Global toy market

Published Date: 23 Mar 2015

1.0 Background

1.1. Global toy industry Scenario

More than 80% of global toy market is generated by three Continents i.e. Europe, North America and Asia. With the recent financial turmoil, the value of toy industry has decreased in two consecutive years, from US$78.67 billion in year 2007 to US$75.033 billion. The shrinking market size is mainly attributed by Western countries, particularly Europe. On the side of the world, Asia registered upward trend in market share for toy market.

Chart 1 World Toy Market Scenario

NPD analysts attribute the downward trend in global market value for toy industry to the following reasons

1. Low unit price particularly in year end, which intensified further by the financial crises
2. Cannibalization by other games categories namely video games, electronic games etc.

In developed market, the per capita usage for toys is high as they are considered to be an important aid in a child's development vis-a-vis a wasteful expenditure in developing nations. The scenario is illustrated in below table:-

Table 1 Toy expenditure

Country	Kids population in 2008 (million)	Spending per kid in 2008 (US$)	Total available market in 2008 (US$)
United States	61.6	$281	$17.31 billion
Japan	17.4	$286	$5 billion
China	267.4	$17	$4.5 billion
United Kingdom	10.3	$348	$3.6 billion
France	11.9	$293	$3.5 billion
Germany	11.4	$223	$2.5 billion
Brazil	52.9	$38	$2.01 billion
India	361.4	$5	$1.8 billion
Mexico	32.6	$53	$1.7 billion
Italy	7.9	$185	$1.5 billion

Source: NDP Group, 2009

1.2 Toy Industry Structure

Toys are classified into four broad categories, namely

• Traditional Toys which consist of action figures, dolls, playsets, stuffed animals, models, and other related products
• Board games
• Video Games
• Casino Games & Accessories.

Globally, the market is dominated by four large players viz: Mattel, Lego, Hasbro & Bandai with Mattel the largest and selling toys under the brand Barbie, Hot Wheels, Fisher-Price etc.

Table 2 Global toy makers' product portfolio

Toy maker	Traditional toys brands	Board games	Video Games	Licensing product
Mattel	Barbie, Break the Safe™, Hot Wheels®, Matchbox®, American Girl®, Fisher-Price®, Little People®, Rescue Heroes™, Power Wheels®	UNO	Barbie CareNCure, UNO, Barbie Girls, Hot Wheels etc	Disney, Warner Bros., Pixar, Viacom International Inc., Sesame Workshop
Hasbro	My Little Pony, SpongeBob, Toy Story	Monopoly, Pictureka, Scrabble	Monkeybar	Transformer, G.I. Joe, Incredible Hulk, Jurassic Park, Spider-Man, Star Wars, Wolverine, Disney, Iron Man
Bai Dan	Ben 10, Power Ranger, Dragon Ball, Digimon, Blue Dragon	NIL	Kamen Rider, Harumika, Tamaguchi, Mugen Pop PopTM	Ben 10, Power Ranger, Dragon Ball, Ultraman
MGA Entertainment	Bratz range, Zapf Creation, Little Tikes, Baby born, Chou Chou, MGA games, My-ePets 3D, Resue PetsTM	NIL	NIL	NIL
Disney	Disney characters	NIL	Disney characters	Disney characters
LEGO	LEGO bricks	NIL	LEGO	NIL
Takara Tomy	Plarail, Pocker Moser, Transformers, Tomica die-cast vechicles, Yumel and Nerul, Licca doll line	Jinsei Games	Tasinoko Production, Game software	Disney characters

There are several market signals have impacted to toy market.

1. Globally, toy manufacturers are partnering with companies from other sectors, like fast-food chains in their merchandise promotion campaigns, e.g. McDonald
2. Mushrooming of dedicated malls/stores for toys is becoming increasingly visible e.g. Toy “R“ us
3. Retail consolidation in overseas markets has changed the landscape for toy exporters.
4. Production of movies based on toy characters for television audience is a unique trend for promoting toy sales in the US.
5. Toy makers are entering into licensing deals with movie studios to make products in the image of film characters e.g. Disney, Sony Picture, Bai Dan etc.

