Pleasant Co. to maintain brand identity post-acquisition

Barbie will not exert any peer pressure on the American Girls, or, for that matter, any other products that the Pleasant Company produces. That's the word that's been coming out of the Middleton, Wisconsin-based direct marketing company since it was acquired...
August 1, 1998

Barbie will not exert any peer pressure on the American Girls, or, for that matter, any other products that the Pleasant Company produces. That’s the word that’s been coming out of the Middleton, Wisconsin-based direct marketing company since it was acquired by Mattel for US$700 million in mid-June.

With annual sales of nearly US$5 billion last year, Mattel’s balance sheet dwarfs that of the Pleasant Company, which pulled in revenues of US$300 million for the same time period. Nevertheless, Pleasant Company is confident that the distinctness of its brand as a developer of wholesome, editorial-based entertainment products and accessories for girls, will remain intact once the deal receives government approval in the third quarter of this year.

‘I think we have to trust that while Mattel is a giant company, they understand the quality and the specialness of each of their brands,’ says Julia Prohaska, director of corporate communications. ‘Certainly they’ve made quite an investment in our company, and we have to believe that what they decide will be best for it too.’

Most toy business watchers are echoing Prohaska’s prediction.

‘I see the Pleasant Company as being a lot different than the Mattel system. I don’t see it being blended. I’m hoping that Mattel keeps it separate, and lets the people who are at Pleasant now continue to run the business,’ says one source, who requested anonymity.

When it comes to acquisitions, Mattel has established a mixed record, sometimes choosing to assimilate companies that have been performing poorly (for example, Tyco), and other times leaving the successful ones alone to exist as individual brands (as was the case with Fisher-Price), says toy analyst Sean McGowan, senior VP at Gerard Klauer Mattison.

While nothing has been solidified yet, Glen Bozar, senior VP of corporate communications at Mattel, says his company has no plans to start branding Pleasant Company product with the Mattel logo. Mattel is interested, though, in using Pleasant Company’s successful direct marketing operation to distribute collectible lines of some of its brands, such as Barbie and Fisher-Price Preschool. Additionally, Mattel will examine the possibility of exporting the concept behind the American Girls Collection-which uses the combination of dolls and books to show how girls have lived during different periods throughout the history of the U.S.-to other countries.

The direct marketing component of Pleasant Company’s business proved to be one of the strongest selling points for Mattel, says McGowan. Like all toy vendors, Mattel has seen a decline in the number of new distribution channels available through which to showcase its product.

‘When you can walk down the aisle of a supermarket and find a special Barbie next to a can of peas, you’ve probably done that channel expansion thing at retail as far as you can go,’ says McGowan.

As an alternative method for distribution, direct marketing will play an important part for Mattel in reaching the adult collector, adds McGowan.

‘If you’re trying to sell a collectibles Hot Wheels set to a 35-year-old male, you’re not going to reach him no matter what your toy channel is. So, you’ve got to get him interested in your product another way.’

Pleasant Company founder Pleasant Rowland, will assume the position of vice chairman at Mattel. While continuing to oversee operations at her company, her new role will involve developing stories-a la the American Girl Collection-around some of Mattel’s existing brands.

For Pleasant Company, having Mattel as a parent will allow it to move some of its products into new categories and areas of the entertainment business where it has little experience, such as in the development of CD-ROMs and in adapting some of its toys into TV and theatrical properties. It also gives it the financial muscle needed to move its products into Europe, Asia and other new markets outside the U.S., where Mattel already has access to distribution routes.

Any U.S. retailers anticipating an announcement that Mattel is going to make the American Girl dolls available at stores should think again, says Bozar.

‘The success of Pleasant Company and the American Girl line is based on their being more successful at direct marketing than any other company,’ says Bozar.

It is an aspect of the business, Prohaska assures, that will figure prominently in the promotion and distribution of all of its future products.

‘Direct marketing . . . has allowed us to show our entire product line, something that would be difficult for us to do in a retail environment,’ says Prohaska. ‘It has allowed us to control the price of our product, to essentially cut out the middleman.’

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