Barbie

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MKTG/057

IBS Center for Management Research

Barbie’s Success Story

This case was written by K. Subhadra, under the direction of Sanjib Dutta, IBS Center for Management Research. It was

compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either

effective or ineffective handling of a management situation.

2003, IBS Center for Management Research. All rights reserved.

To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: [email protected]

www.icmrindia.org

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MKTG/057


“Most toys are only popular for two or three years, but Barbie has been popular for decades and

she shows no signs of weakening.”

Frank Reysen, Editor, Playthings, in 1998.1

“The challenge with Barbie is that it's a 41-year-old brand, and little girls today are nothing like

little girls of 41 years ago, the challenge is to continue to reflect who girls are today.”

Chirs Burns, Editor, Toy Report Weekly in 2000.2

“We know we’re going to have to stay on our toes to keep up with what girls want, Barbie has

always reflected what girls are interested in. Today that is fashion, hair, activities and technology.

We’ve got very cool products that appeal to these girls right now.”

- Adrienne Fontanella, President, Mattel Co. in 2000.3

BARBIE – THE ICON OF AMERCIAN CULTURE

By 2003, though aged 43, she set new fashion trends, expressed the dreams of young girls, and

represented success for them. She was Barbie, the most popular fashion doll across the countries.

Barbie was considered an icon of American culture across the world and a representation of the

flamboyance and luxurious lifestyle of the Americans. She was also regarded as a role model who

inspired young girls to become independent and self-reliant.

Analysts attributed Barbie‟s success to its ever-changing styles and its adaptability to changing

trends in American society. Though Barbie faced of lot of criticism for allegedly sending wrong

messages to young girls, it was the world‟s largest selling toy and one of the most successful

products of Mattel Co., its manufacturer.

The biggest challenge for Barbie in the 2000s was to retain the interest of young girls. In the

2000s, with young girls getting access to various forms of entertainment such as video games and

computers, the number of young girls playing with dolls was decreasing. In addition, Barbie faced

stiff competition from „Disney Princess,‟ launched by Disney in 2001. Analysts felt that Disney‟s

distribution strength and its brand name would make Disney Princess an instant hit with children.

However, some analysts opined that it would not be easy to dethrone Barbie from the position of

the world‟s favorite doll.

MAKING OF BARBIE

The history of Barbie dates back to early 1950s, when Ruth Handler (Ruth), one of the founders of

Mattel Co., (Refer Exhibit I) asked Mattel‟s designers to design an adult looking doll for children.

Ruth got the idea of manufacturing an adult looking doll when she saw her daughter Barbara

1 “Mattel Relies on Dollhouse Diva Barbie‟s Big Business”, www.abcnews.com, June 11, 1998.

2 “Mattel Giving Middle-Aged Barbie a Major Makeover”, Los Angeles Business Journal, March 20, 2000

3 “Barbie ® Doll Marks New Millennium with Hipper Look, Logo and Attitude,” www.collectordolls.

about.com, July 11, 2000.

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playing with paper dolls, imagining they were adults and imitating adult conversation. Ruth

realized that a three-dimensional doll would be an instant hit if they could produce it. However,

when Ruth proposed the idea to the board, it was turned down as the board felt that producing a

three dimensional doll would be very expensive and that it might not click in the market.

In 1955, while Ruth was vacationing in Europe with her family, she came across Lilli doll, which

was based on a German comic strip character of same name (Refer Exhibit II). Ruth bought two

dolls, one for her daughter and the other for herself. She showed the doll to Mattel‟s designers and

asked them to design a similar doll that would look more American, innocent and “project every

little girl‟s dream of the future.” The manufacturing of Barbie was handed over to a Japan-based

company – Kokuasai Boeki Kaisha.4 Mattel also hired Charlotte Johnson,

5 a fashion designer, to

design Barbie‟s wardrobe. In 1959 winter, Barbie was first introduced in the American Toy Fair.6

The first Barbie was dressed in a black and white striped swimsuit (Refer Figure I).

Figure I

The Barbie Doll in 1959

Source: www.abcnews.com

However, she failed to impress consumers, and even Mattel‟s largest customer, Sears,7 refused to carry

Barbie in its stores. Mattel realized that it had to advertise heavily to promote Barbie. After the

American Toy Fair was over, Mattel launched a highly successful ad campaign targeting children.

