The Business of Barbie

Izabel Falco do Rego Barros Feb/Mar 1998 last revised February99

Contents

Summary

Mattel and Barbie - a quite long story

The toy market in the late 50s and 60s

Shaping strategy with design: 70s and 80s

The 90s and the second breakthrough

The near future

Learning from Barbie

Summary

Figure 1 Barbie#1

At the end of the 1990s, the timeless Barbie, an 11 1/2" doll, is America's number one best-selling toy in the market. Mattel Toys, Inc., the largest manufacturer of toys in the US, has produced Barbie since 1959. But very little is known of its business and design aspects of Barbie's story. In the 1998 $31 billion toy market, Mattel has nearly $4.8 billion in sales. Barbie is responsible for more than one-third of those sales. In 1997 alone, Barbie represented 80% of sales in the doll segment. What is it about this doll that makes it such a phenomenon? What are the main factors that have allowed Barbie to dominate the doll market for almost 40 years? How have technology innovation and design strategy influenced product development at Mattel? What kinds of strategies has Mattel used to determine Barbie's design and evolution? What approach to design is behind their strategy? This paper points to possible answers to those questions from an outsider point of view. Issues related to design development philosophy, teamwork, technology and innovation are explored. It is important to stress that this paper does not address or consider sociological or anthropological issues related to the doll - extensive literature is available from other sources on those subjects.

Mattel and Barbie ...a quite long story

Figure 2 Christian Dior Barbie

After World War II, various industrial segments evolved from the existing, and surviving, industries. Manufacturers whose production capabilities had been focused on war-related goods were forced to redesign their businesses for this new era of peace. One of the sectors that grew considerably at that time was the toy industry. Mattel was founded in 1945 by Ruth Elliot, a stenographer at Paramount Pictures, Elliot Handler, a light fixture builder and industrial design student, and Harold Matson, a friend and foreman who left the partnership in 1946. The company was started as "Mattel Creations" with capital composed of the "life savings" of the partners; by 1955 the company was worth $500,000. With a tendency to take risks and a belief in advanced and new materials, Elliot produced Plexiglas furniture, jewelry, candleholders, decorative objects, and picture frames through Mattel Creations before centering its production on toys. An Ukedoodle, a plastic ukulele, was the first popular toy produced by Mattel in the early fifties. The 1950s brought to the toy industry some immortal toys like Mr. Potato Head (1952), Lego (1955), and Barbie (1959). Disneyland opened in July 1955, and the first advertising on TV targeting the youth segment was aired. In the same year, 'The Mickey Mouse Club' was first aired - sponsored by Mattel. It was the first time in industry history that a toy company would sponsor a TV series. Mattel aired a commercial for the Burp Gun on 'The Mickey Mouse Club, and by Christmas the gun had sold out.This was a hallmark for opening new markets, and pioneering aggressive marketing techniques. In the middle of all this, Jack Ryan who had formerly designed missiles for the Pentagon on the Raytheon team, was hired by Elliot to reinforce Mattel's design force. Ryan had everything Elliot had dreamed of: technological knowledge, inventiveness and an open mind. It was in this environment that, in 1959, the first Barbie doll was introduced at the NewYork Toy Fair in February 1959, accompanied by a massive advertising campaign which referred to her as "a shapely teen-age fashion model."

The birth of Barbie

Invented by Ruth Elliot, Mattel's co-founder, Barbie's original design was inspired by a postwar doll called "Lilli". Lilli had been created by Reinhard Beuthien for the Bild Zeitung, a sensationalist German newspaper, in 1952 as a comic strip character. She gained a third dimension at the hands of Max Weissbrodt in 1955. "How do you mean to marry a man with a lot of money? As soon as you marry him it will be gone!"2 The Lilli doll was not intended to be a children's toy. Conceived as a gag gift for the adult male market, Lilli became a common personage in post-war Germany and neighboring countries. "Whether more or less naked, Lilli is always discreet"3
Figure 3 Mattel advertising campaign on Playthings1

