Mattel Case

Mattel revised its product mix significantly between 1980 and 1983. In 1980, the toy and hobby products division dominated the company and electronics represented less than 10 per cent of total sales. By 1983, electronics (mostly in television videogames and Mattel videogames cartridges) accounted for 41 per cent of sales and publishing represented another 18 per cent of sales. Although this new mix was initially successful, in 1983, Mattel lost $300 million overall.

The loss was due to intense competition in and saturation of the videogames marker, which caused a severe cycle of price discounting and left many retailers with excessive inventory. In addition, Matter's unsuccessful home computer was "a day late and a dollar short. It does not offer any special features, extraordinary graphics, or a lot of software." The electronics division lost $400 million in 1983 (toys and hobby products earned $100 million in profit).

In early 1984, Mattel announced that it was leaving all businesses except toys and hobby products. During the year, it rebounded with a profit of $71 million. Over the period from 1982 to 1985, Mattel increased its share of the domestic toy market from 7.5 per cent. Three of its brands are among the leaders, Masters of the Universe, Rainbow Brite, and Barbie.

Mattel's new product activity has been intense since its full-time return to toys and hobby products. For example, Wheeled Warriors is a line of small plastic cars. The Heart Family consists of 11 ½ inch dolls representing a husband, wife, and twin children, and accessories. Angel Bunny is a 30-item infant toy line of rattles, teetbers, and bathtub playthings.

Toy industry experts have conflicting views about Mattel's current product mix strategy. Some see Mattel as a long-term growth company less dependent on unpredictable fads than firms such as Coleco. Others feel that Mattel has been too dependent on its aging Masters of the Universe line, and believe Mattel needs significant