In order to convince parents to buy Barbie, an adult looking doll, Mattel roped in motivational

psychologist Ernest Dichter (Dichter). Dichter studied the responses of parents and children for six

months. It was found that while parents rejected the doll, girls in the 8-12 age group liked the doll

instantly. It was reported that Barbie‟s clothes and accessories attracted children and they loved the idea

of putting Barbie in imaginative situations which required constant wardrobe changes of dress.

Ditcher suggested that Mattel position Barbie as a teaching tool that would encourage girls to

become well groomed young ladies. Barbie was therefore projected as a role model for American

girls, guiding them through puberty into adulthood. The strategy worked well and priced at $3,

Barbie sold 351,000 units in the first year.

4 Kokusai Boeki Kaisha was a components distributor for medium and small toy companies all over Japan.

5 Charlotte Johnson designed Barbie‟s wardrobe for the first 20 years.

6 The American Toy Fair is held at New York City annually. All major toy companies participate in this

fair and launch their new products. 7 Sears – one of the largest retailers in America.

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In the early 1960s, feminists in the US campaigned against Barbie. They argued that Barbie

distorted the concept of femininity and was a symbol of the patriarchal system. Some even accused

Barbie of encouraging girls to visualize themselves as sex objects or housekeepers. However,

Barbie continued to be successful, and by 1963 around 2 million Barbies were sold. Around this

time, Barbie got a boy friend, Ken and had pet animals (Figure II for Ken). In 1963, Mattel test

marketed Barbie in international markets. Since the results were favorable, Mattel entered into

licensing agreements in England, France, Germany, South Africa, Italy and Mexico to market

Barbie in those countries. In the 1970s, Barbie‟s looks were changed. She got a wide smile and

sun-streaked hair, which was a fashion then. In 1976, Barbie was included in „America‟s Time

Capsule‟ during the bicentennial celebrations on the occasion of its 200th year of independence.

8 In

the 1980s, Barbie represented the disco culture along with Ken and her friends Donny and Marie.

In the late 1980s, to counter criticism that Barbie represented only tall blonde Americans, Mattel

launched Japanese, Indian and Mexican Barbies. During the same period, Barbie collectors clubs

sprang up around the country. These clubs became the largest customer group for Mattel. Most

Barbie collectors were in their mid-30s, and they collected Barbie dolls as a hobby. And most of

these collectors were attached to Barbie because the doll was part of their childhood. Mattel

launched special collector series Barbie dolls in limited editions for such collectors. In 1988 it

launched the Happy Holidays Barbie Doll9 series (Refer Exhibit III).

In the 1990s, Mattel realized that Barbie needed to become techno savvy. In 1996, Mattel launched

Barbie Fashion Designer, a CD-Rom. It went on to become the fourth best selling game for that

year with sales of around 353,409 copies within the first three months of its launch. By 1997,

Barbie had penetrated 90% of the US market and 2.5 dolls were sold every second. According to

company sources, by 2002, more than 1 billion Barbie dolls (including its friends and pet animals)

were sold worldwide. The bestselling Barbie in the whole Barbie series was „Totally Hair Barbie‟

launched in 1992, with hair so long that it reached the doll‟s toes. More than 10 million units of

Totally Hair Barbie‟ were sold generating revenues of $100 million.

Figure II

KEN

Source: www.jcsetc.com

8 As part of the bicentennial celebrations, the American government developed a time capsule containing

objects representing major events and important objects of American life in 1976. The time capsule

would be opened on 2076 by the US president. 9 Holiday-themed Barbie dolls came with designer gowns to celebrate holidays.

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Barbie was reportedly the most widely sold doll across the globe. It was reported that on an

average an American girl between 8-12 years owned around 10 Barbie dolls, an Italian or British

girl owned seven, and a French or German girl owned five dolls. According to the Interbrand

survey,10

Barbie‟s brand value was $1,937 million and it ranked 94th in the top 100 brands for the

year 2002. By the 2000s, Barbie contributed to around 40% of Mattel‟s revenues.

Barbie‟s success was attributed to its adaptability to changing trends. A new Barbie was launched

frequently to represent various cultural changes in American society, enabling young girls to

connect with the doll.

BUILDING UP AN IMAGE

Made of molded polystyrene and plastic (for hair), Barbie doll was 11½ inches tall with a 4¾-inch

bust, 3-inch waist and 3¼ inch hips. On a human scale it measured 39-21-33, which was an

improbable figure for women. Barbie faced stiff opposition from mothers who thought that the

doll‟s make up and appearance would have a negative impact on children. However, it caught the

imagination of young girls with its black eyeliner, pearl earrings, a zebra stripped bathing suit and

heels. Barbie had its own wardrobe, consisting of a casual outfit for outings, a bridal gown and a

tennis dress. Young girls liked Barbie instantly, thus triggering sales.

