Mattel was started in 1945 by Harold Mattson and Eliot Handler. The company was primarily focused on manufacturing doll-house furniture. Mattson eventually sold his ownership share to Handler and the company went on to manufacture a wide variety of toys. In addition to manufacturing toys, Mattel decided to sponsor the Walt Disney Mickey Mouse Club in 1955, which was a pioneering and very successful marketing step which provided direct access to millions of young potential customers.
The famous Barbie (named after Eliot Handler’s daughter) was brought to market in 1959 and the company went public in 1960. After going public, gross sales increased to $75 million and the famous Hot Wheels line was launched in 1968. Over the next 20 years, there was a series of management and changes in strategy — the Handlers were forcibly removed from management in 1074 and the company proceeded to acquire non-toy business, such as publishing and entertainment (Barnum & Bailey circus). By the 1980s, the company had revenues in excess of $1 billion, but a net loss of $93 million. In an effort to recapitalize and avoid bankruptcy, new management sold all of Mattel’s non-toy interests, cut manufacturing capacity by 40% and terminated 22% of it’s corporate staff.
In 1991, Mattel acquired Fisher-Price, which proved to be instrumental to the success of the company today. The 1990’s also brought changes to top management — Jill Barad took over as CEO, ousting John Amerman and his 10 year tenure. Ms. Barad’s focus was to add new life to the Barbie brand. Additional key acquisitions during this time were the acquisition of Tyco Toys in 1997 (Matchbox cars and Tickle Me Elmo) and the Pleasant Company, which is now knows as American Girl, one of Mattel’s most successful brands. Ms. Barad also attempted to streamline operations via a 1999 restructuring, closing several plants and laying off 3,000 employees. d restructuring Mattel in 1999, closing plants and laying off 3,000 workers.
After an unsuccessful journey into the software business, Ms. Barad resigned as CEO and was replaced by Bob Eckert, who is still currently in this position. Under Mr. Eckert’s leadership, in 2000 the Fisher-Price subsidiary began to capitalize on it’s well-known name and announced that it would begin to sell children’s apparel and toys on the internet and through direct-mail catalogs. In addition, at this time Mattel began to expand their licensing programs, signing an especially lucrative deal for toys and games based on Barney, TV’s most lovable purple dinosaur.
2007 was a challenging year for Mattel as the company was under fire for a series of recalls related to high levels of lead in toys manufactured in China and potentially hazardous small magnets in certain toys. After learning that certain Chinese-made Fisher-Price toys may contain hazardous levels of lead paint, Mattel recalled one million toys, which included some of Mattel’s most popular characters, such as Dora the Explorer, Elmo, and Big Bird. The second recall included 440,000 die cast toys from the Cars movie and 18 million toys due to potentially hazardous small magnets included in Polly Pocket, Barbie dolls, and Batman action figures. The third recall, in September 2009, pertained to 775,000 Barbie accessories that were believed to contain unsafe levels of lead paint. The financial toll of these recalls was extensive — the company estimates the impact related to these recalls to be $50 million in product returns and related expenses. Additionally, Mattel is anticipating higher legal bills related to class-action suits filed against the company on behalf of parents seeking payment for medical testing for their children. In 2009, Mattel paid a $2.3 million civil penalty to settle allegations that they knowingly imported and sold toys that violated a Federal lead paint ban. In a response to the concern and litigation over the lead content in toys, Mattel has agreed to lower the acceptable level of lead in imported toys to 90 parts per million. 600 parts per million is the current Federal standard.
2009 marked Barbie’s 50th birthday, an event that Mattel marked with a yearlong celebration. However, Mattel lost its Sesame Street licensing business to Hasbro the same year. As a result of recent financial events — regulatory fines, higher legal bills, increased expenses for product testing, higher materials and labor costs — Mattel raised their prices in June 2009. Management also cut 1,000 jobs, effectively reducing professional employees by 10%. In 2009, the company employed 27,000 employees worldwide and reported gross sales of $5.4 billion.
