Lionel Begins Production of Train Sets As Display Pieces
The production of Lionel train sets started in 1901 on a very limited scale. They were originally sold to toy stores and shops as a display piece and to lure potential customers into their shops. As there were no Lionel train sets available to the mass market, people started buying the display trains from the stores. Seeing this demand, Lionel started producing model train sets for the home market.
Early Lionel Train Sets
The early sets were larger than the model trains available today and from 1906, when a new 3-track set came out, Lionel made a model train belonging to a scale incompatible with any of the existing specifications. The popularity of this set of Lionel trains made existing model train manufactures switch to Lionel’s specifications to get more customers.
Change to the O gauge
In 1915 a change was made to the lower-cost Lionel train sets and they were made to conform to the O gauge. The reason for this move was that competitors had widely adopted the O gauge standard for their model trains and had combined to pose a threat to Lionel’s market share in the low-cost market. Thus a change was necessary to avoid a slump in sales.
Color schemes of Lionel Train Sets
The color schemes of Lionel train sets were originally never modeled after real trains. They were instead painted in bright colors which made them more attractive to mothers as gifts for their children. Children were also attracted to these bright colors and they were the primary targets of advertisements. This approach was completely different from the business plans that thier competitors used, which targeted older people and enthusiasts. The competitors invested more in technology to make their trains more accurate, and instead of using enamel paint like the Lionel train sets they invested in expensive lithography technology which printed the design much more accurately.
Effect of the Great Depression
When the Great Depression struck in 1930, the income of the company dropped drastically to just $82,000 annually, down from sales of half a million dollars annually just a few years previous. The company posted losses of $207,000 in 1931. The reason for this sharp decline was that during the Great Depression, expensive toys like the Lionel train sets were considered to be luxuries and people did not have any money to buy them. The top end products from Lionel cost as much as a used motor car during that time.
The Set That Rescued Lionel
The train set that rescued the Lionel train company from bankruptcy was a handcar featuring the very popular Mickey and Minnie Mouse. It cost just $1 and the demand for the model train set was so high that it could not be met with supply even after Lionel produced over 250,000 units of the product. Thus Lionel continued production until 1942 when it stopped production to take part in helping the World War 2 effort.
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