Mattel Marketing Plan
...e market share and opportunities in the industry. For example, our company would embed sound, animation or interactive program in our toys. b) Innovation in toys In the 20th Century, we would meet many challenges from other companies. Every company would establish his innovation product to capture more market shares and achieving the marketing objective. For example, Sony launches his electronic dogs. Such development would definitely make the keen competition and the technology growth in the toy industry. 2.1.4 Political -Legal Environment a) Regulation in toy industry Political and legal environment are strongly affected our marketing decisions. Regulation has three main purposes: to protect companies from unfair competition, to protect consumers from unfair business practices and protect the interests of society from ungridled business behavior. The regulation in toy industry is not very strict all over the world. It is always mention in the product standard and safety for the children. Moreover, many countries would encourage the toy companies under the total quality control management, which is better to obtained ISO certification. In USA, they have a completed full set of regulation in toys/children’s products, which is enforcing by US Consumer Product Safety Commission , they are divided into many different types, e.g. in balloons, balls, toy guns and electronically-operated toys etc. 2.1.5 Social-Cultural Environment a) Values of toys As we all knows, people in different countries would have different culture. Also, different people would hold different values, beliefs and satisfaction in toys. For example, USA people must buy a toy for her children during Christmas time. Hong Kong people would follow the trend for buying toys; they think that they need to have the toys faster than the others do. This is the social norm of the Hong Kong people. Anyway, toys are not the necessaries for us, but it also has a stable market in the world. 2.2 “FIVE FORCES MODEL” BY MICHAEL E PORTER In this session, we would use “Five Forces Model” by Michael E Porter to analyze the competitive forces in the international toy industry environmental in order to identify the opportunities and threats. 2.2.1 Threat of Intense Segment Rivalry a) Competitive Structure They are many toy companies in the world, some companies specially produce dolls, e.g. Sanrio produce Hello Kitty and Hasbro produce Disney characters and some companies specially produce games, e.g. Nintendo and Sony. There are around 10 leading toy companies in the industry, like Hasbro, Konami, MGA Entertainment and Lego etc. Undoubtedly, they are the main competitors to us. According to the statistics in Table 2.1, we could maintain in the top 3 market position in the third quarter 2002. RANK ITEM DESCRIPTION MANUFACTURER INTRODATE AVERAGE RETAIL PRICE $ 1 YU-Gi-Oh Metal Raiders Konami Jun 02 3.5 2 Hot Wheels Basic Cars Mattel <1986 0.7 3 Leappad Books Asst Leapfrog Jul 01 15.3 4 Bratz Asst MGA Entertainment Jul 01 14.2 5 Leappad Leapfrog Sep 99 44.5 6 02 Yu-Gi-Oh Starter Konami Apr 02 10.5 7 SW Episode II Asst 1 Hasbro Mar 02 5.7 8 Spiderman Dual Web Blaster Toy Biz Dec 01 15.3 9 Beyblade Starter Set Hasbro Dec 01 7.4 10 SW II Elect Lightsabers Hasbro Apr 02 20.5 Table 2.1 – Top 10 Best Selling Toys (Ranked on Dollars) Quarter 3 – 2002) Source: NPD Funworld SM TRSTS Service Dec 2002 b) Product Differentiation The differentiation of product in the toy industry is high. Meanwhile, the innovation of the product is necessary. We need to innovate some new products to meet the keen competition in the industry. Moreover, we could differentiate our product through advertising and promotion, brand positioning and product quality so as to compete with our rivalry. Besides, we could maintain our quality to keep our image of the market leader. 2.2.2 Threat of New Entrants a) Entry Barrier Huge capital is required to establish a new toy business, as company needs to have a head office, toys factory, transportation network, R & D investment, which involves many people and equipments. Certainly, the entry barrier is considerably high in the toy industry. b) Economics of Scale As our company, Mattel, we have established 57 years already. As we are in the global market, we have our own factory and good relationship with our contractor, so we could have large scale of production and enjoy the economic of scale. As a result, we could have a low cost of production. With small companies, they do not have sufficient capital to enjoy the advantage from economics of scale, so they are difficult to compete with us. c) Brand Loyalty