From its inception, Barbie fashions were based on the philosophy that “the doll sells the clothes

and the clothes sell the doll.” Charlotte designed a bridal gown, a tennis dress, and a ballerina

outfit as basics accessories for Barbie. She also added a sleepwear for slumber parties, which were

popular in those days. In the early days, Ruth wanted to create an extensive wardrobe for the doll

to enable young girls to choose their Barbie‟s personalities. Barbie‟s wardrobe was designed

according to the latest fashions, so that young girls could connect with the doll and its accessories.

After its launch in 1959, Mattel received suggestions for remolding Barbie. However Ruth felt that

the original mold should be retained because it was familiar to customers. In 1961, Barbie got new

bright blue irises and shaped eyebrows replacing the heavy black eyeliner and pointed eyebrows. It

had a soft skin tone and a bubble cut, which was popular in the early 1960s.

Mattel‟s introduction of Ken, Barbie‟s boyfriend, met with widespread criticism from feminist

groups. However, analysts pointed out that Ken‟s introduction only represented American society

in the early 1960s. They pointed out that in the 60s, women‟s roles were defined by men and that

most women spent their lives raising families. As American women were not career oriented,

Barbie was not introduced in any career mode. Instead she represented the average American

woman‟s life before marriage.

To counter criticism of Barbie being a sex symbol, Mattel introduced Midge, a friend of Barbie, in

1963. Midge‟s face was freckled and not at all sensual. During the same period, there was

increasing demand for Barbie to have kids. Instead of getting Barbie married, Mattel introduced

Skipper, Barbie‟s little sister in 1964, enabling Barbie to baby sit. Consequently, Mattel was

criticized for not getting Barbie married to retain her youthful and perfect figure.

In the late 1960s Mattel added new features to Barbie to sustain the interest of young girls in the

doll. In 1966, Barbie accessories included a magic solution that would change the colour of

Barbie‟s hair and clothes. (In the mid 1960s, colored hair was fashionable among American

teenagers). In 1967, Mattel revolutionized the toy industry when it introduced “Twist and Turn”

Barbie. This Barbie fascinated children since it was able to move its waist. Realizing that dolls that

could move caught the imagination of young girls, Mattel soon introduced a Barbie that was able

to move, bend, grasp, and tilt her head. These improvements in Barbie enabled Mattel to sustain

10

Interbrand is a leading brand consultant established in 1974. Interbrand lists the top 100 brands of the

world in association with BusinessWeek.

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the interest of young girls in the doll. To popularize Barbie‟s new features, Mattel advertised

heavily. It launched “Total Go,” a campaign with a $12 million budget, focusing on the new

features of Barbie. Mattel advertised heavily in both the print and electronic media (press,

television, and radio). Before launching any advertisements, Mattel tested them on children. Only

ads that the children liked were aired.

In 1967, when racial equality was dominating America‟s political and social agenda, Mattel

introduced a black Barbie called Francie. This doll did not perform well in the market. Caucasian

parents were not ready to buy a black Barbie for their children, and black parents were not ready to

accept Francie, as they could not relate to it. As a result, the doll had low sales and was

discontinued within a few months of its launch. In 1968, Mattel introduced Christie, a black friend

for Barbie. Christie was successful compared to Francie. Christie represented the changing social

scenario in the US during the late 60s, a time when African Americans demanded rights and

Martin Luther King and Malcolm X asserted the equality of blacks. Mattel continued innovating

and in 1969 it introduced Talking Barbie, which spoke about its new clothes, hairstyles and Ken.

Along with these innovations, Mattel introduced innovative programs to increase the sales of

Barbie. In 1967 it launched a „trade-in‟ program, which enabled young girls to exchange their old

Barbie for a new Barbie. Analysts pointed out that this venture, not only helped Mattel sell new

Barbie dolls, it also allowed the company to erase the old image of Barbie from the minds of

young girls. Analysts also observed that the trade-in program taught young children about

increasing temporary relationships that was becoming popular in American society.

BARBIE’s CHANGING IMAGE

One of the main reasons for Barbie‟s success was its adaptability to changing trends. It was

reported that Barbie had more than 80 careers within a period of 40 years. The doll had played the

role of college graduate, doctor, teacher, astronaut, Presidential candidate, surgeon and business

executive, among others.

