Lego toys are not very cheap as a lot of precision and high-quality material goes into the making of such toys. Like a home, companies need a solid foundation to ensure they can withstand the test of time. It provides complete integration same goals, same agenda, the ability to solve problems very quickly and much greater learning across the organisation, she told Marketing Week. By using our website, you agree to the use of cookies. LEGO`s Strategy. All Rights Reserved. There are several marketing strategies like product innovation, pricing approach, promotion planning etc. One lesson the Legos growth strategy teaches us is how important it is to stay agile. How 8 innovative leaders keep track of ideas, Senior Lecturer in Operations Management | MIT Sloan, How to leapfrog competitors by partnering with xTechs, MIT Sloan research on location-based innovation, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry, Innovating in Existing Markets: Reviving Mature Products and Services. Its popularity on social media has encouraged fans to create their own LEGO fan channels, such as Beyond the Brick, a YouTube channel with over 821,000 subscribers who promote additional awareness of LEGOs brand independent of the companys marketing efforts. 2. Lego products the whole idea of creative play experiences is something that resonates strongly with Chinese consumers.. Because we know it works. Mads Nipper, the former head of marketing and product development, liked to say, Kids will never lie to you about whether somethings fun or not.. - Process diverse business and industry information to diagnose strategic issues, evaluate strategic alternatives, and formulate a coherent and actionable strategic plan In doing so, youll develop an understanding of how and why this process is fundamental for sustainable competitive advantage. In this post, we're going to look at some of the bestselling toys for kids, and what their product marketing strategies can tell us about creating a product that's perfect for your customers. As a result, your perceived value among prospects will skyrocket. With almost 300 million kids under the age of 18 in 2023, the Chinese toy market is extremely profitable, and reached a revenue of more than 18.9 billion USD in 2022. Nowadays, the LEGO Group is among the world's most recognizable companies, and certainly the most well-known toy company in the world. The Chinese authorities have been supportive in helping to uphold the firms intellectual property Lego has won cases against six copy-cat companies. After research revealed most of their consumers were boys, LEGO developed their LEGO Friends line aimed explicitly at relating to girls. "}}]}. Module 4: Strategic Positioning and Strategic Renewal. So whats next for Lego? The themes were an inspiration from cartoons, comics, movies and also video games. But innovations run their course., From its inception in the 1930s to its brush with bankruptcy in 2003 and its subsequent turnaround, LEGO tried every approach in the book to managing innovation, some resulting in spectacular success and others in great failure, said Robertson, author of Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry.. The company produces toys for children that are consisted of interlocked colorful plastic bricks that make an array of gears, mini-figures, and many other pieces. It started as a toy manufacturing company but it had also become a great marketer. All rights reserved. Presented by : GROUP 1 Nandini Aggarwal Ankur Arora Prachi Arya Vishnu Bhaskaran Pravin Bokil Hrinya Bose Agenda LEGO History and Evolution Product, Positioning, Segmentation and Target market Branding and Advertising Strategy Brand Extension & Pricing Distribution and Retailing Competitor analysis and Future strategies Is there also a great illustration of how companies need to dynamically evolve and adapt to their environments? Its website currently offers many LEGO-based building products specifically designed to help students build STEAM (Science, Technology, Engineering, Art, and Math) confidence in primary and middle school. It can be easy to oversimplify the product and product description as a fun day at a Lego-themed park for the family, but this is not necessarily the best marketing approach to . Every second, about 1300 LEGO pieces are made around the world. Browse marketing strategy and 4Ps analysis of more brands similar to Lego. You need to be dating your customer, not fighting your competitor.. Follow us and get notified of our thought-leadership content: {"@context":"https://schema.org","@type":"FAQPage","mainEntity":[{"@type":"Question","name":"Analyzing the retail LEGO marketing strategy","acceptedAnswer":{"@type":"Answer","text":"The brand's growth is the result of six key factors in the overall LEGO marketing strategy. The classic stuck in the middle problem, and the way the company managers that risk and pursues its dual or integrated strategy without ending up stuck in the middle is its philosophy and system of constraint or guided innovation. Weve seen this tactic working for far smaller and less famous brands than LEGO. However, LEGO also has a sizeable adult consumer base who can join its LEGO Ideas online community and become part of its creative process. LEGOs turnaround from its existential crisis in 2003 is remarkable. LEGO is also YouTubes most popularbrand channelas of June 2020, with 10.04 billion views. LEGO Architecture series is currently in the growth stage. It has been reviewed & published by the MBA Skool Team. LEGO has seen several years of sustained growth in sales and marketshare, but things werent always so stable. Lego started producing Lego sets which used to have a specific theme attached to it and the bricks and the figurines designed accordingly. By revamping the products that clients had grown to love over the decades of LEGOs existenceand modifying them in ways to ensure their relevance and continued popularitythe company ensured its survival. During these turbulent years, the main drivers of sales within the company were LEGOs licensing deals with multi-million dollar blockbuster franchises like StarWars and Harry Potter. LEGO- Niche MArketing. Research showed that Chinese kids play with Lego in much the same way as children of any nationality, and so the toymaker would not be developing product lines