ICMR Case Collection

ICFAI Center for Management Research

Barbie's Success
Story
MKTG 057

This case was written byK. Subhadra,under the direction of Sanjib Dutta, C I FAI Center for Management
Research (ICMR). It was compiled from published sources, and is intended to be used as a basis for class
discussion rather than to illustrate either effective or ineffective handling of a management situation.

2003 ICFAI Center for Management Research. All rights reserved. No part of this publication
may be
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permission.
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 MKTG/057

BARBIE’S SUCCESS
STORY
“Most toys are only popular for two or three years, but Barbie has been popular for decades and
she shows no signs of weakening.”

1
- Frank Reysen, Editor, Playthings, in 1998.
-
“The challenge with Barbie is that it's a 41-year-old brand, and little girls today are nothing like
little girls of 41 years ago, the challenge is to continue to reflect who girls are today.”

2
- Chirs Burns, Editor, Toy Report Weekly in 2000.
“We know we’re going to have to stay on our toes to keep up with what girls want, Barbie has
always reflected what girls are interested in. Today that is fashion, hair, activities and technology.
We’ve got very cool products that appeal to these girls right now.”

3
- Adrienne Fontanella, President, Mattel Co. in 2000.

BARBIE – THE ICON OF AMERCIAN CULTURE

By 2003, though aged 43, she set new fashion trends, expressed the dreams of young girls, and
represented success for them. She was Barbie, the most popular fashion doll across the countries.
Barbie was considered an icon of American culture across the world and a representation of the
flamboyance and luxurious lifestyle of the Americans. She was also regarded as a role model who
inspired young girls to become independent and self-reliant.
Analysts attributed Barbie’s success to its ever-changing styles and its adaptability to changing
trends in American society. Though Barbie faced of lot of criticism for allegedly sending wrong
messages to young girls, it was the world’s largest selling toy and one of the most successful
products of Mattel Co., its manufacturer.
The biggest challenge for Barbie in the 2000s was to retain the interest of young girls. In the
2000s, with young girls getting access to various forms of entertainment such as video games and
computers, the number of young girls playing with dolls was decreasing. In addition,

1 “Mattel Relies on Dollhouse Diva Barbie’s Big Business”, www.abcnews.com, June 11, 1998.

2 “Mattel Giving Middle-Aged Barbie a Major Makeover” , Los Angeles Business Journal, March 20, 2000

3“Barbie ® Doll Marks New Millennium with Hipper Look, Logo and Attitude,”
www.collectordolls.about.com, July 11, 2000.
This case was written by K. Subhadra, under direction of Sanjib Dutta, ICFAI Center for Management
Research (ICMR).
2003, ICFAI Center for Management Research. All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic or mechanical, without
permission
.
To order copies, call 0091-40-2343-0462/63 or write to ICFAI Center for Management Research, Plot # 49, Nagarjuna
Hills, Hyderabad 500 082, India or email icmr@icfai.org. Website: www.icmrindia.org
 Barbie’s Success Story

Barbie faced stiff competition from ‘Disney Princess,’ launched by Disney in 2001. Analysts felt
that Disney’s distribution strength and its brand name would make Disney Princess an instant hit
with children. However, some analysts opined that it would not be easy to dethrone Barbie from
the position of the world’s favorite doll.

MAKING OF BARBIE
The history of Barbie dates back to early 1950s, when Ruth Handler (Ruth), one of the founders of
Mattel Co., (Refer Exhibit I) asked Mattel’s designers to design an adult looking doll for children.
Ruth got the idea of manufacturing an adult looking doll when she saw her daughter Barbara
playing with paper dolls, imagining they were adults and imitating adult conversation.

Ruth realized that a three-dimensional doll would be an instant hit if they could produce it.
However, when Ruth proposed the idea to the board, it was turned down as the board felt that
producing a three dimensional doll would be very expensive and that it might not click in the
market.

In 1955, while Ruth was vacationing in Europe with her family, she came across Lilli doll, which
was based on a German comic strip character of same name (Refer Exhibit II). Ruth bought two
dolls, one for her daughter and the other for herself. She showed the doll to Mattel’s designers and
asked them to design a similar doll that would look more American, innocent and “project every
little girl’s dream of the future.” The manufacturing of Barbie was handed over to a Japan-based
4 5
company – Kokuasai Boeki Kaisha. Mattel also hired Charlotte Johnson, a fashion designer, to
6
design Barbie’s wardrobe. In 1959 winter, Barbie was first introduced in the American Toy Fair.
The first Barbie was dressed in a black and white striped swimsuit (Refer Figure I).
FIGURE I
THE BARBIE DOLL IN 1959

Source: www.abcnews.com
7
However, she failed to impress consumers, and even Mattel’s largest customer, Sears, refused to
carry Barbie in its stores. Mattel realized that it had to advertise heavily to promote Barbie. After
the American Toy Fair was over, Mattel launched a highly successful ad campaign targeting
children.

