Case Memo 1: Mattel s Barbie 1
Issues The Barbie brand, under Mattel, has dominated the doll market for many years, however this is beginning to change. The original appeal of Barbie, an adult bodied doll representing different careers for young girls, is beginning to lose traction among its consumers. The immediate issue Barbie faces is the controversy surrounding Barbie. A symptom of this issue is the declining sales. Barbie has a broken value proposition and customers are no longer responding to it. The broken value proposition has also lowered the public s perception of Barbie. The basic issues that underlie the immediate issue include a changing consumer market that is more concerned about gender issues and the portrayal of women, changing social trends, and a rise in competition. An Urgency Importance Matrix (see Appendix B) will show which of these issues is both urgent and important and will need to be solved first. Analysis In the beginning, Barbie was marketed through a revolutionary and effective strategy of television marketing. This differentiated it with its competitors. As consumer, retail, and industry trends began shifting negatively for Barbie in the mid-2010s, Barbie sales began to decrease. The overall yearly sales in 2013 were the lowest in more than decade, totaling $1.0 billion as compared to $3.6 billion in previous years (Beninger and Robson, 2016, p.6). As a reaction to this, Barbie changed its promotional campaign and products in 2015 to be more diverse and inclusive. Although Mattel has changed its iconic Barbie to reflect the current trends, a horizon scanning will reveal the advantageous points of difference Mattel s competitors have. The current social trends are inclined towards empowering toys that allow children to play constructively. The Lammily doll has been able to harness these social trends and through its average doll. It has become competition, raising $95,000 in under 24 hours. A SWOT analysis of the Barbie situation shows the significant external threats present but also the considerable strengths and opportunities Barbie has to develop (see Appendix A, Strengths, Threats, and Opportunities). As the Urgency Importance Matrix shows, the most important issues Mattel faces include the dropping sales, controversy surrounding Barbie, and rising competition. The proposed alternatives should be able to solve these problems (see Appendix B). Decision Criteria Each alternative will be analyzed and evaluated using the following decision criteria. 1. Is the alternative profitable? 2. Does the alternative provide opportunity for growth? Will the alternative accommodate future growth in reaction to consumer trends? 3. Will the alternative improve Mattel s corporate image? 4. Does the alternative eliminate competitors or allow Mattel to outcompete others? 5. Is the alternative cost effective? Does the alternative use a lot of company resources? Alternative A: Aggressive marketing and redesign as respond to changing trends. This alternative recommends a more aggressive marketing strategy to put Barbie back in the good graces of the public. It requires Mattel to develop and diversify product lines to include different types of dolls reflecting the different types of humans and to promote Barbie s redesign and new value proposition. The new promotional campaign implemented in 2015 has been largely successful in revamping Barbie s image. The Barbie Moschino sold out within an hour and the Barbie Imagine the Possibilities promotional video became a viral internet sensation. A SWOT analysis will show the significant opportunities Mattel has in redesigning Barbie (see Appendix A). This alternative will be profitable if consumers continue to react to Barbie s changing branding. This alternative also capitalizes on the fact that Barbie is a cultural icon, one of Barbie s biggest strengths (see Appendix A) is that she is widely known and recognized. It strengthens Barbie s iconic brand in reaction to consumer trends. 2
This alternative provides many channels for future growth. It is designed to react to changing consumer and market trends by leaving the direction of future promotions open. Along with this point, this alternative will improve Mattel s corporate image because Barbie will no longer be seen as controversial or as a bad role model, but rather as a forward-thinking toy that empowers those who play with it regardless of gender. The alternative will allow Mattel to catch up to competitor s whose brands are more appealing to consumers, such as the Lammily brand. This alternative will not eliminate competitors but it has the potential to allow Mattel to have a sustainable competitive advantage by performing similar activities in different ways. This alternative will be costly in terms of company resources because it requires intensive redesigning and promoting, as well as market research. Barbie s whole image will have to be redesigned and repromoted. Alternative B: Niche high end This alternative proposes that Mattel change Barbie s target market. In this alternative Mattel would change its strategy from Cost Leadership Strategy to Focus Strategy (see Appendix C). It would go from targeting the mass market to targeting niche markets. In this alternative, Barbie would produce luxury collectible dolls targeted towards adults. The Barbie Moschino line was very popular, the limited edition dolls sold out within an hour, and in this alternative