The failure of Mattel Corporation marketing strategy in China is attributable to the lack of necessary market information in a new niche. The company invested millions of money to establish a brand in China that was not consumed profitably. The analysis of the Social, Legal, Environmental, Political, and Technological (SLEPT) environments identifies the marketing gaps that contributed to this downfall.
The Chinese culture does not promote the ownership of products that are detrimental to the academic performance of school going children (Chan, 2005, p. 6). A study carried out by Chan (2005) indicates that older children in the analytical and reflective stages associate toys with academic underperformance. In the same study, only 1 out of 15 children identified a Barbie Doll as her favorite toy. Many of the children recruited in this study did not mention toys as their most valued possession. The researcher identified Confucian teachings about frugality and a culture of saving as the reason behind the lack of emphasis on material needs among the adults and the children (Chan, 2005, p. 3). However, this study does not entirely disassociate children from toys. Instead, it shows that toys are not as common among Chinese children as they are among their Western counterparts. In fact, children still own toys in China. The failure of the Barbie doll market in China is, therefore, not attributed to the lack of consumers for the doll. The other products marketed by the company did not find a warm reception as the company had anticipated.
Carlson (2013) reiterates this idea in analyzing the trend of the performance of US corporations in China. He blames Mattels lack of strategic planning for the collapse of its $30 million investment in Shanghai. He identifies some of the factors that led to this historical downfall. The Shanghai store was too big and complex for a mixed consumer base made of both adults and children. There were adult items like Barbie martinis and children toys under one roof, a spectacle that was distasteful to Chinese consumers. Additionally, Carlson (2013) posits that the low popularity of the Barbie Doll icon in China affected the sales of all other items branded with the same tag. In a nutshell, Carlson (2013) concludes that Mattel did not understand the social-cultural environment in China before making such a big stride.
There is an environmental cause for the failure of Barbie Doll market in China. The placement of Barbie headquarters at the center of a busy street in Shanghai repelled buyers who would otherwise frequent the store if located in another place. Like other cities in the developed world, the streets in Shanghai are polluted by smoke from vehicles and factories. Therefore, consumers prefer spending their time shopping in enclosed malls that are located far away from the city center. Considering that the Barbie franchise sold even food and drinks, the location of the outlet at the heart of a busy town was not ideal. Furthermore, Chinese consumers prefer purchasing their good from a mall that has an assortment of items, rather than hopping from one shop to another (Ang, 2013, p. 15). If Mattel had this information before venturing into the Chinese market, it would have opted to rent out a shop in one of the malls rather than building a tower that would eventually turn costly.
Synthesis of Secondary Readings
The secondary readings presented above indicate that the unprecedented fall of Mattel Company in Shanghai is attributed to the social environment. Other factors in the SLEPT framework do not apply in this case. For example, there is no political correlation in this downfall. In fact, Mattel decision to open a branch in China followed the countrys call for international investment. By the time Mattel was setting footsteps in China. The government of the Peoples Republic was welcoming to multinational corporations. The corporate tax during the period was also favorable for the companys operations in China. In addition to the political environment, there were no legal battles that the company faced in the period surrounding its entry. The company fulfilled all the legal obligations required for a new multinational operating in China. It most likely acquired a license to construct its mega structure on a Shanghai street. It also got the necessary licenses to allow it run a successful business. The legal cases that Mattel had to deal with came later after the companys rebound in China. Its products were accused of containing toxic substances, and it had to defend them in court (Glynn, 2012, p. 317). Finally, there were no technological challenges to the establishment of the Barbie Doll in China. One of the technological hurdles that could have affected the popularity of the brand in China was competition from robotic toys. However, the fall of the company in China was not affected by any technological issues. According to SLEPT analysis carried out above. The Chinese society and to a lesser extent, its environment, are the cause of the apparent failure of Mattel company in China.