4 Kokusai Boeki Kaisha was a components distributor for medium and small toy companies all over Japan.

5 Charlotte Johnson designed Barbie’s wardrobe for the first 20 years.

6 The American Toy Fair is held at New York City annually. All major toy companies participate in this fair
and launch their new products.

7 Sears – one of the largest retailers in America.

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 Barbie’s Success Story

In order to convince parents to buy Barbie, an adult looking doll, Mattel roped in motivational
psychologist Ernest Dichter (Dichter). Dichter studied the responses of parents and children for six
months. It was found that while parents rejected the doll, girls in the 8-12 age group liked the doll
instantly. It was reported that Barbie’s clothes and accessories attracted children and they loved the
idea of putting Barbie in imaginative situations which required constant wardrobe changes of
dress.

Ditcher suggested that Mattel position Barbie as a teaching tool that would encourage girls to
become well groomed young ladies. Barbie was therefore projected as a role model for American
girls, guiding them through puberty into adulthood. The strategy worked well and priced at $3,
Barbie sold 351,000 units in the first year.

In the early 1960s, feminists in the US campaigned against Barbie. They argued that Barbie
distorted the concept of femininity and was a symbol of the patriarchal system. Some even accused
Barbie of encouraging girls to visualize themselves as sex objects or housekeepers. However,
Barbie continued to be successful, and by 1963 around 2 million Barbies were sold. Around this
time, Barbie got a boy friend, Ken and had pet animals (Figure II for Ken). In 1963, Mattel test
marketed Barbie in international markets. Since the results were favorable, Mattel entered into
licensing agreements in England, France, Germany, South Africa, Italy and Mexico to market
Barbie in those countries. In the 1970s, Barbie’s looks were changed. She got a wide smile and
sun-streaked hair, which was a fashion then. In 1976, Barbie was included in ‘America’s Time
th 8
Capsule’ during the bicentennial celebrations on the occasion of its 200 year of independence. In
the 1980s, Barbie represented the disco culture along with Ken and her friends Donny and Marie.
In the late 1980s, to counter criticism that Barbie represented only tall blonde Americans, Mattel
launched Japanese, Indian and Mexican Barbies. During the same period, Barbie collectors clubs
sprang up around the country. These clubs became the largest customer group for Mattel. Most
Barbie collectors were in their mid-30s, and they collected Barbie dolls as a hobby. And most of
these collectors were attached to Barbie because the doll was part of their childhood. Mattel
launched special collector series Barbie dolls in limited editions for such collectors. In 1988 it
9
launched the Happy Holidays Barbie Doll series (Refer Exhibit III).

In the 1990s, Mattel realized that Barbie needed to become techno savvy. In 1996, Mattel launched
Barbie Fashion Designer, a CD-Rom. It went on to become the fourth best selling game for that
year with sales of around 353,409 copies within the first three months of its launch. By 1997,
Barbie had penetrated 90% of the US market and 2.5 dolls were sold every second. According to
company sources, by 2002, more than 1 billion Barbie dolls (including its friends and pet animals)
were sold worldwide. The bestselling Barbie in the whole Barbie series was ‘Totally Hair Barbie’
launched in 1992, with hair so long that it reached the doll’s toes. More than 10 million units of
Totally Hair Barbie’ were sold generating revenues of $100 million.

8 As part of the bicentennial celebrations, the American government developed a time capsule containing
objects representing major events and important objects of American life in 1976. The time capsule would
be opened on 2076 by the US president.

9 Holiday-themed Barbie dolls came with d esigner gowns to celebrate holidays.

4
 Barbie’s Success Story

FIGURE II
KEN

Source: www.jcsetc.com

Barbie was reportedly the most widely sold doll across the globe. It was reported that on an
average an American girl between 8-12 years owned around 10 Barbie dolls, an Italian or British
girl owned seven, and a French or German girl owned five dolls. According to the Interbrand
survey, 10 Barbie’s brand value was $1,937 million and it ranked 94 th
in the top 100 brands for the
year 2002. By the 2000s, Barbie contributed to around 40% of Mattel’s revenues.

Barbie’s success was attributed to its adaptability to changing trends. A new Barbie was launched
frequently to represent various cultural changes in American society, enabling young girls to
connect with the doll.