1.3 Mattel Inc.

1.3.1

Mattel Inc. founded by Harold Matt Matson and Elliot Handler (hence the name "matt-el") and incorporated in 1948 with Headquarter in Hawethorne, Los Angeles County, California and later relocate to El Segundo, CA in 1990. Barbie was brainchild by Elliot and Ruth Handler co-founders of the Mattel Toy Company. Ruth came up with the idea for Barbie after watching her daughter, Barbara Handler, play with paper dolls. The three-dimensional model for Barbie was a Germen doll - Mattel refashioned the doll into an all-American version and named it after Barbara, who was then a teenager. Barbie's boyfriend, Ken, was introduced in 1961 and named after Barbara's brother.

1.3.2

Since establishment, Mattel's product portfolio has grown from its flagship brand, Barbie, to toy cars, board games, dolls, cuddly toys and education toys – Mattel offers comprehensive product lines to cater for different age groups – new born to adult segments. This can encourage repeat customer and attract different customer profiles with its range of different toys.

Table 3 Mattel Inc.'s product range by market segments

Market segment Brand	Infant	Pre-school	School Kids	Tweens @ Pre-teens	Teens (12 years & above)	Adults / Parents
Barbie		P	P		P	P
Fisher Price	P	P	P
Hot Wheel		P	P
Tyco Toys	P	P	P
American Girls			P		P
Sesame Street	P	P	P
UNO					P	P
Scramble			P		P	P
MyScene Dolls				P

1.3.3 Mattel's Corporate Structure

1.3.4 Business Model

Broadly, Mattel Inc.'s businesses are segmented by geographically – domestically and internally. Mattel's presence at Canada, Latin America, European, Asian countries, Australia, and New Zealand.

1.3.5 Along its establishment in the market, Mattel has gone through several hypes and downs…

Table 4 Mattel Inc.' Events in chronological order

Success stories

Failures

* 1959 – Barbie debut * 1965 – Enters Educational Market with See ‘N Say * 1968 – Hot Wheels Introduced * 1977 – Ventures into Electronic Game Market * 1993 – Merges with Fisher-Price * 1996 – Introduces Tickle Me Elmo * 1998 – Fisher-Price takes control of Infant and Preschool Character Brands * 1998- Acquired Pleasant Company, the maker of the American Girl collection, which is a series of historical dolls, books and accessories * Mattel says the average American girl owns ten Barbie dolls, and two are sold somewhere in the world every second * As a teenage fashion model, Barbie has worn many fabulous fashions. Beginning with her trademark black and white striped swimsuit and swirled ponytail, Barbie has followed style trends as well as blazed her own fashion trail. She even inspired some of fashion's top designers * Barbie celebrates her 50th birthday in 2009. * Mattel's Barbie opened her first flagship store on March 6, 2009, six-story showpiece at Shanghai . The store will also be a testing ground for new marketing strategies and services, including a design center where visitors can create their own dolls

* Sold The Learning Company at a lost in year 2000 * Toxic Toys Scandal. Recalled millions of China-made toys as potential hazards from parts of the toys which were colored using lead-based paint that may have exceeded the US Federal limit of 600 part per million. 18.2 million items were recalled in total in year 2007.

2.0 Mattel's Vision and Mission - Jennifer

2.1 Mattel's Philanthropic Vision

To make a meaningful difference, one child at a time.

2.2 Mattel's Philanthropic Mission

Mattel makes a difference in the global community by effectively serving children in need. Partnering with charitable organizations dedicated to directly serving children, Mattel creates joy through the Mattel Children's Foundation, product donations, grant making and the work of employee volunteers. We also enrich the lives of Mattel employees by identifying diverse volunteer opportunities and supporting their personal contributions through the matching gifts program.

2.3 Mattel's Philanthropic Values

We intend to make a meaningful difference in the lives of children in need around the world through our interactions - how we "play" - with our communities, our partners, and our volunteers.

• Play with Passion: By making a meaningful and lasting impact on children globally.
• Play Together: By forming deep partnerships to enrich the communities in which we work and play, and engaging Mattel employees in our efforts.
• Play Fair: By acting with unwavering integrity in all aspects of our work.
• Play to Grow: By striving to make long term differences in the lives of children in need and seeking continuous improvement.

