mattelfinal19nov2010-110121202423-phpapp01

7/26/2019 mattelfinal19nov2010-110121202423-phpapp01

1/60

MATTEL

Kristin Borradaile

Dave Errigo

John Hall

An In-depth Look At The Worlds Largest Toy Copany!"ast# "resent# $ %&t&re


2/60

Where to Begin'The (ise To %ae

) %o&nded in *+, .y Harold /0att1 0atson $ Elliot

Handler2 Their naes s&shed together ake 0attel2They an&3a4t&red pi4t&re 3raes and doll ho&ses

) Handlers 5i3e# (&th# later .e4ae president and is4redited 5ith esta.lishing the Bar.ie line in *++

) *+67! 0attel 5ent p&.li4 and 5as 8&i4kly listed in

%ort&nes list o3 the 77 largest 92:2 Ind&strial 4opanies) By *+6;! Hot Wheels 5as introd&4ed

) 0id *+


3/60

The B&py (oad="ast *7 >ears?

) In 0ay *+++# 0attel a48&ired /The LearningCopany1 3or @2B in sto4k =,2 ties ann&al sales?

In 777# 0attel sold The Learning Copany 3or aper4entage o3 their 3&t&re pro3its

) 0attel 4losed its last Aeri4an 3a4tory in 77

) n A&g&st # 77< 0attel re4alled alost oneillion Chinese ade toys .e4a&se o3 potential

haard o3 lead paint) n A&g&st *,# 77< 0attel re4alled over *; illion

prod&4ts .e4a&se o3 the possi.ility o3 danger to4hildren d&e to deta4ha.le agnets


4/60

:oeties Less Is 0ore

2008 2009

(even&e @2+B @2,B

Fross"ro3it

@26;B=,2,G?

@2


5/60

To In3inity $ Beyond

) Foals 3or 7*7 and0oving %or5ard!

Fross "ro3it0argin! 7G

perating 0argin!* to 7G


6/60

ision Today $ ision Toorro5

) In 777 0attels senior anageent tea

4reated a vision 3or the 4opany! /The Worlds"reier Toy Brands Today and Toorro51

) In 7*7 they la&n4hed a ne5 vision 3or the

4opany! /Creating the %&t&re o3 "lay1 What do yo& think o3 the di33erent visionsM

Where do they take the 4opanyM


7/60

I Will Let >o& In n A :e4ret'

) /'5e dont N&st ake toys2 We 4reate eotional

4onne4tions that last a li3etie .y en4o&raging4hildren to stret4h their iaginations# 4reatingNoy and allo5ing 4hildren to .e4oe lost in play2Thats the real val&e o3 o&r toys2 Thats the val&e

o3 play21 =Bo. E4kert# Chairan o3 the Board $CE# Ann&al (eport 77+?

) 0attel is in the .&siness o3 aking kids leis&retie 3&n and .ringing agi4 .a4k to their lives


8/60

0anageents :i Key :trategies) Iprove Ee4&tion o3 the eisting toy.&siness

) Flo.alie the .rand

) Etend .rands into ne5 areas

) Cat4h ne5 trends# 4reate ne5 .rands# and

enter ne5 4ategories) Develop people

) Iprove prod&4tivity# sipli3y pro4esses#and aintain 4&stoer servi4e levels


9/60

Who Are 0attelsTraditional CopetitorsM

Retailer Logo2009

RevenueMain Products

0attel @2,B Bar.ie# Hot Wheels# %isher "ri4e#9# Aeri4an Firl# :4ene-It

Has.ro @,2*B er3# "okeon# Trans3orers# F2I2Joe# "lay-Doh# 0onopoly# (isk#

:4ra..le# Trivial "&rs&it

Lego @*2;B Lego 9niverse# Lego :tar-Wars#

Lego Kingdos# Bion4le# LegoKingdos

Leap %rog @


10/60

Key otes on Ind&stry "er3oran4e) Ind&strys sie is anti4ipated to 4ontra4t over net 3ive years

