March 11, 1998
Hasbro to Name Marketing Expert
To Key Post to Boost Overseas Sales
By JOSEPH PEREIRA
Staff Reporter of THE WALL STREET JOURNAL
Hasbro Inc., moving to rev up its international business, is expected
Wednesday to name Ertl Co.'s chief executive, George Volanakis, to the new
post of president of European marketing and sales.
Mr. Volanakis, 50 years old, is known for his marketing success. Under his
watch, closely held Ertl, a doll and model-kit maker, tripled annual sales to
$200 million in about eight years. Before that, as vice president of marketing,
he boosted Mattel Inc.'s Hot Wheels business by more than 50% in a couple of
years in the late 1980s -- and landed a preschool-product licensing contract for
Mattel with Walt Disney Co. that blossomed into one of the industry's most
successful movie-and-toy marriages.
The appointment comes as Hasbro, a Pawtucket,
R.I., toy maker, prepares an aggressive overseas
promotion of a number of its popular brands --
including Nerf, Tonka Toys and Monopoly --
while the European toy market is in difficult
straits. Germany's toy sales, hurt by an ailing economy, have declined in three
consecutive years. Sales are soft in France, Italy and several Eastern Europe
countries.
Hasbro's international strategy contrasts with that of its chief rival, Mattel. The
El Segundo, Calif., toy maker announced plans last month to intensify overseas
efforts, with a goal of doubling its sales abroad during the next five years.
Mattel disclosed then that it would revamp its international management and
produce more toys for individual foreign markets rather than simply adapt U.S.
products for local consumption. Mattel said retooling U.S. products had
resulted in overpriced merchandise in some places.
Hasbro's strategy is predicated on the theory that consumers, including
children in Europe and Asia, are increasing emulating U.S. culture and lifestyle.
Indeed, company officials note that starting later this year several
children-oriented movies and their product tie-ins will be released
simultaneously around the globe. In the past, introductions were staggered,
with the U.S. getting first dibs.
Part of Mr. Volanakis's immediate responsibilities will include promoting
Hasbro's Action Man figures, the company's most successful overseas line,
with more than $100 million in annual sales. The company plans to roll out a
number of Action Man entertainment centers at various European theme parks.
Also in the works is a plan to market hand-held games made by Tiger
Electronics Inc., which Hasbro agreed to acquire last month. Last year, only
10% of Tiger's $410 million in sales came from abroad.
Hasbro's new push abroad follows a restructuring that resulted in the
consolidation of several of its foreign operations. With overseas costs under
greater control, "I want to turn the dial up on Europe," said Adam Klein,
Hasbro's president of global marketing and strategy.
Mr. Volanakis will report to Mr. Klein. His appointment will bring to six the
number of executives named to Hasbro's Office of the Chairman. In addition
to Europe and the United Kingdom, Mr. Volanakis will also oversee operations
in the Middle East and Africa. The new position is viewed by some as a
grooming for possibly an even higher post in the U.S. in about three years. A
number of Hasbro's major executives probably will be considering retirement
at about that time.
February 11, 1998
Mattel Tailors Toys for Overseas,
Plans to Increase Sales Abroad
By LISA BANNON
Staff Reporter of THE WALL STREET JOURNAL
Mattel Inc. plans to double its international sales over the next five years as
part of a new strategy aimed at world-wide growth, according to Chairman
and Chief Executive Jill Barad.
In an interview at the American International Toy Fair
in New York, Ms. Barad disclosed that the strategy
includes producing toys for individual foreign markets
rather than simply adapting U.S. products, revamping
the company's management structure to focus more
aggressively on overseas sales and linking bonus
incentives for employees to international growth
targets.
The changes follow a six-month study of Mattel by
Boston Consulting Group to determine key markets
and product areas for growth. The study identified a
potential $6 billion in additional sales growth over the
next five years for Mattel by increasing the size of the
toy market and Mattel's market share. Two-thirds of
that growth should come from Japan and Europe, and
less than a quarter from U.S. and Latin America, Ms. Barad said.
If Mattel manages to double its international sales as it hopes, the U.S. market
would account for less than 50% of sales, compared with 65% today. "The
greatest opportunity exists outside the U.S.," Ms. Barad said. "Only 3% of the
world's kids are in the U.S."
In fiscal 1997, Mattel earned $285 million on sales of $4.8 billion. International
sales accounted for about $1.7 billion of the total.
Sales Forecast
For 1998, Ms. Barad projected overall sales growth of 10% and annual
earnings growth of at least 15%. She declined to break out sales projections
for international sales this year. Ms. Barad said she expects world-wide sales
of Barbie to increase about 10% in 1998, despite a first quarter of flat or
single-digit growth, and dismissed concerns that the famous franchise may be
slowing down. Barbie products include dolls, accessories, software and
collectors' items.
The renewed focus on international growth comes as Mattel seeks to convince
Wall Street that it is evolving away from a toy company associated with fads
and volatility and into a more predictable consumer-products company. Wall
Street analysts, who were also briefed on the plans this week, generally
applaud the new strategy. "Mattel needs to be aggressive in international
markets," says Gary Jacobson, an analyst with Jeffries & Co.
The international push marks the latest move by Ms. Barad to strengthen the
company, the world's largest toy maker, since taking over as chief executive
just over one year ago. Last year, Mattel took a substantial charge and said it
was laying off 2,700 employees, or about 10% of its work force, following its
merger with Tyco Toys. Mattel stock has risen sharply, outperforming the
market, since she took charge.
Four Regions
The process of overhauling the management structure will start later this
month. Mattel currently has a U.S. and an international marketing manager.
That will now change, so that each product category will have its own
managers for marketing and product development in Europe, the U.S., Latin
America and Asia. Managers in these four regions will each oversee
counterparts in every country in their region.
Ms. Barad said the practice of simply adapting U.S. products for overseas
markets has resulted in overpriced merchandise in some places. That's because
products were developed without any regard for how their prices would
translate into foreign currency. The company has been unable to sell Holiday
Barbie -- which has been highly successful in the U.S. -- in many international
markets, for example, because prices were too high.
Barbie alone has potential additional sales of $2 billion, the Boston group's
study found. In the U.S., the company sells four dolls per child each year. In
Europe, it sells only two, and in Japan only one. To capture that market, Mattel
will introduce lower-priced dolls in foreign markets, a line called "Global
Friends" that features a different doll for each major global city, and brand
extensions such as interactive products and collector Barbies.
In the vehicle market, which includes Matchbox, Hot Wheels and
radio-controlled toy cars, the study has identified $1 billion in potential new
revenue, especially from Europe and Japan.