3.0 The External Assessment - Ezuan

Issues to discuss:

Opportunities

• An alliance with an Asian company, Bandai
• Weakening dollar makes Mattel's products more affordable in many of these new markets
• greatest pressures to adapting products with the constant changing of society

* etc

Threats

• Children abandon tangible toys such Hot Wheels and Barbie for more interactive and technological products.
• Need extreme careful to protect customers' legal and moral reputations by respecting the privacy of the children and their families, which is put in jeopardy every time the website asks a minor to provide information.
• Global recession
• problems breaking into foreign markets due to cultural barriers
• After-effect of Toxic Toys Scandal with 18.2 million items were recalled in total in year 2007
• Etc

External Factor Evaluation (EFE) matrix

Key Internal Factors		Weightage	Rating	Weighted score
Opportunities	1. Barbie an recognizable brand worldwide	0.1	4	0.4
	2. Weakening dollar makes results market affordability	0.1	3	0.3
	3. Favorable US tariff law	0.05	3	0.15
Threats	1. Children abandon tangible toys for more interactive and technological products.	0.1	1	0.2
	2. Global recession cause reduce spending or down trading for toy	0.05	1	0.1
	3. Cultural barriers hinder market penetration	0.1	1	0.1
	4. High product substitution	0.1	1	0.1
	5. Government Regulations and Environmental Quality	0.05	2	0.2
	6. Higher bargain power from retailers	0.05	2	0.2
	7. Raw material subject to price fluctuation	0.05	2	0.1
	8. Highly seasonal business	0.05	2	0.1
	9. Rising in ‘cyber @ virtual' games	0.1	1	0.1
	10. Unpredictable shift in the play patterns of Gen X kids & ‘Netizen'	0.1	1	0.1
Total		1.00		2.15

Note:

1. Weight factor: 0.0 (not important) to 1.0 (very important)
2. Rating scale: 1 = Major Weakness 2 = Minor Weakness
3. = Minor Strength 4 = Major Strength.

Competitive Profile Matrix (CPM) for Mattel Inc.
	Wght.	Mattel Inc.		Hasbro		Bai Dan		MGA Ent.		Disney		LEGO		Takara Tomy
		Rating	WS	Rating	WS	Rating	WS	Rating	WS	Rating	WS	Rating	WS	Rating	WS
Global Market share	0.10	4	0.4	3	0.3	3	0.3	2	0.2	4	0.4	3	0.3	3	0.3
Product Quality	0.10	3	0.3	3	0.3	3	0.3	3	0.3	3	0.3	3	0.3	3	0.3
Product variation	0.15	4	0.6	4	0.6	3	0.45	2	0.3	4	0.6	2	0.6	3	0.6
Price competitive	0.10	3	0.3	3	0.3	4	0.4	3	0.3	3	0.3	3	0.3	3	0.3
Technology Innovation	0.10	2	0.2	3	0.3	3	0.3	3	0.3	3	0.3	3	0.3	3	0.3
Management Experience	0.10	3	0.3	3	0.3	3	0.3	3	0.3	3	0.3	3	0.3	3	0.3
Financial position	0.10	3	0.3	3	0.3	3	0.3	3	0.3	3	0.3	3	0.3	3	0.1
Customer loyalty	0.15	2	0.3	2	0.3	2	0.3	2	0.3	2	0.3	2	0.3	2	0.3
Global expansion	0.10	3	0.3	4	0.4	4	0.4	2	0.3	4	0.4	4	0.4	2	0.1
Total	1.00		3.0		3.1		3.05		2.7		3.2		3.2		2.7

4.0 The Internal Assessment - Ezuan

Issues to be discussed:

Strengths

• Long history in toy industry
• Preferred brand by customers
• Releasing new product annually
• follows a code of ethics, as well as requiring ethical actions of their suppliers.
• contributes to the communities
• merged with or struck licensing deals with a number of other established brands, including Disney, Fisher Price, Nascar, and even Microsoft.
• time delivery of products to retailers has soared in recent years from 50% to 90%, due to improvements in information systems and warehouse facilities.
• product availability has been improved in specific market with collaborative efforts with international firms, specifically Bandai Co. of Japan.
• able to simultaneously cater products to each market's taste, and maintain high flexibility and low costs by simplifying packaging strategies
• etc

