Challenge

For 25 years, Hot Wheels existed as a one product brand selling die cast toy cars to boys from 6-12 years old.

Mattel knew that Hot Wheels stood for racing, speed and performance.

However due to longstanding retail tradition Hot Wheels popular die cast toy vehicles sold for only $.99 for most of the brand’s 25-year history. The high concentration of die cast products in the Hot Wheels line coupled with the low wholesale price point made the brand unprofitable at the time.

It seemed continual increases in manufacturing costs over time had eroded away most of the profit in the business. The challenge was to bring profitability to this well-known boys’ toy brand.

Solution

To restore profitability a strategy was developed to leverage the powerful speed/racing/performance attributes of the brand into new market segments of the wheeled category that could provide improved profitability. A new strategy to expand the Hot Wheels business into new segments of the wheeled category carrying higher price points and higher profit potential.

Impact

Within 12 months, Hot Wheels sales grew from $75 million to over $125 million driven by new race sets ($10 range), battery powered vehicles ($25 range), and remote control race cars ($50+).

The Hot Wheels re-positioning and strategic line expansion helped it maintain its position as one of the largest and most profitable toy brands in the world.