specifically for Chinese or Asian markets. The five stages of Marketing Strategy Process of Lego's Lego are -. Following is the distribution strategy in the Lego marketing mix: Lego is headquartered in Denmark and has its major production units in the UK, US, Singapore, and China. Growth slowed in the 1990s for a number of reasons, including a rise in digital play experiences from companies such as Nintendo and Sony, the rise of Toys R Us and other big box stores, the expiration of LEGOs brick patents, and the relocation of production of Mattels and Hasbros products to China, lowering the cost of their competitive toys. Thats how Lego established a sound growth strategy and pushed forwards with confidence. Read our Ideas Made to Matter. Lego Group Employee Alignment. Knudstorps first decisions included widespread structural and financial reforms. This percentage actually also represents the recovery rate of this tactic. LEGOs main eCommerce website offers many outstanding features in its category, product, and checkout process pages. In this article, well take a close look at the tactics and tools LEGO uses to market its products successfully, even during the current pandemic. But what keeps customers interested in Lego and makes it an ever popular toy is the constant innovation with new products. This is something that no other brand has ever achieved. part of the brand's wider strategy to help people understand the creative value of play by instilling a "fresh creative culture" in children. The Danish toymakers trajectory from industry trailblazer to the brink of bankruptcy to sustained recovery shows theres more to innovation than sheer luck or a wholesale focus on disruption. Get a head start with survey templates written by our research experts. In fact, it is difficult to find any construction-related toy which is not, or does not relate to, LEGO. Price. This article provides an overview of five different positioning strategies for your company to consider, as well as provides tips for developing your positioning strategy, and showing some examples of brands and their specific strategies. Global supply chain meets isolationism. Goldin and her team are now working to position Lego as one brand globally, and are preparing for future growth by creating a holistic, immersive experience for consumers. "Unlike people in developed markets like the United States and Europe, people in . According to BusinessInsider, the rapid increase in the variety of toys sold by LEGO, many of which were commercial failures, proved to be expensive and moved the company away from its iconic toy brick models at a huge cost. 3.Toys face continuous threat by the advent of electronic alternatives. Although its core brandoffering its customers a way to develop their imagination and creativity through free playremains the same, it continues to innovate by researching and adapting the LEGO marketing strategy to new digital communications. That creates a lot of hunger in the organisation, she concludes. In the five years leading up to this point, Lego had invested in massive growth. If they tried to do both, how should they avoid the danger of getting stuck in the middle? Module 4: Strategic Positioning and Strategic Renewal. Back in 2015, it was ranked first in Forbes MostValuable Brand list, which rates companies based off of 'marketing-related intangible assets including names, signs, symbols, logos, and designs.' Based on years of research and what hes seen at LEGO and other companies, Robertson advocates for an expansive approach to innovation helping customers get more value from existing products by offering innovative complementary products, services, and business models. Get answers and chat with the team. LEGO`s strategic positioning mainly involves the innovation of products. 4.1.Brand Positioning Since its inception, LEGO has focused on the development of the brand beyond the familiar logo brand in order to guarantee LEGO quality and authenticity and to . Thats where Jrgen Vig Knudstorp comes in, taking over the company as its CEO in 2004. You try to understand who your customer is, what they care about thats the way we should think about innovation, Robertson said. LEGO utilized The Future Lab to develop low-risk, low-cost innovation techniques that led to rapid creation of minimum viable prototypes. Open. You're now subscribed to our mailing list to receive exciting news, reports, and other Lego is present in around 130 retail stores around the world, most of which are present in the U.S. Retail stores are not the only places that carry the selection of Lego toys but you can buy them at movie theatres, amusement parks and popular departmental stores and toy stores. This focused strategy paid off, as LEGO saw a 4% increase in profits and sales in 2018. Brand positioning is the space your brand and products hold in the market and in the minds of your customers. Strategic Management, Business Model, Strategic Thinking, Business Strategy. Hence this concludes the Lego marketing strategy and marketing mix. Despite the fierce competition and challenges, LEGO's brick by brick brand strategy paid off significantly by attracting over 6.5 million people across the world who appreciated the brand. Get a 10 page workbook on Purpose, Vision, and Values. LEGOs venture into the film industry was yet another example of experimentation fused with the classics. We would rather do the investments upfront to be leading that change.. Highly recommended course materials. Innovation leaders need to lean on a range of different approaches for innovation, since tactics will vary depending on the scenario and business goals. LEGO's famous turnaround strategy came from engaging its expansive customer base. Lego is a leading plastic toy manufacturer which specializes in construction toys. His strategy was a unique mix of innovation and going back to the basics. Sometimes knowing where not to innovate is just as important as knowing where to innovate, Robertson said. But unlike other firms, it has chosen to build this foundation using its iconic multi-colored, plastic, and easily snappable bricks. Legos growth plans included adding stores to less central cities in China. Board games by Lego Games include some popular games like Minotaurus, Creationary & Ramses Pyramid. When I have taught this case in class, I