Mattel Seeks That Customer Engagement Magic

Mattel Customer EngagementUsually, for an iconic brand like Mattel, customer engagement and brand loyalty are seldom a problem.

But after the company released its fourth-quarter financial results on Jan. 30, four days after Bryan Stockton resigned from his position as chairman and CEO, it became clear that Mattel is in the midst of some very challenging times.

Interim CEO Chris Sinclair said during the conference call that Mattel has a unique leadership position in the toy industry, given its “unmatched portfolio of brands, our global scale of infrastructure, and our strong balance sheet.”

Sinclair has served on Mattel’s Board of Directors since 1996. But after a 7% decline in worldwide sales during the all-important holiday fourth quarter, Mattel faces an uphill battle to regain its grasp on customer engagement in the toy industry.

“Quite simply, our results were not acceptable,” Sinclair said, according to Seeking Alpha. “So what happened? While our performance was impacted by a number of factors, some of which were out of our control, but most of which were not. As evidenced by the declining POS momentum in the fourth quarter, the company did not execute well during the holiday season. Specifically, we fell short in three areas.”

Sinclair discussed each of the three areas of concern.

“Our brand propositions were simply not compelling enough to consumers,” he explained. “This is particularly true across our Barbie and Fisher-Price brands. Our product innovation was inconsistent. Some brands performed well, but many did not. In addition, the success of our marketing activities was mixed as our spending did not generate a lift to brand sales beyond the specific products that we were promoting. These results make it clear that we need to do a better job with creating compelling brands and products for our consumers. At the same time, we must maintain our Mattel Customer Engagement brand engagements throughout the year instead of waiting until just the holiday season. This is important to help sustain a more consistent consumer mind share each month, with advertisements peaking at the holiday season.”

Second, Sinclair focused on the “most dynamic and challenging environment in the doll category that we’ve seen in many years.”

Sinclair added: “Our doll brands account for approximately 40% of our business and Mattel owns or licenses the top five fashion doll properties. However, the white-hot success of Disney’s Frozen, particularly during the holiday season, did not drive significant overall growth in the doll category and as a result, Barbie lost ground. On American Girl, while we saw growth in its Girl of the Year product line, we did see declines in its other brands. And again, we think this was a function of intensified competition. Beyond this, we were also not successful in delivering captivating products on our Monster High brand, where we became much too dependent on line extensions.”

Thirdly, Sinclair said Mattel’s global retail execution fell short, especially in North America.

“Bottom line is that our global marketing programs and go to market strategy did not effectively breakthrough in a highly competitive environment,” Sinclair said. “But clearly, we must do a better job to reignite momentum. I spent this week working closely with the leadership team and immersing myself in the details of the business. And over the next few months, we will evaluate all aspects of it. We do not anticipate a fundamental shift in strategy at this time, but we clearly need to act with urgency to make the necessary changes around how we execute and how we support and build our brands and drive new innovation. At a high level, we’ll be focused on actions designed to improve performance across our key brands in the adult category, to develop and implement a rigorous sales plan, both in store and online to improve our customer performance, to accelerate our efforts to better position Fisher-Price as a child development brand. And we’re also going to concentrate our efforts around capitalizing on the most significant international market opportunities.”

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