Weaknesses

* Until the acquisition of Fisher Price, most of Mattel's attempts to expand beyond their primary market of children's toys were largely unsuccessful

· Etc

Internal Factor Evaluation (IFE) matrix

Key Internal Factors		Weightage	Rating	Weighted score
Strengths	1. Barbie as a long established brand – 60 years	0.05	4	0.2
	2. Recognizable brand portfolio	0.10	4	0.4
	3. Wide product range to cater various life stage	0.10	4	0.4
	4. New product launch annually	0.05	3	0.15
	5. Business Integrity	0.05	3	0.15
	6. Corporate Social Responsibility	0.05	3	0.15
	7. Strategic partnership with Microsoft, Disney, BanDai	0.10	3	0.3
	8. Energetic management team	0.05	3	0.15
	9. Efficient automation of SCM	0.05	3	0.15
	10. Trade names and trademarks as significant assets	0.05	4	0.2
Weaknesses	1. Unprofitable mergers and acquisitions	0.05	2	0.1
	2. Slipping popularity of their core product, Barbie.	0.10	1	0.1
	3. After-effect of Toxic Toys Scandal	0.10	1	0.1
	4. History of management struggles and uncertainty	0.05	2	0.1
	5. Royalty expense for license agreement	0.05	2	0.1
	6. Liquidity problems or bankruptcy of key customers
Total		1.00		2.75

Note:

1. Weight factor: 0.0 (not important) to 1.0 (very important)
2. Rating scale: 1 = Major Weakness 2 = Minor Weakness
3. = Minor Strength 4 = Major Strength.

5.0 Strategies in Action - Jennifer

6.0 Strategy Analysis and Choice - Ismi

	Strengths [S]	Weaknesses [W]
Opportunities [O]
Threats [T]

7.0 Implementing Strategies

7.1 Background

The growth plan for Mattel Inc will be:-

1. Maintaining its Corporate Social Responsibility – sustain its
2. commitment to children, business partners, suppliers and environment
3. Expending its territories with product diversification and business sustainability – strengthen and gain market share
4. Zero product recall to boost up its brand image

Below illustrate the direction for Mattel Inc. to concentrate in:-

7.2.0 Mattel Inc.'s Direction

7.2.1 Management & Operation Strategies

The massive recall incidence in 2007 Christmas season will be an occasion to be remembered for Mattel Inc. Thus it is essential for Mattel to enhance its working relationship with their suppliers and business partners.

Mattel's product lines are manufactured in both company-owned facilities and through third-party manufacturers and the market demand is highly seasonal driven. In order to mitigate, it is crucial for Mattel to ensure just-in-time inventory practices to reduce backlog of orders.

Mattel is committed to executing Global Manufacturing Principles (GMP) policy in all areas of its business, i.e. to all parties that manufacture, assemble, or distribute any product, or package bearing the Mattel logo, and, will only engage business partners commit to GMP. Mattel will ensure full compliance of GMP by its business partners, and will assist them in meeting GMP requirements.

The GMP principles are to ensure there is a holistic approach that all the key stakeholders are being well care off.

To ensure the closed monitoring the third party manufacturers, Mattel need to set up Centre of Excellence (CoE) in selected geographical areas strategically. The main function of the CoE is to embark manufacturing intelligent and ensure smooth execution of GMP and developing best practice in the manufacturing for their strategic partners.

7.3 Marketing Strategies

7.3.1 Segmentation

Currently, Mattel's product range is catered to wide range of age group,

Market segment Brand	Infant	Toddlers	Pre-School Kids	Tweens @ Pre-teens	Teens (12 years & above)	Adults / Parents
Barbie		P	P		P	P
Fisher Price	P	P	P
Hot Wheel		P	P
Tyco Toys	P	P	P
American Girls			P		P
Sesame Street	P	P	P
UNO					P	P
Scramble			P		P	P
MyScene Dolls				P

From the market mapping, we notice “tweens” @ pre-teens (8-12 years old) market is relatively under-tapped with Mattel Inc's product range. This market segment is essential as Research has shown that children leave tangible toys at the young age of seven, and this age threshold constantly decreasing.

