Mattel Toys India Ltd.Case Analysis

SDM, NMP Term IV

Group 5Abhijeet Tomar - 03Argha Ray - 15Khushal Malik - 28 Vipin Kathuria– 59

Context• Mattel is a the largest manufacturer of toys in the world.

• Launches its product range under a JV with DGP group.

• Remained along the market fringes amidst onslaught from unorganized players.

• Frequently changed its sales and distribution strategy in the last few years to gain market share.

• New distribution strategy brings in the results but causes unease amongst the sales organization.

The Market Dynamics:• Unorganized players rules the roost.

• The Chinese invasion of the Indian market after 1995 with high quality cheap toys.

• Product innovation quickly imitated by unorganized players.

• Lax Intellectual Property Rights protection.

• Higher margin by unorganized players to distribution network.

• Coverage of a fragmented market.

• Funskool’s foray into the branded category.

The Initial Blow Plast Years:• Full line forcing on distributors.

• Mismatch between primary and secondary sales caused inventory pile up at distributor premises.

• Arm twisting by SO or ASM to push slow moving items.

• No parity in Retailer discount.

• Primitive delivery channel on bicycles.

• Retailer segmentation on Sales value rather than profile.

• Sharing of self space with unbranded cheap toys.

• Retailers’ unhappiness on Mattel’s margins vis a vis unorganized players. Discounts accorded to customers show price sensitivity.

• Premium toys stocked with unbranded ones is a dent on Mattel’s image. Retailers may also not be pushing harder on account of low margins.

Revamped Blow Plast:• New manager at the helm.

• Impetus to cost saving rather than sales push.

• Retailer profiling again based on sales volume.

• Dissatisfaction among direct dealers may be due to inadequate servicing and delays in consignment.

• C&F agent handling two product lines may not be competent on dealing with retailer queries on product specifics.

• Delhi model may not be replicable across India.

• Distributor restructuring exercise may have caused bitterness.

Uneasiness under Mattel:• Blow Plast sales personnel may not evolve as competent sales managers.

• Too much reliance on ISOs for generating sales may be misplaced.

• Retail outlet increase may have been done in a jiffy without concern on proper profiling.

• Reduction in Distributor margin seem all stick and no carrot.

• New found rejuvenation in sales and distributor organization may be short lived. It is just around an year and actual implications become palpable only after a lag.

• Too much of paperwork.

• 50-50 salary structure for ISOs may make their supervision and allegiance suspect. Who takes the onus, Mattel or Distributors themselves, for monitoring ISOs?

More Reasons for Unease:• Distributor backlash due to new Wholesaler.

• Distributors may think that their margin may not be at par with that being paid to wholesaler.

• Distributors may also feel that they are being shortchanged in order to accord more margins to even retailers.

• TSE’s may be finding it difficult to cope with new role.

• Is the new Wholesale channel in direct competition with the old Distributor channel?

• Distributors may reject added workload of sales reporting in view of lower margins.

Decision:• Market Coverage should not be the only criterion to increase sales.

• Mattel products are premium products that will be purchased by a particular segment of the society. It makes sense to increase market coverage among those outlets where footfalls are the preserve of only the affluent sections of the society.

• Proper profiling of retailers must be undertaken before allowing them to stock Mattel products. Clubbing a premium product with unbranded ones will send out the wrong signal from the Mattel brand.

• Distributors might be antagonized with reduction in margins but it must be consciously pointed out to them that increased sales may have maintained their profitability.

• Wholesaler and retailer margin must be at par with distributors depending upon channel role and competition.

• Only competent TSE must be given managerial role. Salary structure for ISOs should be handled by distributors. Rethink the channel.