Mattel’s new game

Apr 01, 1999 10:30 PM  By

Spurred by declining retail toy sales and the growth of e-commerce, ñ4.78 billion toy manufacturer Mattel has aggressively entered the direct marketing game, with plans to launch four catalogs this year. “We don’t want to replace our traditional marketing methods, but rather further our growth mainly through direct marketing and the Internet,” says Glenn Bozarth, senior vice president of corporate communications. “We see these channels as an incremental business opportunity.”

Mattel, whose best-known brand is the Barbie doll, kicked off its catalog marketing strategy last June by first shelling out ñ700 million to purchase Pleasant Co., a ñ287 million children’s products cataloger best known for its American Girl brand, and subsequently mailing a Barbie Collector’s Catalog. Then in mid-February, Pleasant Co. spun off Going Places, a girls’ apparel and accessories catalog. It will begin selling the clothes on its American Girl Website in April; the entire Pleasant Co. line of dolls, books, and accessories will be sold online by fall.

By the all-important holiday season, El Segundo, CA-based Mattel plans to launch four titles: a catalog for its Fisher-Price line of toys for preschoolers; a Hot Wheels toy car book; a Matchbox catalog targeting collectors; and a Barbie doll catalog for children, rather than collectors.

And with its acquisition of educational software manufacturer The Learning Co. for ñ3.8 billion, scheduled to be completed next month, Mattel is now toying with the idea of creating an online catalog of The Learning Co.’s entire product line.

“Catalogs allow us to develop a relationship with consumers that we’ve never had before,” Bozarth says. “Pleasant Co.’s expertise in direct marketing and publishing allows us to enter directly into the consumer channel with our other brands. And Pleasant Rowland [Pleasant Co.'s president/founder and Mattel's vice chairwoman] is helping us develop our other brands.” To avoid completely cannibalizing the business of its retail resellers, the catalogs and Websites will sell some merchandise not available in stores.

A move to high-tech toys In addition, Mattel’s acquisition of software firm The Learning Co. should help it combat a trend that has the entire ñ20.3 billion toy industry in a slump. The Toy Manufacturers of America, a trade association, notes that children are outgrowing traditional toys at a younger age than they used to, quickly moving on to computers and the Internet. The result: an industry-wide sales dip of less than 1% last year; a 1% decline in Mattel’s 1998 revenue; a 27% drop in Mattel’s annual earnings, to ñ363.8 million; and a tumble in stock price-to 23131/416 as of the close of March 5, from 4231/48 a year earlier.

Once it has The Learning Co. under its umbrella, however, Mattel plans to launch more sophisticated products, such as the Barbie Photo Designer Digital Camera and CD-ROM. The Learning Co. will also help Pleasant Co. develop more interactive CD-ROMs for its brand, notes Pleasant Co.’s Julia Prohaska, director of corporate communications. “We wanted to expand into interactive products, but we didn’t have the expertise.”