Later, Lilli became popular among children in Germany, and her outfits became more modest to fit this new audience. Ruth found the Lilli doll on a vacation trip in Switzerland and bought three of them for herself and for her daughter as a "decorative item." Seeing her daughter and her daughter's friends playing with the adult doll, Ruth realized that it would be a great idea to make a woman doll for children. She discussed the idea with Mattel's designers foreseeing that this would be a special opportunity. "Special was not how the male designers saw it. It was costly. " In America, they told Ruth, It would be impossible to make what she wanted - a woman doll with painted nails and "real nice clothing" that had "zippers and darts and hemlines" - for an affordable price. "Frankly", Ruth recalled, "I thought they were all horrified by the thought of wanting to make a doll with breasts.4

Designing a breakthrough
The Lilli design was not appropriate for the new Barbie. The doll was redesigned in order to make it viable. Barbie's design was the work of several different minds: Ruth Elliot, Jack Ryan, Frank Nakamura (product designer), Seymour Adler (plastics engineer), Bud Westmore (make-up specialist from Universal Pictures), and Charlotte Johnson (fashion designer) - each one with a different role in the final design. Ruth and Jack coordinated the whole concept of Barbie. Frank Nakamura helped with finding a manufacturer to produce the doll. Seymor Adler solved the problems with injection molding and rotation-molded soft vinyl to guarantee that Barbie would have arms, legs, hands, feet and fingers. Bud

Figure 4 Lilli s comic strip from the Bild Zeitung newspaper: How do you mean to marry a man with a lot of money as soon as you marry him it will be gone! 2

Westmore, together with a sculptor, worked on the face so that Barbie would not look like a "street girl." Charlotte Johnson designed Barbie's wardrobe. Jack Ryan also designed the joints that attached the arms and legs as he supervised the production of the molds. Well-designed wardrobes of synthetic and natural cloth were a hit in the doll market of the early 1960s. For dolls in particular, lifestyle trends dictated industry directions. As described by Judd, in her book on Glamour dolls of the 1950s & 1960s: "...By 1957 careers began to open up for girls. While they still expected to become wives and mothers, they also dreamed of being a glamorous fashion model, airline stewardess, nurse, ballerina or television star." "...This was also a time when the women of the United States discovered the home permanent and hair care was no longer a luxury. Even little girls were given permanents by their mothers. ...these little girls wanted combs, curlers and even permanents for their dolls." In a time of great changes in women's fashion and career opportunities, Barbie was manufactured in Tokyo, by KBK - originally a widget factory. She was launched in the American market with a complete wardrobe to appeal to the most demanding customers - perfect fit, the right fabric, well-done finishing, matching accessories. All of which were made by housewives throughout Japan.

Figure 5 Lillis promotional image: Whether more or less naked, Lilli is always discreet3

Figure 6 #1 Barbie6 actually worth $3,000 to $4,000

The toy market in the late 50s and 60s

Figure 7 Ginny by Vogue Dolls, Inc. Hard plastic jointed neck, shoulders, waist and hips. 7

Barbie was not a success at first. During and after the New York Toy Show its sales were yet to be what Mattel expected. Most of the buyers, used to baby dolls, did not like the new adult look of Barbie. When Barbie was conceived and launched, the doll segment of the toy market was dominated by Ginny, a doll made of hard plastic by Vogue Dolls, Inc. and by Miss Revlon, produced by Ideal Toy & Novelty Corporation. In order to deal with those two strong competitors, and with the issue of the adult look, Mattel commissioned for $12,000 a toy study by Ernest Ditcher, the witchdoctor of 1950s marketing.The study included several observations of children playing with Barbies as well as follow up interviews with the children and with their parents. This study helped establish the guidelines for the advertising campaign that would launch Barbie in the retail market. One cannot overestimate the importance of television in early 1960s and the changes that it brought about in children's participation in the purchasing decisions. For the first time in history advertisers had wide-reaching access to the youth market. Toys were shown in commercials making it possible for children to determine exactly what they wanted. Using the guidelines determined by Ditcher's study, this was how Mattel reached its public. By the end of 1960, Barbie's popularity was well established, and the orders started to grow. It took Mattel several years to catch up with the demand.

