Product Development and Renewal in the Toy Market Toy manufacturers have a tricky task. Each year they license images and characters from a new crop of TV shows and movies without actually knowing for sure which ones will be popular— hoping to sell enough product related to those characters to gain an accept-able ROI. In addition, they develop other non-licensed product lines with the hope that those lines too will become wildly popular and create a positive cash flow and profits. Sometimes, a toy company gets lucky and really hits the jackpot. That’s what happened with Mat-tel in the early years of its existence. Mattel first started as a business making picture frames in 1945. With the war over and a desire to make the most of resources, one of Mattel’s owners had the bright idea of building doll houses with the scrap wood that was left over from making the picture frames. The doll houses were an immediate success and quickly took over for the frames as the company’s main focus. Fast-for-ward to 1959: Mattel introduces Barbie, an iconic brand that is sold in 150 countries. The Barbie line of products has since greatly expanded to include numerous friends such as Ken, Summer, Midge, Nikki, and Teresa, to name a few. In addition, she has had several occupations over the decades ranging from dentist to race car driver, and she and her friends have a multitude of accessories including a house, a cool car, and enough different clothing options that they never have to wear the same thing twice. Despite Barbie’s wild success (she currently has over 10.1 million Facebook friends), Mattel realized that she appealed to just half of the population (girls) and among that group, mainly to a narrow age band. To broaden out its overall appeal, Mattel developed the Hot Wheels, Tyco, and Fisher Price lines of products appealing to boys, preschoolers, and infants. In addition, the company has a strong relationship with the Walt Disney Company and produces toys for many of Disney’s movies, including Cars and Toy Story. All of this activity is emblematic of what it takes to develop a value-enhancing product that continues to provide positive returns to both Mattel and its customers. The essential benefit provided by Mattel’s various product lines includes fantasy play and creativity. The core product includes the product form, which is the doll, the brand name Barbie, and all of the many accessories that provide the overall experience of playing with a Barbie doll. For Tyco the core product includes the remote-control vehicle, the vehicle’s brand name, the remote controller itself, and a warranty for a specific time frame. In terms of the enhanced product, for Barbie it includes interactive play on the website, while for a Tyco remote-control vehicle it might include an owner’s group in which people who own the same remote-controlled vehicle can exchange notes and comments about their experiences. Despite all of Mattel’s success, they continuously are looking for new market opportunities. Recently, they introduced a line of products called Monster High. This product line brings to life fashionable teenage descendants of famous monsters like Frankenstein and Dracula. As the line progresses through the life cycle of introduction, growth, maturity, and possibly decline, marketing managers at Mattel will continuously adjust their marketing strategy for Monster High in an effort to extend its product life cycle. At the same time, you can bet that product researchers will be hard at work developing the next potentially big toy sensation for Mattel.
Questions for Consideration
1. How would you classify Barbie as a product—as a convenience, shopping, or specialty product? Discuss why you chose that particular classification given the amount of shopping effort required by consumers to purchase a Barbie and the strategy utilized by Mattel to market Barbie.
