1. Comment on the strengths and weaknesses of Mattel’s core brands. In looking at Barbie specifically, what actions would you recommend to stem Barbie’s sales decline? Should Mattel accept the fact that the brand will never regain its former sales status? Explain.
2. What opportunities and threats does Mattel face as it looks toward its future?

Over the past fifty years, Mattel has grown to be the world’s largest designer, manufacturer, and marketer of toys. Mattel has built remarkable brand recognition and loyalty for the company and their major brands like Barbie, Hot Wheels, Fisher Price, and American Girl. In its recent history, Mattel has experienced reduced revenues because of the decrease in sales to Toys R Us, complications with its acquisition and later divestment of the Learning Company, and other internal problems. Jill Barad stepped down after only three years as CEO, due to pressure from the board. The current CEO, Robert Eckert, is looking for a way to revitalize sales by strengthening Mattel’s core brands and introducing new brands that have core potential. Despite the financial uncertainties of the last few years, Mattel remains committed to social responsibility through its attention to privacy, philanthropic foundation, and ethical manufacturing principles.

Today, Mattel faces many opportunities and threats, including the rate at which children are growing up and leaving toys, the role of technology in consumer products, and purchasing power and consumer needs in global markets. The continuing lifestyle shift of American youth is of particular concern. Today, many children, tweens, and teens prefer to spend time with music, movies, or the Internet. Children and teens are also more active in extracurricular activities (sports, music, volunteerism) than ever before. Consequently, these young consumers have less time to spend with traditional toys. These shifts have been challenging for Mattel, as the sales growth in its key brands has been relatively flat for some time. Barbie’s worldwide sales, in particular, have been declining over the past several years due to changes in the youth market and intense competition from the Bratz line. However, Mattel’s recent court victory over MGA has transferred ownership of the Bratz trademark to Mattel. Finally, Mattel also faces continued issues with respect to potentially unsafe products manufactured in other countries (particularly China). Several high-profile product recalls have somewhat tarnished Mattel’s reputation for product safety.

Despite these concerns, Mattel has a lot to offer both children and investors. Barbie remains the number one doll in the United States and worldwide. And Barbie.com, the number one website for girls, routinely gets over 50 million visits per month. Furthermore, all of Mattel’s core brands are instantly recognizable around the world. Hence, the ability to leverage one or all of these brands is quite high. A few remaining issues include Mattel’s reliance on Walmart and Target (which lessens Mattel’s pricing power), volatile oil prices (oil is used to make plastics), and increasing competition on a global scale. However, analysts believe Mattel has a great growth potential with technology-based toys, especially in international markets, in spite of changing demographic and socioeconomic trends. The next few years will test the firm's resolve and strategy within the highly competitive yet lucrative toy market.