Figure 8 Miss Revlon, by Ideal Toy & Novelty Corporation Vinyl Magic Touch pliable skin, feathered eyebrows, swivel waist, soft vinyl head. 8

Shaping strategy trough design: 70s and 80s

Figure 9 Barbie from the 70,s

A consistent contribution to Barbies success in the 5-12year-old girls' market has been Mattel's capability in using design strategically. As described before, since Barbie's creation, design has been taken seriously and done by a complementary team. From the moment the first Barbie was launched, the product design group started to redesign the doll in order to cut costs, solve production problems, and adjust it to market exigencies. Since the beginning, manufacturing expertise has contributed to product development together with early design.This has allowed Mattel to be always one step ahead of manufacturing in the race to the end of product cycle. Reinvention was a constant in Barbies life - said Lord. 9 According to Syd Hudspith, who worked on the product development team from 1969 to 1971, Mattel's approach to design in the early 1970s was very close to the most advanced techniques and methodologies used today. Observation techniques accompanied by the analysis of psychologists and other specialists, videotapes, one-way mirrors, pre-market testing and serious interdisciplinary teamwork were part of the design routine. The focus was much more on designing an experience beyond the product than restricted simply to product issues. ...Overall a genuine attempt to design a great experience for all those little users, developed around constructs like theme, apperception, play value, play pattern and others. 10 Creativity was intrinsically related to feasibility and rapid prototyping key to product success. Ideas should be translated into design, that should be turned into testable prototypes, that should support manufacturability evaluation, that should allow production on a short schedule with as few redesigns as possible. ...At that time the formal target areas for products were loosely identified as Make and Play, Mechanical Toys, Pre School, Barbie, See and Play, and some others. Interesting note: The idea generator person was also responsible for developing his/her ideas into testable breadboards or prototypes. Mattel bet heavily on moving as quickly as possible from idea to a testable prototype that would also predict manufacturability. Mattel had the most skilled group of modemakers I ever saw anywhere in ANY business. Quite often, new products or major features

would evolve unpredictably in the modeling stage. ...The whole spirit of the group was wonderfully nutty and ferociously competitive. 11 The use of design in various specialties gave Mattel the opportunity to build a design culture that would support product development in the years to come. Since the beginning Mattel invested in designing and redesigning Barbie based on changing role models. This tendency proved to be definitively successful once it became possible to have the "role model of the moment" translated into a Barbie doll.

On Design and Redesign

Elliot Handler, Mattel's co-founder, was a man with an eye toward the future, especially where new materials were concerned. He invested in new materials and technologies to give Barbie different features, offering varied and compelling experiences to the users. With a user-centered approach to product development, Mattel's designers anticipated children's wants, creating unexpected possibilities in the Barbie world.

Graph 1 Barbie facelifts12

Barbie's face has been redesigned several times in order to keep up with current fashions in make-up and hair styling and to adapt the doll to an ever-changing market. During this time, Barbie's body has not changed in proportions but it has endured several changes in the design of joints, molds and moving parts according to new production techniques and materials. It has always been safer and more cost effective to re-create the doll through its external features than by making fundamental changes. Moreover, why make a radical change in a product that is champion in sales?

On fashion, lifestyle and design

Based on this strategic thinking, Mattel invested heavily in product and fashion design throughout the '70s and '80s. As a result, Mattel fashion designers, led by Charlotte Johnson, created special collections for the doll year after year. It is important to stress that they designed not doll clothes, but true miniature fashions. Besides designing outfits, fashion designers over the years also created an enormous amount of miniature accessories - jewelry, gloves, shoes and purses, which have populated Barbie's world of consumer goods since the introduction of the first models. Packages of clothes and accessories without the doll were a part of the first marketing strategy that grew tremendously in the '70s and '80s, and which still persist today.This strategy was particularly successful because of the variety of outfits that were made available over time. A study shows that in 1976 there were more than 700 outfits created exclusively for Barbie in the U.S. market alone. As a complementary strategy, a Barbie small world was designed to keep up with the tendencies in society. Along with the doll and its clothes, accessories, houses, shops, cars, boats, trunks, planes, even friends, family members and animals were created. ...Girls growing up in the 1960s played with a fashion shop, a school, and a little theater. Twenty years later modern times replaced these with a fitness center, an office and a rock stage. 14 The option for incremental change, however, did not prevent Mattel from innovating in its approach to technology, in its design practice and in its use of materials. In the fashion design world, big names of the haut-couture started to design special outfits for Barbie. The first to do so was Emilio Pucci in 1967, with the design of special outfits for a Brannif Airlines' gift-set. Although not produced by Mattel, those sets are recognized as part of the Barbie para-

