Before the release of the Mega Drive/Genesis, Sega wanted to make sure that their new console would sell as well as the NES. To do so, Sega held a competition throughout all of its branches to create a character that would end up replacing Alex Kidd as the mascot of the company.
Eventually, it came down to four designs created by Naoto Ōshima, who had previously worked on the Phantasy Star series.
It was decided that the hedgehog character was the best of the lot, and was redesigned into Sonic the Hedgehog. Some of the other designs were reused later: this fat, pajama-wearing man based on Theodore Roosevelt became the basis for Dr. Eggman/Robotnik's design.