Global toy market

Global toy market 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$75.033 billion. The shrinking market size is mainly attributed by Western countries, particularly Europe. On the side of the world, Asia registered upward trend in market share for toy market. Chart 1 World Toy Market Scenario NPD analysts attribute the downward trend in global market value for toy industry to the following reasons Low unit price particularly in year end, which intensified further by the financial crises Cannibalization by other games categories namely video games, electronic games etc. In developed market, the per capita usage for toys is high as they are considered to be an important aid in a childs development vis-a-vis a wasteful expenditure in developing nations. The scenario is illustrated in below table:- Table 1 Toy expenditure Country Kids population in 2008 (million) Spending per kid in 2008 (US$) 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 Safeâ„ ¢, Hot Wheels ®, Matchbox ®, American Girl ®, Fisher-Price ®, Little People ®, Rescue Heroesâ„ ¢, 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. Globally, toy manufacturers are partnering with companies from other sectors, like fast-food chains in their merchandise promotion campaigns, e.g. McDonald Mushrooming of dedicated malls/stores for toys is becoming increasingly visible e.g. Toy â€Å"Râ€Å" us Retail consolidation in overseas markets has changed the landscape for toy exporters. Production of movies based on toy characters for television audience is a unique trend for promoting toy sales in the US. 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. Barbies boyfriend, Ken, was introduced in 1961 and named after Barbaras brother. 1.3.2 Since establishment, Mattels 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 Mattels Corporate Structure 1.3.4 Business Model Broadly, Mattel Inc.s businesses are segmented by geographically – domestically and internally. Mattels 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 fashions top designers * Barbie celebrates her 50th birthday in 2009. * Mattels 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 Mattels Vision and Mission Jennifer 2.1 Mattels Philanthropic Vision To make a meaningful difference, one child at a time. 2.2 Mattels 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 Childrens 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 Mattels 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 Mattels 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: Weight factor: 0.0 (not important) to 1.0 (very important) Rating scale: 1 = Major Weakness 2 = Minor Weakness = 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 markets taste, and maintain high flexibility and low costs by simplifying packaging strategies etc Weaknesses * Until the acquisition of Fisher Price, most of Mattels attempts to expand beyond their primary market of childrens 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: Weight factor: 0.0 (not important) to 1.0 (very important) Rating scale: 1 = Major Weakness 2 = Minor Weakness = 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:- Maintaining its Corporate Social Responsibility – sustain its commitment to children, business partners, suppliers and environment Expending its territories with product diversification and business sustainability – strengthen and gain market share 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. Mattels 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, Mattels 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