Mattel Marketing Strategy: SWOT and PEST Analysis

Introduction and Company Background

Mattel was founded in 1945 by Ruth Handler, Elliot Handler, and Harold Matson. The first products the company made were picture frames, but Elliot soon began making dollhouse furniture, and the company gradually built a toy business from there. In 1959, Barbie was introduced and would become Mattel's signature product. The company went public on the Pacific Coast Stock Exchange the following year, and by 1965 was a Fortune 500 company with revenues exceeding $100 million. Hot Wheels cars were introduced in 1968 and became another major product line. By 1977, the company had entered the electronic gaming segment — a decision that proved poor, and by 1984 Mattel was losing money and was forced to abandon the segment, which had been built around the Intellivision brand.

In 1982, the company introduced the He-Man brand, and by the end of the decade was entering into deals with foreign firms for their properties and to bring key Mattel brands overseas. In 1993, the company acquired Fisher-Price, the major infant toy manufacturer, and that brand brought Mattel Tickle Me Elmo in 1996 — another smash-hit product. The period since then has been characterized by a series of acquisitions and divestitures that brought the company to its current form. Mattel also licensed a number of properties, including Harry Potter, that helped earn revenue over the following decade. New product introductions during this period were largely brand extensions, such as "Chicken Dance Elmo" and similar products (Mattel.com, 2012).

Today, Mattel is a relatively stable company. Revenues have fluctuated in recent years as a result of the financial crisis but remained within the $5.9–$6.2 billion range for four of the last five years (MSN Moneycentral, 2012). The company demonstrated relatively stable profits over the same period, with only one year posting an unusually low result. In fiscal year 2011, Mattel earned net income of $768.51 million on revenue of $6.266 billion. The balance sheet is healthy, with just $1.5 billion in long-term debt and a debt-to-equity ratio of 1.17.

Using Porter's generic strategy typology, Mattel pursues a differentiated strategy, in which the branding and uniqueness of its toys allow it to charge premiums while still courting the mass market (QuickMBA, 2010). The company's major brands include Barbie, Hot Wheels, Matchbox, Fisher-Price, and American Girl, supplemented by major licensing properties such as Toy Story, WWE Wrestling, Batman, Dora the Explorer, and Disney Classics (Mattel 2010 Form 10-K). The organizational structure is divided into three product divisions — Mattel, Fisher-Price, and American Girl — each with its own geographic and product units. North American sales represent 54% of total sales; international sales account for the remaining 46%, with Europe comprising 52% of that figure. Latin America contributes a further 30% of international sales, while Asia Pacific and other regions make up only a small portion.

The company owns some of its production facilities and also uses third-party manufacturers. Production is concentrated in China, Indonesia, Thailand, Malaysia, and Mexico. Mattel competes against firms such as Bandai, Hasbro, Lego, Playmobil, and MGA Entertainment across various segments of the children's toy market. Because Mattel sells primarily to children, its business is affected not only by the number of children in its major markets but also by the relative wealth of their parents, since the products are positioned through a differentiation strategy (Mattel 2010 Form 10-K).

Works Cited

Barboza, D. & Story, L. (2007). Toymaking in China, Mattel's way. New York Times. Retrieved March 26, 2012 from http://www.nytimes.com/2007/07/26/business/26toy.html?pagewanted=all

Dittmar, H., Halliwell, E. & Ive, S. (2006). Does Barbie make girls want to be thin? The effect of experimental exposure to images of dolls on the body image of 5- to 8-year-old girls. Developmental Psychology, 42(2), 283–292.

Egan, M. (2011). Mattel's 3Q matches street's view; Barbie sales soar 17%. Fox Business. Retrieved March 26, 2012 from

Kell, J. (2011). Mattel has holiday hopes as sales keep up momentum. Wall Street Journal. Retrieved March 26, 2012 from http://online.wsj.com/article/SB10001424052970203914304576630574067645008.html

Liu, L. (2009). Botox for Barbie. Time Magazine World. Retrieved March 26, 2012 from http://www.time.com/time/magazine/article/0,9171,1874769,00.html

Mattel 2010 Annual Report & Form 10-K. Retrieved March 26, 2012 from files.shareholder.com/downloads/MAT/1748350584x0x455252/1587E36E-D23A-4783-8AC3-A3ADE3FE9A6F/2010_Mattel_Annual_Report_Bookmarked_.pdf

Mattel.com. (2012). Website, various pages. Mattel Inc. Retrieved March 26, 2012 from

MSN Moneycentral: Mattel. (2012). Retrieved March 26, 2012 from

Ng, P. (2012). Mattel to release 'Hunger Games' Barbie doll. MSNBC. Retrieved March 26, 2012 from

QuickMBA. (2010). Porter's generic strategies. QuickMBA. Retrieved March 26, 2012 from http://www.quickmba.com/strategy/generic.shtml

Ready, R. (2011). Oil prices and long-run risk. The Wharton School. Retrieved March 26, 2012 from

Skariachan, D. (2011). Barbie helps Mattel win market share; shares rise. Reuters. Retrieved March 26, 2012 from http://www.reuters.com/article/2011/04/15/us-mattel-idUSTRE73E1NW20110415

White, G. (1998). Mattel will unveil plan to detect abuses. LA Times. Retrieved March 26, 2012 from http://articles.latimes.com/1998/may/06/business/fi-46747