%ore4ast is predi4ting a *2G ann&al de4line over the net

years to a total o3 a.o&t 6;7 prod&4ers in the 9:) 0an&3a4t&rers 5ere slo5 to respond to shi3ts in deand 5hi4h

lead to a de4line in sales

) Cheaper iports have 4reated intense 4opetition 5ithin thelo4al arket

) In4reased erger $ a48&isition a4tivity 5ithin the ind&stry haslead to the deise o3 n&ero&s saller operators

) 0essage is siple! toys 4&rrently on the arket are no longereeting the deand 3or 4hildren

Toys need the /WW1 3a4tor

Firls are no5 o&tgro5ing Bar.ie .y the age o3 eight# rather

than the target age o3 *7


11/60

Ho5ever# >o&re ot J&st InThe (ailroad B&siness'

Competitive Toy

Manufacturers

Internet

Video

Games

Television

Sports

Mattel has to compete against any

other activity that will take upchildrens time


12/60

*Healthy from standpoint of either educational or active

Children Leis&re Tie"er4eption 0ap


13/60

What 0akes 9p the Ind&stry


14/60

:t&4k Bet5een A (o4k# A Hard "la4e#and a ol4ano A.o&t to Er&pt

) 0an&3a4t&rers have an &phill .attle2 Have to satis3y

three 4&stoers! The (o4k! (etailers .&y# sto4k# and advertise the prod&4t

The Hard "la4e! Children &ltiately have to 3ind theprod&4t enNoya.le and it has to have repeata.le /playval&e1

The ol4ano A.o&t to Er&pt! "arents have to see theprod&4t as innovative# ed&4ational# or dee it as a/val&e21 In addition# parents 5ill only .&y prod&4ts thatre3le4t their 3aily val&es2

)Will look at the pro3ile o3 ea4h o3 0attels /4&stoers1


15/60

0arket :egentation


16/60

The *77 0illion "o&nd Forillas) (etailers 4ontrol!

"&r4hases 3ro an&3a4t&rers

:hel3 spa4e and 5hereprod&4ts are vie5ed

Advertiseents to 4hildrenand parents that enter stores=4o&pons# in-store ads# et42?

) (etailers proote their o5nprivate .rands

) 0attels three largest retail4&stoers a44o&nt 3orapproiately ,7G o3

5orld5ide sales

@*277

@72


17/60

Its All A.o&t The "sy4ho'2Fraphi4s

) Lets take a look at the typi4al 4hildren that 0attelis trying to rea4h to and then 5e 5ill pro3ile a4o&ple o3 /4hild 4&stoers1

) Children =7-*,? ake &p *G o3 Aeri4anpop&lation and this is predi4ted to reain sta.leover the net 3ive years

) "ro3ile three o3 0attels 4hild segents Cy.er "oss&

Frease 0onkey

%ashion O&een Bee


18/60

Cy.er-"oss&) 0ale or %eale

) Likes to .e alone

) Likes .eing inside

) O&iet# :hy# Bash3&l) 9se internet 3or so4ial intera4tion

and p&r4hases

) ot very 4on3ident

) *7-*, age gro&p

) :lightly over5eight) Craves intelle4t&al sti&lation

) EnNoys .lok&s prod&4ts $ videogaes

) %o4&s on advertisingintera4tivePele4troni4 toys to this

gro&p along 5ith internet gaes


19/60

Frease 0onkey) 0ale

) ;-* Age Fro&p

) Likes siple toys

) Likes .eing o&tdoors) Thinks the 5orld 5ide 5e. is

soething a .ig spider akes

)Aggressive and etroverted

)Wants toys to re3le4t real o.Ne4ts

) In good physi4al shape) Craves adrenaline r&sh

) EnNoys hot 5heels prod&4ts

) %o4&s on advertising 4arsPtr&4ks#ilitary a4tion 3ig&res# and

sporting 3ig&rines to this gro&p


20/60

%ashion O&een Bee) %eale

) 6-*7 age gro&p

) Loves 3ashion 5orld and dressing

&p) EnNoys o&tdoors and inside

) Chatty and so4ial

)ie5s the internet as a 4han4e toin4rease so4ial net5ork

) Craves living li3e o3 glao&r) EnNoys Bar.ie and Aeri4an Firl"rod&4ts

) %o4&s on advertising .ar.ieprod&4ts 5ith vario&s a44essories#horsesPponies 3ig&rines# and polly

