MBA 5102

LOC X. PHAN
Week 2 Assignment: Prepare a Critical Analysis of a Case Study
Course Instructor: David Johnson, PhD
February 24, 2019

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 Introduction

Within the last decade, successful American companies are expanding beyond the

American soil into other markets internationally hoping to gain additional market shares and

increase sales revenue. Some businesses succeeded, and others failed in their attempt to expand

globally. Examples of the successful companies are Air B&B, Dunkin Donuts, Domino’s, Nike,

Red Bull and Coca-Cola (Fleishman, 2016). Examples the unsuccessful companies are Google,

E-bay, Best Buy, Groupon, Mattel and so on. Since the year 2000 until now, ten big businesses

have failed in their globalization campaign (2013). A thorough analysis of the strategy that

failed globalization used by one of the firms would yield valuable lessons in international

marketing. The selected company is Mattel, a big American toy company, and their failed

market expansion campaign of Barbie, a doll, into China. Review of the literature and comments

on CNN, BBC and CNBC suggested that the strategy Mattel used was flawed (Voigt, 2012).

The flaw was the lack of attention to addressing the cultural differences; then that led to the

failure to apply the fundamental marketing principles. In this case, there are six applicable

cultural gaps between the U.S. and China. The lack of responses to the cultural differences were

the principal causes of the marketing campaign failure.

Problems Mattel Faced

The points about the cultural gaps are what led the company to ineffectively apply

fundamental marketing principles in its strategy to expand into China. If the definition of

marketing is to offer for sale products and services that meet and satisfy the customer wants and

needs at the right price, the right place, and the right time, then Mattel completely missed the

mark (wrote, n.d.). The 4Ps of the marketing mix are product, price, promotion, and place;

Mattel failed to apply all of these to varying degrees effectively.

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 Product - The toy maker completely missed delivering the product, a doll, for little girls

and young female adults. Mattel introduced Barbie, the associated fashion lines, and

accessories; all of them American. This American doll has American beauty features,

and American desired characters demonstrated the toy maker’s lack of background

knowledge about the target market. Assumptions about the new market without

supporting data is a disaster waiting to happen. It is common for firms planning to

expand into a new market to gather as much market intelligence as possible in the initial

stages to formulate an effective strategy for the marketing campaign.

Chinese consumers have different criteria for femininity, aesthetic and culturally

accepted behaviors all of which can affect the products or the services. To offer the

Chinese consumers a product that turned out to be culturally incorrect, and might even be

offensive showed the lack of understanding of the cultural practices of the customers.

For example, girls in Asian countries such as China and Vietnam prefer girls to be gentle

and sweet (Harris, 2011). On the contrary, for Western nations such as the U.S., Canada,

and Great Britain, like the girls to be tough and independent (Kuo & Ferdman, 2013).

Chinese women and Western women have a very different aesthetic criteria. Chinese

girls like small cute things such as Hello Kitty and Snoopy, more submissive in nature.

On the contrary, Mattel offered a toy for sale that was sexy, revealing and more

dominant. Culturally and generally, Barbie represented those things that were not

encouraged in China. The criteria for femininity in China and the U.S. are very different,

which is something Mattel should already have known.

It is important that the firm did not get the product offering wrong because of the

four components of the marketing mix, the product is harder to change in the field. In

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 the toy industry, any product offering, to be in-line with the customer wants and needs

must take culture into consideration.

 Price – Possibly, Mattel was likely targeting the middle class, working females, between

the ages of 24 and 32. According to Forbes, this new middle class experienced the

largest jump in income, 20% from 1950 (Rein, 2010). Thus, they had the highest

disposable income and the highest purchasing power. Initially, it all seemed correct, but

if the product comes short of meeting the customers wants and needs, then the customers

will not buy the product regardless how low the price.

The pricing structure that Mattel set between $65 for Barbie goods and $165 for a

pair of Barbie jeans were excessive for someone making the purchase for the first time,

knowing nothing about the brand. Chinese women would consider such spending to be

frivolous.

