopular - is also very important for those charged with actually selling the products in question - the toy retailers.

Mr Clive Long, store manager of Toymaster in Limerick, would generally see the stock for the following Christmas as early as January and February. By the start of May, he says, most of his orders would be tied down.

But, unlike toy manufacturers, he says his store "won't even think about next year at the moment", concentrating instead on making sure there is sufficient product to meet demand during the Christmas rush.

In a store that very much relies on customers of three to eight years of age to decide what will sell, he believes their tastes are "totally advertising driven".

Almost inevitably, however, there will be shortages in some of the most popular toys.

"We'd get promotional activity from each company, and would get a big knock-on effect in our stores within a matter of days of it. Kids really know what they are looking for," he says.

However, striking a balance between meeting demand on one hand, while minimising the amount of unsold stock on the other, is where the real challenge for the industry lies.