In the 1970s, Americans experienced turbulent times, both socially and politically. The women‟s

liberation movement and the sexual revolution overthrew the values and traditions of the 1950s. In

addition society became more materialistic. Mattel realized that to suit the changing times, Barbie

needed to look more assertive. In 1971, Mattel introduced “Live Action Barbie” to portray the

liberated woman. Live Action Barbie had a trimmer figure than earlier Barbies and wore tie-dyed

outfits. The Vietnam War and the increasing usage of drugs by teenagers put new challenges

before Barbie. So far, Barbie had represented changes in society, but Mattel was against making

Barbie a representative of the drugs and free sex culture.

During this period Mattel went through some turbulent times. An enquiry was ordered by federal

agencies into Mattel‟s finances and Mattel‟s founders Ruth and Elliot were expelled from the

company in 1974.

In 1974, Mattel introduced “Sweet Sixteen” Barbie. However, the sweet sixteen Barbie was not

glamorous as teenagers during that period opted for less make up and long hair. In 1975, Mattel

associated Barbie with the Winter Olympics and a new athlete Barbie was launched. The athlete

Barbie had the clothes and accessories of a swimmer, a skater and a skier. Along with the new

versions, Barbie‟s face saw a few changes. In 1975, she got a warm grin and by 1977 she had a

permanent smile. In the 1980s, Barbie came with wide smile and winged hair, riding on the disco

wave of the early 1980s.

By the mid-1980s, with American women exploring different careers, Mattel realized the need to

change Barbie‟s image to boost its sales. Mattel realized that young girls were becoming more

techno savvy and career oriented. Thus, Barbie was launched as an astronaut (Astronaut Barbie –

1986) and as a doctor (Doctor Barbie in 1988) (Refer Exhibit IV). In 1985, Mattel introduced

“Day to Night Barbie,” representing the busy lifestyle of working women. Mattel also revived the

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image of Barbie as a fashion doll by introducing Crystal Barbie, Puerto Rican Barbie and Great

Shape Barbie. Analysts felt that these new Barbies enabled girls to not only fantasize about the

adult life of women but also think and dream of the careers they wanted to pursue.

To support Barbie‟s new image, Mattel launched a new ad campaign – “We girls can do

anything” in 1980s. The ad showed a series of scenes. The first scene showed a young girl running

to greet her mom coming from office and carry her briefcase. This scene was followed by another

young girl playing baseball11

and then playing with her doll. The third scene showed a young girl

looking through a microscope. The whole ad conveyed the idea that young girls could do anything

they wanted.

In 1992, Mattel launched “Presidential Candidate Barbie,” inspiring young girls to opt for a

career in politics. By 1993 Barbie crossed the $1 billion sales mark. The Internet revolution of the

mid-1990s changed people‟s lifestyles and also affected Barbie. In 1998, to keep up with the

technology revolution, Mattel launched Barbie‟s website www.barbie.com. The site provided

various interactive items. Along with interactive games, the site provided a letter from Olympic

Gold Medalist, Tara Lipinski,12

to inspire girls to pursue their dreams and ambitions. The site also

included a parents‟ section, through which Mattel conducted an online survey of parents regarding

features that should be added to the site. Digital Planet 13

collaborated with Mattel on the design

and development of Barbie.com. Commenting on the site, David Haddad, general manager, Mattel

Media, said, “We‟re very excited about building our website to include a destination where girls

can have a meaningful experience with Barbie on-line. In addition, we truly hope that parents will

be our partners in this effort to bring girls to the Internet in a way that's fun and comfortable for

everyone.”14

In the mid-1990s, Barbie experienced a drop in sales due to the increased in alternative means of

entertainment for, kids such as videos games, computer games and the Internet. Also kids could

not relate to Barbie due to changing priorities. Analysts observed that in the 1990s, young girls

became more career minded and techno savvy and they failed to relate to Barbie. In 1997, Jill

Barad (Barad) took over as CEO of Mattel. She announced that she planned to make Barbie‟s

image more consistent with the image of women in the 1990s.

In 1997, Barbie‟s domestic sales were reported to be $320 million while global sales were reportedly

$2 billion. That year Barbie‟s first classical ballet series, Sugar Plum Fairy was launched. In this series

Barbie was launched under seven world famous ballet series (Refer Exhibit V).

Inspite of this launch, Barbie‟s sales started declining after 1997. Analysts pointed out that while

Barbie‟s target market consisted of young girls between 3-12 years till the 1980s, the target group

was reduced to girls between 3-8 years by the late 1990s. They observed that in the late 1990s,

girls were not keen on playing with traditional playthings such as dolls. Analysts also said that

since young girls in the late 1990s had lots of exposure due to the Internet, they felt that playing

with dolls was childish.

