• Pop Mart is definitely benefiting from fan behavior. This is why toys infused with popular culture are better (but more unpredictable) than traditional toys.
• We can segment customers as casual fans vs. dedicated fans / enthusiasts vs. super fans. Within each group, we can look for specific drivers of fan behavior. See my checklist for this.
• Overall, I think pop toys without associated entertainment (gaming, videos, tv) are a fairly weak form of fandom. I rank it at 3-5 out of 10. I don’t see a strong emotional connection. It’s mostly just fun and fans think the characters are cute.

***

In Part 1, I went through the basics of fan toy retailer Pop Mart. It’s a simple business model that captures some really interesting consumer behavior. Specifically, pop toys (toys infused with popular culture and trends) can be a powerful combination of 3 consumer behaviors:

1. Fan and enthusiast behavior
2. Collecting behavior
3. Gambling behavior

In this part, I am going through fan behavior.

Casual Fans vs. Dedicated Fans / Enthusiasts vs. Super Fans

Traditional toys are mostly for fun for children. Think soccer balls and toy trucks. In contrast, pop toys are infused with popular culture and trends and are much more about fan-like behavior. And they are more about emotional rewards for adults. Adults (15-40) are the ones who buy Pop Mart’s toys. And they don’t play with them. They mostly sit on a shelf.

So, at first glance, pop toys are much more about the pre-purchase and purchase activities. And then they are about the feeling of owning them after.

Fan behavior is really interesting. And I put it into mild, medium, and extreme versions. I try to classify them as:

• Casual Fans. This is common. Most consumers are casual fans of lots of things. Everyone has favorite musicians, favorite movies, and so on. This is mostly about enjoyment.
• Dedicated Fans and Enthusiasts. These are your regular buyers of a specific character or genre. They buy with higher frequency and can be fans for a long time. Businesses really like this group. This is also the group with much more engagement. They might go to conventions. They join clubs. They have social connections with others with similar cultural interests.
• Extreme Fans. Think fans that sleep on the sidewalk for weeks prior to a movie opening. This group goes to the convention every year. Often dressed as their favorite characters.

That’s simple but I find it helpful. Here’s how I visualize it.

 

Pop Toys has 3 big characters (Molly, Dimoo, Skull Panda) and they definitely have fans. However, the first thing you notice is the emotional connection isn’t as deep as with characters in movies and books. Or with musicians. It helps when the toys are about movies, tv shows, books and comics – where the characters have lots of stories. The power of pop toys is usually closely tied to entertainment (movies, tv shows, comics, video games). Beanie Baby fans are just less intense than Iron Man fans.

It’s also worth noting that fandom is a “hits driven” phenomenon. There are tons of movies and toys out there. But only a rare few develop fan bases. And only a small portion of those have long-term or highly intense fans.

Every science fiction writer wants to create the next Luke Skywalker. Every toy creator wants to create the next Pokémon. And Pop Mart had 93 IPs in 2021. But 3 characters are still 50% of revenue in 2023. Although their top character Molly did decrease 89% to 16% of revenue from 2017 to 2021 as they grew their portfolio.

How should we think about this? Here’s my framework.

My Checklist for Fan Behavior

I have a checklist I use to assess fan behavior in businesses. It details the specific psychology I am looking for.

Casual fans are the most common. They mostly buy toys and other fan-related merchandise for:

• Pleasure. It’s fun. This is #1. It’s why most people go to the movies on Friday night.
• Self-expression and individuality / identity. This is important. What art people hang in their homes is about self-expression. Being a fan of a certain set of books can be an expression of their individuality. A lot of fan behavior is about deciding how your individuality. Showing it to people. And validating their identity.
• Emotional connection and / or nostalgia. This is the deepest driver. They feel an emotional connection to an artist or character. Or an event. Or part of their history. Buy owning part of this, they feel a connection. They feel closer to it. Emotional connection is more powerful than just fun. But does anyone have an emotional connection with Pokémon? Or it that mostly fun?

Dedicated fans and enthusiasts buy at higher frequency. It is common for casual fans to become dedicated. They can have the psychology drivers of casual fans, plus some other drivers:

• Social connections with those with similar interests. They become part of the membership club. They join the chat rooms. They make comments on videos. Baseball trading cards can be social. So can playing games like World of Warcraft. The conventions are about fun and connections. But the emotional connection is quite weak.
• Immersion in a world. Being a dedicated and super active fan is often about immerse yourself in that world. Think Chinese netizens living in gaming cafes and playing all day long. This type of immersion can be an escape. It can be a catharsis.
• Appreciation of the craftsmanship. Fans of statues, architecture, and paintings can be a lot about this. There is not a big emotional connection but they can see the skill. Paintings are more about the craftmanship than emotional connection or fun.
• A source of inspiration. Often fans look at others as their role models. People might buy photos of Abraham Lincoln because they admire him. Charlie Munger used to always talk about his idol Benjamin Franklin.
• An emotional investment, which can lead to attachment. Buying merchandise. Putting it in your room on a special shelf. Feeling an emotional connection. All of these types of actions and investments are a type of commitment. And there is the well-known psychological bias of commitment / consistency. When someone takes an action or a form of emotional of other investment, it triggers a commitment to that. People don’t like to have disconnect between their actions and their beliefs. So, they will change their beliefs to match their actions. And the more public the commitment the better. Ben Franklin was famous for asking rich guys to loan him books. He got them to take a small action. The rich guys would then decide they liked him to make their belief match the action they took. All subconsciously of course.

