Corporations: All’s Swell at Mattel

In 1945 a Los Angeles industrial designer who had gone into the picture-frame business found himself with a lot of extra frame slats and decided to make doll furniture with them. Thanks to the doll furniture, Elliot Handler and his wife Ruth cleared $30,000 on sales of $100,000 that year. The Handlers have never quite matched that profit margin, but in the 17 years since then their Mattel, Inc. has joined the front rank of U.S. toymakers. Last year Mattel earned $4,000,000 on sales of $49,400,000. And in the first half of this year, the Handlers happily told the New York Society of Security Analysts last week. Mattel’s sales jumped a whopping 73%.

Mattel gives much of the credit to saturation selling on TV. In 1955, Mattel, still a fledgling firm with annual sales of only $6,000,000, decided to move into toy burp guns. Anxious to give the new product a big advertising sendoff, the Handlers nervously agreed to sponsor Walt Disney’s Mickey Mouse Club show for a year, at a cost of $500,000. Recalls Ralph Carson of Los Angeles’ Carson-Roberts ad agency, which handles the Mattel account: “We were on the air six times and nothing happened. Then the Mattel people came back from a long weekend and they couldn’t open the door. The place was filled with orders and reorders. That was when we realized the pipeline in this business is six weeks long.”

Mattel’s Mickey Mouse Club advertising, which plugged the Mattel name as hard as the burp gun, has revolutionized the $2-billion-a-year U.S. toy industry. Previously, toy companies spent most of their ad budget in the Christmas season and concentrated on selling individual items. Today, top companies advertise year-round on TV, and accent the brand name. Mattel, with a 1962 advertising budget of $5,700,000, still plugs harder than anybody else.

The Built-in Whinny. To back up their advertising (”You Can Tell It’s Mattel—It’s Swell”), the Handlers aim for well-made, moderately priced toys. One Mattel innovation was a mass-produced music-box mechanism that has now gone into 60 million toys ranging from guitars to lullaby cribs. Another gold mine: a miniature voice recording that stands rough handling, allows Mattel’s Chatty Cathy doll to speak eleven phrases and a $48 rocking horse to whinny.

Mattel’s biggest success has been the Barbie doll, a more or less scale model of a busty teen-ager which appeals to little girls because it looks “grown up” and to their parents because it is inexpensive. Made in Japan to save on labor costs, the Barbie doll (which now has a boy friend named Ken) is priced at $3 retail and has become, according to Ruth Handler, “the greatest phenomenon that ever hit the toy business.” Mattel also offers separately a Barbie wardrobe ranging from lingerie up to a $5 wedding gown.

Barbie and her wardrobe reflect a favorite Mattel device that Elliot Handler calls “the razor and razor blade” technique. Explains Handler: “You get hooked on one and you have to buy the other. Buy the doll and then you buy the clothes. I know a lot of parents hate us for this, but it’s going to be around a long time.” Parents, in fact, get scant sympathy from the Handlers, whose advertising is admittedly designed to evoke the razor-razor blade urge in children. Says Elliot Handler unapologetically: “We feel it’s up to the parents to handle the child.”

On the Frontier. As chairman and president of Mattel, Elliot Handler, 46, likes to think up new toys. Chic, aggressive Executive Vice President Ruth Handler, 45, oversees manufacture and administration. (By family agreement, they never talk business at home.) Husband and wife aspire to make Mattel the world’s biggest toymaker; this year, if their sales hit $80 million as expected, they will achieve their goal and surpass longtime industry leader Louis Marx (TIME cover, Dec. 12, 1955).

In their drive for the top, the Handlers this year alone have doubled their plant space and payroll (to 4,400). At Mattel’s Los Angeles factory, a staff of 200 toy developers, including chemists, sculptors and engineers, tinker behind locked doors on an annual research budget of $1,500,000. Currently, the company has 17 new toy “principles” ready to employ in a variety of toys. Exults Jack Ryan, a onetime missile engineer who heads Mattel’s R. & D. department: “We’re right out on the frontier of technology.”