po4ket gaes to this gro&p


21/60

I3 the "arents Dig It# They Will B&y It) 0attel al5ays has to keep the parents in ind as 5ell2

) I3 the parents dont see the prod&4t as ed&4ational#

prooting an a4tive li3estyle# or having a 5o5 3a4torthey 5ont p&r4hase it

) In addition# i3 the parents dont see the 4opanyprod&4ing the prod&4t as a 8&ality .rand they ay8&estion the p&r4hase

) :o# at the end o3 the day the parents 4ontrol the .&yingde4ision

)And again 0attel does have a so4ial o.ligation to this4&stoer segent =even i3 only 3or pro3it reasons?2

"arents tend to .&y toys that re3le4t their 3ailial val&es2


22/60

Key Eternal Drivers) "er 4apita disposa.le in4oe

Ho&seholds 5ith higher levels o3 disposa.le in4oe generally spendore on toys and gaes

) Do5nstrea deand 3ro ho..y and toy stores (egarded as spe4ialist retailers 3or these goods

) &.er o3 4hildren =7 to *, years?

Age distri.&tion o3 a region a33e4ts it deand 3or toy# doll and gaeprod&4ts

) Do5nstrea deand 3ro departent stores

D&e to sheer sie and range o3 prod&4ts they o33er# any regard thesestores as ain 4&stoer 3or toy an&3a4t&rers

) Iport Copetition

Despite o3ten in3erior 8&ality# s&4h toys have .e4oe pop&lar aong4ons&ers d&e to lo5er pri4es and etensive varieties

:ee graph on net page


23/60

"&t :iply# The World Is %lat WhenIt Coes to "rod&4ing Toys


24/60

Ind&stry Key :&44ess %a4tors) Esta.lishent o3 Brand aes

Brand nae# rep&tation and iage are iportant

Agreeents to s&pply aNor 4opanies 5ith theseattri.&tes are e8&ally iportant

) Having a diverse range o3 4lients

)A.ility to 4ontrol sto4k on hand

) E33e4tive 4ost 4ontrols)A.ility to 8&i4kly adopt ne5 te4hnology

) 0&st 4oply 5ith re8&ired prod&4t standards


25/60

STR!GT"S


26/60

Brand (e4ognition


27/60

) Created .y 0attel in *++

) Q* seller# o3ten a44o&nting 3or &p to7G o3 reven&e

) R* .illion Bar.ies have .een sold inR*7 4o&ntries

) Bar.ies sold every se4ond

) Bar.ie has taken on alost everypossi.le pro3ession

) Etree .rand re4ognition# otherdoll .rands are re3erred to as/.ar.ies1


28/60

) Introd&4ed .y 0attel in *+6;

) ver * illion .oys -* areavid 4olle4tors =avg ,* 4ars ea4h?

) T5o Hot Wheels 4ars are sold

every se4ond o3 every day

) Together# Hot Wheels andBar.ie generate a.o&t 6G o3

0attels pro3its


29/60

) In *++;# 0attel a48&ired "leasant Copany

) Well-kno5n line o3 histori4al dolls# a44essories#.ooks# againes# ovies# 4lothes

) riginally sold in 4atalogs only

) 0attel etended .ase .y selling a44essories inWalart $ Target

) (e4ent opening o3 shops in >C# Chi4ago# LA#Atlanta# Dallas# Boston# 0inneapolis

