Doll market has always been highly monopolized by Mattel’s Barbie Doll. It has been an icon for almost half of the last century, changing together with history and adopting to different customer requirements. Barbie was a symbol of femininity and independence, a role model for girls all over the world. Today Barbie is not only a doll, but also numerous collections of accessories, video games, cosmetics and even movies. Until very recently Barbie was dominating the fashion doll market. The few minor competitors could barely compete with Barbie, due to significant barriers to entry, or the obstacles, which prevent firms from entering the market (Besanko, Dranove, Shanley, and Schaefer ). Firstly, the high brand recognition of Barbie made all the efforts of the competing companies futile. The wide range of products, associated with Barbie, made it hard for competitors to match Mattel’s product offering or promote their dolls as efficiently.
However, Barbie’s market position was shattered in 2001 with the introduction of Bratz Dolls by MGA Entertainment Inc. While Barbie customers began to age, Bratz dolls appealed to the teenage consumers by their provocative look and trendy series of accessories. The loss of sales due to competition from Bratz made Barbie producers to file a lawsuit against MGA for stealing design secrets and violating copyright law. Although the long series of appeals is not yet over, the impact of the trial is likely to affect both Barbie and Bratz sales. Firstly, the aggressive actions of both companies in the court are likely to have a negative effect on their brand image and decrease demand for both dolls. In the highly volatile toy market, the ability to understand demand trends and to predict customer preferences is key to success. Therefore, court battles between the two market leaders may create an opportunity for smaller players to penetrate the market with new ideas and fashion. The situation is especially grave for Bratz Dolls, which fall behind the current trends, while their ownership is being decided in the courtroom. Even in case MGA wins against Mattel, the damage to Bratz will be hard to repair. Lagging behind current market trends will lead to lower demand, and as a result lower profits for the company. Unless MGA comes up with a new concept for doll development, Bratz Dolls may disappear from the market, leaving Barbie a sole monopolist. In this case consumers will be the first to suffer, due to a decreased variety of dolls and the fact that Barbie will be able to dictate price levels, as the most powerful market player.
Although the results of the Mattel – MGA trial are not yet known, it is possible to suggest that this trial has already become a victory for Barbie. The reputation of the Bratz Dolls has been shattered, creating tension both in the relationships with customers and retailers. Therefore, it is unlikely that Bratz will be able to regain their market share and seriously compete with Barbie again.
Besanko, David, David Dranove, Mark Shanley, and Scott Schaefer. Economics of Strategy.
5th ed. Hoboken, NJ: John Wiley & Sons, 2010.