Figure 10 The Brannif Airlines gift set

phernalia. This practice was revived in 1985 when Oscar de la Renta developed a complete signed wardrobe for Barbie and launched it together with Mattel in high style. Entertainment tonight broadcasted the debut of these fashions at a special black tie event held at the Waldorf Astoria in New York, February 12th, 1985. Life size versions of Barbie dolls Fashions were modeled by the then Miss America, Suzette Charles; actress Rebecca Holden, the daughter of actor William Holden; Genie Francis, best known as Laura of the daytime drama, General Hospital and Cathy Lee Crosby, spokesperson/model/actress. Each Barbie fashion has a special label stating the designer logo and identifying that fashion as part of the collector series.15 It was such a success (for both the designer and Mattel) that it became a trademark of Barbie to have clothes specially designed by big names of the fashion industry and sold only through the designers' official outlets. Other American designers followed the tradition: Bob Mackie (1990), Dona Karan (1995), Calvin Klein (1996), and AnnKlein (1997) among others. But, designing for Barbie was not a privilege only for Americans. European fashion designers also developed exclusive outfits for Barbie - among them, no less than Christian Dior.

Figure 11 1st Oscar de la Rent Barbie

Graph 2 Ownership growth curve

This policy may, in part, explain the incredible rate of Barbie ownership in the U.S. In 1974, by the doll's sixteenth birthday, a sur vey showed that 90% of the American girls between 5 and 11 years old owned at least one Barbie. Those numbers increased by 1997 to 99%. As part of the commemorations of Barbie's 16th birthday, a portion of Times Square was renamed "Barbie Boulevard" for a week in her honor. In the same year Mattel almost went bankrupt, but Barbie survived. Another reflection of Barbie's power was seen in 1976 when Barbie dolls were placed in time capsules and sealed during the Bicentennial celebrations to be opened in 2076 as the favorite doll of this century.
16

Figure 12 the first Barbies in the Dolls of the World Collection

With the 1980s came the first special series of Barbie. The Dolls of the World Collection started with three models: Italian, Parisian and Royal. Meanwhile, the collectors market became important, revealing a new niche to be targeted. In 1985, the American artist Billy Boy created the first Barbie aimed at collectors. An edition of 6,000 dolls was produced and sold in France in cities where a display of his collections and design dresses were shown. With the growth of the collectors market, the first limited edition collector Barbie series was introduced in 1986. A special characteristic of this series is that the dolls are manufactured in porcelain and exhibit very elaborate fashions.

Figure 13 Le Nouveau Theatre de la Mode Barbie 17

The 90s and the second breakthrough

Figure 14 Th1 1998 collection

The 1990s brought the champion-in-sales, Totally Hair Barbie to the market. Introduced in 1992, it sold more than ten million units. Also in 1992 the first full Barbie store opened at FAO Schwarz, in New York. Newspapers of that time report the never ending lines to see (and buy) Barbies at FAO Schwarz.They remark on how people were astounded by the idea of a dedicated space for Barbie inside FAO Schwarz's fantasy toy land. In that year Barbie alone was responsible for 52% of Mattel's revenue. According to Mattel, every second two Barbies were sold somewhere in the world by the end of 1993.18 That makes 172,800 units per day, or 63,072,000 dolls per year. Considering the average price of a Barbie doll is $20.00 in the American market, this makes Barbie a $1,261,440,000 business a year.

