Companies that manufacture toys and games purchase the raw materials needed for creation, design the prototypes and samples, and then market the finished products to a variety of retailers and wholesalers, including toy and hobby shops, merchandisers, and department store chains.
The demand for toys and games is propelled by the 12 and younger age group. Product innovation and the income of the consumer are responsible for the demand of electronic gaming products. The revenue an independent company generates depends on how well it is able to identify and participate in the market trends, and the effectiveness of their marketing strategies. Bigger companies in this industry are more readily able to provide a vast selection of toys and games, and because of their already established place in the business world they also have advantages in buying, manufacturing, marketing, retailing, and distribution. Smaller companies typically focus on specializing in certain sectors of products, or being quicker to react to trends in the market. Manufacturers in the toys and games industry have to deal with more competition in this market as other sources of entertainment directed at children are becoming more common and accessible, such as the internet, consumer electronics, and television.