In 1998, Mattel redesigned Barbie. Barbie was launched with slimmer hips, a wider waist and

smaller breasts. According to Mattel sources, the new Barbie reflected society in the late 1990s. It

was reported that the earlier Barbie‟s measurements were improbable for humans. According to

Mattel, the slimmer Barbie would fit into the fashion outfits of the 1990s, which did not suit the

earlier Barbie.

11

Base Ball is the American national game. 12

Tara Lipinski was the Olympic Gold Medalist in Skating. She won a gold medal in 1998 Olympics. 13

Founded in October 1994, Digital Planet was based in Beverly Hills. Digital Planet had produced over

120 Websites, created over 100 DVD interface designs and won more than 100 awards. 14

Mattel Celebrates the Birthday of the Barbie(R) Doll with the Launch of Barbie.Com For Girls, PR

Newswire, March 9, 1998.

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To support the image overhaul of Barbie, Mattel launched the „Be Anything‟ campaign in 1999.

The advertisement showed a girl staring into the camera with untamed hair and a confident look,

holding a hockey stick behind her head.

In the same year, Mattel celebrated Barbie‟s 40th birthday. During its birthday celebrations, Mattel

introduced successful women (“Ambassadors of Dreams”) who like Barbie doll taught little girls

that they could do anything. Commenting on the company‟s decision to honour women achievers,

Anne Parducci, senior vice-president, Barbie marketing, said, “This was an exciting opportunity to

begin the year of celebration of the Barbie doll. The accomplishments and wisdom of these

outstanding trail-blazing women will provide little girls with tools to imagine their futures and to

reach their goals. The gala was one way to acknowledge the positive impact of the Barbie brand

and honor people that share the same visions and goals.”15

OVERHAULING THE IMAGE

In March 1999, Adrienne Fontanella took over as Mattel‟s girls‟ division president and announced

a total overhaul of Barbie‟s image. To improve Barbie‟s sales, Mattel adopted two strategies. The

first strategy involved introducing more brand extensions for Barbie and segmenting the market

according to age. The second strategy involved targeting older girls by stretching the Barbie doll to

other products such as perfumes cosmetics and music. Analysts were skeptical of this approach as

Barbie would face stiff competition from established brands in cosmetics, music, fashion and

electronic games. Mattel also announced that to increase profits from Barbie it would create two

distinct personalities of Barbie, one career oriented and the other, cyber Barbie that would

specialize in the traditional gender role game.

As part of the brand extensions of Barbie, Mattel introduced hi-tech products like the Barbie

scrapbook, which came with talking stickers and voice activated locks. Mattel also introduced the

Barbie computer, which was available through the Internet.

Along with the change in image, Mattel changed the packaging of Barbie dolls. Till late 1999,

Barbie was packaged in a bright pink box, which did not have the usual rectangular shape. The

name of the doll was prominently displayed on the package, along with graphics and the Barbie

logo. In 1999, Barbie boxes were redesigned, featuring the new logo. „Barbie‟ was written in big

letters while the name of the doll was written in small letters after the logo. The earlier bright pink

colour was replaced by a new light pink colour. In addition, the box was shaped like a rectangle,

with well-defined angles. The packaging was done in such a way that Barbie‟s accessories and toy

line were visible.

In 2000, Mattel also launched Jewel Girl Barbie, which was able to move in a more realistic way.

According to company sources, Jewel Girl Barbie‟s waist was more soft and fleshy and would

twist and bend to give a more realistic feel. Jewel Girl Barbie also had a soft smile and an oval-

shaped face. The doll was launched with around 20 outfits including slim pants, long spilt skirt,

colored vinyl jacket and stick on fashion jewels.

Due to all these initiatives, by 2000 Barbie‟s sales reportedly increased by 9%. However, in 2001,

Mattel announced that Barbie‟s sales declined by 12% in domestic markets due to decrease in

demand for the collector series and the Holiday Celebration‟ series. In order to increase Barbie‟s

sales, in 2002, Mattel launched Barbie as Rapunzel, a computer animated video. Extending its

computer-animated videos, Mattel launched Barbie as Swan Lake16

in early 2003.

