Recovering From a Bad

By Kim S. Nash  |  Posted 2005-08-04 Email Print this article Print
 
 
 
 
 
 
 

Mattel's world-class competitive intelligence system crunches sales reports, children's play-pattern studies, and even findings on where kids go online. The system picked up signals that young girls, heavily influenced by the gyrations of pop star Britney

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To stop the bleeding from The Learning Co., Eckert signed an unusual deal. He gave The Learning Co. to Gores Technology Group, a turnaround firm in Los Angeles, in exchange for "future consideration." Mattel would get a share of any profits Gores could coax from a revitalized Learning Co., or part of the proceeds if, as eventually happened, Gores sold it. Mattel got $21.3 million—a sliver of what it paid. But Eckert had freed Mattel from the drag of funding a money-losing software firm.

Eckert also forged a financial realignment plan in late 2000, to save $200 million over the period from 2001 through 2003. Mattel closed factories in Kentucky and Mexico along with some international offices, and lopped 2,570 people from its 27,000 workforce.

Amid Mattel's upheaval, Bratz' mojo grew.

Zwiers, the former Barbie marketing leader, says her alma mater needed to work harder to figure out where to take Barbie.

"Leadership at the very top of Mattel had changed," she notes. "There was not the same understanding of the level of ferocity needed to cut someone off immediately and not let them gain a foothold."

Former Barbie marketing director Lewis says Mattel intelligence had picked up wisps of age compression from internal surveys and external lifestyle studies even when she was there in the mid-1980s.

Mattel did bring out dolls wearing flashier clothes, such as its Diva Starz line. But with no competitor yet capitalizing on those concepts—and Barbie's sales still growing—Mattel didn't push this new direction.

"Mattel did not have an incentive to turn the fashion-doll aesthetic upside down," Zwiers says. "Only someone trying to unseat Barbie could do that."

When Bratz arrived next to Diva Starz on toy-store shelves, the Mattel dolls' rounded heads and muted makeup looked immature. Diva Starz are still available but have been repositioned for "transitional" girls age 6 to 8, rather than tweens.

In addition to the My Scene dolls, in June 2003 Mattel tried to further dilute the market for trendy dolls, adding an even edgier line called Flavas. But the dolls, meant to evoke the hip-hop music scene, incensed some parents who felt Mattel had turned Barbie into a tart. By early 2004, Eckert killed the product.

"Every year we have products that work well and products that don't and simply said, Flavas was one of those that didn't work well," he told financial analysts in a February 2003 conference call.

Mattel acknowledges that today few segments of its Barbie product line are doing well—mostly those intended for girls under age 5. Other Barbie versions, including those competing against Bratz, "need more work," Eckert acknowledged in an April conference call with financial analysts. He vowed to continue "rebuilding relevance with girls."

The lesson? A giant that rules its market can't get comfortable, says Day of the Wharton School. Instead, he says, it should create crisis internally, to teach itself how to respond when trouble does appear.

If Mattel, as part of its intelligence operation, had set up an internal "attack team" to strategize about how it would compete with itself, he says, it would have known to move faster when MGA first launched Bratz. "Ask yourself what have been your blind spots in the past and what's happening there now," he says (see sidebar, p. 45).

  • Story Guide:
    How Barbie Lost Her Groove Great product; historical franchise; huge market share; unbelievable customer affinity. And rapidly dropping popularity
  • The First Tentative Steps: Mattel did see signs of trouble and started to react; but not strongly enough.
  • A Body at Rest Stays at Rest: Mattel isn't the only company that failed to react quickly, even to clear warning signs.
  • Barbie's Eye for the Competition: From the beginning, the Barbie franchise was protected by intelligence gathering and analysis, which helped Mattel reinvent her for every generation of girls.
  • Hard Analysis Gets Answers on Soft Subjects: "Are you ready for this doll?" "Whatever." "Hello, connect me with Design...."
  • Mattel Upgrades IT to Crunch Better Barbie Numbers: You're not going to predict the future with a white-box desktop and an Excel file.
  • Recovering From a Bad Relationship: Acquiring The Learning Co. turned out not to be the best move Mattel ever made. CIO: Mattel was in a desperate time when I came on."
  • Barbie Fights Back: Mattel floods store shelves with new product, sues MCA and makes reviving Barbie its No. 1 corporate goal. Bratz still dominate toy-store shelves.
  • Barbie by the Numbers: Who's who and what's what at Mattel. Business stats paint a portrait of Barbie's creators.

    Operational Details on the Barbie Situation:

    Barbie's Heroes: Mattel's intelligence agents, their bosses, and who played what role in the problematic reinvention of Barbie.
    Roadblock: CEOs can be the Greatest Obstacle to Success. Mattel's intelligence told it kids wanted hipper Barbies; CEO Robert Eckert and Mattel reacted slowly, and paid the price.
    World Class Tool Box: Mattel uses a sophisticated set of data and intelligence tools to steer the Barbie franchise.
    Near-Sighted Corporate Intelligence Can Be as Deadly as the Competition. Rival companies with successful toys put Barbie in a tough spot. Politics, social pressures and fashion changes can sink you or—as Japanese car-makers demonstrated—make you a winner.
    ACNielsen: Retail Riches. Every day, ACNielsen gathers data associated with millions of retail purchases, from apples in Arizona and Barbies in Boston. It charges a bundle for the results. Is it worth it?

    Next page: Barbie Fights Back.



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    Senior Writer
    Kim_Nash@ziffdavisenterprise.com
    Kim has covered the business of technology for 14 years, doing investigative work and writing about legal issues in the industry, including Microsoft Corp.'s antitrust trial. She has won numerous awards and has a B.S. degree in journalism from Boston University.
     
     
     
     
     
     

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