BUILDING UP AN IMAGE
Made of molded polystyrene and plastic (for hair), Barbie doll was 11½ inches tall with a 4¾-inch
bust, 3-inch waist and 3¼ inch hips. On a human scale it measured 39-21-33, which was an
improbable figure for women. Barbie faced stiff opposition from mothers who thought that the
doll’s make up and appearance would have a negative impact on children. However, it caught the
imagination of young girls with its black eyeliner, pearl earrings, a zebra stripped bathing suit and
heels. Barbie had its own wardrobe, consisting of a casual outfit for outings, a bridal gown and a
tennis dress. Young girls liked Barbie instantly, thus triggering sales.

From its inception, Barbie fashions were based on the philosophy that “the doll sells the clothes
and the clothes sell the doll.” Charlotte designed a bridal gown, a tennis dress, and a ballerina
outfit as basics accessories for Barbie. She also added a sleepwear for slumber parties, which were
popular in those days. In the early days, Ruth wanted to create an extensive wardrobe for the doll
to enable young girls to choose their Barbie’s personalities. Barbie’s wardrobe was designed
according to the latest fashions, so that young girls could connect with the doll and its accessories.

After its launch in 1959, Mattel received suggestions for remolding Barbie. However Ruth felt that
the original mold should be retained because it was familiar to customers. In 1961, Barbie got new
bright blue irises and shaped eyebrows replacing the heavy black eyeliner and pointed eyebrows. It
had a soft skin tone and a bubble cut, which was popular in the early 1960s.

10 Interbrand is a leading brand consultant established in 1974. Interb rand lists the top 100 brands of the
world in association with BusinessWeek .

5
 Barbie’s Success Story

Mattel’s introduction of Ken, Barbie’s boyfriend, met with widespread criticism from feminist
groups. However, analysts pointed out that Ken’s introduction only represented American society
in the early 1960s. They pointed out that in the 60s, women’s roles were defined by men and that
most women spent their lives raising families. As American women were not career oriented,
Barbie was not introduced in any career mode. Instead she represented the average American
woman’s life before marriage.

To counter criticism of Barbie being a sex symbol, Mattel introduced Midge , a friend of Barbie, in
1963. Midge’s face was freckled and not at all sensual. During the same period, there was
increasing demand for Barbie to have kids. Instead of getting Barbie married, Mattel introduced
Skipper, Barbie’s little sister in 1964, enabling Barbie to baby sit. Consequently, Mattel was
criticized for not getting Barbie married to retain her youthful and perfect figure.

In the late 1960s Mattel added new features to Barbie to sustain the interest of young girls in the
doll. In 1966, Barbie accessories included a magic solution that would change the colour of
Barbie’s hair and clothes. (In the mid 1960s, colored hair was fashionable among American
teenagers). In 1967, Mattel revolutionized the toy industry when it introduced “Twist and
Barbie. This Barbie fascinated children since it was able to move its waist. Realizing that dollsTurn”
that
could move caught the imagination of young girls, Mattel soon introduced a Barbie that was able
to move, bend, grasp, and tilt her head. These improvements in Barbie enabled Mattel to sustain
the interest of young girls in the doll. To popularize Barbie’s new features, Mattel advertised
heavily. It launched “Total Go,” a campaign with a $12 million budget, focusing on the new
features of Barbie. Mattel advertised heavily in both the print and electronic media (press,
television, and radio). Before launching any advertisements, Mattel tested them on children. Only
ads that the children liked were aired.

In 1967, when racial equality was dominating America’s political and social agenda, Mattel
introduced a black Barbie called Franci . This doll did not perform well in the market. Caucasian
e
parents were not ready to buy a black Barbie for their children, and black parents were not ready to
accept Francie, as they could not relate to it. As a result, the doll had low sales and was
discontinued within a few months of its launch. In 1968, Mattel introduced Christie a black friend
for Barbie. Christie was successful compared to Francie. Christie represented the changing , social
scenario in the US during the late 60s, a time when African Americans demanded rights and
Martin Luther King and Malcolm X asserted the equality of blacks. Mattel continued innovating
and in 1969 it introduced Talking Barbie , which spoke about its new clothes, hairstyles and Ken.

Along with these innovations, Mattel introduced innovative programs to increase the sales of
Barbie. In 1967 it launched a ‘trade-in’ program, which enabled young girls to exchange their old
Barbie for a new Barbie. Analysts pointed out that this venture, not only helped Mattel sell new
Barbie dolls, it also allowed the company to erase the old image of Barbie from the minds of
young girls. Analysts also observed that the trade-in program taught young children about
increasing temporary relationships that was becoming popular in American society.

