President & Chief Commercial Officer, MATTEL INC
Mattel's Chief Commercial Officer, Steve Totzke on Crafting Timeless Toys | Podcast
In this episode of The Speed of Culture, Matt Britton interviews Steve Totzke, Chief Commercial Officer at Mattel. Steve discusses ...
About Steve Totzke
In a September 2024 podcast appearance, Steve Totzke, President and Chief Commercial Officer at Mattel, discussed the company's enduring market position and evolving retail strategy. Totzke noted that Mattel has remained the number one toy company in the U.S. for 30 years, with Barbie, Hot Wheels, and Fisher Price still leading their respective categories. He stated that 25 to 30% of toy purchases are now made online, requiring the company to keep its digital assets "relevant, sharp, and engaging." Totzke described an "all-channel growth strategy" in which products are designed in partnership with retailers, noting that the toy shopper "shops more often, spends more, and travels throughout the store more frequently." Totzke highlighted the adult consumer as the fastest-growing toy segment, citing Mattel Creations, launched three years ago, as one of the company's fastest-growing business segments, driven by nostalgia and collectors. He said Mattel's strategy includes growing its IP-driven toy business and expanding its entertainment offerings through partnerships with licensors like Disney, Universal, and Warner Brothers, as well as leveraging its internal IP vault. Regarding direct-to-consumer sales, Totzke noted that Mattel operates large DTC channels through American Girl and Mattel Creations but prefers partnering with retailers for main line products. He also discussed the use of AI in design, marketing content, and translations, while emphasizing caution around safety, compliance, and data privacy for products aimed at younger consumers.
Transcript (46 segments)
H
Host0:05
Today we're excited to be joined by Steve Totzke, the President and Chief Commercial Officer at Mattel, where he's been for 22 years and counting. Steve, it's so great to see you today. I'm so excited to dive into all things Mattel.
S
Steve Totzke0:17
Matt, it's great to be with you. I'm really looking forward to this conversation.
H
Host0:20
Likewise. So, you know, you started at Mattel in really a completely different era, in 1995. The internet was not a mainstream consumption habit amongst your consumer target, and we're living in a completely different world where today we're doing a podcast from two different locations with our computers. As you think about the changes that you've had a front row for at Mattel, what would you think were the most impactful ones as it relates to your role and Mattel's business?
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Steve Totzke0:48
Sure. Well, look, let me start with what's remained the same over those last almost 30 years. When I first started, Mattel was the number one toy company in the US, and 30 years later, it's still the number one toy company in the US. Barbie was the number one fashion doll, Barbie still the number one fashion doll. Hot Wheels was the number one vehicle brand, it still is. And Fisher-Price was the number one infant and preschool brand, and it still is. But as you mentioned, Matt, almost everything else has changed. When I first started, it was all about brick and mortar. You would have your product, you get it on an endcap, you put it in an ad, Saturday morning cartoons, that was your ad buy, and you were off to the races. Today, it is wildly different. Media fragmentation is real. The complexity of demand creation is like never before. There are so many tools to marketers. So everything pretty much has changed, other than that, in our category, omnichannel retailing is for real. 25 to 30% is now purchased online, so that is much different than it was. You have to make sure your digital assets are relevant and sharp and engaging. So yeah, everything pretty much has changed in the last 30 years in terms of how we go to market.
H
Host2:10
That's fascinating because when you talk about those iconic brands and the staying power they've had, I hadn't realized that what goes behind a type of IP that can withstand so much cultural change. And I know that you've had to, especially with Barbie, really massage the brand in ways to make sure it stayed relevant with the changes in culture. But what is it about those brands that has given it such staying power?
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Steve Totzke2:35
Well, let me start with Barbie. This year we're celebrating Barbie's 65th anniversary. And if you think about Barbie, she has not only reflected culture, many times Barbie has led culture. Last year was the summer of Barbie. Barbiecore was trending everywhere. You could not go anywhere on the planet Earth last year without being aware of the Barbie brand. And as Lisa McKnight, our Chief Brand Officer, often says, it takes a village to keep this brand as relevant as she is. Barbie's been on the cover of Time Magazine twice. Barbie was a person of the year last year. So keeping this brand relevant is a journey for all of us. But it's not just Barbie, it goes beyond that. If you think about Hot Wheels, Hot Wheels is not far behind, almost 60 years. And everything from live events with the Hot Wheels Legends Tour, to Hot Wheels Monster Trucks, to content on Netflix, it is now everywhere. Every touch point you want to be, that's what's really necessary to keep brands relevant today.