7.3.2 Target

1. It is important for Mattel Inc. developing products that will receive attention of adolescence as well as the “tweens @ pre-teens', which contributed 2 billions of total global population in 2050.
2. Another market that Mattel Inc. possible to consider will be pet animal market. The market demand for pet toys will be fueled with the following phenomena
1. Pet humanization - Increasing social recognition of “being together with a pet” concept in everyday life
2. Pet owners are increasingly willing to indulge their pets with quality products
3. Demand for expensive pet accessories is increasing, with owners opting for fashion driven products.

There are enormous addressable market in pet accessories

1. US - The potential market size to tap will be US$11.41 billion in year 2010 with CAGR 4.8% for year 2008-2013.
2. Australia – In year 2006, total pet accessories accounting for US$227 million.
3. Japan – US$1.9 billion @ 165 billion yen in 2010.

7.3.3 Marketing Strategies

7.3.3.1 Pet supplies

Mattel Inc. to offer a wide range of toys designed to build the animal brain. The pet toys aim to challenge and entertain their animals much the way developmental toys do for children. For instance, features a plush cube with balls nestled inside to test dogs' intelligence and puzzle-solving skills as they try to get the balls out.

7.3.3.2 Tweens market

1. Convergence of Traditional Toy and Website ala Mattel-bay
• Websites extend play value by giving kids the ability to manage their collections (e.g. Barbies, Hot Wheels cars, etc.) online.
• Helps kids organize, swap, value, and potentially sell items in their collection
• Highlights limited editions, rare, sought by others, new releases, as well as wish list items etc.
2. Extend product functionality
• Frisbee with integrated video camera
• Monopoly-like board game with electronic sound effects when players land on particular squares
• Extending Monopoly-like games into ala SecondLife environment etc
3. Content Creation and Community ala Mattel-community. This will enable and empower kids to create themselves - Movies, music, animated cartoons, art, fashion etc. Mattel can partnership with social networking e.g. MySpace, Facebook, Twitter, Flickr, Fli etc.
4. Physical Activity Immersion with Multi-sensory and interactive. Exercise game that rewards tweens with points
5. towards their MMOG (Massively Multiplayer Online Game) characters.
6. To develop a computer game involving Hot Wheels, it will likely increase demand for the actual Hot Wheels. Cross-promotion that will occur due to the affiliation of the products within the company. The benefit will also be felt in the opposite direction: if a child likes playing with Hot Wheels, then he will also want to purchase additional Hot Wheels products. Long term advantages for Mattel to expand into technology. The technology market is a rapidly growing market, making for a large amount of market share to be gained. Children are losing interest in toys at an age as young as seven years old and want games on the computer or on a gaming system.
7. Second Life. Mattel to expand its presence in virtual world – to explore, create, socialize and have fun with Mattel Inc. product range. Mattel's products can be avatar in Second Life virtual world in various environment or settings. Beside utilize Second Life as an virtual play ground, Second Life can be extended to be product test bed, market education, or sell virtual or digital goods. The main argument for marketing in Second Life is based on the strong attachment the player has for his/her avatar (character). Because the attachment is so strong, the users no longer feel like they are in a virtual world. In their minds, they are leading an actual life with their Avatar. Therefore, the users view the products and services offered as if they were seeing them in a shopping center. This new medium allows users to experience products more intensively and interactively then previously possible on the internet. By adapting to this new medium and allow the user to have a more interactive and hands-on experience with Mattel products will be able to count on long term success. This also help to promote Mattel by advertising events across in-world and out-of-world media channels.

7.4 Finance/Account Strategies

Economic downturn which implicates consumer confidence affects global and indiscriminately to all business, and toy industry was not immune to the effect. Toy retailers and manufacturers are impacted, with estimates of more than one thousand Chinese toy manufacturers closing their operations and significant toy sellers in the US, UK, Mexico, and other major markets closing their operations or entering bankruptcy.

Mattel expects the unfavorable economic conditions experienced in 2008 will be extended to 2011, which affect Mattel's revenue to be under pressure.

Note: 2010e = estimation

Mattel's objective is to continue to create long –term shareholder value by generating strong cash flow and deploying it in a disciplined and opportunistic manner.