Mattel establish in 1945, during the 57 years, we get good reputation and become a friend to the child. We are the child’s fantasy. Moreover, we are the world’s largest toy company with a rich and diverse portfolio of power brands, including the world’s best-selling fashion doll, Barbie, the number one vehicle brand in the world, Hot Wheel, the number one brand worldwide for infant and preschool toys, Fisher-Price, and a true blue-chip brand, American Girl. As a result, it is very difficult to a new entrant to complete with us. 2.2.3 Threat of Substitute Products Nowadays, increasing in the information technology, children tend to play Internet or something interactive games. Because of the competition, the internet charges are very low, so this is an important threat to us. We need to monitor the price trends closely, and make some innovation product to maintain the market share. 2.2.4 Threat of Buyers Growing Bargaining Power a) Bargaining Power Because of the competition is keen in the market, our buyer has strong bargaining power against us. They would not buy our product without discount or they only buy our product for some occasion, e.g. Christmas and birthday. In order to retain our customers, we would offer some special discount for some items, and we would using some pricing strategy, e.g. buy one get one free program. 2.2.5 Threat of Suppliers Growing Bargaining Power a) Suppliers’ Bargaining Power In our company, suppliers bargaining power is likely to be low as we are one of the largest toy company in the world. We have a lot of contractors and suppliers around the world and have good relationship. As a global company like us, we should be a big client for our supplier. As a result, they have very low bargaining power against us. b) Supplier Concentration In the toy industry, there are many suppliers in the market. Especially in China, they could provide lower cost and higher quality of the product than the others country. So, the bargaining power of the supplier is low. 3. SWOT ANALYSIS Table 3.1 summarizes the findings from the SWOT Analysis and the following sections in this chapter provide details of the Company’s most significant internal strengths and weaknesses, and external opportunities and threats. In accordance with these results, the Company should capitalize on the key strengths, overcome or alleviate the major weaknesses, avoid significant threats, and take advantages of the most promising opportunities. Strength Weakness Ø Market ShareØ Brand NameØ Partnership and Licensing DealsØ Financial Situation Ø Market ConcentrationØ Distribution EffectivenessØ Inventory Control Opportunity Threat Ø Growth of Preschool ToysØ Global DemandØ Demographical FactorsØ Political FactorsØ E-commerceØ Direct MarketingØ Joint Marketing ForcesØ Digital Technologies Ø Worldwide Population Growth RateØ Global CompetitionØ Economical FactorsØ Foreign CurrencyØ Social-cultural FactorsØ Change in Consumer PreferencesØ Digital TechnologiesØ Substitutes Table 3.1 -Results of SWOT Analysis 3.1 STRENGTHS 3.1.1 Market Share The Company is the toy industry leader. Since 1985, the Company has also grown to be one of the top 20 consumer direct-mail companies. Last year Mattel, creator of Barbie, earned worldwide sales of US$1.1 billion for that brand name alone. 3.1.2 Brand Name The Company has brand names with high market awareness of various product lines. The Girls segment includes brands such as Barbie fashion dolls and accessories, Polly Pocket and American Girl. Boys segment includes Hot Wheels, Matchbox, Tyco Radio Control, Disney, Harry Potter. Infant and Preschool segment includes Sesame Street, Disney preschool and plush, Winnie the Pooh. 3.1.3 Partnership and Licensing Deals The Company, in partnership with PC maker Patriot Computers, has introduced computers with Barbie and Hot Wheels themes in 1999. Since 1996, the Company has an agreement to make preschool and plush toys dolls, games and puzzles based on classic Disney characters, In 2001, an agreement with Time Warner Inc. to make toys based on Harry Potter books and films. In 2002, Warner Brothers signed a 4-year licensing deal with the Company, giving the company worldwide rights, excluding Asia to produce toys based on Batman, Superman, Looney Tunes, Baby Looney Tunes and the Justice League. The estimated value of this deal is between US200M and US$600M in revenue. TDK Mediactive Inc., a global publisher of interactive entertainment software, signed a worldwide, multi-year exclusive licensing agreement with the Company to publish software based on Masters of the Universe. 