H
Host3:42
Absolutely. And as we mentioned at the onset, one thing that has changed is just the impact of technology on the consumer. And ultimately, with toys, the end consumer is younger children, but as we know, the people who are the buyer of those toys are the parents. When it comes to the end consumer, the kids who play with Barbie dolls or play with Hot Wheels, how has technology impacted the way that they play and the way that they interact with toys and how they spend their free leisure time?
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Steve Totzke4:12
Sure. Well, traditional toys has been growing for the last 50 years. COVID was definitely an accelerator for traditional toys. We had a bit of a dip last year, but we were about 25% above where we were pre-pandemic. And I can tell you, Matt, largely the way children play with toys from 0 to 5 hasn't really changed all that much. Certainly in the youngest children, learning and development. But when you get into the five, six, seven-year-old, that really hasn't changed too much the last 25 years. There was a phenomenon we used to call it KGY, kids getting older younger, and that kind of has already occurred, where we no longer have that 11, 12, 13-year-old playing with toys. But the funny thing is, the fastest growing segment of toys right now is the adult consumer. And the last two years, the adult consumer with toys is the fastest growing segment. For us, you can see that in our collector segments, whether it's Barbie collector or Hot Wheels collector. But we launched Mattel Creations about three years ago, and that's one of our fastest growing segments of the business to capture that adult consumer.
H
Host5:29
And is that largely just being driven by nostalgia? People wanting to do what you're doing and kind of showcase something that they feel represents their childhood or their culture? What's driving that growth?
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Steve Totzke5:43
Definitely a lot of nostalgia involved. It's a yes and. I can tell you that as a marketing organization, we like to say we're making emotional connections that last a lifetime. Just think of your own life. I travel a lot and wear a Hot Wheels shirt. I'll be at an airport, I'll have grown men, 50-year-old men, they'll engage me in conversation. They find out I work for Mattel and they'll start telling me a story, and I can see them instantly transport it back to their childhood. Sometimes they get emotional. So there's definitely an emotional connection. Even as young as three, you're of a certain age, you think about that Fisher-Price record player. There's a lot of people's first record player was a Fisher-Price record player. You remember these things for a lifetime. So nostalgia definitely is driving some of that. But for Hot Wheels, Redline Club, it's a lot of just adult vehicle lovers at every age, and they love our brands and how authentic we are. So it's nostalgia, it's some hardcore collectors, and we like to serve all these audiences.
H
Host6:49
Yeah, it keeps people young as well, I'm sure. Just anything that hearkens back to when you were younger, as we get older, there's just so many things to stress out about and worry about, and there's something peaceful and innocent about going back to maybe the brands and the things that you loved and enjoyed doing when you were younger.
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Steve Totzke7:07
Yeah, look, the power of play benefits all of us. It certainly benefits us when we're at a developmental age, but it develops us all through our teenage and adult years. The power of play and the importance of play never stops.
H
Host7:22
It's interesting going back to the young consumer and their interaction with technology. I have a three-and-a-half-year-old daughter. You've probably heard of this product before, it's called the Toniebox. It's a small startup where you can put different characters on top of it. She intuitively knows that she can put the character on top of the box. She even knows how to turn it off or turn the volume up, etc. I guess that's where my mind was going in terms of kids are born learning at a very young age how to swipe the screen on an iPad, etc. So it is a different consumer today just in terms of what they observe their parents doing and the technology that's around for them to touch and feel at earlier stages of life.
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Steve Totzke8:01
Yeah, Toniebox started out of Germany, they've become wildly successful. I know the company quite well, and yeah, they have captured audio play. And you're right, it's very intuitive. And as a parent, there's something magical about your child engaging in audio play. For us, we had the old See 'n Say and some of these products that we've always had that they do just tap into something a little bit more innocent when it comes to the play patterns. I think you have a great example there with Toniebox.
H
Host8:32
Yeah. So as Mattel looks to innovate moving forward, because obviously you have these incredibly iconic brands we talked about, whether it be Fisher-Price or Hot Wheels or Barbie, etc., but like any company, you need to continue to innovate, come up with new brands, new products, new stories. What does that innovation process look like? Are you doing direct research with the younger consumer that's actually interacting with the toys? Are you conversing with the parents? And what does the innovation timeline look like as well?
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Steve Totzke8:58
Well, it's all of that. We have a very large insights group, not just a shopper and consumer insights, but a product insights group. We have them on site. They're staffed with doctors and scientists, and we observe how children are playing with our new innovations. We make refinements all the time. We then test market with a wider group. We test market with mothers, and for the youngest children, that's the best way to see if your product is resonating. The timeline is typically about 18 months, so from kind of concept to shelf, it's a fairly quick timeline. That's the one thing about the toy industry that's quite beautiful, that you can innovate and have an idea and get it to shelf sometimes in 18 months. If you fast track it, you can get there even faster.
