Businessmodel of Mattel

Customer Segments

Mattel manufactures, markets, and sells a broad portfolio of toys and games that are designed for boys and girls of various ages, and sells products directly to the general consumer market through its online store, as well as through its chain of American Girl stores. The majority of the Company’s direct sales, however, are made to two customer segments:

• Wholesalers and Distributors, comprising a range of specialist toy distributors and wholesale retailers; and
• Retailers and Online Merchandisers, comprising discount and free-standing toy stores, chain stores, department stores, supermarkets, and other retail outlets. Mattel’s three largest customers are Walmart, Toys “R” Us, and Target, which accounted for approximately 37% of worldwide consolidated net sales in 2015.

Mattel’s largest market is North America, which accounts for the majority of the Company’s business. The Company, however, also serves an extensive international customer base, spanning Europe, Latin America, and Asia Pacific.

Value Propositions

Mattel provides value to its customers in the following ways:

• Its reputation and industry standing, with the Company established as a leading toy manufacturer both domestically and internationally, having a track record for manufacturing high-quality and safe products;
• Its broad range of products, with the Company owning and selling an extensive portfolio of products targeted at boys and girls of all ages, including third party licensed products and unique, proprietary products;
• The strength of its core brands, with the Company controlling a number of popular, market-leading toy brands, including Hot Wheels, Matchbox, Polly Pocket, Barbie, and Fisher Price;
• Its commitment to innovation, with the Company dedicating a significant portion of its resources to researching and developing products new and innovative products for its customers; and
• Its international reach, with the Company serving a large domestic audience, as well as significant numbers of customers internationally, including across Europe, Latin America, and Asia Pacific. ### Channels

Mattel operates a corporate website at www.corporate.mattel.com, through which it provides information on its activities and leadership. The Company also operates a consumer-facing website at www.play.mattel.com, through which it provides information on its various products and brands.

Mattel makes sales directly to consumers through an online store, which can be access via its consumer website, that enables customers to browse products, and make purchase orders. Mattel additionally sells products directly to consumers through several small retail outlets, generally near or at its corporate headquarters and distribution centres, including small outlets in Europe and Latin America. Additionally, the Company operates 20 American Girl retail outlets across the US.

Mattel makes the majority of its sales through its in-house direct sales force, which is organised by segment and geographic region. These sales personnel deal directly with retail and wholesale customers across North America and internationally. The Company also employs the services of various distribution partners and independent sales agents in various countries where Mattel has no direct presence.

Customer Relationships

Mattel provides a number of its products to consumers on a self-service basis through its online sales channel. This digital retail outlet allows customers to browse products, place orders, and schedule deliveries without interacting with members of the Mattel sales force. The Company also makes sales on a mostly self-service basis through its range of retail outlets, where customers can browse products freely but also have access to sales personnel in order to receive personalised service and advice.

Mattel makes its sales to retailers and wholesalers through its dedicated direct sales force, which works closely with customers to establish the details of sales and distribution contracts. These contracts typically span multiple years, with the Company’s larger customers having their own dedicated account management teams. Mattel seeks to establish long-term relationships with its retail customers, securing recurring business over extended periods of time.

Mattel provides a range of online games and video for children that are related to its various products and brands. It also provides support resources such as recall information, store locations, FAQs, instructions, replacement parts. Customers are additionally able to contact the Company’s customer support staff with queries and complaints over the phone or via an online contact form.

Mattel is able to interact with its customers through its social media accounts, including with Facebook, YouTube, Twitter, and Pinterest.

Key Activities

Mattel is an international toy manufacturing company. It produces and markets an extensive range of toy products to customers across north America, Asia Pacific, Latin America, and Europe. The Company organises its operations into three business segments: North America, International, and American Girl.

It organises its products under four major brand categories Mattel Girls and Boys Brands, which includes Barbie fashion dolls, Monster High, Disney Classics, Ever After High, Little Mommy, and Polly Pocket, Hot Wheels and Matchbox vehicles and play sets; Fisher-Price Brands, which includes Fisher-Price, Little People, BabyGear, Laugh and Learn, Imaginext, Thomas and Friends, Blaze and The Monster Machines, Shimmer and Shine, and Mickey Mouse Clubhouse; American Girl Brands, which includes American Girl, Bitty Baby, and BeForever; and Construction and Arts and Crafts Brands, which includes MEGA BLOKS, RoseArt, and Board Dudes.

Key Partners

Mattel works closely with a number of companies and organisations throughout the manufacture and distribution of its various products. These partners include:

• Supplier and Vendor Partners, comprising suppliers of material, manufacturing resources, tools, technology, and services that support and facilitate the Company’s manufacturing, distribution, and sales activities;
• Branding and Licensing Partners, comprising various intellectual property owners, including media studios, from which the Company licenses the rights to manufacture branded toys and products, as well as companies with which the Company co-produces and co-manufactures toys;
• Channel and Distribution Partners, comprising distribution companies and independent sales agents that support and extend the sales and marketing reach of the Company’s in-house sales force; and
• Social and Community Partners, comprising various non-profits and charitable organisations with which the Company collaborates on social and community projects. Mattel has a number of licensing partnerships, producing toys and games related to a number of high-profile franchises, including Star Wars, Marvel, DC Comics, Minecraft, Mickey Mouse Clubhouse, and WWE. The Company has also recently launched a number of other partnerships, including a deal with Quirky to co-develop crowd-sourced toy and game products, and an agreement with DHX under which they will develop a range of media content inspired by Mattel products and brands.

Key Resources

Mattel’s key resources are its intellectual properties and brands, its portfolio of products, its online sales channel, its IT and communications infrastructure, its physical sales and distribution infrastructure, its partnerships, and its personnel.

Most of Mattel’s products are sold under trademarks, trade names, and copyrights, and a number of these products incorporate patented devices or designs. The Company considers these trademarks, copyrights, and patents to be significant assets. Searches of records published by the US Patent and trademark Office identified a number of patent applications filed in Mattel’s name, including applications entitled ‘Frame for an infant support structure’, ‘Reconfigurable infant support structure’ and ‘Toy vehicle launcher and toy track for use therewith’.

Mattel owns and or leases a number of properties across the US and internationally. This includes a number of distribution facilities and warehouses, as well as a network of sales and administrative offices, and retail outlets.

Cost Structure

Mattel incurs costs in relation to the design and development of its products, the operation of its manufacturing network, the licensing of third party properties and brands, the operation of its sales and distribution channels, the maintenance of its IT and communications infrastructure, the implementation of advertising and marketing campaigns, the management of its partnerships, and the retention of its personnel.

In 2015 Mattel incurred costs of $217.8 million in relation to the design and development of products, exclusive of royalty payments, and accrued costs of $717.9 million in relation to advertising and promotion activities. The Company’s other selling, general, and administrative costs totaled $1.55 billion for the year.

Revenue Streams

Mattel generates revenue through the manufacture and sale of toys and games for children of all ages. The Company organises its sales results by brand category, comprising the Girls and Boys Brands, Fisher-Price Brands, American Girl Brands, and Construction and Arts and Crafts Brands, as noted above.

In 2015 Mattel generated net sales of $5.70 billion, down slightly on the $6.02 billion recorded by the Company in 2014. The majority of the Company’s sales related to its Girls and Boys Brands category, which accounted for $3.46 billion in net sales. This was followed by the Fisher-Price Brands category, which accounted for $1.85 billion in net sales.