BARBIE’s CHANGING IMAGE

One of the main reasons for Barbie’s success was its adaptability to changing trends. It was
reported that Barbie had more than 80 careers within a period of 40 years. The doll had played the
role of college graduate, doctor, teacher, astronaut, Presidential candidate, surgeon and business
executive, among others.

In the 1970s, Americans experienced turbulent times, both socially and politically. The women’s
liberation movement and the sexual revolution overthrew the values and traditions of the 1950s. In
addition society became more materialistic. Mattel realized that to suit the changing times, Barbie

6
 Barbie’s Success Story

needed to look more assertive. In 1971, Mattel introduced “Live Action Barbie” to portray the
liberated woman. Live Action Barbie had a trimmer figure than earlier Barbies and wore tie-dyed
outfits. The Vietnam War and the increasing usage of drugs by teenagers put new challenges
before Barbie. So far, Barbie had represented changes in society, but Mattel was against making
Barbie a representative of the drugs and free sex culture.
During this period Mattel went through some turbulent times. An enquiry was ordered by federal
agencies into Mattel’s finances and Mattel’s founders Ruth and Elliot were expelled from the
company in 1974.

In 1974, Mattel introduced “Sweet Sixteen” Barbie. However, the sweet sixteen Barbie was not
glamorous as teenagers during that period opted for less make up and long hair. In 1975, Mattel
associated Barbie with the Winter Olympics and a new athlete Barbie was launched. The athlete
Barbie had the clothes and accessories of a swimmer, a skater and a skier. Along with the new
versions, Barbie’s face saw a few changes. In 1975, she got a warm grin and by 1977 she had a
permanent smile. In the 1980s, Barbie came with wide smile and winged hair, riding on the disco
wave of the early 1980s.

By the mid-1980s, with American women exploring different careers, Mattel realized the need to
change Barbie’s image to boost its sales. Mattel realized that young girls were becoming more
techno savvy and career oriented. Thus, Barbie was launched as an astronaut ( Astronaut Barbie –
1986) and as a doctor (Doctor Barbie in 1988) (Refer Exhibit IV). In 1985, Mattel introduced
“Day to Night Barbie,” representing the busy lifestyle of working women. Mattel also revived the
image of Barbie as a fashion doll by introducing Crystal Barbie, Puerto Rican Barbie and Great
Shape Barbie. Analysts felt that these new Barbies enabled girls to not only fantasize about the
adult life of women but also think and dream of the careers they wanted to pursue.

To support Barbie’s new image, Mattel launched a new ad campaign – “We girls can do
anything in 1980s. The ad showed a series of scenes. The first scene showed a young girl running
” greet her mom coming from office and carry her briefcase. This scene was followed by another
to
11
young girl playing baseball and then playing with her doll. The third scene showed a young girl
looking through a microscope. The whole ad conveyed the idea that young girls could do anything
they wanted.

In 1992, Mattel launched “Presidential Candidate Barbie,” inspiring young girls to opt for a
career in politics. By 1993 Barbie crossed the $1 billion sales mark. The Internet revolution of the
mid-1990s changed people’s lifestyles and also affected Barbie. In 1998, to keep up with the
technology revolution, Mattel launched Barbie’s website www.barbie.com. The site provided
various interactive items. Along with interactive games, the site provided a letter from Olympic
12
Gold Medalist, Tara Lipinski, to inspire girls to pursue their dreams and ambitions. The site also
included a parents’ section, through which Mattel conducted an online survey of parents regarding
features that should be added to the site. Digital Planet 13 collaborated with Mattel on the design

and development of Barbie.com. Commenting on the site, David Haddad, general manager, Mattel
Media, said, “We’re very excited about building our website to include a destination where girls
can have a meaningful experience with Barbie on-line. In addition, we truly hope that parents will
be our partners in this effort to bring girls to the Internet in a way that's fun and comfortable for
everyone.” 14

11 Base Ball is the American national game.

12 Tara Lipinski was the Olympic Gold Medalist in Skating. Sh e won a gold medal in 1998 Olympics.

13Founded in October 1994, Digital Planet was based in Beverly Hills. Digital Planet had produced over 120
Websites, created over 100 DVD interface designs and won more than 100 awards.
14 Mattel Celebrates the Birthday of the Barbie(R) Do ll with the Launch of Barbie.Com For Girls, PR
Newswire, March 9, 1998 .

