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Copyright Dow Jones & Company Inc Jul 18, 2003
LOS ANGELES -- Tika, 10 inches tall with two-toned hair, is of ambiguous
ethnic origin -- maybe she's Asian, maybe Latina -- but her "platinum"
medallion, airbrushed jean jacket, shell-toe sneakers and graffiti-streaked
packaging make one thing clear.
"She's like . . . hip-hop," said Crystal Audigier, 10 years old, as she
rifled through the first crate of "Flavas" dolls to arrive at a Los Angeles
Mattel Inc. hopes the dolls are hip enough to take on the "Bratz." The
Flavas (pronounced "Flay-vuhs," like "flavors"), a set of six dolls brought
from design to production in just three months, represent a striking gamble
for the giant toy company. In the 44 years since it introduced its bombshell
Barbie, Mattel
has rarely brought out a doll line to compete with her.
But Mattel, which had become accustomed to its buxom blonde dominating
the market, has watched in alarm as Barbie has been challenged by a smaller
toy maker's Bratz -- a line of big-headed, pouty-lipped characters. While
Barbie, which posted about $1.7 billion in sales for Mattel
last year, is still queen, her share of the so- called fashion-doll market
has fallen, almost entirely due to the Bratz.
After trying -- and failing -- to defeat the Bratz with a trendier Barbie
last year, Mattel
has come up with a radical battle plan. Among other things, that means
curtailing its reliance on, and near- reverence toward, its cash cow.
While Barbie is still a plaything of choice for girls 3 to 7 years old,
it's been years since she managed to hold the attention of the tweens,
or 8- to 12-year-olds. With the Flavas, Mattel
is trying to get back into that market -- even if it risks cannibalizing
its biggest product.
Mattel
has tweaked Barbie many times since she was introduced in 1959: bronzing
her skin during the 1970s, introducing black and Hispanic counterparts
and giving her a band (the fuchsia-clad "Rockers") during the 1980s. Mattel
even shrunk her chest and widened her hips in 1998.
But Mattel
now concedes Barbie has gradually lost touch with some young girls' lives.
"Barbie began as a great girl who was simply a reflection of popular culture,
but in the past few years we had sort of put her on a pedestal," says
Matt Bousquette, president of the newly created Mattel Brands unit, which
consolidated the boys' and girls' toys divisions. "We're taking her off
that pedestal."
While Mr. Bousquette and his team overhaul Barbie, he is also enlisting
the Flavas, who wear sweats and heavy chains and have names like "Tre"
and "P. Bo," as a second force with which to fight the Bratz. Mattel
says hip-hop -- which it defines as "a cultural phenomenon . . . dimensionalized
through freestyle dance, street sports, music and fashion" -- has gained
sufficient ground in the mainstream to have its own toy line.
"Mattel
is recognizing that there are other trends besides Barbie that girls want
to play with," says Manny Francione, divisional merchandise manager for
Toys
"R" Us Inc., Paramus, N.J. "Hip-hop is one of those trends."
The Bratz, developed by a toy maker called MGA Entertainment Inc., North
Hills, Calif., were introduced in the summer of 2001. They became a hit
with tweens, an age group of girls that the toy industry had almost written
off.
For the past decade, toy makers have been grappling with a phenomenon
analysts call "age compression," in which media-saturated youngsters are
outgrowing dolls and other toys at an earlier age. NPD Group Inc., a market-research
firm, says toy spending on children peaks at age 3 and steadily declines
after that, with spending on 12- year-olds at about a quarter of the peak
level. By attracting tweens, the Bratz bucked that trend.
Bratz "appealed to an older girl . . . who is not necessarily still a
Barbie customer," says Sean McGowan, a longtime industry analyst with
Gerard Klauer Mattison. "Nothing's ever challenged Barbie like the Bratz."
At Barbie's 1997 peak, a year in which Mattel
posted $1.9 billion in sales of the doll, her clothing and accessories,
she boasted more than a 90% share of the fashion-doll market, Mr. McGowan
says. Barbie held at least 85% of the market right before the Bratz were
introduced, he says, but her share has now dropped to about 70%.
