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Essay: Mattel market analysis PESTEL, Porter’s (Barbie)

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  • Mattel market analysis PESTEL, Porter's (Barbie)
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BUSINESS PROBLEM:

I don’t think there is anybody out there who does not know what a Barbie doll is. It has been one of the most iconic dolls since its introduction in 1959. Even though Barbie is a huge hit throughout the world, over the years, Mattel has been mainly facing criticism over projecting beauty that is unrealistic (Wiener-Bronner, 2018). The body size of Barbie is what led to the criticism. People argued that toys like this would put an image in the minds of young girls that they were to look like the doll, slim and beautiful, to be successful. There has also been another issue that Mattel has been facing which is ,I think, how the product and the message it sends put to the public don’t really match. One side the message that Barbie generally portrays is that ‘you can be anything you want’, but on the other side the message sent out like that ‘Math is tough’ and other such examples. Initially, Barbie was made with the objective of bringing out the idea of endless possibilities for young girls, but Mattel’s advertisement campaign and the product penetration has proved the opposite. I feel that Mattel has failed to integrate the business strategy in to the positioning of the market.

Apart from all this I think that the main issue that Barbie is facing, is that of branding. Customers are ever changing and Mattel need to understand that and act accordingly. Barbie must also change with the customers. Gender stereotypes is a huge issue that the toy industries face in today’s world which I think that Mattel also need to address.

ISSUE ANALYSIS:

While micro environment factors such as competition norms impact the competitive advantage of the firm : paraphrase

Macro-environmental Factors:

Macro environment assembles all uncontrollable factors together and has a direct relationship with how the company behaves in an international or national market (Grigorut, (2016). Any changes in the macro-environment can be measured by using the PESTEL Analysis and this analysis could possibly have a major impact on Porter Five Forces that shapes the company’s strategy and the competitive scene.

I. PESTEL ANALYSIS:

• Political Factors: deal with those things that would have an impact of Mattel’s profitability in a particular Country.

  • Laws against Toys and Games.
  • Pricing regulations enforced by various Governments
  • Product branding or packaging rules
  • Trade tariffs placed

• Economic Factors: deal with factors such as interest rate, exchange rates and inflation rate.

  • GDP rates in countries
  • Market size
  • Interest rate
  • Exchange rate
  • Inflation rate
  • Stages in Business Cycle
  • Comparative advantages

• Social Factors: deal with things that would have an impact on the working culture of the company in the industry or globally.

  • Demographic situation
  • Different cultures in different countries
  • Other attitudes of people everywhere

• Technological Factors: deal with how technological changes around the world would impact the company.

  • Competitor’s developments
  • Other technological developments

• Environmental Factors: deal with environmental norms and laws that would have an impact on the company’s profitability

  • Environmental laws related to plastic pollution
  • Green environment

• Legal Factors: deal with the legal framework that the company operates in or chooses to operate in

  • Laws against discrimination

Porter’s five forces

Threat of New Entrants:

The toys industry in which Mattel is operating is one of the few industries where there is a constant threat of new entrants. There are always people coming up with new ideas for toys and games. Mattel has to absolutely bring in a lot of innovation in products to offer their customers to maintain that competitive edge. Also, I think that Mattel should do a lot of research on the current market trends and also on the competitors, because then New entrants would be a little skeptical to enter into a market where there is a dynamic player like Mattel Inc is operating. They need to keep redefining themselves for the sake of not losing customers to the new entrants.

Supplier’s Bargaining Power

Suppliers can be a very prominent factor in any company’s profitability. They should not be taken easily. It is always important to maintain a good rapport with the suppliers. Mattel Inc needs to have a good supply chain with their suppliers. I think that they should also try out products from other suppliers just so that they can be safe if the price of one of the goods go high, they are still in a safe space.

Buyer’s Bargaining Power

The thing about buyers is that they want to buy the best product with the best quality, but they want to pay less. Now, I think that Mattel Inc should try and build their customer base because that would minimise their bargaining power at the same time it would also create a continuous production process. By introducing new products into the industry will also help them maintain their existing customer base and not lose them to their competitors.

Threat of Substitution

Introduction of dolls like the Lammily dolls are things that could put the business of Mattel Inc in trouble. The industry that Mattel Inc is operating in is like that where al lot of competition will arise. Frozen Princess dolls have also been quite a huge part of the substitute product for Barbie. What Mattel Inc should do is to understand the exact need of the customer and try to make products more for what the generation needs now. So, by doing that there can be a possibility of customers maintaining brand loyalty.

Rivalry among the Existing Industry players.

