Mattel Case

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  • Topic: Mattel, Barbie, Ruth Handler
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  • Published : October 4, 2012
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MATTEL CASE

I. OVERVIEW

Mattel was founded in 1945 by Elliot and Ruth Handler. The couple started out making furniture to sell out of their garage. This business was a success, but they wanted a new business approach to remain competitive in the fast-changing world. So, they turned to making toys, and Mattel became the world’s largest toy company, with a revenue of $5.8 billion and a net income of $684 million in 2010.

Recently, the company commissioned Chinese companies to produce some of its toys. These Chinese-made toys were suspected of containing harmful aspects for children such as magnets which could be swallowed by children, hazardous lead paint, and plastic ignition key that kids can sit on or fall.

II. STRATEGIC ANALYSIS

Value proposition

The company designs, manufactures, markets and distributes a wide variety of toy and game products to entertain children as well as adults all over the world.

Marketing mix

Product: The company's products include several toy lines, such as Barbie dolls, clothing, and accessories; Hot Wheels toy cars; See-and-Say toys; American Girl collection of dolls and books; Warner Brothers toys; Fisher-Price toys, … It also produces toys related to Disney and Sesame Street characters as well as games such as Scrabble and UNO. Mattel is now getting more into the video/DVD market.

Price: Mattel maintains low costs. Toys are affordable for the majority.

Place: Mattel sells its product in over 150 countries.

Promotion: Mattel offers store coupons and markets its toys through magazine and televison avertissements. Moreover, it has recently created websites for its products (like Barbie.com). There are even Barbie’s facebook pages, and Barbie has also started a blog and a Twitter account.

SWOT

Strength

Mattel is a well known and reputable company, and the brand is very popular among customers.

Mattel thinks of way to design and manufacture its products with a focus on sustainability.

Mattel’s products are usually affordable for all.

Mattel has an excellent portfolio of iconic brands such as Barbie, American Girl, Polly Pocket, and Hot Wheels. More recently, the company has branched out into the popular WWE, HighSchool Musical, and Toy Story 3 characters, which increase the likelihood of the success of Mattel.

Mattel’s operations are spread across the US, EU, Latin America, and Asia. International sales account for roughly one-third of Mattel’s revenue.

Mattel does its best to focus on the customer. That is why market research are regularly conducted in an attempt to satisfy the market’s wants by releasing new products annually.

Mattel has been able to satisfy customer’s needs and wants worldwide by making modifications to its products according to different segments of the market. For example, the « Burqa Barbie », dressed in traditional Islamic garb.

Weaknesses

One occurring mistake of Mattel is that of unprofitable mergers and acquisitions which causes Mattel financial disasters, such as the purchase of Intellivision in the late 1970’s, and the Learning Company in 1999. There is a slipping popularity of their core product, Barbie.

Opportunities

An alliance with an Asian company, Bandai, offers a huge increase in customer base.

Another positive signal for international sales is the weakening dollar. This makes Mattel’s products more affordable in many countries in which Mattel sells its products.

Threats

Competition is a concern for Mattel. Mattel’s main competitors are Hasbro, RC2 Corporation, and Jakks Pacific.

Mattel is highly exposed to the cost of oil for the production of their toys. So, if oil prices expand in the future, Mattel profitability will decrease.

In 2007, Mattel was forced to recall nearly 20 million toys due to lead paint being used and magnets that could be swallowed by children. Later, in 2010, Mattel recalled over 10 million of its toys because the tricycles...
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