) "op&lar 5ith girls


30/60

) Created alost #777 di33erent toys sin4ethe *+7s

) Alost 7 .rands

) A48&ired in *++ as a 5holly o5neds&.sidiary

) Brand tr&sted .y parents aro&nd the 5orld

) "rod&4ts are ed&4ational# sa3e# and&se3&l

) Innovative learning toys

) Chara4ter-.ased tools thro&gh li4ensingagreeents 5P :esae :treet# Disney# andi4kelodeon


31/60

:trong al&es


32/60

9: 0arket :hare


33/60

Barriers to Entry) 0ost signi3i4ant! tie $ 4apital

re8&ired to esta.lish a ne5 .randnae

) eed to invest a lot o3 tie $oney in order to pers&ade4ons&ers to shi3t a5ay 3rostrong .rand naes2

) The level o3 arket share already4ontrolled .y eisting players is akey deterrent2

) E4onoies o3 s4ale! largeprod&4tion r&ns typi4ally re8&ired

3or toys# 3avors large esta.lished4opanies

) Developent o3 ne5 prod&4tso3ten re8&ires s&.stantial4hanges to eisting a4hineryand prod&4tion pro4esses


34/60

Li4ensing Agreeents


35/60

Corporate (esponsi.ility) Taken steps to strengthen 4oitent to .&siness ethi4s

)As 4ore prod&4ts are designed 3or 4hildren# 0attel is sensitive to so4ial 4on4erns a.o&t4hildrens rights

) (esponsi.ility o3 arketing to 4hildren $ priva4y on 5e.sites

) International environent! di33erent legal systes $ 4&lt&ral epe4tations

) *++< Flo.al 0an&3a4t&ring "rin4iples

) "rin4iples related to sa3ety# 5ages# adheren4e to lo4al la5s

) 0an&3a4t&ring 3a4ilities &st 3avor .&siness partners 5ith ethi4al standards 4opara.le to0attel

) Independent a&dits o3 an&3a4t&ring 3a4ilities every yrs

)A3ter 77< re4alls# hired " o3 Corporate (esponsi.ility


36/60

) 0attels Childrens %o&ndation

) 0attels Childrens Hospital at 9CLA

) The 0attel %aily Learning "rogra

) Tea 0attel

) En4o&rageent o3 0attel eployees

to give .a4k


37/60

#$%!SS

S


38/60

0ergers $ A48&isitions

) Jan 1997: Jill Barad CE

) *; yrs at 0attel# yrs as C

) Largely 4redited 5P Bar.ie gro5th -@70 in id-;7s to @*2+B in *++;

) Height o3 0attels s&44ess) :to4k pri4e @


39/60

) ne o3 the 5orst a48&isitions in4orporate history

) "oor D&e Diligen4e

) Epe4ted too &4h) "aid too &4h =@2B#

,2 ann&al sales?

) ! 1999 epe4ted @70 inpro3itsS instead lost @*70

) "! 1999 epe4ted earningsto .e


40/60

La4k o3 Diversi3i4ation) The pop&larity o3 ele4troni4 and intera4tive toys has 4ontri.&ted to a de4line in

the traditional toy arket =0attels 4ore .&siness?

) :o4ial 0edia

) ideo Faes

) Ele4troni4s

) Children are o&tgro5ing toys at an earlier age and deanding ore ad&lt-likeer4handise

) DD players# 4ell phones# laptops

) :hortens the li3e 4y4le o3 prod&4ts

) This trend is epe4ted to in4rease as 4hildren .e4oe orete4hnologi4ally advan4ed at yo&nger ages

) 0attel is seen as .ehind in ele4troni4 toys and ed&4ational toys

L 3 : :t t


41/60

Loss o3 :esae :treetLi4ensing Agreeent

) At the end o3 7*7#

:esae :treet li4ensingagreeent 5ith 0attelepires# and has .eengranted to Has.ro


42/60

(e4ent "rod&4t (e4alls) In 77


43/60

(esponse to 0an&3a4t&ring Iss&es) At 3irst# 0attel .laed Chinese s&.4ontra4tors 3or the h&ge toy

re4alls

) The 4opany later a44epted a portion o3 the .lae# .&t still saidChinese an&3a4t&rers 5ere largely at 3a&lt2