	2004	2005	2006	2007	2008
Profitability Ratio
ROE (%) (Net income available for shareholder/common equity)	0.24	0.20	0.24	0.26	0.18
ROA (%) (Net income available for shareholder/total asset)	0.12	0.10	0.12	0.12	0.08
Liquidity Ratio
Current Ratio (times) (Current asset/current liability)	1.53	1.65	1.80	1.65	1.89
Acid-test Ratio (times) [(Current asset – Inventory)/current liability]	1.28	1.39	1.56	1.38	1.51
Day sales outstanding (day)	37	37	40	41	41
Debt Management
Debt Ratio (%) (Total debt/Total asset)	0.50	0.52	0.51	0.52	0.55
Activity Ratio
Inventory turnover (times) (Sales/Inventory)	12.19	13.74	14.75	13.93	12.18

The Financial ratio Analysis

1. ROA defines "what the company can do with what it's got", i.e. how many dollars of earnings they derive from each dollar of assets they control. Return on assets gives an indication of the capital intensity of the company, and it is an indicator of how profitable a company is before leverage. Mattel's ROA retain at least 10% before year 2008, where it experienced a dip in year 2008, to 8%. This properly result from the higher use of debt of Mattel, which interest rate is at increasing trend from year 2004-2008.
2. ROE measures a firm's efficiency at generating profits from every dollar of net assets (assets minus liabilities), and shows how well a company uses investment dollars to generate earnings growth. ROE is equal to a fiscal year's net income (after preferred stock dividends but before common stock dividends) divided by total equity (excluding preferred shares), expressed as a percentage. Generally, capital-intensive businesses have high barriers to entry, which limit competition.

In Mattel case, it able to generate more profit and its shareholders could get back a greater return on their investment throughout the first four studied years. From 24% in year 2004, it had increase to 26% in year 2007, except a drop in 2005, which may be due to the increased of net income generated by the company through its operation. As expected, ROE dipped along with decreased of net income in year 2008.

3. Current Ratio is an indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. Both current ratio & quick ratio for Mattel are improving from year to year with a ratio of 1.53 in year 2004 to a ratio of 1.89 in year 2008. This shows Mattel Inc. is good financial health.
4. Quick ratio is an indicator of a company's short-term liquidity. This ratio measures a company's ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, the position of the company will be better. The quick ratio for Mattel Inc. is also getting better from year 2004 to year 2008 with ratio of only 1.28 times in year 2004 to as high as 1.51 in year 2008.
5. Day sales outstanding (DOS) related to collection period for the receivables. Changes in the ratio may indicate changes in the company's credit policy or changes its ability to collect its receivables. DSO for Mattel Inc. is increasing, from 37 days in year 2004 to 41 days in year 2008. The higher the DSO may expose Mattel Inc to exchange rate fluctuations. Thus, it is crucial for Mattel Inc. to reveal its credit policy.
6. Debt Ratio is measuring the percentage of funds provided by sources other equity. Debt ratio for Mattel Inc. increase gradually year by year from 2004 to 2008. Creditors prefer low debts ratios because the lower the ratio, the greater the cushion against creditors' losses in the event of liquidation.
7. Inventory Turnover commonly used in analyzing the size of the inventory items. Inventory turnover ratio for Mattel Inc. reaches its peak in year 2006 but decrease in 2007 for two consecutive years. This ratio corresponds to the sales pattern of Mattel, and indicate the total inventory is enough to support the sales. The second reason may the product or services price is decreased more than the inventory prices.

As a result, Mattel needs to manage its business based on realistic revenue assumptions and taking actions intended to improve profitability and strengthen in its balance sheet:

1. To continue to renegotiate product cost with vendors
2. A modest price increase
3. Evaluating reduction of the number of stock keeping unite (“SKU”) it offers
4. Reassessing its advertising spending and strategy
5. Its Global Cost Leadership program which expected to generate accumulated cost saving US$200 million by 2010.

7.5 Research & Development Strategies

7.5.1 Recycle material

Mattel Inc. to recycle materials for its product range e.g. accessories for Barbie Dolls. Turning recycled plastic bottles into a soft polyester fabric. An average of 1 bottle goes into 25 pieces of clothes. With this, Mattel Inc. able to boost further its commitment to environment.