Barbie would continue partnerships with popular designer brands to create limited edition collectable dolls. Marketed correctly, this alternative will profitable by selling highly unique customizable products for a niche market at a high price. Barbie will have to downsize since it will no longer be a mass market product so the employees and the key activities of the business will also be diminished. This alternative does provide growth for Barbie. In changing the market for Barbie, it opens a new direction for Barbie to grow in. Through partnership with other respectable brands Barbie would be able to grow. This alternative will change Mattel s corporate image. Mattel will no longer simply be a toys and games company but part of it will now cater to adults. In order to implement this alternative, Mattel will need to change its brand. This creates challenges because Mattel is widely recognized as a children s toys and games company (see Appendix A, Strengths) and it would need intensive marketing to change the public s perception. Similarly, this alternative will change Mattel s competitors. No longer will Mattel be competing with large toys and games companies like Hasbro and LEGO, but with other companies that make and sell luxury, collectable dolls This alternative is the most costly of the three because it requires a complete overhaul of Barbie s current image and brand. It will require intensive market research to see if there is a demand for this and if there is, what the demand looks like. It also requires a complete new design for the Barbie doll as well for the packaging it is sold in, and all of the promotions and advertisements. This alternative also holds significant risk because there is no guarantee the public would react well to this change. This alternative also requires Mattel to find new distribution channels, such as online stores or through the partnered designer, since Mattel would not be able to sell the new luxury Barbie at toy stores anymore. Alternative C: Sell the Barbie line This alternative proposes Mattel sell the Barbie line and focus on its less controversial products. The Barbie brand has a broken value proposition and customers are reacting negatively towards it, therefore this alternative would solve these issues by simply eliminating Barbie from the Mattel brand. 3
This alternative will be profitable only once. Barbie is a huge brand and would sell for a significant amount, however once the sale was made, Mattel would cease to make money from the Barbie brand. This alternative would also require Mattel to find a willing buyer and negotiate a price that justifies the sale. Barbie, although less profitable than before, is still above its break-even point and is still making money. Finding a suitable buyer and negotiating the price are the biggest challenges presented by this alternative. This alternative would not provide any basis for growth in the Barbie brand. It would effectively end Mattel s involvement in the Barbie brand. This alternative would improve Mattel s corporate image by distancing and removing it from the damaging Barbie brand. This alternative would allow Mattel to be more competitive in its other sectors because it can now divert more time and resources into developing them, but this alternative would not make the Barbie line any more competitive. It would not allow the Barbie line to perform different activities or similar activities in different ways. In fact, this alternative will benefit Barbie s competitors by eliminating a strong competitor that used to dominate the market for dolls. This alternative is the most cost effective of the three options. It does not require any redesign, promoting, marketing or research. This alternative will be costly in terms of Human Resources as it will take people to find and negotiate a profitable sale. Recommendations Alternative A: Redesign as reaction to changing trends is the alternative that Mattel should move forward with. Alternative A is the best choice because it satisfies all the decision criteria. It will increase profits, it has the potential for future growth, it improves brand image and increases competiveness. This alternative addresses the immediate issue of the controversy surrounding Barbie and the declining sales. The rebranding of Barbie will lessen the controversy and improve Barbie s brand and public opinion, as well as increasing Barbie s competitive advantage. Once Barbie s value proposition is fixed, sales will increase. This alternative also addresses the basic issues surrounding Barbie. It will allow Barbie to respond to the changing consumer, social, market trends. Mattel can begin implementing this alternative by redesigning Barbie to reflect the consumer s needs and wants. The Barbie doll would have to be further changed to reflect the diversity of the consumers. In order to do this, Mattel needs to conduct market research in order to understand the consumer s needs and wants. This alternative requires Mattel to have a strong and aggressive marketing strategy in order to change the public s opinion of Barbie as well as advertise the newly redesigned Barbie. While redesigning Barbie, Mattel runs the risk of losing its widely recognized brand. Mattel should keep this risk in mind while designing and promoting. Overall, this alternative is both the least risky alternative as well as the one that will mitigate both the immediate and basic issues. 4