H
Host9:48
Yeah, it's fascinating. And I know that your business also has a big licensed business component, and you do work with the likes of Disney where you sell Disney princess dolls, etc. As you look at the mix of business moving forward, do you see the licensed business growing versus developing or leveraging your existing brands as part of your overall portfolio?
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Steve Totzke10:08
Well, look, our strategy is to grow our IP-driven toy business and expand our entertainment offering. When it comes to our in-licensing, we always want to partner with the best and be the best partner. That's been our mantra for many years. We famously lost the Disney Princess business six or seven years ago and got it back a couple years ago. That was a huge moment of pride for us. But whether it's Disney or Universal or Warner Brothers, we have decades-long relationships with these companies, and they love to partner with Mattel. When we have that IP, we treat it like it's our own, and we honestly believe that we improve their IP with our global reach. But internally, we have such a library of IP, probably one of the best family and children's IP vaults in the world. And so we have been going to that vault to relaunch. Four or five years ago, we relaunched Polly Pocket, it's been wildly successful. Masters of the Universe with a Netflix series, and now we've just greenlit a movie with Amazon. Monster High, we partnered with Nickelodeon to bring a TV series and a movie to life, and that's been wildly successful. So Mattel's own IP is deep, it's well beyond our power brands, and you can expect to see more of that. Barney is the next one up. We announced it. I can't believe the fanfare and reaction to Barney. You talked about nostalgia, the reaction to one Instagram post with Barney with the hard hands, it was incredible.
H
Host11:44
I'm sure. To be able to tap into those super fans and influencers within that category and that brand, I'm sure is a huge unlock for you when you do roll out new products and you surprise consumers with new announcements.
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Steve Totzke11:57
Yeah, absolutely. That's part of the beauty about social media today. You can even just test it. You can put things out there into the world, you can gauge the response, and if the response is kind of overwhelming, you can start to move to the next step. This is one area where it's become a lot more affordable just to kind of gauge the interest that's out there in society.
H
Host12:19
Yeah. So you mentioned earlier, Steve, just omnichannel strategies and the overall channel outlook for the toy business. Obviously, Toys 'R' Us is where I went as a kid to get toys, and they famously filed for bankruptcy three or four years ago, but they're apparently back in some iteration. What does the retail landscape look like for toys? How important are channels like Amazon versus traditional big box retailers and then the local toy stores that still exist in many markets?
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Steve Totzke12:48
Yeah. Well, first of all, they're all important. We have an all-channel growth strategy. We like to design and develop for a channel. Every channel is slightly different. Just think about a Costco or a club versus a CVS or your local pharmacy. How our brands show up there are wildly different. So we need to design and develop our product with intention from the beginning in close partnership with our retailers. The toy category is incredibly important. Through research and in partnership with our retailers, the toy shopper shops more, they shop more often, they spend more, they travel throughout the store more frequently. We track all this with our partners. So the toy shopper, the lifetime value, just think about it intuitively, it's young families with young children. So if they can capture that shopper and move them through, it's very important for retailers.
H
Host13:42
I'm sure. One interesting thing I saw just in doing research for this podcast, Steve, is if you're on the Mattel site and you try to shop, you have your entire inventory there, but then you're sending the consumer to a third-party retailer. You're sending them to Target or Walmart or a variety of other stores. You can even locate a store, which I thought was cool. So wherever you want to buy where Mattel is sold, you can buy from there. In the quest for many brands to acquire first-party consumer data, which you don't necessarily get when you're sending the consumer to the big box, has there been any discussion or are there any plans to actually have a direct-to-consumer channel to sell your toys directly to the customer?
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Steve Totzke14:24
Yeah, well, we do have actually one of the largest direct-to-consumer channels in the toy business, and it's through two areas. One is American Girl, which is part of Mattel, which is 100% direct to consumer, or pretty close, about 95% direct to consumer. And Mattel Creations, which we just stood up three years ago, which is growing rapidly, and that is all 100% direct to consumer right now. So yeah, we do have millions and tens of millions of data points. But beyond that, right now our plans are, we like partnering with our retailers. When they come to our site, we give them an opportunity to shop our main line, and that's when we send them to convert with our core customers. We like that strategy for now, and there are other ways where we can obtain data. We do believe precision marketing is quite important for this category, for sure.
H
Host15:16
Yeah. And of course, one of the benefits of first-party data is obviously your ability to harbor stronger ties and loyalty with your customer. I'm sure like any other business, repeat customers are a lot easier to drive revenue from than finding new customers. What are some of the ways that you've seen Mattel over the years, and more recently, gain that loyalty with consumers so they're going back to Mattel when they're purchasing toys for their children versus other competitors?