) 0attel 3a4ed 4riti4is .y any 4ons&ers 3or denyingresponsi.ility and pla4ing &4h o3 the .lae on China

) While 0attel a&dited its 4ontra4tors# it did not a&dit the entires&pply 4hain# in4l&ding s&.4ontra4tors2

) 0attel hired " o3 Corporate (esponsi.ility

) 0ade 4hanges to a&diting pro4ed&res# in4l&ding testing theirprod&4ts theselves instead o3 relying on s&.4ontra4tors


44/60

&''&RT(!ITI

S


45/60

0attel pport&nities) Ed&4ational "rod&4ts

"er4eption 0ap identi3ied 5hitespa4e 3or 0attel

Less relian4e on retailers as the distri.&tionnet5ork epands

Hospitals# Day Care Centers# :4hools2

) 0$A 5ith video gaes 4opanies BeyondRadica

Lets take a look at gaing /Cons&er Loyalty0atri1


46/60

Faing Cons&er Loyalty 0atri

'()*S DR+,*RS

(*-)R'LS $&&L.S /&LD

DIFFERENTIATION

RELEAN!ETO!

ON"

#$ER

)

"IG"

ONLINE

!ONNE!TIIT%

&A$E TITLE"

'!OOL( FA!TOR

&ENDER ")E!IFI!IT%TAR&ET A&E

"IG"


47/60

0attel pport&nities)Flo.al arkets =still not 4opletely tapped .y 0attel?Approiately 7G o3 sales are internationalThe 3&rther the dollar 3alls# the ore 0attel akes .y selling its prod&4ts a.road2 Flo.al

sales partially ins&late the 4opany against a 92:2 re4ession2Where 4o&ld they gro5M China and IndiaChinas toy arket is 3ragented# altho&gh 0attel estiates it is one o3 the leading playersthere2%ollo5ing its entry into China N&st eight years ago# 0attel no5 has a.o&t ,7 li4ensingpartners2

China is a do&.le-digit gro5th arket

)Iproved prod&4tion 4apa.ilitiesClo&d 4op&ting%o4&sed 3a4tories 5ith N&st in tie inventory anageental&e engineering $ ;7P7 "rin4iples

)Bar.ie ovie P Aeri4an Firl%ollo5 Has.ro Bl&eprint:ales ki4k .a4k


48/60

A Fae Changing "rod&4t 3or 0attel

)An intera4tive toy 3or .oys and girls that integratesso4ial edia# 4o&nity and ost iportant

physi4al a4tivity) The 3irst in a line o3 physi4al a4tivity 4opanions

that 4onne4t to so4ial edia thro&gh &s.4onne4tion2

) Co.ination o3 a /doll1 and /Digi5alker1pedoeter that is then registered thro&gh 4opany

5e.site

) Digi5alker Doll 4lips onto 5aist.and and logs

4alori4 daily o&tp&t


49/60

Meet Hoppin Henry & Va miga

) &ter shell o3 doll is a %rog .oy 3or /HoppinHenry1 or %rog girl 3or /a Aiga1

) :yn4 5ith 5e.site 3or 5eekly# onthly and ann&altotals

) In4rease in 4alori4 o&tp&t in4reases Doll /health1

) Conne4t thro&gh so4ial edia sites to esta.lish

g&ilds and teas


50/60

T"R$TS


51/60

0attel Threats D2E2)Rising Ra Material osts

3l&4t&ations in oil pri4es a33e4t inp&t 4osts 3or aking plasti4-.ased toys

A 4onsidera.le ao&nt o3 0attels an&3a4t&ring 4ost 4oes 3ro plasti4

resin# 5hi4h a44o&nts 3or approiately one-8&arter o3 4ost o3 goods sold2(esin pri4es have soared .e4a&se o3 a rise in pri4es o3 its key4oponent! petrole&2il pri4es skyro4keted in 777; 3ro ,62G in %>7


52/60

il olatility "otential (ise in 4osts ="lasti4sPDistri.&tion?