The history of the Bratz is intertwined with Mattel. MGA says the Bratz
were designed by Carter Bryant, a former member of the Barbie team.
Inside Mattel, some are convinced the Bratz borrow liberally from
a Mattel project that was scrapped at the testing stage in 1998.
Mattel declined to comment.
Mr. Bryant didn't work on the line that Mattel
scrapped, according to former and current Mattel
designers. But most Barbie designers had seen the prototypes, his former
colleagues say. Mr. Bryant, through MGA, declined to be interviewed.
The Mattel
doll line that was scrapped wasn't exactly like the Bratz, says a longtime
Mattel
designer who worked on the project. But the Bratz's oversized heads --
with their pursed lips and cartoonish eyes -- are "virtually identical"
to the heads of the dolls her team created, says the designer, who left
Mattel
in 2001.
Lily Martinez, a designer who still works at Mattel, came up with the
idea for the big doll heads for Mattel, colleagues say. Mattel declined
to comment. She even posted her sketch on her cubicle, colleagues
say. "Anyone who passed by her cubicle would see the picture up
on the wall," says another designer who also left Mattel in 2001.
"The big heads, the big eyes, the big feet -- they were all the
same" as the Bratz. Ms. Martinez declined to comment.
The Mattel
dolls were scrapped in testing, current and former designers say, because
Mattel
had strict quotas that allowed only one "flanker brand" -- that is, a
brand that would compete with Barbie for shelf space -- on the market
at a time. At the time, Mattel
chose a product called "What's Her Face" -- a doll with a blank face on
which kids could draw expressions. That doll remains on the market; Mattel
declined to discuss its sales.
Designers say they often faced a higher bar for non-Barbie projects.
And Barbie's image was carefully protected. Bruce Stein, who was president
of Mattel
until 1998, says that former Chief Executive Jill Barad nixed an idea
for "Barbie as Xena" dolls in 1998.
Ms. Barad was replaced in 2000, after Mattel's
disastrous $3.5 billion acquisition of a software maker called The Learning
Company. Under her successor, Robert Eckert, a former Kraft
Foods president, the company has returned to profitability by cutting
its work force 10%, streamlining its supply chain and developing international
sales, among other things. Mattel,
which reported a net loss of $431 million in 2000, reported net income
of $230 million last year. Its stock has risen about 76% since Mr. Eckert
arrived.
Isaac Larian, chief executive of MGA, says he had never heard of a project
similar to the Bratz at Mattel.
He says he chose Mr. Bryant's idea for the Bratz over several others after
holding a sort of fashion-doll design contest in late 1999.
Mr. Larian, who emigrated to the U.S. from Iran, founded his company
in the late 1970s, making a name by picking up the license for hand- held
Pac-Man games. Though his company had made baby dolls before, it had never
made fashion dolls. He says he was motivated by a challenge from a Wal-Mart
Stores Inc. buyer to "give me something that can compete with Barbie."
This year, closely held MGA expects revenue of about $800 million --
with 65% of that coming from the Bratz. The company says it's profitable,
but won't discuss specifics. Mr. Bryant still does design work for MGA,
Mr. Larian says, and collects royalties on the Bratz line.
Mattel
began worrying about the Bratz's momentum during the 2001 holiday season.
Barbie sales fell 12% in the U.S. that year, despite a marketing campaign
featuring an animated video, "Barbie in the Nutcracker."
By spring of 2002, Adrienne Fontanella, then president of the girls'
division, decided to launch what the company termed a more "reality based"
Barbie line. Like the Bratz, the "My Scene" Barbies boasted bigger heads
and feet and fuller lips, as well as trendier clothes.
Mr. Larian, the head of MGA, calls the My Scene dolls a "cheap imitation"
of the Bratz. Mattel
declined to comment. Introduced in October 2002, the My Scene Barbies
helped Mattel's
sales, but still ranked behind the Bratz during the 2002 holiday season,
according to NPD. "My Scene has been just OK for us," says Fred Hurley,
a longtime girls'-toys buyer for KB Toys Inc., Pittsfield, Mass.