15

Barbie Doll Gala Kicks off Year-Long Celebration; An All-Star Salute to the Barbie Doll's 40th

Anniversary, BusinessWire, February 8, 1999. 16

Popular character in a ballet series

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BARBIE’S COMPETITOR

Barbie not only had to deal with changing trends in children‟s tastes, it also had to deal with stiff

competition from the Disney Princess launched in 2001. Disney launched characters like Snow

White and Sleeping Beauty as dolls. The 12 inch plastic doll came with accessories similar to

Barbie, such as pyjamas, wrapping paper, magazines and videos. According to reports, Disney

dolls were rapidly becoming popular. Reportedly, revenues increased from $136 million in 2001,

to $700 million in 2002. Disney expected sales to increase to around $1.3 billion in 2003.

Though both Disney and Mattel claimed that they encouraged young girls‟ fantasy, Disney was

aware of criticism faced by Barbie for focusing more on fashions. It took care that its doll was not

representative of fashion statements of the day. According to Disney sources, its Disney Princess

was all about magic and fantasy, while Barbie, with its handbags and high heels focused on new

fashions. Commenting on the comparison between Barbie and Disney Princess, a Disney source

said, “It's about girls wanting to be little girls, rather than encouraging them to grow up fast.”17

Analysts felt that with the fast changing preferences of young girls and increasing competition

from Disney, Barbie would face tough times in the years to come. However, Mattel sources were

confident of retaining Barbie‟s supremacy.

QUESTIONS FOR DISCUSSION:

1. Analysts observed that Barbie, the icon of American culture, reflected changes in American

society. Analyze the changes in Barbie‟s image over the years.

2. Analysts attributed Barbie‟s success to the Mattel‟s innovative product development. They

pointed out that Mattel's product development reflected changing cultural patterns in American

society. Analyze the role played by product development in Barbie‟s success.

3. According to analysts technological innovations and the availability of various other forms of

entertainment were turning young girls away from traditional playthings such as dolls. In this

scenario, discuss the future of Barbie. Do you think Barbie will be able to retain its

dominance? Justify your answer.

17

Can a Disney Princess topple the queen of Toyland? The Economist, April 17, 2003.

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Exhibit I

History of Mattel Co

Ruth Handler, Elliot Handler and their friend Harold Matson formed Mattel company in 1945.

Initially it was known as „Mattel Creations.‟ The company was located in a garage in southern

California. Initially Mattel produced picture frames, then soon, from the scrap of picture frames,

Elliot started producing dollhouse furniture. In 1946, due to personal problems, Matson sold his

share to the Elliots. Encouraged by the success of dollhouse furniture, the Handlers decide to focus

on producing toys.

The first successful product of the company, a musical toy – Uke-A-Doodle was launched in January

1947. In 1948, Mattel launched its Baby Grand Piano at the toy fair and even got patent protection

for the toy. In the same year Mattel was incorporated. The company established its headquarters at

Hawthorne, California.

Mattel sub-contracted most of its manufacturing activities to save costs. The company also made

toys out of various materials to bring down the cost of raw materials. Mattel focused on providing

variety and brought out new toys every year. In her autobiography, Ruth said, “We‟d developed a

basic mechanism around which new products could be designed year after year.” Around 20 million

music toys were produced and sold between 1947-49.

Along with new product development, Mattel focused on marketing. One of the major marketing

initiatives taken by the company was the sponsorship of a television show. In 1955, the American

Broadcasting Company (ABC) (Disney‟s television network), approached Mattel to sponsor its new

program – The Mickey Mouse Club – a daytime show targeting children. This was the first time that

a toy manufacturer had been approached to sponsor a program on television. The Handlers had to

consult their auditor before taking decision, since they were asked to pay $500,000 to ABC for

sponsorship rights, an amount that equaled the net worth of Mattel. After consulting with their

auditor, the Handlers decided to go for the sponsorship deal. In October 1955, The Mickey Mouse

Club was aired on television, and it soon topped the rating charts. Along with the program, Mattel

launched its new toy Burp Gun. Initially, Mattel did not see any results, however, slowly sales

picked up and Burp Gun became the best selling toy that year and its sales touched around one

million. Mattel also developed a system to predict and track sales. It had a „retail detail‟ team which

visited stores to set up displays and check the shelf movement of the products.

In 1959, inspired by her daughter‟s fascination for adult looking toys, Ruth designed Barbie, the

most successful product of the company. It became very popular, and in its first year recorded sales

of 351,000 units. In 1960, riding high on the success of Barbie, Mattel went public and got listed on

the New York and Pacific Coast Stock Exchanges. By 1965, Mattel sales touched $100 million and

it got listed in the Fortune 500 list. In 1970 it reported profits of $17.4 million. In 1971, its stock was

priced at $522.50.