3.1.4 Financial Situation For the 9 months ended 30 September 2002, net sales increased 3% to US#3.22 billion. Net income from continuing operations before accounting change increased 56% to US$268.9M. 3.2 WEAKNESSES 3.2.1 Market Concentration The Company concentrates on a small group of major customers; replies on Barbie for roughly 40% of its profits. 3.2.2 Distribution Effectiveness The Company replies on the top retailers: Wal-Mart, Toys “R” Us and Target. Financial analysts noted that half of the Company’s revenue come from five retailers, a potentially dangerous scenario 3.2.3 Inventory Control Shortages of raw materials or components, resulting in poor inventory control, affect the Company’s ability to produce product in time to meet customer demand. 3.3 OPPORTUNITIES 3.3.1 Growth of Preschool Toys Interactive toys or smart toys are expected to continue to be the mainstay, while technology allows the development of “intelligent toys”. 3.3.2 Global Demand The global toy industry, excluding video, remains a big business – US$55 billion. 3.3.3 Demographical Factors Apart from the 60M US kids, India has 400M potential toy consumers, and China has 300M kids. Imported toys are enjoying steady growth in China. Their consumers tend to have greater brand loyalty and come from better-educated families. 3.3.4 Political Factors The Chinese government regulations limit families to one child. In consequence, the adults may be indulging the whims of each child. 3.3.5 E-commerce Starting in 1998, girls were able to log onto www.barbie.com and customize “My Design” dolls. They choose the doll’s skin tone, eye color, hairdo and hair color, clothes, accessories, and name. They even fill out a questionnaire detailing their doll’s likes and dislikes. When the doll arrives in the mail, the doll’s name is on the packaging, along with a computer-generated paragraph about her personality. 3.3.6 Direct Marketing The Company is trying to reduce its reliance on its biggest retailers, Wal-Mart, Toys “R” Us and Target, through its own catalog and internet sales. 3.3.7 Joint Marketing Forces The Company is to form marketing, sales and product development alliance with Bandai whose strength has rested on the boy’s category. Under the agreement, Bandai markets and sells the products of the Company in Japan. The Company will also start marketing and selling Bandai products in the US and Latin America and even other areas. 3.3.8 Digital Technologies The chip-driven interactive toys grow rapidly, like the robotic dogs that were the No.1 sellers in 2000 (from Toy Quest and Hasbro’s tiger Electronics). Use of the Internet has been growing exponentially, and today 40% of the US kids aged 9-14 have access to a computer and 22% are actively engaged in the Internet. With the popularity of the cyber world, linking toys with the Internet is another new development. The trend of mass customization gives the toys and customers a sense of uniqueness. 3.4 THREATS 3.4.1 Worldwide Population Growth Rate In less developed regions of the world currently account for 76% of the world population and are growing at 2% per year. In more developed countries is growing at only 0.6% per year. 3.4.2 Global Competition International segment competes with global toy companies including Hasbro, Lego, Tomy and Bandai. 3.4.3 Economical Factors Possible weaknesses in global economic conditions may negatively affect the sales of the Company’s products. There is a decline trend in traditional markets. It is found that toy sales in traditional markets declined almost US$1 billion in 2000. 3.4.4 Foreign Currency The reportable income and cash flow may be impacted by exchange rate fluctuations. 3.4.5 Social-cultural Factors Product standardization cannot fulfill the needs of customers of different areas. The Japan-only Barbie is a less “sexy” version of the Western model, with smaller breasts and slimmer curves. In China, Shanghai No.1, Yaohan and Baodaxiang department stores all claim the majority of consumers prefer toys below Rmb50 whereas the products of the Company, as imported toys, cost over Rmb100. In Malaysia, the Consumers’ Association of Penang has called for Barbie dolls to be banned outright. They said that the doll’s blond, leggy and non-Asian appearance promoted the wrong aesthetics In Iran, the government condemned the forever young Barbie as a threat to traditional culture. 3.4.6 Change in Consumer Preferences Significant change sin the play patterns of children, whereby they are increasingly attracted to more developmentally advanced products at younger ages, which may affect brand loyalty and the perceived value of and demand for the Company’s products. 