7
 Barbie’s Success Story

In the mid-1990s, Barbie experienced a drop in sales due to the increased in alternative means of
entertainment for, kids such as videos games, computer games and the Internet. Also kids could
not relate to Barbie due to changing priorities. Analysts observed that in the 1990s, young girls
became more career minded and techno savvy and they failed to relate to Barbie. In 1997, Jill
Barad (Barad) took over as CEO of Mattel. She announced that she planned to make Barbie’s
image more consistent with the image of women in the 1990s.

In 1997, Barbie’s domestic sales were reported to be $320 million while global sales were
reportedly $2 billion. That year Barbie’s first classical ballet series, Sugar Plum was
Fairy
launched. In this series Barbie was launched under seven world famous ballet series (Refer
Exhibit V).

Inspite of this launch, Barbie’s sales started declining after 1997. Analysts pointed out that while
Barbie’s target market consisted of young girls between 3-12 years till the 1980s, the target group
was reduced to girls between 3-8 years by the late 1990s. They observed that in the late 1990s,
girls were not keen on playing with traditional playthings such as dolls. Analysts also said that
since young girls in the late 1990s had lots of exposure due to the Internet, they felt that playing
with dolls was childish.

In 1998, Mattel redesigned Barbie. Barbie was launched with slimmer hips, a wider waist and
smaller breasts. According to Mattel sources, the new Barbie reflected society in the late 1990s. It
was reported that the earlier Barbie’s measurements were improbable for humans. According to
Mattel, the slimmer Barbie would fit into the fashion outfits of the 1990s, which did not suit the
earlier Barbie.

To support the image overhaul of Barbie, Mattel launched the ‘Be campaign in 1999.
Anything’
The advertisement showed a girl staring into the camera with untamed hair and a confident look,
holding a hockey stick behind her head.

th
In the same year, Mattel celebrated Barbie’s 40 birthday. During its birthday celebrations, Mattel
introduced successful women (“Ambassadors of Dreams”) who like Barbie doll taught little girls
that they could do anything. Commenting on the company’s decision to honour women achievers,
Anne Parducci, senior vice-president, Barbie marketing, said, “This was an exciting opportunity to
begin the year of celebration of the Barbie doll. The accomplishments and wisdom of these
outstanding trail-blazing women will provide little girls with tools to imagine their futures and to
reach their goals. The gala was one way to acknowledge the positive impact of the Barbie brand
15
and honor people that share the same visions and goals.”

OVERHAULING THE IMAGE

In March 1999, Adrienne Fontanella took over as Mattel’s girls’ division president and announced
a total overhaul of Barbie’s image. To improve Barbie’s sales, Mattel adopted two strategies. The
first strategy involved introducing more brand extensions for Barbie and segmenting the market
according to age. The second strategy involved targeting older girls by stretching the Barbie doll to
other products such as perfumes cosmetics and music. Analysts were skeptical of this approach as
Barbie would face stiff competition from established brands in cosmetics, music, fashion and
electronic games. Mattel also announced that to increase profits from Barbie it would create two
distinct personalities of Barbie, one career oriented and the other, cyber Barbie that would
specialize in the traditional gender role game.

15 Barbie Doll Gala Kicks off Year-Long Celebration; An All-Star Salute to the Barb ie Doll's 40th
Anniversary, BusinessWire, February 8, 1999.

8
 Barbie’s Success Story

As part of the brand extensions of Barbie, Mattel introduced hi-tech products like the Barbie
scrapbook, which came with talking stickers and voice activated locks. Mattel also introduced the
Barbie computer, which was available through the Internet.

Along with the change in image, Mattel changed the packaging of Barbie dolls. Till late 1999,
Barbie was packaged in a bright pink box, which did not have the usual rectangular shape. The
name of the doll was prominently displayed on the package, along with graphics and the Barbie
logo. In 1999, Barbie boxes were redesigned, featuring the new logo. ‘Barbie’ was written in big
letters while the name of the doll was written in small letters after the logo. The earlier bright pink
colour was replaced by a new light pink colour. In addition, the box was shaped like a rectangle,
with well-defined angles. The packaging was done in such a way that Barbie’s accessories and toy
line were visible.

In 2000, Mattel also launched Jewel Girl Barbie , which was able to move in a more realistic way.
According to company sources, Jewel Girl Barbie’s waist was more soft and fleshy and would
twist and bend to give a more realistic feel. Jewel Girl Barbie also had a soft smile and an oval-
shaped face. The doll was launched with around 20 outfits including slim pants, long spilt skirt,
colored vinyl jacket and stick on fashion jewels.

