The Chief Marketing Officer of Mattel, one of the largest toy manufacturing companies in the world, has a dilemma. She saw a new doll called “My Friend Cayla” at the International Toy Convention earlier this year. It is currently imported from England, but will be launching in the U.S. soon. She came to realize it will be a mighty threat to Mattel’s American Girl series.

The American Girl series has been very popular with girls ages 2 -12 for more than 15 years. Part of its appeal is that you can customize each doll’s eye color, hair color, freckles, or glasses. Mattel has built an empire around the brand with American Doll stores in many cities; established a line of matching clothing for the dolls and their owners; and offers beauty services for the dolls in their stores or by mail-in. The appeal of American Girl dolls is they evoke experiences that are similar to the challenges and preferences of girls in the target age group. Many parents praise the wholesomeness of the dolls.

The U.S. market for dolls in 2013 was $2.70 Billion and showed no increase over the previous year. That year’s sales for the American Girl line were $1.13 Billion; however, this year’s sales are down 7% and second quarter results show a continuing slide. With Christmas season coming in just a few months, the Chief Marketing Officer needs a plan of action to offset the possible loss of sales to the new “My Friend Cayla” doll series.

“My Friend Cayla” is unlike any other doll on the market. It uses speech-to-text software that syncs with a smartphone or tablet to do an amazing range of activities with the child. It can understand and chat with the child, tell stories, play games, and understand and answer the child’s questions. Google’s SafeSearch technology prevents transmission of bad words or unsuitable content. The doll’s target market is children ages 4 and up. It also has potential to attract boys in the 4 and up age group if the manufacturer decides to produce a brother for Cayla. The Cayla line could also introduce the doll in various ethnicities, which was a successful tactic for Mattel. One pitfall the manufacturer of “My Friend Cayla” needs to avoid is an early sellout of the dolls. When parents can’t find the doll their child wants, they are forced to find substitutes. This disappoints the child and frustrates the parent.

From the customer’s point of view, both dolls fulfill the desire girls have to stretch their imaginations; however, the My Friend Cayla doll also interacts with and educates the child, thus extending and reinforcing the learning component to another dimension.

Mattel is the largest toy manufacturer in the world, with more than $6.3 billion in sales per year. So why would they worry about a new competitor? The My Friend Cayla doll is one of the first toys that combines digital functionality with an attractive doll. Toy manufacturers have seen this development coming, and have their own plans to launch similar products.

The American Girl line of dolls relies on customization for its strong sales. My Friend Cayla dolls do not offer customization, but are mass-produced in a select number of versions in order to keep manufacturing efficient.

From the list below, select the advantage(s) of Mattel’s approach:

a. Production orientation allows them to better serve the needs of their customers.

b. All raw materials can be bought in mass quantities, as the specifications for the dolls don’t change.

c. They are less likely to have production overruns, because the company knows how many dolls to produce based on their customer orientation.

d. Customer orientation allows them to concentrate on efficiency and cutting costs.

e. Customer orientation allows them to better meet their customer’s needs.

2.Companies work hard to offer a complete marketing mix to satisfy the needs of their customers. Select the statement(s) that relate to the value Mattel provides to their customers with their American Girl line.

a. The dolls are offered online and in stores nationwide.

b. Mattel sends catalogs of doll clothing and accessories in advance of holidays such as Easter, the 4th of July, Halloween and Christmas so children and the dolls have matching outfits for special occasions.

c. The cost of the American Girl dolls is competitive with other dolls of similar size and similar qualities.

d. Mattel opened a chain of American Girl stores so customers can attend a tea part, have their birthday party, take a cooking class, or share a special date with dad.

e. Parents can customize the doll’s features like hair color and eye color to match the appearance of their child.

3.Marketing gurus believe the first-to-market will often win the largest market share; if they get the marketing mix right. It is almost certain Mattel has a doll similar to My Friend Cayla in development and they have a limited time to finalize their marketing plans before the My Friend Cayla doll launches in the U.S. From the statements below, select the tactics that address elements of the marketing mix.

a. Sell their doll for 5% less than the Cayla doll.

b. Offer customization options (hair color and eye color).

c. Sell the digital doll in the American Girl stores, offer it online with Amazon, and stock it in toy stores like Toys R Us.

d. Launch the new doll at least one week before the Cayla doll is available in the U.S.

4.Event marketing has been very successful for doll launches in the past. The CMO for Mattel knows that in order to have a successful launch of the new doll line, Mattel must accurately define the target market, and then create an event that matches the needs and interests of the target market. Below are a few facts about this new doll that her marketing team must keep in mind when defining the target market:

1. The doll is expensive.
2. The home must have high speed internet access.
3. The adults in the home must be tech savvy enough to work with Mattel’s tech support if the doll isn’t working properly.
4. The doll can only be purchased in American Doll Stores or at select Toys R Us for the first 3 months (per an exclusive agreement with Toys R US).

The marketing team uses the above facts to define the target market for this initial launch as urban mothers in a major city with an annual household income of more than $250,000. Given this target market, which of the following promotions tactics should Mattel use for the introduction of the new doll? Check all that apply.

a. Tea Party events with celebrity moms and their daughters at American Doll Stores in Chicago, New York, Seattle, and Los Angeles.

b. Mail a 10% coupon to households with less than $100,000 in annual income to make the dolls more affordable.

c. Partner with several hundred Best Buy electronics stores across the country to launch the new product.

d. Full-page ad in local small city newspapers.

5.The launch of the new doll went very well with the initial target market of high-income urban mothers in major cities. Now Mattel is ready to launch a massive ad campaign to introduce the doll across the country. The expanded target market focuses on mothers of daughters aged 4-12, in households with an annual income of $75,000 or more. To support the strategy of expanding the target audience, the dolls are now sold online at Mattel.com and Amazon.com. Mattel also believes this target audience is likely to buy accessories and additional dolls over time, so continued engagement with customers is important. Given this new target market, which of the following promotion tactics would you recommend Mattel select? Choose the four best tactics.

a. Invitation to doll owners to attend tea parties at local Toys R Us stores.

b. Internet pop-up ads that offers a 10% discount on the doll.

c. Email newsletter that gives tips and advice on new ways for your child to interact with the doll.

d. Advertise on Sprout and Nick Jr. television channels.

e. Advertise in the New York Times and Los Angeles Times newspapers.