3.4.7 Digital Technologies Development of new technologies, including digital media and the Internet, may create new risks to the Company to protect its intellectual property rights or affect the development, marketing and sales of products. 3.4.8 Substitutes Video and electronic games have stormed the market in recent years, compared to traditional toys. 4. MARKET FORECAST 4.1 MARKET DEMAND Nowadays, the economics are declined all over the world. But the toys market is still very important and profitable business. The main toys producers are Hasbro and Mattel. As the market leader of toys, Mattel has owned nearly half market share in toys market. But its competitor, Hasbro, the net sales are also in a large amount. The figure 4.1 and figure 4.2 have showed that Mattel and Hasbro have strong net sales and their profits are large. Fig. 4.1- Net Sales Comparison between Mattel and Hasbro Fig. 4.2 – Net Income Comparison between Mattel and Hasbro As a result, we can see that the market demand of toys is still very large although it is in the economic decline stage. 4.2 PRODUCT LIFE CYCLE Toys have developed for several years and become a mature business, the main representative is Mattel Inc. We can see that Mattel is now staying at the maturity stage of the Product Life Cycle in figure 4.3. Fig. 4.3 – Overall Product Life Cycle In 40’s - 60’s, is the introduction stage of Mattel. It has designed many different kinds of toys, the most famous is - Barbie. In this period, Mattel cannot have a large market share but the sales and profit are continuously increased. In 60’s – 90’s, Mattel is stayed in a growth stage. People knew Mattel much more and the image of Barbie is very popular. In this period, Mattel’s sales and profit increased rapidly. Mattel has the brand loyalty. Although there has many new entries such as Hasbro, etc, it still cannot reduce the development of Mattel. In 90’s up till now, Mattel is in Maturity Stage. In this period, Mattel’s sales and profit are no more increase or increasing slowing. Also, Mattel should face to many threats such as its main competitor - Hasbro, economic decline, etc. They may make Mattel’s decrease and perhaps lost its position of market leader. The mainly markets of Mattel are USA, Europe and Asia (mainly China), the status of these 3 main markets as below: USA The growth rate of Mattel in the US market is saturating because throughout the past 60 years, Mattel has already conquered this market, and the marketing has becoming saturated. However, there is still a slow growth due to the needs of toys for children became a necessity. Therefore, we predict the US market will always be a stable and profitable market. Since the market has already been developed, unless there are special changes in product types, the market share and profit will not be able to grow significantly. Due to the growing popularity of computer, so the electronic game segment still has a margin to grow for Mattel. The other two segments, entertainment and educational have developed already. However, the company has to be aware of substitute products from its competitors. Another factor the company has to concern is the economic downfall, which weakened the buying power of the consumers, as a result to consume fewer toys for their children. Europe The Europe market for Mattel is another saturating market, it is a stable market as well. The company is still enjoying a profitable market in this segment, yet, the growth rate is becoming less due to the development of the market size. The most important factor for Mattel to pay attention to if the company wants to have a bigger market is larger its market size by getting into the Eastern Europe market. This part of Europe is still weak for Mattel. In the future, people in the Eastern Europe will be able to buy more toys for their children. Yet, it is hard to see a significant growth of sales in the segment because the economical and political situation in that area is still unstable, people do not have enough buying power to buy toys for their children. Also, the Euro is depreciating and not very stable, this is also a disadvantage for Mattel because this will affect the profit and sales of toys. Growth in the Western Europe is also difficult due to the different cultures of the Americans and Europeans. The Europeans do not accept the American culture, therefore, Mattel should produce some products that are more suitable for the European children and parents. Asia (mainly China) While the US and Europe markets are well developed and saturated markets, the Asia (mainly China) market is just at an introductory stage. The mainland market...