Due to all these initiatives, by 2000 Barbie’s sales reportedly increased by 9%. However, in 2001,
Mattel announced that Barbie’s sales declined by 12% in domestic markets due to decrease in
demand for the collector series and the Holiday Celebration’ series. In order to increase Barbie’s
sales, in 2002, Mattel launched Barbie as Rapunzel a computer animated video. Extending its
computer-animated videos, Mattel launched Barbie ,as Swan Lake 16 in early 2003.

BARBIE’S COMPETITOR

Barbie not only had to deal with changing trends in children’s tastes, it also had to deal with stiff
competition from the Disney Princess launched in 2001. Disney launched characters like Snow
White and Sleeping Beauty as dolls. The 12 inch plastic doll came with accessories similar to
Barbie, such as pyjamas, wrapping paper, magazines and videos. According to reports, Disney
dolls were rapidly becoming popular. Reportedly, revenues increased from $136 million in 2001,
to $700 million in 2002. Disney expected sales to increase to around $1.3 billion in 2003.

Though both Disney and Mattel claimed that they encouraged young girls’ fantasy, Disney was
aware of criticism faced by Barbie for focusing more on fashions. It took care that its doll was not
representative of fashion statements of the day. According to Disney sources, its Disney Princess
was all about magic and fantasy, while Barbie, with its handbags and high heels focused on new
fashions. Commenting on the comparison between Barbie and Disney Princess, a Disney source
17
said, “It's about girls wanting to be little girls, rather than encouraging them to grow up fast.”

Analysts felt that with the fast changing preferences of young girls and increasing competition
from Disney, Barbie would face tough times in the years to come. However, Mattel sources were
confident of retaining Barbie’s supremacy.

16 Popular character in a ballet series

17 Can a Disney Princess topple the queen of Toyland? The Economist, April 17, 2003.

9
 Barbie’s Success Story

QUESTIONS FOR DISCUSSION:

1. Analysts observed that Barbie, the icon of American culture, reflected changes in American
society. Analyze the changes in Barbie’s image over the years.

2. Analysts attributed Barbie’s success to the Mattel’s innovative product development. They
pointed out that Mattel's product development reflected changing cultural patterns in American
society. Analyze the role played by product development in Barbie’s success.

3. According to analysts technological innovations and the availability of various other forms of
entertainment were turning young girls away from traditional playthings such as dolls. In this
scenario, discuss the future of Barbie. Do you think Barbie will be able to retain its
dominance? Justify your answer.

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 Barbie’s Success Story

EXHIBIT I

HISTORY OF MATTEL CO
Ruth Handler, Elliot Handler and their friend Harold Matson formed Mattel company in 1945. Initially it
was known as ‘Mattel Creations.’ The company was located in a garage in southern California. Initially
Mattel p roduced picture frames, then soon, from the scrap of picture frames, Elliot started producing
dollhouse furnitu re. In 1946, due to personal problems, Matson sold his share to the Elliots. En couraged
by the success of dollhouse furniture, the Handlers decide to focus on producing toys.

The first successful product of the company, a musical toy – Uke-A-Doodle was launched in January
1947. In 1948, Mattel launched its Baby Grand Piano at the toy fair and even go t patent protection for
the toy. In the same year Mattel was incorporated. The company established its headquarters at
Hawthorne, California.

Mattel sub-contracted most of its manufacturing activities to save costs. The company also made toys out
of various materials to bring down the cost of raw materials. Mattel focused on providing variety and
brought out new toys every year. In her autobiography, Ruth said, “We’d developed a basic mechanism
around which new products could be designed year after year.” Around 20 million music toys were
produced and sold between 1947-49.

Along with new product development, Mattel focused on marketing. One of the major marketing
initiatives taken by the company was the sponsorsh ip of a television show. In 1955 , th e American
Broadcasting Company (ABC) (Disney’s television network), approached Mattel to sponsor its new
program – The Mickey Mouse – a daytime show targeting children. This was the first time that a
Club had been approached to sponsor a program on television. The Handlers had to consult
toy manufacturer
their auditor before taking decision, since they were asked to pay $500,000 to ABC for sponsorship
rights, an amount that equaled the net worth of Mattel. After consulting with their auditor, the Handlers
decided to go for the sponsorship deal. In October 1955, The Mickey Mouse Club was aired on
television, and it soon topped the rating charts. Along with the program, Mattel launched its new toy
Burp . Initially, Mattel did not see any results, however, slowly sales picked up and Burp Gun
Gun
became the best selling toy that year and its sales touched around one million. Mattel also developed a
system to predict and track sales. It had a ‘retail detail’ team which visited stores to set u p displays and
check the shelf movement of the products.