The social environment is very critical to the performance of a brand in the market. It is even more significant when the brand is foreign to the people. The culture of a society stems from its history and beliefs. The Chinese society is rather conservative as compared to the Western. There are peculiar traditions in China that are rare in the USA. For example, Confucian teachings about fragility account for the consumer trends observed in China (Chan, 2005, p. 3). The ownership of expensive clothes and fashion may appear common in the USA, but the Chinese population can consider it to be to excessive (Ang, 2013, p. 15). The Chine population is also sensitive to the value of money. In as much as the buyers are looking for fashion and the emerging trends in clothing, they also wish to purchase long-lasting and decent outfits that will auger well with the contemporary society (Ang, 2013, p. 15). There is also a strict code of ethics that guide the Chinese on various issues in life. Clothing, for instance, must conform to these social norms that Chinese follow. The Chinese population also embraces the consumption of domestic products more that it does the foreign ones (Chan, 2005, p. 4). Mattel tapped into this market need and customized a Barbie Doll to mimic this cultural orientation. Nonetheless, the Ling Doll was associated with a foreign brand, and it did not sell as the company anticipated.
The environment in which a company operates must be conducive for the kind of business that it installs. Pollution and human traffic are very important when deciding on the strategic location of a business. Shanghai, just like any other major city in the world, is polluted. Food and beverage businesses, therefore, do not do well in locations that are noisy and polluted. In China and other countries, businesses prefer shopping malls that are located off the central business district. On the contrary, Mattel opted to stock all their Barbie-labeled line of products in its Shanghai outlet. Given the fact that this brand included restaurants and spas, this brand was bound to fail due to its poor location at the heart of the city.
Conducting a market research is the most important factor to the success of a new business in a foreign country (Gauri, 2004, p. 110). One of the characteristics that a company must investigate in its prospective market is the buyer purchasing power and how it is affected by the socio-cultural norms. For the Barbie Doll, the company could have utilized the research findings like Chan (2005) to get a glimpse on the consumer trends of children toys. In addition to this, Mattel could have invested in a study to understand whether branding restaurants, clothes, and spa as its iconic Barbie Doll would have had an impact on the sales among the adult population. This kind of research could have possibly shown that this idea was not feasible. Therefore, the company could have dissociated its non-toy products from the Barbie brand and sell them separately. Although the company thought that associating these products with the mother brand would have propelled them to success in the Chinese market, it was important to differentiate the consumer trends between the US market and the East Asian consumerism. A thorough market research could have also highlighted the best location to erect the Barbie building in line with the consumer purchasing culture.
After the Barbie businesses failed to pick in China, Martell lost close to $30 million of investment. This money could not have gone to waste if it was invested in bits. It is informed to say that the decision to make this investment was blindly taken without the all the prerequisite steps being taken. Instead of erecting a new building in China, the company could have rented an outlet in one of the busy shopping malls in Shanghai. After the boom of business and the establishment of the Barbie brand in the country, the company could then think of erecting a building to cut on rent cost. The company overrated the existing market and thought that its high investment would break even in a matter of years. Renting a business outlet and expanding the business progressively could have been a better entry strategy than the one that the company adopted.
Finally, it is recommended that a new company in a foreign market diversifies the product line in a slow but steady manner. For the case of Martell, it would be prudent if it ran its Chinese subsidiary as a franchise. Instead of stocking toys and clothes with the same label together, it could have marketed the dolls long before beginning to sell clothes. After the Barbie doll picked in the market, the company could then begin introducing clothes and fashion items one after the other. It could not necessarily have put all its merchandise under one roof, but separate the products based on the findings of market research on location. If the company was beginning to fall, its directors could have detected the decline before going too far into the investment and change its entry strategy before so much money could be lost.
List of References
Ang S. H., 2013. Barbie Doll in China. International Marketing (4th ed.). Milton, Qld: John Wiley & Sons.
Carlson, B., 2013. Why Big American Businesses Fail in China. Global Post.Chan, K., 2005. Material World: Attitudes Towards Toys in China. Young Consumers, 6(1), pp.54-65.Ghauri, P., 2004. Designing and Conducting Case Studies in International Business Research. Handbook of Qualitative Research Methods for International Business, pp.109-124.Glynn, S., 2012. Toxic Toys and Dangerous Drywall: Holding Foreign Manufacturers Liable for Defective Products-The Fund Concept. Emory Int'l L. Rev., 26, p.317.
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