In February, Ms. Fontanella's job, along with others, was eliminated
in what Mr. Eckert called a "restructuring" of Mattel's
executive ranks aimed at "increasing efficiency."
Mr. Bousquette, the then-head of Mattel's
boys' toy division, became the first man to take control of Barbie in
more than a decade. "It used to be that whoever ran Barbie ran the company,
not the other way around," says Mr. Stein, the former president. "For
Matt to be in charge is a major shift."
Mattel
no longer has quotas on how many products can compete with Barbie. After
sitting through a girls'-design-team presentation in March, Mr. Bousquette
seized upon the Flavas as the ideal dolls to compete for the dollars of
Bratz buyers. Ivy Ross, head of girls' design, suggested bringing them
to market for the spring 2004 season. Mr. Bousquette said the company
should aim for this July instead.
"We were stunned," says a designer who worked on the Flavas and left
the company in May. Another surprise: Mr. Bousquette asked the team to
make the dolls look more hip-hop than the prototypes. "No one had really
believed in the concept before that meeting, and it was stuck in this
back-and-forth where first they were too edgy, then they weren't edgy
enough," says the designer. "Matt came through and cut all of that out."
Mr. Bousquette says he told designers to make the dolls "as authentic
as possible, as quickly as possible."
Flavas are more complicated to manufacture than most fashion dolls. They
are all different heights -- meaning separate molds -- and they have 10
points at which they can move, allowing them to strike a variety of poses.
The Flavas design team often slept in their cubicles to get the dolls
ready in time for summer shipment. Two designers each clocked 53 hours
during Memorial Day weekend to prepare the line for the company's annual
toy fair held in the first week of June.
Some buyers have been impressed. Mattel's
girls' division "has never been a particularly forward-thinking group,
but the Flavas are right on trend," says KB's Mr. Hurley. The six dolls
in the Flavas line are certainly edgier than anyone in Barbie's clique.
The Flavas girls have highlighted hair, flashier jewelry and wear midriff-baring
tops with low-slung pants. Unlike Barbie, they have flat feet and wear
sneakers. The two boy Flavas dolls sport earrings and serious expressions.
Boxer underwear appears to show from the top of their cargo pants.
The Flavas come in boxes splashed with black-and-white photos of urban
scenes shot around Venice Beach. When arranged together, the boxes create
a "graffiti" mural that reads: "FA SIZZLE." It is a play on the hip-hop
expression "Fa' shizzle," which means "For sure." Marketing director Lisa
Tauber explains that it is also an acronym that stands for "Fashion, Attitude
and Sizzlin' Style." The dolls, aimed at 9- to 11-year-olds, are "all
about fearless self-expression," she says.
MGA's Mr. Larian says he isn't scared by the Flavas. "The only thing
that's missing is a cocaine vial," he says. "You think of Mattel,
you think of Barbie and you think of sweetness. . . . This is like 'gangster'
Barbie, and I think it's going to backfire."
Telejah Dean, a nine-year-old from West Los Angeles noticed the Flavas
last week, as she was admiring Mattel's
Mary-Kate and Ashley dolls. The Flavas are "not as pretty as Barbie,"
she said. But her older sister, Tiffany, 22, seemed impressed by the blond
Happy D. doll. "Look, she's got black [hair] extensions like Christina,"
she exclaimed, referring to pop singer Christina Aguilera.
In fact, Mattel
has hired people to give out Flavas hats, wristbands and decals during
Ms. Aguilera's concert tour this summer. Ms. Aguilera, who got her start
on the Disney Channel, is now probably as well known for her 11 body piercings
and her mud wrestling-themed MTV video called "Dirrty."It's a sign of
the changing times, says Mattel
spokeswoman Julia Jensen. "The old Mattel
probably wouldn't try to tie up with someone like Christina Aguilera."
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