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Steve Totzke15:42
Well, there's two ways. One way, not to keep going on this collector component, but for Barbie collector and Hot Wheels collector, we have deep, sometimes decades-long relationships with these consumers. We have people that have been in the Barbie Collector Club for over 25 years. We have fan conventions. We know them, they know us, they know our designers. It is truly like a family. It's an environment. They are true fans. Similar on Hot Wheels. When it comes to the core consumer, it's Mattel's reputation. We are celebrating 80 years next year of Mattel. That is generations of trust and credibility built up in our products and our brands, our characters and stories. And that has resonated. You mentioned nostalgia earlier, Matt. There's not someone that I have ever met that doesn't have some kind of Mattel story, or Hot Wheels, Barbie, American Girl. It is incredible, and that's incredibly valuable as a company.
H
Host16:47
Absolutely. So shifting gears a little bit, Steve, to you and your career and your current role as President and Chief Commercial Officer at Mattel. Obviously, very high-profile, iconic American company that you're at a very pivotal role for. How do you spend your time? Prioritize what's most important? And how do you look at building a team and making sure that you're grooming the next generation of leaders at Mattel?
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Steve Totzke17:12
Yeah, well, look, I feel very privileged to be in this role. As you mentioned, Matt, I've been at this company, well, I took a couple years off to go to a small startup, for 29 years. So it has been a lifelong love affair with Mattel. And how I spend my time today, I would say I spend it 50 or 60% with my team or with our external partners. There's a lot more internal time these days in this position, as you can imagine, with the management team, with our strategy team, thinking about earnings and the rest of it. But I still try to make sure that I stay as externally focused as possible. I think that's critical. When it comes to any level of senior managers, make sure you stay externally focused and don't fall into that trap. When it comes to succession planning and grooming next-level leaders, the higher you get, the more critical that is. And quite frankly, that's the most enjoyable part of the role quite often.
H
Host18:15
And what are some of the skill sets that you see increasingly being needed at a company like yours in order for the next generation of talent to succeed? Because there's obviously so much being thrown at younger professionals these days in terms of learn AI, learn management, learn to negotiate these things. What are the core attributes that make the markings of a successful professional in a company like Mattel?
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Steve Totzke18:41
Yeah, well, first and foremost, the ability to manage complexity, I think, is a skill set that is even more important today than it's ever been. But I've always had four or five key traits that I see, whether it's in my own company or anytime I deal externally. One is persistence. Persistence to me is a cornerstone, whether it's entrepreneurs or people in the film industry or retailers. Staying curious and being open to ideas, this is the idea of complexity. Being willing to do hard things, take on hard challenges and fail. And then finally, I'm a big believer in the power of personal accountability, having a solution orientation. These are kind of traits that I see that are consistent in high performers. And how you hone those traits, I think, will be important to how you advance in any organization. That's why I always love this idea of mentorship. It can be an official mentorship, but as you get up, you've got almost a responsibility. I benefited greatly from excellent mentors, and you try to pay that forward. When you get into any organization, I think finding some mentors will be critical to your success.
H
Host19:58
Yeah, I mean, I agree with everything you said. One thing you said that frankly we don't hear as much on the podcast that I think we should is perseverance. I think we live in a world right now where the younger generation grew up with Instagram and they see all these what they think are instant successes. As you and I know, there's really no such thing, and you have to persevere in anything you do. The saying that every no gets you closer to yes, in my opinion, couldn't be more true. I think it's a skill that can easily be lost in this day and age, and one that the most successful people I've encountered in my career are just that, they persevere and they don't give up.
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Steve Totzke20:33
100%. You've seen it time and time again, and you're right, it's not as obvious these days. People don't highlight their failures. When everyone's successful, they blast it out, but there's so much failure that goes behind that final success. It's the old cliché, you learn so much more in failure than you do in success, and you just apply that forward.
H
Host20:59
Absolutely. So looking ahead to the future in the toy category, Steve, and where things are going, I mentioned AI a couple minutes ago. Obviously, it's on the tip of everyone's tongues these days that are in the advertising, marketing, or consumer product space. Do you see AI being inside some of your toys moving forward? Do you see younger children playing with robots in their homes? Where's all this going 5, 10 years from now given the rapid leaps in innovation and technology we've seen in the last couple years?