Inspired by the success of the Barbie doll, Mattel launched Chatty Cathy, a talking baby doll with a

string-activated voice box. The doll was a big hit in 1960. In 1965 it launched „N‟ say products, and

in 1968 it launched – Hot Wheels, die cast metal miniature cars. Hot Wheels were the Handlers‟ last

successful product for Mattel. The unrealistic high sales projections of the Hot Wheels line, Sizzlers,

resulted in over production and unsold stock. In order to avoid panic among investors, the

company‟s executives resorted to improper accounting practices to hide the losses. In addition, in the

late 1960s, Mattel started diversifying into related fields through acquisitions. Mattel acquired

Metaframe (a pet products company), Turco (a manufacturer of playground equipment), and

Ringling Brothers (Barnum & Bailey Circus). The acquisition of the Barnum & Bailey Circus cost

around $47 million. In 1971, since the companies acquired by Mattel had internal problems, Mattel

posted its first ever loss. In 1974, the SEC ordered an enquiry into Mattel‟s books for hiding losses

from its investors. The enquiry indicted the Handlers for irregular accounting practices. In 1975, the

Handlers were ousted from Mattel. In 1978, Ruth was indicted and was ordered to pay a fine of

$57,000 and put in 2,500 hours of community service.

Contd…

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Contd…

In 1977, Mattel entered the electronic games market and re-evaluated its diversification strategy. In

1979, it launched the Intellivision home video entertainment system and in 1982 it launched Masters

of the Universe toys – featuring He-Man the main character. The masters of the universe product

series was a big hit and even surpassed the demand for the Barbie doll. The new series reported sales

of $400 million in the year of its launch. However, by 1983, Mattel reported a loss of $394 million,

and in 1984 it hived off its non-toy ventures due to increasing losses.

In 1987, Mattel announced its core brand strategy. Under this strategy Mattel would try to maximize

its focus on core brands by creating product extensions. At the same, the company would try to

identify new products that had good sales potential. In 1988, Mattel entered into an alliance with

Disney. The alliance resulted in the introduction of infant and pre-school toys based on famous

Disney characters such as Mickey Mouse, Donald Duck etc. Later on, the agreement was expanded

to the manufacturing and marketing of toys based on popular Disney movies such as Toy Story.

Mattel also entered into an agreement to produce infant and pre-school toys, dolls, games and

puzzles based on classic Disney characters.

In the late 1980s and early 1990s, Mattel acquired Corolle S.A. (a France based doll manufacturer),

Corgi Toys Ltd., (a Britain based manufacturer of scale model, die-cast cars) and Aviva Sports Inc (a

manufacturer of sport toys). To strengthen its core brands, in 1993, Mattel brought in Fisher-Price,

the world‟s number one infant and pre-school toy brands, into the Mattel family. In 1995, Mattel

acquired the rights to manufacture and distribute Cabbage Patch Kids dolls.

In 1996, Mattel entered into a licensing agreement with Nickelodeon to make toys based on the

channel‟s famous characters. In 1997, Mattel merged with Tyco Toys. The merger strengthened for

Mattel‟s infant and pre-school product line. In the same year, Mattel sold its sports brand to Wham-

O Inc. It also established Global Manufacturing Principles (GMP), which provided a framework of

manufacturing principles to its units. In 1999, Mattel entered into licensing agreements with the top

five Formula One race teams – Ferrari, Jordan, McLaren, Stewart-Ford and Williams F1 – to

produce adult collectibles, track sets, radio-control cars and electric racing sets (as part of its Hot

Wheels series). In 2000, Mattel acquired the license to produce the toys based on characters in J.K.

Rowling‟s Harry Potter series. By 2002, Mattel reported net sales of $4.9 billion and had a presence

in around 150 countries worldwide.

Adapted from various newspaper articles, Mattel.com and Mattel Annual Reports.

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Exhibit II

About Lilli Doll

Lilli was based on a comic strip, which appeared in Bild Zeitung, a German paper, in the early

1950s. Reinhard Beuthien created the comic strip. Lilli was a semi-pornographic character who

targeted the wealthy men for their money. As the comic strip increased in popularity, Greiner &

Hauser GmbH produced Lilli doll in 1955. Lilli was 11½ inches tall and was made of flesh

colored plastic. She had a well-shaped body, a tiny waist, heavy make up, a ponytail and

provocative eyes. Greiner & Hauser retained the character of Reinhard Beuthien‟s Lilli and

promoted the doll as sexy, cunning and immoral. They positioned Lilli as “the kind of girl every

man wants to own.”