7.5.2

It is essential to add-on to and re-innovate their existing product lines. Mattel has made many of the same products nearly since it was established, with the exception of picture frames and doll furniture, which were short lived products. Barbie has changed a little bit, but other than that, the products have remained unaltered. In order to have a competitive advantage, Mattel needs to grow with the market. As of right now, Mattel has four major subsets of their company: Barbie, Hot Wheels, Fischer Price, and American Girls. Mattel may want to consider either expanding on what these sectors make, or developing brand-new sectors to keep their company up to date.

7.5.3 To redesign its product range particularly Barbie with freedom in movement features.

7.5.4 Material used for traditional toys should be dirt resistance and color will not be fading.

7.6 Management Information System Strategies

7.6.1 Supply Chain System

Mattel must apply an integrated & task oriented approach to modernizing applications and infrastructure with rational

1. Technology deployed without process is a guaranteed failure
2. In toy industry, the hot areas for process improvement and cost reduction can be found between the creative community producing packaging, e.g. copywriter, package creator, graphic artist and the sales and marketing organizations, e.g. distributors, wholesalers, advertising agencies, etc.

Toy industry is an industry that high seasonal where the market demand is fluctuated frequently. Thus, it is crucial for Mattel to have an integrated communication channel with its contract manufacturing and retail partners. Product Lifecycle Management (PLM) solution that is Web-based, fully configurable, scalable and able to manage complex workflow processes of seasonal-based industry, that provides the necessary requirements and capabilities companies need to successfully manage information and facilitate communication and collaboration across the entire product lifecycle from idea through retirement. PLM has emerged as the primary means by which to improve product development processes across the value chain to deliver the most business value. This system will provide analytics solution to Mattel and its business partners to minimize bullwhip effect, and enable global collaboration, change management, and robust workflow for managing the complex interdependent relationships.

7.4.2 Customer Lifetime Value Monitoring System

With the technology advancement and relatively low cost adoption, Mattel can utilize technology to embark a customer database and develop ‘X' Factor programs to built on data mining, and deliver:

• Highly effective marketing programs
• Incremental revenue opportunities
• Low cost per sale
• Increased customer/prospect contact and satisfaction

The customer insight and retention team is responsible for analyzing behavior of the customer base and for a particular stage in the life cycle of the customer – namely the decision point at which a customer might consider leaving Mattel. For example, when a customer starts having issues with Mattel or shows signs it

could churn, the team needs to identify those at risk of churn and evaluate the business case for preventing such churn. The latter is a necessary step for evaluating the profitability and potential lifetime value of the customer. As Cesconi puts it, "The customer is king, but a profitable customer is above the king."

The possible X-Factor initiatives will be focus The Loyalty and Prospect Programs, combined with the database, offer great potential for creative, interactive X factor programs:

• Contests
• Programs for different market segments
• Special Events
• Referral Programs
• Lifestyle Programs

Database provides the central focus for:

1. Owner loyalty communication programs
2. Prospect communications
3. Opportunistic “Quick Win” Programs
4. Measurement of success
5. Building Mattel's Brand Loyalty

8.0 Strategy Review, Evaluation, and Control - Deric

10.0 References

David, F. R. (2009). Strategic Management. Concepts and Cases (12th ed.). New Jersey: Pearson International.

Kotler, P. & Keller, K.L.. (2009). Marketing Management (13th ed.). New Jersey: Pearson International.

Laudon, K. C. & Laudon J. P. (2007). Management Information System. Managing the digital firm (10th ed.). New Jersey: Pearson International.www.npd.com

11.0 Presentation Slides

---

1. NPD Group ‘Toy Markets in the World, 2009 edition.
2. http://www.mattel.com
3. http://www.hasbro.com
4. http://www.bandai.com
5. http://www.mgae.com
6. http://www.takaratomy.co.jp/company/english/pdf/brochure.pdf
7. 2008 Annual report
8. http://corporate.mattel.com/about-us/default.aspx#
9. http://www.cbsnews.com/2301-207_162-2039729-19.html
10. http://en.wikipedia.org/wiki/Mattel
11. ditto
12. http://corporate.mattel.com/about-us/philanthropy/default.aspx
13. Ditto
14. Ditto
15. Packaged Facts. U.S. Pet Market Outlook 2009-2010: Surviving and Thriving inChallenging Economic Times, March 2009
16. Euromonitor, U.S.Commercial Service, World Trade Atlas
17. 2009 Yano Research Institute Ltd