Graph 3 Number of Barbies sold

Going Digital
It is in the middle of the nineties that Mattel made its second Barbie breakthrough. At the hands of Andy Rifkin, ex-Time Warner software vice-president, Barbie got a new dimension. Reflecting on his 8 year-old daughter's question about why she could not print directly onto fabric and on some "playing with Barbie" himself, he developed and presented to Mattel the idea of a CD-ROM of patterns with printable cloth.The toy maker not only bought the idea but also pulled Rifkin to lead its software division. During 1995 Mattel, together with Digital Domain, a Hollywood specialeffects studio (Interview with Vampire, Apollo 13, and Titanic) developed the idea into an innovative series of software based on creative play: Barbie

Fashion Designer - a CD-ROM that allows children to design doll outfits printable on computer-compatible fabric and to assemble them without sewing; Barbie Story Maker - movie making kit; and Barbie Print'n Play - cards and stationary maker. The products were presented at a showing for investors and caught the attention of both buyers and market analysts. 30-year-old-women were having a great time making doll clothes, said an economic analyst present on the event. 19 While some analysts were very critical of the girls segment in the software industry, Rebecca Runkle, a Morgan Stanley analyst, foresaw Barbie CDROMs as a "strategic coupe." With the fantastic brand recognition Mattel enjoys, this is a tremendous opportunity to expand, she said in 1996. No traditional toy company today can ignore computer technology.20 Mattel Barbie CD-ROMs were available in retail stores in the fourth quarter of 1996, with analysts' predictions that 200,000 copies of the program would be sold. Barbie Fashion Designer alone sold more than a million copies and could not be found in most toy stores by Christmas. With an average price of $45.00, it represented $45 million worth of business. With Barbie CD-ROMs, Mattel established a hot market in computer games for girls, continuing its growth in the toy market. Again, changing lifestyles influenced Mattel's growth strategy, as the company quickly envisioned the opportunity to create and position itself into a new market. Barbie Fashion Designer is the number-one selling children's CD-ROM, with more than one million units sold worldwide since its release in October 1996.Then, Mattel developed a second breakthrough Barbie product: the digital Barbie.

Graph 4 Mattels sales growth and Barbies sales growth

Figure 15 Barbie CD-ROMs

The near future

Currently, the toy and game market in the U.S. is estimated at $31 billion.21 In 1997 Mattel was responsible for 16% of that market, while Barbie represents about 80% of sales in the doll segment in the same American toy and game market.
Figure 16 The face of the 80s

On February 3, 1998, "Mattel, Inc. reported an 82% surge in fourth-quarter earnings on 13% higher sales, as lower-than-expected sales of its key Barbie line were off-set by strong performances by other toys." ...Sales of the Holiday Barbie line of collectors dolls, which is traditionally a high-volume business, and the newest Talk with me Barbie, a talking doll driven by CD-ROM software that was marketed aggressively by Mattel, both fell short of expectations, Mattel officials acknowledged last month. Retailers said they continue to have a large inventory of both lines.22 Does this mean that the Barbie empire is declining? Or is it that Mattel will, again, strike competition with a new breakthrough in the Barbie line? Despite a disappointing holiday season for the mannequin-doll-related sales, Mattel said "Barbie worldwide sales for all 1997 increased 12% in local currency and 9% in US dollars." 23 Besides, it was reported on January 1998 that the digital branch of the Barbie line had had successful sales performance on the fourth quarter of 1997. Barbie Magic Hair Styler CD-ROM and Barbie Fashion Designer CD-ROM finished the quarter in the number one and number two sales positions, respectively, in the children's CD-ROM category. As a subsequent product strategy, it has been publicized that Mattel and Digital Domain are working together again on a new CD-ROM title to be launched next March: Barbie Cool Looks Fashion Designer CD-ROM. Some new extensions on the Barbie paraphernalia are also supporting Mattel's continued growth through core brands: electronic commerce and foreign market tailored product development, among others. As part of the new trend in electronic commerce, and targeting mostly the collectibles market, Mattel's website Barbie.com makes an interesting range of products available. On the site it is possible to access a special "shoppe" with some items that can be bought exclusively through the Internet, from a catalogue of the current models and future editions.Targeting mainly the collectors market, it is also a place for customers to be made aware of Mattel's new creations in the Barbie product line.