SWOT Analysis of Mattel
The SWOT analysis helps an organization understand the current and potential environment for their particular product and service which allows them to adjust their marketing tactics in order to help focus their strategy. When doing a SWOT analysis, it is important to recognize that the Strengths and Weaknesses are internal reflections, whereas the Opportunities and Threats are external reflections.
Strengths
- With successful operational and marketing strategies, Barbie has been known as a long established brand for 60 years. With recognizable brand portfolio and wide product range to cater various life stage, in fact, Mattel has safeguarded its market leader position for years. One of the strategies is to have new product launch annually, so that, customers will have “surprise” every year. Such strategies are considered successful.
- With the effort and perseverance in maintaining business integrity and practicing corporate social responsibility, it has brought much credit to the reputation of Mattel. Despite the scandals, Mattel does have a group of loyal supporters and fans who will purchase new products of Mattel. Such strategy of creating loyalty and trust in customers is very effective in customer retention.
- Since Mattel has strategic partnership with Microsoft, Disney, BanDai and etc, this created an invincible strength for it. As there are so many other strong rivals who strive to win market share from Mattel, Mattel tries to form a strong alliance with other strong companies in the market.
- Devoted, highly-motivated and energetic management team which works together to make better and better products and performance and stay together during doom time, this shows that Mattel has a successful HR strategy which retains experienced and outstanding employees in the corporation.
- Since early year, Mattel has been keeping its intangible assets as its valuables, such as trade names and trademarks. That is why it has a particular department which deals with this issue.
Weaknesses
- Unprofitable mergers and acquisitions of the Learning Company had made a loss of nearly billion in Mattel’s account. Although eventually Mattel sold off this subsidiary, this reduced the confidence of investors as Mattel’s management is perceived as too reckless in M&A strategy.
- Due to many external changes, slipping popularity of their core product — Barbie has been shown in the declining sales of its product. Therefore, Mattel keeps coming out with new products to retain the interest and passion of customers.
- After the outbreak of toxic toys scandal, generally, the level of acceptance of customers has dropped. No doubt, Mattel has been striving to give the customers the best products, in terms of quality, safety, and etc, however, such an incident is nearly fatal to the reputation and future of Mattel. No matter how good the strategies are, one scandal might ruin the company as a whole.
Opportunities
- Mattel has a chance to market Barbie to the whole world and make it a recognizable brand worldwide. This has been proven that Mattel tries its best to improve its marketing strategies to penetrate different market segments and strive for stable revenue annually from international market.
- Weakening dollar makes the price of Mattel’s toys becomes more affordable. It is helpful in increase its revenue. To take this advantage, in fact, Mattel has reduced the selling price of its products in some countries.
Threats
- Many children start abandoning tangible toys and looking for more interactive and technological toys or cyber/virtual games. That was why Mattel tried to diversify into software industry. However, until now, its result is not satisfactory. One of the reasons is, the adopted strategies are not matched with its corporate culture or operations.
- Global recession caused reduced spending or down trading for toys. This is inevitable despite how much effort has been made to stimulate the revenue. However, if Mattel is able to make it more affordable and create a need for customers, it might change its situation. However, strategies should be well developed.
- Different countries with different cultures and languages in fact have posed barriers which hindered market penetration strategies of Mattel. However, Mattel seemed to have overcome them well as it tried to market its products with different languages in different countries and modified the content of ads with some “local flavors”.
- Many other competitors keep coming out with different and better products, such high product substitution threat might threaten the competitive position of Mattel. Therefore, Mattel is particularly cautious with its product quality and safety issues. However, there was still an outbreak of toxic toy which caused few millions loss to Mattel.
- Due to the emergence of China market and since many production plants have been setup in China, raw materials are subject to price fluctuation when the economy of China appears to be unstable. To overcome this, possibly, Mattel can locate its plants at many different countries. The downfall in one country might be offset by the upturn of another country.