Barbie is the platinum blonde in power at Mattel, the #1 toy maker in the world. Its products include Barbie and Polly Pocket dolls, Fisher-Price toys, Hot Wheels and Matchbox cars, American Girl dolls and books, and various Barney, Ferrari, and other licensed items. Mattel also sells action figures and toys based on Walt Disney and Warner Bros. movies. To satisfy techie kids, Mattel has accessorized Barbie with interactive games, software, and a line of MP3 players. The company has even licensed the Barbie name for eyewear. It also sells games (UNO) and puzzles. Mattel is trying to reduce its reliance on its biggest customers -- Wal-Mart, Toys "R" Us, and Target -- through its own catalog and Internet sales.
Mattel fills toy chests worldwide. The toymaker rang up 57% of its sales in the US in 2011, with the remainder coming from abroad. Europe is the company's largest market, accounting for about a quarter of Mattel's total sales. Latin America accounted for 16% of 2011 sales, followed by the Asia/Pacific region.
Mattel in 2012 reorganized around two operating segments: North America, which includes Mattel Girls & Boys Brands US, Fisher-Price US, American Girl, and Canada. The International segment includes products marketed by Mattel's North American segment, with the exception of America Girl Brands (sold only in the US and Canada). Mattel's products are sold directly to retailers and wholesalers in most European, Latin American, and Asian countries, and in Australia, and New Zealand, and through agents and distributors in those countries where Mattel has no direct presence. In addition to about 10 American Girl retail stores, Mattel operates retail outlets in Latin America and Europe, as well as several small retail stores near or at its corporate headquarters and distribution centers.
Sales & Marketing
To create demand among young children and their parents for its toys, Mattel advertises extensively, peaking during the key holiday season. Ads include television and radio commercials, magazine, newspaper and Internet ads, and social media promotions. Mattel capitalizes on major events, such as movie releases, by focusing on product tie-ins. In total, in 2011 the toymaker spent nearly $700 million (about 11% of net sales) on ads and promotion, up from $647 million and $610 million in 2010 and 2009, respectively.
Mattel also promotes its toys and characters through online and broadcast media. In March 2013 its animated superhero Max Steel will debut on Disney XD in the US and globally on major network operators. A corresponding interactive Web presence will also launch at that time.
Mattel's sales increased by 7% in 2011 vs. 2010, while net income grew by more than 12%. 2011 marked the second consecutive year of sales growth (up 8% in the previous annual comparison), after two years of falling sales during the world financial crisis. Indeed, sales topped $6.2 billion in 2011, a record for the company. The strong performance was driven by increases across both the international and domestic segments. Mainstays Barbie and Hot Wheels posted gains worldwide, and Disney Princess and Monster High products also performed well. Net income in 2011 benefitted from higher sales and operating income, partially offset by a higher effective tax rate, interest expenses, and other cost increases. Wal-Mart Stores, Toys "R" Us, and Target are the company's three largest customers, accounting for 19%, 11%, and 8% of its sales, respectively. Mattel did more business with giant Wal-Mart in 2011 vs. 2010, while it sold less to Toys "R" Us. Target remained unchanged.
Mattel's strategy to drive sales is to launch new products while keeping core products, such as Barbie and Hot Wheels, fresh through innovative marketing campaigns. To mark Ken's 50th birthday, Mattel in 2011 launched the "Ken Campaign -- Will Barbie Take Him Back?" supported by a contest that combined social media (Facebook and Twitter) with an eight-part webisode that aired on Hulu. A campaign called Team Hot Wheels combines viral content, video, and web-based communication to rev up brand sales. Indeed, Mattel is stepping up its efforts to connect with its young customers, many of whom spend more time online than in front of the TV.
Another way Mattel capitalizes on its core brands is by forming licensing deals. REM Eyewear developed a line of Barbie eyewear for girls and the company peddles a line of Barbie MP3 players called Barbie Girls. Other licensing deals include a plethora of purple playthings featuring TV's Barney character for its littlest customers; toys based on Warner Bros. characters, including Looney Tunes, Batman, and Superman; and Innovo Group adult apparel and accessories under the Hot Wheels brand. The company also holds toy licenses for WWE Wrestling, Thomas and Friends, and Disney/Pixar's Toy Story. Mattel's Entertainment business capitalizes on movies to spur sales of new toys based on films, such as CARS 2 and Green Lantern in 2011.
To target foreign sales, the company in 2012 acquired London-based HIT Entertainment for some $680 million in cash. HIT Entertainment owns popular preschool brands such as Thomas & Friends, Barney, and Bob the Builder.
Another stubborn problem for Mattel -- and the broader toy industry -- in recent years has been product recalls. Most recently, its Fisher-Price business in fall 2010 agreed to recall millions of kids' products, for a variety of potential risks, stemming from a handful of injuries. This latest recall came three years after a spate of recalls in 2007, spurred by lead-laden Chinese-made products.