In 2017, the team at Hot Wheels led by Chris Down, Global Brand General Manager was planning on how to pursue the brand's franchise to ensure sustainability in the future. The team was considering coming up with a new "mixed-play" product, involving both a physical toy and digital play. However, a major consideration for this innovation is the required time and resources, considering that Mattel Inc. (Hot Wheels' parent company) had seen some loss of income in recent years. Another option would be to develop a special collection of die-cast cars or physical toys. With Hot Wheels' anniversary coming, the team had to decide on which path to pursue.
Elie Ofek, Andres Terech, Nicole Tempest Keller
Harvard Business Review (521015-PDF-ENG)
September 20, 2020
Case questions answered:
- What has made Hot Wheels at Mattel such a successful brand over the course of nearly 50 years?
- What effect, if any, do changing childhood play patterns and the shift to digital experiences have on the future of Hot Wheels?
- What innovations can Hot Wheels explore in the digital space? What could be a compelling value proposition of a Hot Wheels pure-digital experience?
- If you were the Global Brand General Manager for Hot Wheels, which growth plan would you recommend to Mattel’s new CEO? Why?
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Hot Wheels at Mattel: Reinventing the Wheel Case Answers
1. What has made Hot Wheels at Mattel such a successful brand over the course of nearly 50 years?
The success of the Hot Wheels at Mattel brand for 50 years is due to the following factors:
Diversifying its products in the digital segment: Because of age compression, there was a demand for digital toys at an early stage of life. Seeing this gap, Hot Wheels entered the market with digital toys by licensing the IPs to game developers.
Mixed Play: While digital products were increasing in demand, physical toys also had substantial demand and had a significant share in the toy industry. This led to the development of the mixed play category, combining physical and digital products. These products were in line with the demand in the market. One example of mixed play toys is the “smart car.”
Acquisition of other top companies: The acquisition of companies like Fisher-Price and in-house top brands like Barbie led to strong brand value and recall for Hot Wheels.
Product Development and Innovation: From its initial footprints, Hot Wheels has been keen on innovating its product based on the market demand or supply gap. For example, the introduction of metal axles for the free spinning of wheels in toy cars was a significant breakthrough by Hot Wheels in the toy car industry. In addition, the Hot Wheel cars were easy to hold and manipulate, making them the right product for the young segment.
Brand Value: Hot Wheels has a strong brand value. With the introduction of new models, the die-cast car model had very few significant changes. Hot Wheels, as a brand under Mattel Inc., had a favorable image, and the products were likable by the consumers.
Emotional Benefits: Hot Wheels changed its positioning to a “growth mindset” by introducing “Competition,” “Creativity,” and “experimentation.”
Low Price: The price of Hot Wheels cars had been about $1.00 for almost 50 years, making it a value-for-price product for the customers.
Technology: Hot Wheels has always invested in technology to have a competitive edge, for example, the introduction of AI in toy cars. It could follow the track designed by the customer.
2. What effect, if any, do changing childhood play patterns and the shift to digital experiences have on the future of Hot Wheels?
Since the introduction of Hot Wheels by Mattel Inc., children’s play patterns have changed, but never as dramatically as in the last decade. Children were increasingly transitioning from physical toys to digital play at a younger and younger age, a phenomenon known as “age compression.”
One reason for this shift was the…
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