In 1959, inspired by her daughter’s fascination for adult looking toys, Ruth designed Barb ie,the most
successful product of the company. It became very popular, and in its first year recorded sales of 351,000
units. In 1960, riding high on the success of Barbie, Mattel went public and got listed on the New York
and Pacific Coast Stock Exchanges. By 1965, Mattel sales touched $100 million and it got listed in the
Fortune 500 list. In 1970 it reported profits of $17.4 million. In 1971, its sto ck was priced at $522.50.

Inspired by the success of the Barbie doll, Mattel launched Chatty Cathy, a talking baby doll with a
string-activated voice box. The doll was a big hit in 1960. In 1965 it launched ‘N’ say products, and in
1968 it launched – Hot die cast metal miniature cars. Hot Wheels were the Handlers’ last
successful product for Wheels,
Mattel. The unrealistic high sales projections of the Hot Wheels line, Sizzlers
resulted in over production and unsold stock. In order to avoid panic among investors, the company’s ,
executives resorted to improper accounting p ractices to hide the losses. In addition, in the late 1960s,
Mattel started diversifying into related field s through acquisitions. Mattel acquired Metaframe (a pet
products company), Turco (a manufacturer of playground equipment), and Ringling Brothers (Barnum &
Bailey Circus). The acquisition of the Barnum & Bailey Circus cost around $47 million. In 1971, since
the companies acqu ired by Mattel had internal problems, Mattel po sted its first ever loss. In 1974, the
SEC ordered an enquiry into Mattel’s books for hiding losses from its investors. The enquiry indicted the
Handlers for irregular accounting practices. In 1975, the Handlers were ousted fro m Mattel. In 1978, Ruth
was indicted and was ordered to pay a fine of $57,000 and put in 2,500 hours of community service.

In 1977, Mattel entered the electronic g ames market an d re-evaluated its diversification strateg y. In 1979,
it launched the Intellivision home video en tertainment system and in 1982 it launched Masters of
Univers toys – featuring He- the was a
the main character. The masters of the universe product series
e hit and even surpassed the
big Man
demand for the Barbie doll. The new series reported sales of $400 million
in the year of its launch. However, by 1983, Mattel reported a loss of $3 94 million, and in 1984 it hived
off its non-toy ventures due to increasing losses.

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 Barbie’s Success Story

In 1987, Mattel announced its co re brand strategy. Under this strategy Mattel would try to maximize its
focus on core brands by creating product extensions. At the same, the company would try to identify new
products that had good sales potential. In 1988, Mattel entered into an alliance with Disney. The alliance
resulted in the introduction of infant and pre-school toys based on famous Disney characters such as
Mickey Mouse, Donald Duck etc. Later on, the agreement was expanded to the manufacturing and
marketing of toys based on popular Disney movies such as Toy Story. Mattel also entered into an
agreement to produce infant and pre-school toys, dolls, games and puzzles based on classic Disney
characters.

In the late 1980s and early 1990s, Mattel acquired Corolle S.A. (a France based doll manufacturer), Corgi
Toys Ltd., (a Britain based manufacturer of scale model, die-cast cars) and Aviva Sports Inc (a
man ufactu rer of sport toys). To strengthen its core brands, in 1993, Mattel bro ugh t in Fisher-Price, the
world’s number one infant and pre-school toy brands, into the Mattel family. In 1995, Mattel acquired the
rights to manufacture and distribute Cabbage Patch Kids dolls.

In 1996, Mattel entered into a licensing agreement with Nickelodeon to make toys based on the channel’s
famous characters. In 1997, Mattel merged with Tyco Toys. The merger strengthened for Mattel’s infant
and pre-school produ ct line. In the same year, Mattel sold its sports brand to Wham-O Inc. It also
established Global Manufacturing Principles (GMP), which provided a framework of manufacturing
principles to its units. In 1999, Mattel entered into licensing agreements with the top five Formula One
race teams – Ferrari, Jordan, McLaren, Stewart-Ford and Williams F1 – to produce adult collectibles,
track sets, radio-control cars and electric racing sets (as part of its Hot Wheels series). In 2000, Mattel
acquired the license to produce the toys based on characters in J.K. Rowling’s Harry Potter series. By
2002, Mattel reported net sales of $4.9 billion and had a presence in around 150 countries worldwide.

Adapted from various newspaper articles, Mattel.com and Mattel Annual Reports.