 Promotion – The images that Barbie represented were too progressive for most people in

the Chinese society. The society, although changing very fast, the Chinese family might

still want the daughters to be more traditional, stay-at-home and not be in society struggle

with the masses. The Chinese consumers and government (society) may think that Mattel

was pushing a radical agenda which could be disastrous for the toy maker losing a

potentially an enormous market.

 Place – Key opinion leaders (KOL), people who study and observe the industry agree

with Mattel about the need for expansion into new markets. The sales revenue of Mattel

has been steadily declining because nearly all their big revenue generating toys are aging.

The toy maker needs new markets that would buy aging old toys to make up for the

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 company’s slumping revenue. However, the new Barbie Experience store in Shanghai

did not live up to the expectation. It opened in 2009 and two years later in closed 2011,

after losing $43M (Harris, 2011).

The store did not bring in the expected revenue because many issues were

working against it. The store, although located in an expensive shopping area, access

was difficult because of no available parking, valet parking nor passenger drop-off

(Thomas, 2014). Furthermore, the storefront entrance did not have any signage to tell

people passing by what the shop was selling inside. There was no signage outside

indicating that this was a Barbie Experience store. The store was pink everywhere from

the entrance to the interior. Pink was saturated everywhere, giving the impression that

the location was for adult entertainment.

Mattel wanted the store to be a fashion hub for the young girls of Shanghai;

however, to these young girls, Barbie fashion lacked the name recognition to be a fashion

hub. The girls felt that the items were too revealing and too expensive. According to

some critics, the best location choice for the store would have been in a large shopping

mall. This error by Mattel is completely separate from the cultural one. In opening a

superstore without having tested the notoriety of the Barbie, name indicated that Mattel

was over confident

Six Cultural Issues and Mattel Performance

For the toy industry, bridging the local customs practices is critical. Otherwise, the toy

might not sell in the new market. There are numerous cultural differences between the U.S. and

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China, at least six is crucial in this case; however, Mattel did not recognize and failed to respond

to all of them.

1. Language – This is the most important tool for communicating with customers and for

marketing the products and services. Mattel spent millions of dollars to build the

Barbie Experience store, and they did not consider basing the communication medium to

be in the local language. It is easy to misunderstand and think that the toymaker chose

to use English as the main communication medium in Shanghai China out of arrogance.

It is possible that Mattel’s reason for choosing English out of consideration for Non-

Mandarin speaking visitors and potential customers. Nevertheless, the politically correct

course of action would have been to make Mandarin the official store language with

English as the secondary. Language and communication are part of the promotion

category within the Marketing Mix. No one will buy the product unless there is an

effective promotional strategy to let potential customers know the reasons he or she

wants to purchase the product (Carlson, 2013).

2. Values and Attitudes – The fact that China does not have a Social Security system, and a

government provided health system trained Chinese to be super savers (Weagley, 2010).

Even very well off families would rather buy the cheap toys for their children and save

the money for a book or tutoring to help in the education of their children (Palich,

Neubert, & McKinney, 2016, p. xx). Everyone in China puts saving for the future the

highest priority after the food and housing expenses. Thus, Mattel was completely out

of touch with the target market in their pricing structure and priced out practically all of

their potential customers. Barbie doll sold well when the local distributors initially

marketed it. However, it did well because it was a doll with western features. Mattel

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 might have mistakenly thought that their Barbie doll reached cultural icon status in

China. To the Chinese consumers in China, the Barbie doll line was an expensive mid-

level brand. Chinese consumers do not buy mid-level brands. They buy either the most

expensive brands, for example, Louie Vuitton or Hermes. Alternatively, they buy the

cheaper locally produced brands. The price and the product must match consumer

expectations of worth.