The Lilli doll was targeted towards adults. The doll‟s clothes were transparent and the doll was

available in careless styles. The doll was basically sold as a pornographic gift for men and was

displayed in many bars and beer gardens.

Adapted from various newspaper articles.

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Exhibit III

Happy Holiday Series – Barbie

1988 1989 1990

1991 1992 1993

1994

Source: www.dollectibles.com

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Exhibit IV

Barbie Doll Over the Years

1959 – Barbie 1961 – Bubble Cut Barbie 1966 – Color Magic Barbie

1965-66 – Teacher Barbie 1967 – Twist n Turn Barbie 1971 – Malibu Barbie

1975 – Olympic Barbie 1986 – Astronaut Barbie 1988 - Doctor Barbie

Contd…

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Contd…

1992 – President Barbie Busy Girl Barbie

Source: www.dollectibles.com, www.barbiecollectibles.com

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Exhibit V

The Barbie Classical Ballet Series

1997 1998 1999

2000 2001 2002

2003

Source: www.dollectibles.com

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Additional References & Readings:

1. This Barbie Even Knows Your Name, BusinessWeek, 1997.

2. A Doll For All, www.pbs.org, February 26, 1998.

3. Mattel Celebrates the Birthday of the Barbie (R) Doll with the Launch of Barbie.Com

For Girls, www.prnewswire.com, March 9, 1998.

4. Nash – Sherly Nance, A Look Back, Fortune, May 5, 1998.

5. Humpherys Christine, Mattel Relies on Dollhouse Diva Barbie’s Big Business,

www.abcnews.com, June 11, 1998.

6. Goldstein Lauren, Barbie’s Secret Plan for World Domination, Fortune, November 23, 1998.

7. Barbie Doll Gala Kicks off Year-Long Celebration; An All-Star Salute to the Barbie

Doll's 40th Anniversary, BusinessWire, February 8, 1999.

8. Taub Daniel, New Reality For Mattel: Girls Grow Out of Barbie Earlier, Los Angeles

Business Journal, February 8, 1999.

9. Kim J. Nancy, Barbie Gets An Image Makeover, www.bizjournals.com, March 12, 1999.

10. Barbie's Midlife Crisis, www.sfbg.com, May 19, 1999.

11. Searching For Turnaround Barbie, BusinessWeek, September 6, 1999.

12. Barbie Teams with Working Woman Magazine and Girls Incorporated to Encourage

Girls to Celebrate Their Dreams, www.prnewswire.com, October 5, 1999.

13. Grassel Kathleen, Barbie Around the World, www.ru.org, 1999.

14. Gorchov Jolie, Mattel Giving Middle-Aged Barbie a Major Makeover, Los Angeles

Business Journal, March 20, 2000.

15. Haley Kathleen, Barbie Gets a Political Makeover, www.alternet.com, April 1, 2000.

16. Barbie® Doll Marks New Millennium With Hipper Look, Logo And Attitude,

www.collectdolls.about.com, July 11, 2000.

17. Mattel Creates a New Era of Collecting with Celebration Barbie(R) Series; Celebration

Barbie(R) Tops Toy Wishes Hot Toy List for Holidays, www.prnewswire.com,

November 21, 2000.

18. Barbie – Career Girl, www.abcnews.com, 2000.

19. Barbie® Boxes: Trends in Barbie Packaging for 2000, www.collectdolls.about.com, 2000.

20. The Barbie Doll Story, www.toymania.com, April 2002.

21. Ruth Handler, The Economist, May 2, 2002.

22. Life in Plastic, The Economist, December 19, 2002.

23. Lukas Paul, Mattel: Toy Story, Fortune, March 19, 2003.

24. A Challenge to Barbie, The Economist, April 17, 2003.

25. www.mattel.com

26. www.barbie.com

27. www.dollcollectibles.com

28. www.people.virginia.edu

29. www.collectdolls.about.com

http://www.collectdolls.about.com/

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Related Case Studies:

1. L‟Oréal – Building a Global Cosmetic Brand

2. Samsung – Making of Global Brand

3. Nestlé‟s Branding Strategies

4. Himalaya Drug Company – Branding of Ayurveda

Barbie

Documents

olympic gold

mickey mouse

barbies success

mattel giving

mattel advertised

american toy

mattel launched

toy story