A year ago this month, the buzz first broke about a fuzzy, inexpensive new toy with some remarkable abilities. It could talk in its own language, play games, dance to music, respond to touch, light and sound, and perhaps most amazingly, interact with others of its kind. It was Furby, and now that the Christmas madness has died down and a fresh batch of toys are vying to follow in its footsteps, it’s time for an analytical look at the furry phenomenon. After all, creating the hit toy of the Christmas season is a toy manufacturer’s holy grail, and lessons learned from Furby and his predecessors can help create the hits of the future.

In analyzing Furby’s popularity, one can’t help but wonder how much of the phenomenon is due to savvy marketing and how much is due to the qualities of the product itself. Jeff Jones, VP of marketing for Hasbro-owned Tiger Electronics, which developed the toy, says the two are closely entwined, but the marketing played a more limited role with Furby than with other products. ‘The role of marketing in this instance is to generate awareness of the product and awareness of the types of things the product can do,’ he says. ‘And then, ultimately, the product has to deliver, because even with the best hype in the world, if the product is not functional, people will simply stop buying it.’ Jones says Furby received a lot of its publicity through the mainstream press, with coverage kick-started by a 12-page spread in Wired magazine last September. Trend watchers picked up on the story, and Tiger helped build media interest by sending out samples of the toy to a targeted group of outlets across the U.S.-a strategy successfully used by Coleco when it launched the Cabbage Patch Kids 15 years ago.

A launch at FAO Schwarz in New York on October 2, attended by more than 100 media representatives previously supplied with samples, clinched Furby’s popularity. Advertising undertaken by Tiger consisted of a series of print ads appearing in New York before the FAO Schwarz launch, followed by TV ads, clever press releases and cross-promotions with Cartoon Network and Hi-C. Tiger actually had to pull its TV advertising shortly after it began airing because, as Jones says, ‘you can’t advertise to empty shelves.’

The fact that the shelves were empty contributed to the buying frenzy, producing a flurry of the annual Christmas store-storming tales in the popular press. And although Jones admits the coverage generated by the temporary Furby shortage ‘certainly hasn’t hurt’ sales, he is adamant that the shortage wasn’t intentional. He points out that Tiger calculates the number of toys to manufacture based on the orders placed at Toy Fair, and that as of last December, Tiger had already shipped more than double the approximately one million pieces ordered last February.

That Tiger was intentionally limiting supply is just one of the many myths that quickly sprung up about the toy, many of them giving Furby powers far beyond what he is actually capable of. Marc Rosenberg, Tiger’s VP of corporate communications, recalls a woman calling to say her Furby started to cry during a tragic episode of her favorite soap opera, ‘which was novel,’ he says, ‘because Furbys don’t actually weep.’ Another misconception stems from Tiger’s claim that the toy starts off speaking Furbish and then gradually ‘learns’ English as its owner plays with it. In fact, although the toys can respond to loud noises, much like the Clapper light switches, they cannot understand or repeat words. Furby’s entire English vocabulary is pre-programmed at the factory, then automatically released over time as the toy is played with.

All in all, both Jones and Rosenberg admit that, to a certain extent, they were as surprised by the response to their marketing efforts as anyone else. ‘Believe me, no one would benefit more than me from saying we did it all ourselves,’ says Rosenberg, ‘but a lot of it just happened.’

Tiger’s marketing strategy worked because somehow the qualities of the toy itself captured the imagination of parents, kids and the media. Retail analysts and Tiger’s executives agree that Furby’s key qualities are the randomness of its responses, its general sophistication, its ability to emulate a living creature and its collectibility. These leverage points have appeared in various forms in all of the hit toys of the last 15 years, from Cabbage Patch Kids to Tickle Me Elmo to Tamagotchi. Furby has built on the strengths of these toys, and in fact, could be considered to have a Tamagotchi heart in a fuzzy shell, but the factor that sets it apart from previous hits the most-its randomized response to the same stimuli-may be where its key power lies.

‘Furby is completely different in that you never quite know what he’s going to do. He’s unpredictable, and that makes him a lot of fun,’ says Jones. The fact that when you tickle Furby he is just as likely to respond ‘Ohhh, tickle more’ as ‘Ohhh, no more tickle’ makes the toy less rigid and more open to becoming part of varied games. At the same time, unlike Microsoft’s ActiMates, which require complicated setup involving your home computer, the toys are ready to go right out of the box-kids instinctively know what to do with them.

At US$30, like Tamagotchi and Teddy Ruxpin of past years, Furby was one of the most sophisticated toys available for under US$50 when it hit its peak popularity. This sophistication is a trend that Dan Acuff, president of California-based Youth Market Systems Consulting and author of What Kids Buy and Why, says will continue. ‘Once conditioned to a certain level of stimulation, one needs to keep that level or advance beyond it to keep the challenge going,’ he says. ‘Kids face that all the time with electronic games, so they’re wanting more sophistication, and they’re leaving some of the more simple play patterns behind.’ This observation is echoed by retail analyst Margaret Whitfield at Boston-based investment banking firm Tucker Anthony. ‘Children of today don’t want to play with a lifeless, inanimate object,’ she says. ‘They want to play with something they can communicate with. I’m sure there will be many more.’

Both the randomness and sophistication of Furby allow the toy to more closely emulate a living creature, a pet that can be safely left in the hands of a six-year-old without worrying about harm coming to either pet or child. Specifically, Furby borrows the nurture-inducing qualities of a Tamagotchi, in that it needs to be periodically fed (by sticking one’s finger in its mouth) or it gets sick and starts sneezing. By mimicking the needs of real creatures, be they babies or pets, Furby is building on the nurturing demanded by dolls that need their bottles and diapers changed, and Cabbage Patch Kids and Pound Puppies that need to be adopted. In one way or another, all of these toys depend on their owners, giving kids a feeling of responsibility for their store-bought friend.

The final feature attributed to Furby’s success is its collectibility. This was intentionally built into the toy by offering six core fur patterns, four eye colors and 24 pre-programmed names-for a total of 576 variations. The diversity in the toy gives collectors a reason to buy more than one, makes each toy seem more special, and has made Furby auctions more interesting. The availability of individualized varieties contributed to the success of the Cabbage Patch Kids, which also came with their own names, and is perhaps the main leverage point for the popular Beanie Babies.

Jones knows that keeping demand up in the future may prove to be more of a marketing challenge than creating the demand in the first place, and to that end, a March tie-in with McDonald’s Happy Meals and a possible Furby TV show are planned to keep things rolling. As well, as part of Hasbro’s out-of-court settlement of a suit launched by Warner Bros. over Furby’s similarity to its Gremlins characters, Tiger agreed to redesign Furby for Toy Fair this month.