Kids know what they want. The trick is to read their minds before it's too late. Every Christmas it's the same old "must-have" toy story. Manufacturers step up production of the lucky product at the last minute but supply fails to match demand.

The hype escalates around November, with warnings to parents to start queuing or risk tears on December 25th.

Pictures are painted of short-tempered parents on a mission to elbow others, equally frantic, out of contention for the prize, which could be a robotic dog, a furry creature with its own special language, or a doll that's a DIY expert. It doesn't matter, as long as everyone remembers that batteries are almost certainly not included.

"Nobody knows what products are going to take off," says Mr Stephen Doyle, general manager of Musgrave's World of Wonder and Supertoys retail group.

"The scooters - they caught everybody out. This year, there is a very good product in my opinion: a special pair of runners that, at the press of a button, turn into roller-blades. The wheels pop out, so the kids can skate down to the shops. But if the shop owner won't let them in wearing rollerblades, they can just press the button again, and the wheels pop back in."

The toy market in the Republic is valued at around £140 million (€177.76 million) a year, excluding computer games, so predicting which products will be popular in the playground is more serious business than child's play.

In January, retailers attend trade shows to view new products and get advice from more than 200 suppliers. They then monitor market trends throughout the year.

In the run-up to the Christmas season, toy retailers will often conduct product testing with their target audience. Leading London toy store Hamleys, for example, has a consumer panel of six- to eight-year-olds.

Every October, World of Wonder hosts a product testing event called "Toys on Test" at its 18,000 sq feet store in Newbridge, Co Kildare.

"We invite in around 30 kids and get some feedback from them," explains Mr Stephen Doyle. "We have no hidden agendas, no favoured manufacturers - all the toys are on display. It is very good, because kids are brutally honest. They know what they like and what they don't like. It's quite funny."

Not everyone is getting the joke, however. There are concerns in several European countries about the ethics of advertising to children, who are seen as both impressionable victims of exploitative marketing and as demanding consumers who use "pester power" to influence their parents' spending habits.

The European Commission is working on a new code of practice that could set stricter controls, although it is unlikely to go as far as Sweden and Norway, where there is a complete ban on television advertising aimed at children under 12.

"The feeling is that kids are exposed to advertising anyway and that they are able to decipher when people are selling to them," says Mr Doyle, on the question of ethics. On the question of profits, retailers are "not unduly worried", he notes.

"Toy sales in Sweden have been unaffected by the ban on television advertising, so we are not really too concerned about it. Television does help push products out but, on the other hand, scooters were not advertised at all last year. Television didn't launch that craze, and it was the same with the success of yo-yos in the UK the year before."

Another reason sales may remain steady without the help of 60-second television promotions is that it is during actual programmes - rather than commercial breaks - that the most effective toy advertising takes place.

Recent pre-school crazes including Bob the Builder, the Tweenies and the Teletubbies started life as kids' TV programmes on the advertisement-free BBC, and have since generated multimillion pound licensing deals.

Hit Entertainment, which makes Bob the Builder for the BBC and owns the brand, has licensed the character for more than 500 products, with leading toy manufacturers such as Hasbro, Mattel and Lego signing up to make Bob merchandise.

This merchandise extends from traditional figures and accessories to licensed stationery, books and music.

World of Wonder stock Top 20 music in their larger stores - unsurprisingly, given the crossover between the two markets. Pop acts such as S Club 7 have their own range of dolls, while the Teletubbies and Tweenies score Top 10 hits.

The biggest selling single in Britain in 2000 was Bob the Builder's Can We Fix It? With his follow-up, a version of Lou Bega's Mambo No. 5 also hitting the number one spot, Bob now plans to go on tour.

But cross-promotion in the toy market can be hit-and-miss. Harry Potter may succeed in waving his magic wand over toy company profits this winter but recent film tie-in products have failed to live up to the expectations of the companies that hold the manufacturing licences.

Hasbro, whose manufacturing plant in Co Waterford exports its products to Europe, was disappointed when Star Wars figures flopped, despite the box office success of The Phantom Menace in 1999.

Similarly, PokΘmon: the Movie has failed to sustain the "gotta catch 'em all" phenomenon, with the company's recent downturn in profits partly attributed to the decline in sales of the PokΘmon trading card game.

"Film merchandise has sold but not in the quantities you would call a craze," says Mr Stephen Doyle. "Really, the only successful merchandise from a film in recent years has been Toy Story, and even then, everybody thought Toy Story wouldn't sell any toys."

Among the doubters were Mattel, Hasbro's main rival in the traditional toy market, which refused to let Toy Story's makers use its most famous product, Barbie. But when Buzz Lightyear's popularity went into "infinity and beyond", Mattel decided not to let a prime product placement opportunity pass by a second time, making sure the plastic glamour doll landed a starring role in the sequel.

Now Barbie has her own feature-length video, Barbie in the Nutcracker. A range of Nutcracker ballerina Barbies, Prince Ken and an accompanying sleigh are all selling well here, according to Ms Michelle Walsh, marketing manager at Smyth's Toys. In the chain's "Boys' Toys" department, Action Man figures are also "still going strong", she says.

With most of the worldwide growth in the toy market concentrated in the computer games sector, traditional toy manufacturers have tried to extend existing brands like Barbie and Action Man by forming alliances with software companies. Lego, for example, is currently developing products with Microsoft.

"Eight-year-olds don't want to play with Lego any more," says Mr Doyle. "At around nine years of age, we find kids get a bit tired of Action Man or Barbie. They don't want to be seen playing with an Action Man doll, but if they have a CD-ROM, then they can continue to have Action Man adventures on computer," he explains.

The industry refers to this as age compression, or "kids getting older - younger". But Barbie and Action Man aren't getting any younger themselves.

The dolls have both been on sale for more than four decades, while another major tip for success this Christmas, Power Rangers, first peaked in the early 1990s.

Amid all the fads, crazes and gimmicks, it seems that relaunching tried and tested brands also pays off for toy manufacturers.

"There is quite a lot of consistency out there," confirms Mr Doyle. "Kids still like the same things."

The toy market has more than one target audience, appealing directly to nostalgic adults, he says. "Parents would know the brand from their own childhood and, when they recognise it, they feel it is something their kids should have." It all just depends on how long they are prepared to queue.