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 Barbie’s Success Story

EXHIBIT II

ABOUT LILLI DOLL

Lilli was based on a comic strip, which appeared in Bild Zeitung, a German paper, in the
early 1950s. Reinhard Beuthien created the comic strip. Lilli was a semi-pornographic
character who targeted the wealthy men for their money. As the comic strip increased in
popularity, Greiner & Hauser GmbH produced Lilli doll in 1955. Lilli was 11½ inches tall
and was made of flesh colored plastic. She had a well-shaped body, a tiny waist, heavy
make up, a ponytail and provocative eyes. Greiner & Hauser retained the character of
Reinhard Beuthien’s Lilli and promoted the doll as sexy, cunning and immoral. They
positioned Lilli as “the kind of girl every man wants to own.”

The Lilli doll was targeted towards adults. The doll’s clothes were transparent and the doll
was available in careless styles. The doll was basically sold as a pornographic gift for men
and was displayed in many bars and beer gardens.

Source: Adapted from various newspaper articles.

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 Barbie’s Success Story

EXHIBIT III

HAPPY HOLIDAY SERIES – BARBIE

1988 1989 1990

1991 1992 1993 1994

Source: www.dollectibles.com

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 Barbie’s Success Story

EXHIBIT IV

BARBIE DOLL OVER THE YEARS

1959 – Barbie 1961 – Bubble Cut Barbie 1966 – Color Magic Barbie

1965-66 – Teacher Barbie 1967 – Twist n Turn Barbie 1971 – Malibu Barbie

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 Barbie’s Success Story

1975 – Olympic Barbie 1986 – Astronaut Barbie 1988 - Doctor Barbie

1992 – President Barbie Busy Girl Barbie

Source: www.dollectibles.com, www.barbiecollectibles.com

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 Barbie’s Success Story

EXHIBIT V

THE BARBIE CLASSICAL BALLET

1997 1998 SERIES
1999

2000 2001 2002

2003

Source: www.dollectibles.com

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 Barbie’s Success Story

ADDITIONAL REFERENCES & READINGS:

1. This Barbie Even Knows Your Name, BusinessWeek, 1997.

2. A Doll For All, www.pbs.org, February 26, 1998.
3. Mattel Celebrates the Birthday of the Barbie (R) Doll with the Launch of Barbie.Com
For Girls, www.prnewswire.com, March 9, 1998.
4. Nash – Sherly Nance, A Look Back, Fortune, May 5, 1998.
5. Humpherys Christine, Mattel Relies on Dollhouse Diva Barbie’s Big Business,
www.abcnews.com, June 11, 1998.
6. Goldstein Lauren, Barbie’s Secret Plan for World Domination, Fortune, November 23,
1998.
7. Barbie Doll Gala Kicks off Year-Long Celebration; An All-Star Salute to the Barbie
Doll's 40th Anniversary, BusinessWire, February 8, 1999.
8. Taub Daniel, New Reality For Mattel: Girls Grow Out of Barbie Earlier , Los Angeles
Business Journal, February 8, 1999.
9. Kim J. Nancy, Barbie Gets An Image Makeover, www.bizjournals.com, March 12, 1999.
10. Barbie's Midlife www.sfbg.com, May 19, 1999.
Crisis,
11. Searching For Turnaround Barbie, BusinessWeek, September 6, 1999.
12. Barbie Teams with Working Woman Magazine and Girls Incorporated to Encourage
Girls to Celebrate Their Dreams, www.prnewswire.com, October 5, 1999.
13. Grassel Kathleen, Barbie Around the World, www.ru.org, 1999.
14. Gorchov Jolie, Mattel Giving Middle-Aged Barbie a Major Makeover, Los Angeles
Business Journal, March 20, 2000.
15. Haley Kathleen, Barbie Gets a Political Makeover, www.alternet.com, April 1, 2000.
16. Barbie® Doll Marks New Millennium With Hipper Look, Logo And
Attitude,
www.collectdolls.about.com, July 11, 2000.
17. Mattel Creates a New Era of Collecting with Celebration Barbie(R) Series; Celebration
Barbie(R) Tops Toy Wishes Hot Toy List for Holidays, www.prnewswire.com, November
21, 2000.
18. Barbie – Career Girl, www.abcnews.com, 2000.
19. Barbie® Boxes: Trends in Barbie Packaging for 2000, www.collectdolls.about.com, 2000.
20. The Barbie Doll Story, www.toymania.com, April 2002.
21. Ruth Handler, The Economist, May 2, 2002.
22. Life in Plastic, The Economist, December 19, 2002.
23. Lukas Paul, Mattel: Toy Story, Fortune, March 19, 2003.
24. A Challenge to Barbie, The Economist, April 17, 2003.
25. www.mattel.com
26. www.barbie.com
27. www.dollcollectibles.com
28. www.people.virginia.edu
29. www.collectdolls.about.com

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