) Rising Distri%utions osts %l&4t&ations in oil pri4es a33e4t distri.&tion 4osts 3or transporting

prod&4ts 3ro 3a4tories in Asia to other parts o3 the 5orld2


53/60

0attel Threats) Iports 3ro Asian 4o&ntries =5ages# 3a4t others

4an 4opy? 5orld is 3lat

) Age 4opression phenoenon Firls are no5 o&tgro5ing Bar.ie .y the age o3 eight#rather than target age o3 *7

) (ise in p&sh 3or physi4al a4tivity# 4o&ld de4reasetoy sales Be4a&se o3 Aeri4as o.esity epidei4

) E4onoi4 do5nt&rn =less disposa.le in4oe? pro3it argins at 0attel and other traditional toy

an&3a4t&rers are .eing s8&eeed .y a4ro-

e4onoi4 3a4tors largely o&t o3 their 4ontrol


54/60

0attel Threats) 0attels three largest retail 4&stoers a44o&nt 3or

approiately ,7G o3 5orld5ide sales2

W0T# TFT# and Toys ( 9s have 4onsidera.le leverageover 0attel 5hen negotiating pri4es2

(etailers also prod&4e toys

) The .iggest 4on4ern is Internet and ideogaes

Has.ro =ndin reven&e? is the o.vio&s threat# .&t ''

Toy sales in the 92:2 have .een gro5ing at a very lo5 rate3or the last 3e5 years2 In 3a4t# in 77; toy sales in the 92:23ell G2 This is ainly .e4a&se o3 the shi3t 3ro traditionaltoys to5ards video gaes2

In 77;# sales o3 video gae so3t5are &nits =a4t&al gaesas opposed to 4onsoles? gre5 *G in the 9nited :tates and

6G in the 9nited Kingdo2


55/60

C&!C)(SI&

!


56/60

"ossi.le :trategies 0oving %or5ard

) Q* :tay TheCo&rse

) Q >o&re otJ&st In the

(ailroadB&sinessAnyore


57/60

:trategy Q*! :tay The Co&rse

) Advantages 9se their .&ying po5er

to pri4e o&t 4opetitors Leverage kno5n .rands

Cost 4&tting te4hni8&esand operational

e33i4ien4ies haveiproved pro3it so 3ar

Contin&e to aintainli4ensing agreeents to4orner the arket

) Disadvantages Chaos Theory! Doing

5hat yo&ve al5ays donedoesnt ne4essarily netthe sae res&lts

>o&re either innovatingor getting le3t .ehind

Age Copression o34hildren is 4a&sing theind&stry to 4hange

%lat World allo5s others

to 4opy toys easier


58/60

:trategy Q! >o&re ot J&st

In the (ailroad B&siness Anyore

) Advantages Diversi3y .&siness into high

gro5th areas =video gaes#ed&4ational intera4tive?

(ed&4e ipa4t o3 4ore.&siness and .randsshrinking

pens 4opany &p intoother leis&re tie a4tivities#res&lts in ne5 .&sinessopport&nities and arkets

) Disadvantages

ot prie on 4ertainte4hnologies

Certain vent&res 5ill.e risky d&e to the&nkno5n 3a4tor

Co&ld dil&te the .rand E4essive 4osts 5hile

trying to ove 4ertainprod&4ts 3ro ($D toarket


59/60

0attel and /The %&t&re o3 "lay1

) Cir4ling .a4k to one o3 the original slides

)Whi4h strategy sho&ld 0attel 3ollo5M)What does /The %&t&re o3 "lay1 ean to the

4lassM

)And 5here does that stateent leave 0attelM


60/60

THANK YOU!

Documents

mattelfinal19nov2010-110121202423-phpapp01