3. Roles & Expectations – It might seem unusual, but regardless of whether in the U.S. or

China, parents use a toy to help or reinforce a certain lesson on expected behavior or

social norm. When parents purchase a doll toy for their daughter, they anticipate that the

toy helps them reinforces expected behaviors such as expression, appearance, and

obedience (McLeod, 2014). The last thing that any parent wants is for the toy to suggest

rebellious behavior or has an unwanted influence on the child. Chinese parents want

their daughters to learn femininity and to learn obedient behavior (Lacroix, 2014). The

femininity concept for the U.S. girls is very different from that for the Chinese girls.

Regardless how Mattel sees that it should be, Mattel should not interfere and make the

job of parenting more difficult. A toymaker Has complete control over the way that the

toy expresses these characteristics through appearance, facial expressions, and clothing.

4. Aesthetics – “Beauty is in the eye of the beholder.” It is possible that this phrase

became so overused that Mattel forgot how true it is. Marketing studies of the target

market should have informed the toymaker that Chinese and American had very

different ideas about the criteria for beauty, and how it may be perceived. There is a

broadly accepted criterion for beauty, but not for specific features (Wike, 2016).

American culture puts emphasis on individualism; therefore, the author gets to impose

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 on the audience what he or she thinks it should be. Thus, Barbie will confidently display

her beauty and strong personality. In an Asian society, this behavior is considered vain.

Completely and 180° opposite is the Chinese culture where it is much more important to

be polite. Thus, the specifics about beauty would not be so clearly defined and flaunted.

Rather, it is left up to the individual imagination to handle (Ying, 2015).

5. Marketing styles differences – Americans became a trendsetter of the world since

1920’s (Flamming, 2009, p. xx). For this reason, many American companies,

particularly those that started many years ago still think that a market plan that works in

the U.S. will work in every other market around the world (, 2016). As demonstrated by

Mattel, management of this organization thinks that China should follow their aesthetic

criteria as shown through their product the Barbie doll. Management of Mattel was so

certain about their venture that they had no backup plans. The severity of the marketing

blunder demonstrated that the management team lacked diversity and no one there knew

anything about China, the target market.

6. Collectivism and Individualism – In Chinese society, collectivism is preferred over

individualism, opposite that as in American society. Mattel produces the Barbie doll to

carry and display individualism traits and characteristics. Being a rebel is not desirable

by the society or by the parents. Mattel marketed a Barbie doll that had a permanent

tattoo which symbolized individualism as well as a rebellious character. Ideally, a toy

should neither display or carry those undesirable characteristics. Had Barbie been more

cultural correct her reception by Chinese society would have much more overwhelming.

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 Summary and Recommendations

This global expansion campaign was a disaster for Mattel. The perception that the toy

maker has about their target market was completely wrong. Being wrong about the target market

resulted in a failed and ineffective marketing strategy. One phrase may summarize the source

of it all… “know the target market”. That is, Mattel should intimately understand the culture

and behavior of the consumers in the new market. Apply this knowledge to the marketing mix

and derive a sound marketing strategy. Test the newly derived marketing strategy on a small

scale first. Analyze the result of the small scale market launch test, make adjustments and derive

an adjusted strategy and continue as needed.

The second mistake that Mattel made was that they overwhelmed the consumers with so

many Barbie doll related things at one time. The consumers did not have the chance nor the time

to absorb the whole experience (Harris, 2011). For those early adopters that were able to

absorb the whole experience, came away with a positive impression.

References

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Beaton, J. (2011, March 8). Shanghai Barbie store closes | CNN Travel. Retrieved from

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Carlson, B. (2013, September 26). Why big American businesses fail in China. Retrieved from

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Flamming, D. (2009). 27 - Wars, Revolutions and the Birth of Mass Society. In Cross Roads and

Cultures : A History of the World's People (p. 913). Retrieved from

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Harris, D. (2011, March 28). Barbie In China. Retail Lessons to Be Learned. | China Law Blog.

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Thomas, H. (2014, April 22). Why It Failed: House of Barbie Shanghai - GWU Spring 2013.

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failedhouseofbarbieshanghaigwuspring2013

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