Mattel: Getting it Right is No Child's Play

Mattel: Getting it Right is No Child's Play

THE MATTEL TOY DESIGNER HELD everyone's interest as he prepared to push the green launch button. The assembled Hot Wheels brand managers and Mattel top executives marvelled as a tiny plastic car, called Top Speed, leaped off the launcher, zipped through a plastic accelerator tube and whizzed around the race track's curves and

loops. The managers were impressed, especially given that Mattel's designers had developed the new car models at Mattel's toy­design centre in El Segundo, California, in oniy five months. However, they knew that many challenges

remained. They wondered if the new toy would be the market hit they needed, or whether it would turn out to be just another of the nightmares that were all too common in the toy industry.

Nightmares It's ever;' parent's nightmare. Suddenly the kids start asking for something called Mighty Morphin Power Rangers for Christmas, First, they have to explain to their parents what a Mighty Morphin is, while giving them that 'don't­grown­ups­know­ anything' look. Then the parents start looking for the toys casually on shopping trips. No luck. Then. Mum takes a day off from work to do some serious looking. Still, no luck. Over the weekend, Dad sneaks off to a major mall in another town or city while Mum calls out­of­town relatives to ask them to look. Again, they come up empty handed. It's panic time! Christmas is only two weeks away and all the kids are talking about is Mighty Morphin Power Rangers. How can Mum and Dad explain that Santa has run out of Power Rangers?

It's also every toy retailer's nightmare. Buyers travel to the region's annual Toy Fair, a trade show where toy manufacturers present their products. Thousands of retail toy buyers attend the show to place orders for the following Christmas season. As they wander down the aisles, they see the usual assortment of brand extensions for the perennial favourites, like Barbie, G.I. Joe and Hot Wheels. However, they also see 5,000­6,000 new toys each year, 80 per cent of which won't be around next year. The trick is to pick those that will be big hits.

So, a buyer places a small order for something new called Mighty Morphin Power Rangers. The manufacturer, Bandai America, claims that the toys will be popular after the September start of a television show about the Rangers. Later in

the year, the toys begin to sell, even before the television show debuts. The buyer is not sure what to make of it and decides to wait until two weeks into the show to see how the new product moves. The delay proves costly. By the time the buyer

places a new order in early October, ever;' other retailer has seen the same trend

(i74 • Overview Cane Four: Mattel

and has also reordered. Bandai is able to ship only 600,000 Power Rangers despite orders for 12 million] During the next two months, angry parents flood the

buyer's store wanting to know how they will explain to their children that Santa ran out of Power Rangers.

This process is no picnic for toy manufacturers either. The annual Toy Show is a make­or­break event. Sometime well before the February .show, manufactur­

ers have to decide which toys to present, which toys will be popular two Ghristmases away. Then they have to hope that they can manufacture enough toys between February and late summer to meet demand. To make matters worse, the major retailers like Toys '>!' Us and major department stores have moved to a

just­in­time philosophy to replenish inventory. Instead of placing one big order for toys, they place small orders initially, then reorder based on demand. They want to replace toys on their shelves just as they sell out. This strategy improves cash flow and avoids storerooms full of dud toys. But the just­in­time plan has a significant disadvantage for both retailers and manufacturers. If a surprise hit appears, neither ean gear up fast enough to respond.