And of course, there is extreme fandom. The super fans. I don’t have a separate checklist for them. But they’re pretty easy to spot.

Here’s how I visualize fan behavior.

 

How I Rate Fan Behavior for a Product. And for Pop Mart.

When looking at Pop Mart and similar B2C companies, I am checking for fan behavior. And we start by looking for business outcomes. I look for:

• Gross Margin
• Purchase frequency
• Retention / loyalty
• Net promoter score

Pop Mart has +60% gross margins on its products. That was a big red flag. Gross profit is usually a direct measure of the power of your product with consumers. Most traditional toys don’t have such gross margins.

Pop Mart also has high purchase frequency. That’s a good measure. This is really what we are looking for. Higher purchase frequency is the most important.

Retention and loyalty is the tricky one. Fan behavior is hard to predict. And it can fade or decrease quickly. Iron Man still has fans after 50 years. Beanie Babies didn’t last very long. And Bill Cosby went from having lots of fans to none very quickly.

Then I am trying to answer three qualitative questions:

• What specific fan psychology is this product / service tapping into? The most common drivers are fun, self-expression, and emotional connection. You can see my full list in the graphic. But these are the most common.
• How powerful is the fandom overall? I put a 1-10 ranking. It’s a judgement call but it helps to have a feeling for whether the fan behavior is weak or strong. And whether we are looking at casual fans vs. dedicated fans.
• How long will it last? What is the likely duration? This is really important.

So, what is Pop Mart really tapping into in terms of fan behavior and psychology?

Using this framework, it is clear is why toys tied to popular culture are better than traditional toys. And why they command +60% gross margins.

I think buying the popular pop toys Dimoo and Molly is mostly:

1. Fun. Fans think they are cute characters. And it’s fun to buy the new ones when they come out. It’s like getting a treat for a couple of dollars. They sell a lot of these in vending machines.
2. Self-expression and individuality / identity. These fans put the toys in their rooms on shelves where they can be seen. It’s a form of self-expression.
3. Appreciation of the craftsmanship. Especially for the new designs for the characters.
4. Social connections with those with similar interests. I’m not sure how common this is.

I think this fan behavior is mostly about #1 and #2.

Overall, I think pop toys without much associated entertainment (gaming, videos, tv) is a fairly weak form of fandom. I rank it at 3-5 out of 10.

I don’t see a strong emotional connection. It’s mostly just fun and fans think the characters are cute.

And I don’t think it is that long lasting. Years. Not decades. I don’t think it will last decades like Iron Man and baseball cards.

Fan behavior is definitely part of why Pop Mart has been successful. But I think it’s the weakest part of their consumer behavior.  In Part 3, I’ll talk about a much more powerful part of their second consumer behavior, which is collector behavior.

 

Conclusions

• Pop Mart is definitely benefiting from fan behavior. This is why toys infused with popular culture are better (but more unpredictable) than traditional toys.
• We can segment customers as casual fans vs. dedicated fans / enthusiasts vs. super fans. Within each group, we can look for specific drivers of fan behavior. See my checklist for this.
• Fan behavior needs to show up in business outcomes to be valuable. I look for: gross margins, purchase frequency, retention / loyalty and net promoter score.
• Overall, I think pop toys without associated entertainment (gaming, videos, tv) are a fairly weak form of fandom. I rank it at 3-5 out of 10. I don’t see a strong emotional connection. It’s mostly just fun and fans think the characters are cute.

 

• Fans, Collectors and Gamblers: The Engine of Pop Mart (1 of 4) (Tech Strategy)
• Pop Mart and My Checklist for Collector Behavior (3 of 4) (Tech Strategy)

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Related articles:

• When Microsoft’s Bundles Are Good vs. Bad for Customers and Markets (Tech Strategy)
• Microsoft’s 3 Big Upgrades to its 2 Platform Business Models (2 of 2) (Tech Strategy – Daily Article)
• What is Elon Musk’s Plan to 10x Twitter? (2 of 2) (Tech Strategy – Daily Article)

From the Concept Library, concepts for this article are:

• B2C Customer View: Fans and Fandom

From the Company Library, companies for this article are:

• Pop Mart

Photos are AI generated

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I write, speak and consult about how to win (and not lose) in digital strategy and transformation.

I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.

My book series Moats and Marathons is one-of-a-kind framework for building and measuring competitive advantages in digital businesses.

This content (articles, podcasts, website info) is not investment, legal or tax advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. This is not investment advice. Investing is risky. Do your own research.