In the traditional doll segment, the next maneuver will be to reinforce international markets. This new approach was determined by a study conducted by Boston Consulting Group in which key markets and product areas for growth are defined.The strategy includes the development of special products for target markets, rather than simply adapting U.S. products to them. Barbie alone has potential additional sales of $2 billion, stated Boston Consulting Group study.24 The greatest opportunity exists outside the US. -said Jill Barad, Mattels Chief Executive. Only 3% of the worlds kids are in the US. 25 In order to increase Barbie's presence in Japanese and European markets, culturally suitable friends are being planned for Barbie: Ingrid in Germany and Collete in France are examples. The ultimate goal is to boost the number of dolls owned by each child.

As a complementary strategy to maintain Barbie's dominance in the market, Mattel has been working on an actualization of the doll. In recent years, the bulk of the discussion has been concerned with Mattel's intention to redesign Barbie's body, making it look more appropriate to the nineties women's look.

Graph 5 Barbies global reach

Today, Mattel's focus is on increasing earnings per share by at least 15% in the next three to five years through building core brands with Barbie leading the process, of course; and expanding its international sales.

Learning from Barbie

Figure 17 The business-like look of the 90s

More than one-third of Mattel's nearly $4.8 billion in annual sales, can be attributed to the 11 1/2" mannequin-doll.With a 16% share of the US toy market, the company has succeeded in expanding and maintaining itself with its mature brands. Its strategy for achieving constant growth relies on its capability of managing change and constantly revitalizing and reinventing its products. By combining tested technologies and innovative design in its core product, Mattel has been able to maintain Barbie's status in the market for almost 40 years as a champion in sales. Mattel's ability to "update" Barbie to appeal to generational interests shows how societal changes affect design, and consequently shape the market. Barbie is a cultural icon and a rich source of information on how society affects design. 26 Mattel's strategy was to improve on tested systems, and at the same time, to supply new emerging niches with new technologies, or new approaches to existing technologies. This procedure corresponds to Christensen's idea of converting disruptive technologies into new revenue streams. Of course, keeping close to customers is critical for current success. But long-term growth and profit depend upon a very different managerial formula. Quite simply, disruptive technologies are often the catalysts for emerging markets. And finding new markets and exploiting them _ is crucial if a company is to enjoy continued growth well into the future. 27 Mattel's interest and investment in "technology" and "ideas" is an interesting point to compare with the new economic theories that consider those two elements vital to economic growth. It also makes a link to the issue of design and its fundamental role in converting ideas into tangible products. It shows how design can be strategically used by a corporation not only to add value, but especially to create value through products, which returns as profits.

On Strategic and systemic design

Likewise, Mattel's experience demonstrates that strategic and systemic design can be used as a means of corporate strategy if understood and

accepted throughout a corporation. It shows that integral design is economically viable. Throughout Barbie's history, design has been used in several different ways to support the doll's endurance and to open new markets. In an analysis of the consumer non-durable market champions of 1997, Nancy Rotenier addresses the importance of consumers (users) in the purchase decision process. Although she does not mention design, her considerations on the matter imply the importance of design to the process of establishing a product in the mar ket. There are three hot buttons for consumers today time, status and value, says Smith Barney analyst Faye I. Landes. Companies whose brands pushed one or more of those buttons did very well last year. ...For consumers, value isnt just about price its about perception. 28 Ken Goldstein, economist, also stresses the importance of value advantage for consumers. Consumers are indulging, but they also want the best value for their dollar. 29 Above all, it has been design's role to re-invent Barbie throughout her life, giving users new and different perspectives of the classic doll. The ability to understand different phases of the product life cycle and its influence on design decisions cannot be overlooked. From beginning to end, Barbie "updates" and new designs were done with a full understanding of which kind of design was most appropriate to that moment.

