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Mattel Case Study

Introduction Mattel, the world’s leading toy and children’s good manufacturer has cultivated a strong portfolio of well known brands and products while being recognized has a highly responsible corporate citizen that makes ethics and safety a priority. The company must build on its heritage, while defending itself from threats. At the same faced with maintaining its market position in the face of many changes in their target market. Situational Analysis STRENGTHS ? ? ? ? ? Strong Products and Brands Global Presence High ethical standards High safety standards Highly influential market segment

WEAKNESSES ? ? ? ? ? MGA lawsuit Product Recalls High Dependence on Few Customers Declining Market Share Other litigation and legal issues OPPORTUNITIES ? ? ? Online and Video Game Markets Changing Demographics Strategic Alliances THREATS ? ? ? ? ? ? MGA and other competitors Changing customer preferences and lifestyle Kids Getting Older Younger Privacy/Use of Technology Governmental Regulations Economic Conditions Strengths Strong Products and Brands After nearly six decades, Mattel has cultivated many strong brands and products.

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Over time, Mattel has become the leader in the toy and family products industries with brands such as Barbie, Hot Wheels, Fisher-Price, The American Girls and many more. Through strategic acquisitions that have expanded their brand offerings, including previous competitors. Global Presence Mattel has operations in approximately 40 countries and markets their products in over 150 countries. Mattel takes pride in instituting company policies that encompasses this global nature. High Ethical Standards

In 2009, Mattel was acknowledged among the “100 Best Corporate Citizens” and one of the “World’s Most Ethical Companies” (Thomas, Fraedrich and Ferrell 461). The company takes pride in implementing policies that set standards across the company regarding issues of working conditions without being disrespectful the cultural and other differences among its employees worldwide. High Safety Standards As the manufacturer of products that ultimately are used for and by children, Mattel places a high value on the safety of its products.

When product issues arise, the company spends extensive time and money to examine and correct the problems. Mattel holds its vendor to these high standards also and will discontinue using a vendor that is found to be in violation of them. Highly Influential Market Segment Recent study (Advertising Educational Foundation) shows that children wield a strong influence over parents purchasing decisions. Parents indicated that their kids had “some” to “a lot” of influence on household purchases.

Many parents now adopt a “Kids come first” attitude to parenting, which combined with the high level of brand awareness that these children possess creates the perfect market for Mattel and its products. Weaknesses MGA litigation Mattel has been involved with several lawsuits with rival MGA Entertainment maker of the popular Bratz dolls in what is being called the “one of the longest court fights in toy-industry history” (Townsend, Barbie vs. Bratz). Initially, Mattel sued the creator of the dolls, former onagain off-again employee Carter Bryant for breach of contract MGA then sued Mattel over

Mattel’s copying distinct features such as the Bratz-style eyes. In response, Mattel expanded its lawsuit against Bryant to include MGA and its CEO, insisting that it had intellectual property rights to the Bratz dolls; because Bryant was employed by Mattel at the time the he created and pitched the dolls to MGA. Mattel settled with Bryant prior to that case going to court. Mattel won a favorable decision in the case, winning $100 million in damages. After the favorable outcome, Mattel was able to receive a court order barring MGA from producing certain Bratz toys.

That order was later overturned pending the outcome of the trial’s appeal was determined. In 2011, MGA was successful in proving its case against Mattel and won $88 million in damages. With this recent ruling, each of the companies have won one battle. It is unknown at this time, if there will be any appeals of the recent decision or additions lawsuits to be filed; but recent Wall Street speculation has indicated that Mattel plans on reducing its legal costs significantly in 2012 (Dividend. com Staff). Product Recalls

In the past four years, Mattel has had to recall nearly 30 million of toys due to safety concerns such as lead level in paint, magnets and dangerous toy parts or design. High Dependence on Few Customers Mattel’s three largest customers are responsible for more than one third of the company’s revenue. With such a large portion of the company’s sales dependent on the these three customers any changes such as purchase reduction, favoring competitors or private label expansion, will have a significant impact on Mattel’s revenue. Also, with this limited customer base Mattel is hindered in with its ability to change prices.

Declining Market Share Mattel’s market share has been declining over the last four years, the company growth rate during this period is less than one percent The average growth rate for the industry during this period is closer 10 percent. Other litigation and legal issues Product recalls have opened the company to numerous lawsuits from consumers that were hurt by the recalled products. Opportunities Online and Video Game Markets Children are becoming technology-savvy at a young age and enjoy using the computer and playing video games more than traditional toys.

