This document analyzes Mattel Toys India's distribution strategy and challenges in the Indian market. It discusses Mattel's previous strategies that led to inventory issues and retailer unhappiness due to margin differences compared to unorganized competitors. Mattel's new strategies brought initial sales growth but also unease among distributors due to reduced margins and the introduction of wholesalers. The document concludes Mattel must properly profile retailers, ensure all channel margins are equitable, only promote competent managers, and rethink its distribution channel strategy.

1. Mattel Toys India Ltd.
Case Analysis
SDM, NMP Term IV
Group 5
Abhijeet Tomar - 03
Argha Ray - 15
Khushal Malik - 28
Vipin Kathuria– 59

2. Context
• Mattel is a the largest manufacturer of toys in the world.
• Launches its product range under a JV with DGP group.
• Remained along the market fringes amidst onslaught from unorganized players.
• Frequently changed its sales and distribution strategy in the last few years to
gain market share.
• New distribution strategy brings in the results but causes unease amongst the
sales organization.

3. The Market Dynamics:
• Unorganized players rules the roost.
• The Chinese invasion of the Indian market after 1995 with high quality
cheap toys.
• Product innovation quickly imitated by unorganized players.
• Lax Intellectual Property Rights protection.
• Higher margin by unorganized players to distribution network.
• Coverage of a fragmented market.
• Funskool’s foray into the branded category.

4. The Initial Blow Plast Years:
• Full line forcing on distributors.
• Mismatch between primary and secondary sales caused inventory pile up at
distributor premises.
• Arm twisting by SO or ASM to push slow moving items.
• No parity in Retailer discount.
• Primitive delivery channel on bicycles.
• Retailer segmentation on Sales value rather than profile.
• Sharing of self space with unbranded cheap toys.
• Retailers’ unhappiness on Mattel’s margins vis a vis unorganized players.
Discounts accorded to customers show price sensitivity.
• Premium toys stocked with unbranded ones is a dent on Mattel’s image.
Retailers may also not be pushing harder on account of low margins.

5. Revamped Blow Plast:
• New manager at the helm.
• Impetus to cost saving rather than sales push.
• Retailer profiling again based on sales volume.
• Dissatisfaction among direct dealers may be due to inadequate servicing
and delays in consignment.
• C&F agent handling two product lines may not be competent on dealing
with retailer queries on product specifics.
• Delhi model may not be replicable across India.
• Distributor restructuring exercise may have caused bitterness.

6. Uneasiness under Mattel:
• Blow Plast sales personnel may not evolve as competent sales managers.
• Too much reliance on ISOs for generating sales may be misplaced.
• Retail outlet increase may have been done in a jiffy without concern on proper
profiling.
• Reduction in Distributor margin seem all stick and no carrot.
• New found rejuvenation in sales and distributor organization may be short
lived. It is just around an year and actual implications become palpable only
after a lag.
• Too much of paperwork.
• 50-50 salary structure for ISOs may make their supervision and allegiance
suspect. Who takes the onus, Mattel or Distributors themselves, for
monitoring ISOs?

7. More Reasons for Unease:
• Distributor backlash due to new Wholesaler.
• Distributors may think that their margin may not be at par with that being
paid to wholesaler.
• Distributors may also feel that they are being shortchanged in order to
accord more margins to even retailers.
• TSE’s may be finding it difficult to cope with new role.
• Is the new Wholesale channel in direct competition with the old
Distributor channel?
• Distributors may reject added workload of sales reporting in view of lower
margins.

8. Decision:
• Market Coverage should not be the only criterion to increase sales.
• Mattel products are premium products that will be purchased by a particular
segment of the society. It makes sense to increase market coverage among
those outlets where footfalls are the preserve of only the affluent sections of
the society.
• Proper profiling of retailers must be undertaken before allowing them to stock
Mattel products. Clubbing a premium product with unbranded ones will send
out the wrong signal from the Mattel brand.
• Distributors might be antagonized with reduction in margins but it must be
consciously pointed out to them that increased sales may have maintained
their profitability.
• Wholesaler and retailer margin must be at par with distributors depending
upon channel role and competition.
• Only competent TSE must be given managerial role. Salary structure for ISOs
should be handled by distributors. Rethink the channel.