On Barbie, Technology, and Innovation

There are various theories that deal with technology and innovation issues as they relate to product development. Although I cannot agree with Gomory when he asserts that most often scientists play a leading role in shaping products (because scientists shape ideas, not products), his explanation of innovation through two different concepts can be generally accepted. In the first, the notion of breakthrough through accumulation of knowledge turned into a business opportunity - the ladder. The ladder. The most common, reasonable perception of the relationship of innovation to production is the step-by-step reduction to practice of new scientific knowledge that then generates a radically new product. ...I think of the process as a kind of ladder because usable things come as culmination of cumulative scientific research -

as in nuclear physics or organic chemistry; the process then moves, step-by-step toward increasing practicality. ...When revolutionary products emerge out of scientists labs, they succeed by providing a big business opportunity. Windfall profit comes from doing what nobody else can. You are first and you have what everybody wants or can be expected to want. You invent nylon, and you sell millions of stockings. 31 In the second one, incremental development leads to the perfection of existing products and features - the product cycle. ...There is another, wholly different, less dramatic, and rather grueling process of innovation, which is far more critical to commercializing technology profitably. ...Its hallmark is incremental improvement, not breakthrough. It requires turning products over and over again; getting the new model out, starting work on an even newer one. ...Year after year, refrigerators are changed; plastic replaces steel, glass becomes more and more resistant to breaking...32 To those two basic concepts I would add a third: the innovative expansion when new, tested technology is used in innovative ways. It is also innovation in the sense that there is a process of identifying new uses for technologies that no one has thought of before. Clearly Mattel's design team understood the technological opportunity and matched it intelligently with the corporate core product. In addition, Mattel's move into the girls' game segment shows corporate ability to foresee new (or neglected) markets. Expanding Barbie into the digital space was definitely an innovative expansion that created a breakthrough product. With the Barbie experience, Mattel went trough all three stages. First, the breakthrough of the adult doll in a baby-doll dominated market.Then, throughout the years, incremental change and innovation adapting Barbie to a growing market and maintaining it as champion in sales. Finally, innovative expansion into the digital market, developing a forgotten girls' game niche with the Barbie Fashion Designer CD-ROM. Moreover, Mattel's experience shows how important it can be to have innovative and incremental design co-existing in the same corporate environment, contributing to corporate profits. As a consequence, the company has quadrupled in number of products released and in overall sales over the last two years. This strategy has led Mattel to the position of worldwide leader in the design, manufacture and marketing of children's toys.33 It is important to consider that Barbie still has 80% dominance in the doll

market in the US and that it is responsible for 40% of Mattel's $4.8 billion of sales in 1997 - with an expected 5% growth in 1998, indicating a $5 billion sales.35 We are very proud of this performance, said Mattel Chief Executive Jill Barad, noting that global sales of Barbie, the worlds most popular doll, rose 12% in local currencies and 9% on a dollar basis. 36 (data related to the fiscal year of 1997) As always, some analysts are predicting considerable slow down of the Barbie empire, based on market saturation of the classic doll, that could drag Mattel's sales with it. Considering that Barbie is by far Mattel's biggest business, and that Mattel has reversed all predictions in its history, let's wait and see what is going to happen.

End note

Mattel or any manufacturer did not sponsor the research of this paper. All the information, which served as a basis for this case study, was acquired from bibliographical research and other public sources. Several attempts were made to contact Mattel to hear the inside story without success.

Research and last revision on May 1998.

References

Figure 18 The 1967 facelift

1. Judd, Polly & Pam . 1988. Glamour dolls of the 1950s & 1960s. Hobby House Press. p. 154155. 2. Lord, M.G. 1994. Forever Barbie: the unauthorized biography of a real doll. William Morrow and Company, Inc. New York. p. 26. 3. ibid. p. 30. 4. ibid. p. 30. 5. Judd, Polly & Pam . 1988. Glamour dolls of the 1950s & 1960s. Hobby House Press. p. 4-5. 6. Deutch, Stephanie. 1996. Barbie the first 30 years: 1959 through 1989. Collector Books. Schroeder Publishing Co., Inc. Kentucky. US. p. 24. 7. Judd, Polly & Pam . 1988. Glamour dolls of the 1950s & 1960s. Hobby House Press. p. 228. 8. ibid. p. 127. 9. Lord, M.G. 1994. Forever Barbie: the unauthorized biography of a real doll. William Morrow and Company, Inc. NewYork. p.298 10. Syd Hudspith worked at Mattel from 1969 to 1971 and gently sent some information about his exper ience at Mattel during this period, through an Email conversation. 11. ibid.