Like previously mentioned before the industry in which Mattel Inc is operating is quite competitive. There already exists a lot of rivalry between the industry players like Hasbro. Mattel should build up to a level where they should be able to be differentiated by people. Mattel could also work with the competitors and increase the market size instead of just working around with the existing markets.

Who are Barbie’s Customers today:

Barbie has a market all over the world and has cut international and social borders and has come up with a lot of ideas for dolls in different countries by understanding different cultures like for example the hijab barbie, Indian barbie, African-American barbie. The customers are everywhere.

Market Segmentation:

Mattel Inc currently uses the following forms for customer segmentation

a) Demographic: Mattel has formed a segment based on age groups. Customers of Mattel are kids aged between 4-15. it is important to know and understand their needs. The thing is that they need to get the parents to be convincing as well

b) Geographic: Mattel has a wide reach internationally. It has a presence in a lot of countries where Barbie has different looks and attires to cater to the needs of different customers culturally.

c) Behavioural: Now, this segment is for those people who like to gift barbies to other kids be it for their birthdays, or for their nieces or nephews or anyone who’s invited to some social norm related to kids. So they have sort of developed this idea where when it comes to gifting a young girl something, people always pick a Barbie doll. It is an easy choice.

How Should Mattel Target Customers:

a) Demographic and Geographic: These two segments will prove to be the most successful for Barbie because young kids would need new toys. Mattel’s performance in this segment would improve profits and also still continue to keep Barbie in the markets.

b) Behavioural: This is what might need more work, in the sense that Mattel could offer more discounts for their products and induce more buying so even more people can access it. Especially in developing countries, not everyone can afford to buy a Barbie doll for their kids. So if it is made more affordable for them then their kids could also be inspired by Barbie and her world.

Mattel’s Future Customers:

a) Psychographic: Mattel should target more of this group of customers because Social media in today’s world is huge. There are unlimited areas of development through social media. Mattel could have an even larger market with they are able to appeal to families through great social media presence, better television commercials etc. come up with schemes where mums would be more happier and interested to buy Barbies for their kids (Veloso & Campomar, 2012).

Barbie’s customers should be anyone and everyone. It really should. Barbie should be a doll for whoever wants to play. It can be a boy, a girl or even a Drag Queen. Millennials today are evolving so much and all they want is to be accepted for who they are. Mattel should understand that and develop Barbie accordingly.

V. STRATEGIC MARKETING ALTERNATIVES

Barbie has been on the declining side for some years now especially since Disney’s ‘Frozen’ products have been on the market. Since Disney has more years of presence in the market, they seem to have a higher edge in competition. Barbie’s efforts are not really working currently as kids prefer Frozen dolls more, so Barbie really needs to up their game especially in the technological field as youngsters prefer more of mobile gaming apps more that dolls these days. Mattel has been facing a lot of losses for a few quarters and there have been a lot of factories cut as a part of cost cutting (Zacks, 2018).

The major competitors of Barbie are:

o Hasbro
o Fisher-Price
o LEGO
o Namco
o Toys-R-Us

Mattel needs to increase their market share. It is at 25% currently and still behind its major competitor, Hasbro. Mattel can increase the market share by increasing the Sales of Barbie. Mattel can also increase the frequency of the Barbie doll usage by providing offers and schemes for young mums to encourage them to buy the dolls more.

2) Product Development:

Mattel needs to bring in more developments for the doll because over the years Barbie has faced a lot of criticism for being overly thin, and for have the perfect body and shape. Barbie has to be made in a figure that people can relate to for them to accept it more.
Also, technological advancements is what is important today. Kids these days are so technologically advanced so something in that area would help Barbie, like how Frozen” dolls are so technologically forward.

3) Market Development:

Although Barbie has a wide reach globally, I think that not everyone can afford a barbie doll yet. Mattel should be able to extend to markets internationally and relate to the markets locally. If the motto is young girls can be anything it should not be just girls who can afford to buy a barbie doll. Mattel can work out schemes and discounts to make it affordable for parents to buy. Apart from that I think Mattel should extend to other segments like the psychographic one and have a strong obdurate presence in the social media so Barbie is always in the picture, so people don’t forget her. Also barbie should stand up for a lot of social causes and inspire young girls even more. So if Mattel is into more of Corporate Social Responsibility Activities, that would have a great impact on Barbie as well.

4) Diversification:

Mattel should work with its competitors to expand their markets rather than just work with themselves in their existing markets. It would help them increase the market share collectively which is great for both the companies. Working with technological industries would also give Mattel more ideas on how to improve Barbie in that area.

25.4.2020

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