Hooked on Rapid Growth
Hooked on Phonics was created in 1987 as an instructional program to assist school-age children who were struggling with reading skills. Sold primarily through infomercials, the name grew increasingly recognizable as more and more television viewers stumbled upon the advertisements and their memorable “Hooked on Phonics worked for me!” tagline. Throughout the 1990s and into the early 2000s, the company introduced a handful of additional products, including “Hooked on Math,” but still remained true to its original direct-to-consumer sales model. In 2005, Hooked on Phonics, now known as HOP LLC, was acquired by Baltimore-based Educate Inc. (which also owns Sylvan Learning Center) and was poised for a new-product explosion. Since the acquisition, HOP has launched a range of new products, including “Hooked on English” (developed specifically for non-English speaking children), “Hooked
on Bible Stories,” “Hooked on Phonics Discover Reading” (the company’s first line of reading programs for babies and toddlers), and “Hooked on Phonics Learn to Read” (for children ages 3 to 4 years). It also began mass distribution to a variety of retailers, including big-box giants Target, Wal-Mart and Barnes & Noble. Here, Hooked on Phonics CEO Chip Paucek talks about the company’s evolution from its single-product infomercial roots to its current endeavor as a leading creator of educational products for children of all ages.
• What are the greatest challenges in trying to reach children today in terms of creating products geared toward them?
Chip Paucek: From our point of view, the greatest challenge is [first] getting buy-in from parents. Our mission is to provide parents and caregivers with age-appropriate resources to help introduce, teach and build reading skills in their children from infancy through age 12.
That said, once the parents are on board, we still have to cross the ultimate satisfaction hurdle, and that’s ensuring the child has a positive experience with the product. Our main challenge is to deliver a product that genuinely improves reading skills and confidence, while keeping kids interested and entertained.
• What changes have taken place at HOP as a result of the 2005 acquisition by Educate?
Paucek: The most significant change has been our swift and aggressive move to retail. As you may remember, prior to 2005, “Hooked on Phonics” was sold almost exclusively through infomercials. In less than 24 months, the “Hooked on Phonics” brand went from zero retail penetration to distribution in nearly every mass-market retailer in the United States, including Wal-Mart, Target, Costco, Sam’s Club, Borders, Barnes & Noble, among others.
• What have been the challenges of adapting to new ownership?
Paucek: Whenever a company goes through a major change, such as what we’ve experienced, there are always challenges. In our case, because the company’s DNA was entirely direct response, we needed to build a team with both sales and packaged-goods experience.
Take the product packaging for example; our “Learn to Read” program was sold in a large, brown cardboard box. This was something we obviously needed to address before we could launch our product [in retail outlets].
• What was your vision for HOP when you took over as CEO at the end of 2005?
Paucek: Our vision was two-fold: [First, to] make “Hooked on Phonics” available to consumers on a wider scale through mass-market retail distribution; and [second, to] extend and diversify the “Hooked on” product line through the addition of new programs for infants and toddlers, language products, and [electronic learning aids] with partners such as [Bannockburn Ill.-based toy developer] Zizzle.
[In May 2006, HOP announced a partnership agreement with Zizzle to create a new line of electronic learning aids to be sold at major retailers worldwide.]
• Hooked on Phonics is a household name, but some consumers may still remember it strictly as an infomercial product. What strategies have you been taking to increase consumer awareness about HOP’s growth beyond that niche?
Paucek: That’s a great question. This year marks Hooked on Phonics’ 20th anniversary and, in celebration of this milestone, we are partnering with Zizzle on a mobile marketing tour called “Hooked on Phonics HOP Across America.” Visiting 10 key U.S. markets, the tour is designed to get parents and kids excited about reading and to show them how much fun learning to read can be.
Our tour bus will be outfitted with the latest and greatest “Hooked on Phonics” reading programs, such as “Learn to Read” and our new “Discover Reading” program for infants and toddlers, as well as new electronic games from Zizzle.
We’ll be hosting three-day events in each market, including a retail day, to generate consumer awareness and media exposure. As part of this celebratory event, we are partnering with First Book, a nonprofit organization that gives children from low-income families the opportunity to read and own their first new books. Through First Book, we will donate $1 million worth of reading programs to literacy organizations [to benefit] children and families who may not otherwise have access to these resources.
• HOP recently has had an explosion of new product launches in a relatively short span of time. To what do you attribute this growth?
Paucek: When Educate Inc. bought Hooked on Phonics in 2005, there was a total of four products in the line. In order for us to drive retail growth, we needed to expand our line, so we have the right products to place in the most opportunistic sections at retail. For example, we introduced a line of workbooks to sell in book sections [of stores], and we added new “Hooked on” titles, such as “Handwriting,” “Spelling” and “Language” programs, to further increase our retail presence.
• Hooked on Phonics now offers foreign-language products, such as “Hooked on Spanish” and “Hooked on Chinese.” What are your plans for reaching these markets and for expanding globally?
Paucek: We’ve seen a strong need for reading programs in markets all over the world. In response, we’ve released more than a dozen “Hooked on” language titles, including “Hooked on English,” our ESL [English as a second language] product, and other international languages, such as Spanish, Portuguese, Russian, Chinese, Korean and many others.
Our “Hooked on” language products are designed for English-speaking children whose parents want to get them started on a new language. As such,
they are primarily distributed in the United States and Canada. The “Hooked on English” product line will ship
this summer and will be available all over the world.
Interestingly, we are producing a series of infomercials for “Hooked on English” … [which] will begin airing internationally in August. In Mexico, we are working with a popular local celebrity, Martha Debayle. In addition to being a TV and radio personality, Martha is also known as a parenting expert through her parenting publication and Web site, BB Mundo (BBMundo.com). BB