This paper is to provide a detailed analysis on Barbie’s failure in China using PESTLE model. PESTLE is to analyze business activities by evaluating political, economic, social, technological, legal and environmental factors. The case of Barbie mainly involves two factors being social and economic. A. Case Review
1. Socio-background in China
1). Social Background
In the marketing strategy of Barbie, telling the story is idiomatic methods (Brand Strategy 2004). In U.S., Barbie is not only a doll, but rather an icon for lifestyle. It is a leading fashion for young ladies. And each Barbie has her own design, clothes, accessories and fashion style. All of which is a part of the product. However, little have Chinese women treated Barbie doll as a kind of lifestyle. Instead, it is more likely to be taken as just a toy for young children. China has got its own doll product back in the history. Beijing silk doll is a well-known toy for girls back in the ancient time. Asian tend to have their own choices when it comes to picking up toys. Actually, silk doll is a sort of toy commonly found in far-east countries like China, Korea and Japan. And they are sharing the similar techniques for manufacturing. And the history of Chinese silk doll can be dated back to 2000 years ago. In Chinese, “Barbie” is a word borrowed from western civilization representing the similar meaning of “doll”. It is rather being treated as a noun for the item, instead of a brand name. In such case, when hearing the brand name “Barbie”, most people will think of the doll instead of the brand. In fact, many people failed to realize that Barbie is actually a brand name for a kind of doll. Without deeply investigating into the social background in the local market, the company has entered into China overconfidently. 2. Business Strategy
1). Store Location
The store sites in HuaiHai Road which is one of the most expensive streets in Shanghai, China. It opened in the year of 2009 when the economic recession was undergoing across the world. In addition, the consumer items, such as: restaurant, spa, cocktail bar and adult clothing section are too illusion, the store is more like museum, rather than a shopping place. The toymaker has spent $30 million to build up the mall for setting the “Barbie town” in this downtown area (Yang, 2009). In order to attract the Chinese consumer, they even launched the localized doll named Lin, so as to create the doll environment in this mega mall. 2). Pricing
The price of Barbie is very expensive and the location is unapproachable for consumers. In reality, the doll pricing is the same as in the US; however, the purchasing power between China and American is disparity. And the luxuries location and decoration make the majority of Chinese families step back of the stores (Xu & Qi, 2013). The pricing of the Babie dolls failed to conduct the pricing strategies that is in line with the marketing positioning of the Babie product in the Chinese market. Before too much it can do for the two years, the House of Babie has to shut down due to the significant loss of money. 3). Learning Experience
Moreover, Mattel was expected to use the experience gained in China in other countries. According to Mattel International President Bryan Stockton, if this mode became successful in China, the company might introduce it into other markets. Thus, this entry mode can also satisfy their global strategic position and gain advantage by exploitation of the strategic options in China. Despite exporting and joint venture arrangements were better from a risk reduction perspective; they may not allow the strategic control, change, and flexibility which are needed to secure long-term global competitiveness.
4). Entry mode: wholly owned subsidiary
In the past, Barbie toys were sold by agents in China before it set up is a wholly-owned subsidiary- Barbie (Shanghai) Commercial Co. and opened its first House of Barbie flag store in Shanghai...
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