12. information collected from different sources 13. DeWein, Sibyl and Ashabraner, Joan. 1977.The collectors encyclopedia of Barbie dolls and collectibles. Collector Books. Crown Publishers, Inc. New York. US. p 264-270. 14. Deutch, Stephanie. 1996. Barbie the first 30 years: 1959 through 1989. Collector Books. Schroeder Publishing Co., Inc. Kentucky. US. p. 5. 15. _____ . 1998. Collecting Barbie Doll. Mattel corporation website. http://www.barbie.com US. 16. Deutch, Stephanie. 1996. Barbie the first 30 years: 1959 through 1989. Collector Books. Schroeder Publishing Co., Inc. Kentucky. US. p. 90. 17. ibid. p. 111. 18. Lord, M.G. 1994. Forever Barbie: the unauthorized biography of a real doll. William Morrow & Company, Inc. NewYork. p. 7. 19. Greenwald, John. 1996. Barbie boots up.Time. November 11, 1996. Vol. 148. Nr. 22. 20. ibid. 21. Kelley, Kristine P. 1998. Mattel battles Hasbro Technology. KnowledgeSpace. February 12,

1998. US. @ http://www.knowledgespace.com. 22. _____. 1998.Mattels profit soared 82% as other toys took up Barbies slack. Dow Jones Online News. February 3, 1998. US. @ http://www.knowledgespace.com. 23. ibid. 24. Bannon, Lisa. 1998. Mattel, Inc. plans to double sales abroad. Dow Jones Online News from Wednesdays Wall Street Journal. February 11, 1998. US. @ http://www.knowledgespace.com. 25 ibid. 26. Pierce, Michael. 1998. Contribution to [email protected] discussion on Barbie Doll and Mattel, Inc. February, 1998. US. 27. Christensen, Clayton. 1998. Best practices can hurt - Interview with Clayton Christensen, Harvard Business School Professor, for the Management Roundtable. Originally published in the Product Development Best Practices Report. Management Roundtable website. http://www.managementroundtable.c om. US. 28. Rotenier, Nancy. 1997. Consumer Nondurables. Forbes Magazine. January 13, 1997. US. 29. Hawn, Carleen. 1998. Households and personal products. Forbes Magazine. January 12, 1998. US. 30. Gomory, Ralph E. . 19989. From the ladder of Science to the product development cycle. Harvard Business Review. NovemberDecember 1989. US. p. 3. 31. ibid. p.3.

32. ibid. p. 3. 33. _____. 1998. Mattel media and digital domain announce release of highly-anticipated CD-ROM sequel to the best-selling Barbie Fashion Designer CD-ROM. PR Newswire. January 14, 1998. US. @ http://www.knowledgespace.com. 34. Morgenson, Gretchen. 1997. Saturation Barbie?. Forbes Magazine. October 20, 1997. US. 35. _____. 1998. CALIFORNIA: News and insights on business in the golden state Barbie, Hot Wheels give Mattel 82% profit boost. Los Angeles Times. February 04, 1998. US. @ http://www.knowledgespace.com. 36. ibid

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Corporate information
MATTEL TOYS, Inc. 333 Continental Blvd. El Segundo, CA 90245 Tel: (310) 252-2000 Fax: (310) 252-2179

Web Site s :

http://www.barbie.com http://www.hotwheels.com http://www.mattelmedia.com

P ro d u c t s :

Barbie, Hot Wheels, Activity Toys, Small Dolls, Large Dolls, Disney Infant & Pre-School, Male Action Figures.
Trade Names:

BARBIE, HOT WHEELS

C a te go r y :

Consumer - Children, Consumer - Art , Consumer - Mail Order, Entertainment - Recreation - Community - Family, Entertainment - Other