Warfare in Toyland
Elliot Handler and Harold Matson started off as a garage workshop and became world leaders in manufacturing, design and marketing of toys. The combined their names to start Mattel. In the beginning they offered doll hoses picture frames and furniture only, but with the changing time Mattel introduced a three dimensional doll. This doll was named as Barbie and the idea of introducing such a doll was very unique and was a hit. The company’s financials ascended at a very high pace. The management was very happy with the results and was pretty much satisfied as there were no rivals in the industry. Barbie did not have to face any kind of competition and was a favorite among young girls and their moms as well. But this monopoly had to end some day. Unfortunately the management over looked any prospective competition and did not pay any attention towards changing the style or bringing any variety to their product in order to coup with ever changing demand and trend of the consumers. They were somewhat risk averse and did not want to experiment with the proved success formula. The result of this negligence was Bratz, a product of MG entertainment. Bratz was a new line of dolls with oversized eyes, larger heads, wearing short dresses and heavy makeup. This product was a result of a lot of research about the likes and dislikes of young girls capturing the new trends and fashion. These dolls were multicultural in order to give each doll attitude and personality. Bratz had to offer a lot more than Barbie as a consequence of which Mattel’s sales dropped drastically and the company had to face big loss. The company strived hard to regain its market share by introducing few new lines of dolls but none of them could match the popularity of Bratz. The company then filed a case against M.G. Entertainment arguing that the copyrights of Bratz rightfully belonged to Mattel as M.G. entertainment hired Mattel’s key employees and that the initial drawings of Bratz were a creation of a Mattel employee and the company had applied for copyright protection. The case was however in court till 2009.
Question: 1
What business model and strategies made Mattel the industry leader?
The business model adopted by Mattel that lead the company to enjoy biggest market share in the toy industry was based on differentiation. Mattel, from the very beginning adopted strategies like ‘chaining’ and consequently these strategies proved to be the key factor of its success. By implying such strategies in order to run a business model that relies on differentiation, Mattel has achieved greater profitability and competitive advantage to become industry leader, the Toyland giant. The company made a history by introducing the Barbie Doll which was undoubtedly the world’s best selling doll. This doll was created in 1960s at the time when women were mostly homemakers. Barbie’s voluptuous figure and shape was a reflection of a dated image of what an “ideal” woman shall look like. It was attractive the mothers as well as they played with the original dolls in their childhood and it was different and charming, they bought Barbie for their daughters and granddaughters thus Barbie became a super hit, an American icon. Mattel strategy of selecting its customers is obvious. It chose mothers or the young girls and differentiated its product. Mattel’s strategy was creative; they also focused on acquiring and maintaining their customers by introducing more products that were different from those in the market and by enhancing them later. Mattel broadened the Barbie line by introducing Barbie boyfriend Ken along with her clothes and accessories. Barbie and its accessories totaled for almost 50 percent of Mattel’s toy sales in the 90s taking the company to the position of industry leader.
Question: 2
What strategies have its rival, MGA, pursued that have threatened its competitive position?
Mattel failed to focus on the changing trends and needs of customers thus they did not invest their capital in improving, enhancing and introducing the ways that did not lead to the distinctive competencies with growing demand. Mattel’s CEO Bob Eckert, and his top management underestimated the changed trends of the world. The cultural view has altered a lot. The changed role of girls, sex, women, and marriage shifted the tastes and demand of the customers. Mattel did not bring any substantial changes to the appearance of the Barbie. Mattel’s top management neglected the fact that the world has changed a lot and the girls of today want something new that is parallel to the new trends. The Management did not consider the possible disadvantages of this risk averse behavior and kept on using the tried and tested formula fearing from failure, they were moving on the strategy ‘ if it’s not broken, don’t fix it’.
MGA Entertainment took the advantage of the negligent behavior and introduced a new line a dolls that was trendy, up to date and more attractive. They put in a lot of effort prior launching the line in research and development in order to know the current likes and dislikes of young girls. This new line had a lot more to offer in terms of variety and trend. As a result of which MGA Entertainment’s ‘Bratz’ snatched away a big portion of Mattel’s sales and the company had to face substantial loss.
Question: 3
What new strategies does Mattel need to pursue to regain its competitive advantage?
The very first strategy that Mattel needs to adopt is investing more on research in order to know the current demands of the latest trends of the market as on today. This has to be done on immediate basis. Next based on this research the company needs to launch a new and enhanced product with lot more variety that is lucrative enough for the customers to divert to Mattel’s new product line. Mattel will have to focus on the present strategies of product marketing and advertisement. They could go for a cartoon series or a film, the characters of which could later be introduced as toys in the market. They shall not vest much of their energy and capital in court cases and shall rather use that in developing new product line. In order to beat Bratz, the company needs to bring in a new doll that is trendier and more attractive. Mattel needs to creat the demand for its products once again. They need to focus on children likes and dislikes as they are Mattel’s ultimate customers as the parents no longer decide which toys their child will play with, the children themselves are decisive of what they want to get from the toy store.