Parents also see computer use more beneficial to their children’s development and a better alternative to watching television. Changing Demographics Several demographical changes in the United States have occurred in recent years that affect toy buying. Working mothers Working women are continuing to increase leading to more dual income families that spend less time with their children. Toys and gifts are used to make up for spending less time with time. Population Growth Toddlers and Preschoolers (0 – 4 years) are the fastest growing segment of the population out pacing total population growth by 1. %. Multiple residences Due to the high rate of divorce, many children have two residences. This may lead to duplicate toy purchases, one for each residence. Strategic Alliances There are many opportunities to form strategic alliances, as children become more brand savvy. Studies show that the use of a character reinforces the brand message with children. Whether it is finding or developing new characters, television shows and movies to license toys for or licensing the use of the company existing characters for other products, television shows and movies. Threats MGA and Other Competitors

After the long legal battles, MGA is poised to take renew focus in promoting their Bratz brand. At the height of their popularity, Bratz posed a significant threat to Barbie’s popularity. Mattel must stay innovative in developing new toys or it is also possible for another competitor to have the next big toy. Changing Customer Preferences and Lifestyles Children spend their time doing things other than playing with traditional toys. The window that toy manufacturers have for traditional toys has decreased over the years. Kids Getting Older Younger (KGOY) Recent studies have proven the much held notion that children are get older faster.

The study reveals that the children’s market of the 1960’s is starkly different from the children’s market of today. In the 1960’s the children’s market was look at as children from ages 2 to 11, today there are five discernable segments with the children’s market. Technology and increased brand messaging to children are seen as a major cause of this KGOY phenomenon. Privacy/Use of Technology As children are using the internet more, Mattel has to take care in how they are using information collect from children. Parents and regulators are concern about what information is being collected and how it is being used.

Governmental Regulations With a presence in many nations, Mattel must conform with the rules and regulations of all countries that it operates in. Economic Conditions Since the most recent economic recession, consumers have decreased their purchasing for nonessential items. Problem Among the many factors that have lead the company’s market share decline, the ways and how children play must be addressed by Mattel if the company wants to continue to enjoy its market position. Mattel must develop innovative products and find new ways to use technology in order to maintain its position and grow. Alternatives ? ?

Develop new and innovative products that better meet the needs and wants of children. Increase the use of technology to engage children in new ways. The company may also look at developing toys that transition between technology and traditional toys such as toys that are able to connect to the family computer in order to increase its functionality. ? Look to revamping old toys for current customers. There is a wave of nostalgia with parents looking to the toys of their youth. These toys could be marketed to the parents as collector’s items or modified with new character backstories or features that appeal to today’s children.

Recommendation Mattel must develop innovative products and find new ways to use technology in order to maintain its position and grow. Implementation Plan 1. In order, to better understand the new needs and wants of children, Mattel needs to develop a National Children’s Panel with children of all ages and listen to their feedback. While it may be difficult to get younger children to articulate their wants, Mattel can present the youngsters with many choices to discern what features are wanted in their toys.

The company may also look at developing toys that transition between technology and traditional toys such as toys that are able to connect to the family computer in order to increase its functionality. 2. Mattel can also revamp their design team so that they can translate the feedback from the panel into new hip toys. This can be accomplished by either challenging their current staff to think outside the box (the company’s current products) or by hiring new staff or a combination of both. 3.

Form strategic alliances with technology companies to introduce software, revenue generating websites and other tech related products for the new toys. 4. Become the market leader or close follower with new toys 5. Be ready to adjust strategies as needed, according to feedback. Works Cited Advertising Educational Foundation. “Kids Getting Older Younger. ” 31 January 2002. Advertising Educational Foundation. 24 September 2011 . Dividend. com Staff. “Needham & Co. Reiterates “Strong Buy” Rating on Mattel (MAT). ” 9 September 2011. Dividend. com. 26 September 2011 .

GlobalData. “Mattel, Inc. – Financial and Strategic Analysis Review. ” 2011. The Associated Press. “Jury Rebuffs Mattel, Giving Bratz Dolls Rights to a Rival. ” 21 April 2011. New York Times. 20 September 2011 . Thomas, Debbie, et al. “Mattel: Overcoming Marketing and Manufacturing Challenges. ” Ferrell, O. C. and Michael D. Hartline. Marketing Strategy. Mason: South-Western Cengage Learning, 2011. 457-469. Townsend, Allie. “Barbie vs. Bratz: It’s a Doll-Eat-Doll World. ” 22 April 2011. Time. 2011 September 2011 . —. “State of Play. ” 11 July 2011. Time. 23 September 2011 .

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