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Steve Totzke21:27
Yeah, well, look, AI is everywhere. First of all, where we're using AI right now quite a lot is in our design and development enhancement. It's quite incredible how it can add in that, everything from storyboards to packaging execution, to fast-tracking images. So that is one area that we're really utilizing AI. When it comes to marketing, it's amazing how you can take content and it can cut it down from 30 seconds to 15 seconds to 6 seconds. These things used to take a lot longer and cost a lot more. Now it is almost instantaneous and close to free. Everything from language translations, if you're a global company, you used to have large external third parties that would do translations for you. These things are much faster now. When it gets into product, this is an area where you need to tread a little more carefully. You've got to make sure you're compliant, it's safe, data privacy and all that, especially with the younger consumer. We launched a product last year, Pictionary vs. AI, which had an AI component. AI was right in the title. It was mildly successful, but when we started going back to consumers to pull what they thought about it, some people were off-put by the fact that there was AI in there and they were wondering what are you capturing for me. So I think it's one to kind of tread very carefully.
H
Host23:00
Yeah, completely makes sense, especially in the category that you play in. So to wrap up here, Steve, you've obviously had a great run at Mattel, and it seems like you're by no means wrapping up, you're just getting started in a lot of ways in terms of your vision for the future and where things are going. If you had to point to some of the things you think that you've done right, particularly at your run at Mattel, that has enabled you to start from your humble beginnings there to get to the seat that you're in today, what were some of those things that you think you did right?
S
Steve Totzke23:35
Well, thank you, Matt, for that. You're right, I started at the most entry-level position in Canada. It was the smallest brand on the smallest account. So what I tried to do is, number one, as I said, take on hard things. If there were projects or brands or customers that seemed to be very hard, I felt it was a no-lose situation. Either I would go in and put the effort in and be successful, and that would make me stand out, or if I failed, it wasn't really expected to succeed. Staying curious, as I said, has been a cornerstone in my career. For me in this company, being mobile, I do believe getting into another country or another culture, another environment, there's nothing better from a learning standpoint than getting out of your comfort zone. That's when all kind of great learning happens, in my opinion. And then just to kind of finish where we started on this conversation, persistence. When you fail, and you will fail, especially in this industry, you fail a lot more than you succeed. Just take those learnings, move forward, apply to the next time, and just continue to refine it. And then finally, and this is nothing new, just make sure you network. It's amazing when you find the power of people, the power of connection, the power of mentors. It just will enhance your career and enhance your life, quite frankly.
H
Host25:05
Couldn't agree more. I think especially at times of transition or times when you really need help, your network, who you lean into, I think a lot of people overlook that, especially at the most important time to build that network is earlier in your career because you can form career-long relationships that can be mutually beneficial along the way.
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Steve Totzke25:26
Absolutely. Some of the people I met in this company almost 30 years ago are still some of my best friends and advisors to this very day. So I think you hit it on the head there, Matt.
H
Host25:38
Fantastic. So to wrap up, is there a quote or mantra that you live by that you think sums up your professional journey today?
S
Steve Totzke25:46
I have so many, you'll have to pick one. But I'll tell you the one that I talk to my team a lot about. When you're in a fast-moving business that gets pretty intense, I like to say, let's keep a calm sense of urgency. I like everything that happens, good usually is with a sense of purpose or urgency, but being calm about it is, I think, the key, especially in leadership. Nobody wants to see you freak out. So keeping a calm sense of urgency has been a mantra for me and my team for many years.
H
Host26:17
I love that, especially given your industry where ultimately you guys get to make people happy and give them joy in their lives. So I think having a calm sense of urgency makes all the more sense, especially for a role in a company like yours.
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Steve Totzke26:29
Absolutely.
H
Host26:31
Well, Steve, thanks so much for joining today. It's been a great chat. It's been awesome to hear about your journey, and I can't wait for our audience to listen in as well. So I really appreciate the time.
S
Steve Totzke26:39
Matt, it's been an absolute pleasure talking with you today. Thank you very much, and hope to see you soon.
H
Host26:45
Likewise. On behalf of Susie and the Adweek team, thanks again to Steve Totzke, President and Chief Commercial Officer at Mattel, for joining us today. Be sure to subscribe, rate, and review the Speed of Culture podcast on your favorite podcast platform. Till next time, see you soon, everyone. Take care.
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Narrator27:03
The Speed of Culture is brought to you by Susie as part of the Adweek Podcast Network and a Creator Network. You can listen and subscribe to all Adweek's podcasts by visiting adweek.com/podcast. To find out more about Susie, head to susie.com. And make sure to search for The Speed of Culture in Apple Podcasts, Spotify, and Google Podcasts, or anywhere else podcasts are found. Click follow so you don't miss out on any future episodes. On behalf of the team here at Susie, thanks for listening.