tried to get students to see that differentiation through innovation is a key selling point for Lego. A special opportunity for partner and affiliate schools only. Pexels and Unsplash And most importantly what that leads to is they are more agile and responsive to the marketplace.. Other sections offer homeschool and distance learning resources for children learning during the pandemic. LEGO learned that in a new digital landscape it was no longer enough to offer a box of plastic bricks the brick had become a commodity. Maintain a customer-centric development process. This article has been researched & authored by the Content & Research Team. It had started off as stackable wooden blocks which then converted to plastic. How marketing built Lego into the world's favorite toy brand. I hope you enjoyed learning about Lego Group and analyzing the company's generic strategies. The toy industry is no child's play. But just 16 years ago, in 2003, LEGO was on the brink of bankruptcy. Among the key lessons that companies with a mature product line can follow to innovate: Respect what made you great. The course and the Professor was really having a high practical approach. But actually, the brick itself is easy to imitate now. As LEGOs commitment to education is well respected, educators are far more likely to see the value in these products and online resources. "}},{"@type":"Question","name":"Analyzing LEGOs eCommerce website","acceptedAnswer":{"@type":"Answer","text":"LEGOs main eCommerce website offers many outstanding features in its category, product, and checkout process pages. Pursuing multiple, complementary innovations that harmonize to create something is much better than any one key alone.. World-famous landmarks like the Eiffel Tower and The Statue of Liberty could be replicated in miniature forms using LEGOs colorful bricks. The legacy started in 1949. Its iconic brick remained central to the line, and thus LEGO fused innovation and experimentation with a throwback to the classics. (originally published by Booz & Company) Lego art by Sean Kenney. Its how Apple turned itself around, its how GoPro got five years of 90% growth, its how Sherwin-Williams gets twice the price per gallon of paint than other paints that are functional equivalents, explained Robertson, who also teaches an executive education course on the topic. But in general, you position your brand so that your target market views it as: top-tier; . Lego Brand Strategy. LEGO was a small family business that grew steadily until the management reins were handed off in the late 1970s to the grandson of the founder and newly minted MBA, Kjeld Kirk Kristiansen, who quickly unleashed a wave of innovation. In 2004 the Lego group was under the leadership of CEO Kjeld Kirk Kristiansen, the company faced a large number of problems including posting a loss for the year of DKK 1,800m despite a group turnover of DKK 6,295m. In my opinion, this is a good strategy because by increasing . The interactive program gives participants aset of tools and techniques for mastering new approaches to innovation and astructured framework for applying those tools and techniques within their organizations. Although, he added that the company would not be aiming for the supranatural growth rates of the past. However, with little experience inhospitality, operating these establishments proved to be a logistic and financial strain on the firm, and loss-making continued. It has differentiated . In 2016, LEGO reported stalling sales in Europe and North America, but double-digit growth in China. It also included decisions on commercial activities that Lego Factory would discontinue. The purpose of this report is to analyze the Lego's turnaround and business model in light of its competitive position from approximately 2003 - 2013 . LEGO products are in 130 countriesbut the company is always looking to expand its operations. Joyce runs Growth & Strategy at ContactPigeon. The beginners guide to campaign planning. Its well-thought-out assessments and its willingness to execute consistently enables this family-owned company to survive even today. But how big would the impact be? In the years leading up to 2003, many of its long-serving designers were fired and people with little knowledge or appreciation of the companys roots were hired. Key marketing strategy #2: Licensing & merchandising mentality It goes through rigorous tests to qualify to be sold out in the market, which incurs a lot of cost to the company. To put it simply: Throughout the everyday life of an average kid raised in advanced countries of the world, its parents, its teachers, and its friends will encourage it to play with LEGO. It became a medium of creative play and enhanced critical learning abilities amongst children. Photographs by Matthew Septimus. The growing middle class, importance of education, and growing economy make India a logical next step in our efforts to reach many more children around the world, he added. That means Goldins role encompasses both product and marketing, which she describes as a really big shift for the company. Their channel offers promotional, educational, and how-to videos that promote the companys brand. These were cleverly targeted at a more adult-dominated demographic, and consequently sold at a premium price. Lego marketing strategy helps the brand/company to position itself competitively in the market and achieve its business goals & objectives. Comparably data clearly shows that a focused mission statement and cohesive core company values are vital to maintaining employee alignment. How to setup a benefit-driven Exit-Intent Pop up in ContactPigeon, 2. Initially, these toys were made of wooden. The second was to get a long-term strategy in place which sharply defined Lego Factory's positioning, target market, growth options, marketing mix, and revenue and cost projections. If youre looking for brand growth strategy examples that you can borrow and adapt, Legos shows you how scaling back can sometimes be beneficial. AsWhartons business analysis journal reported, they reduced losses and set the stage for a new period of rapid growth. Now it's real risky here, which is that by trying to do both; differentiation and cost control, the company ends up doing neither thing very well. An entrepreneurial atmosphere was fostered by LEGOs Future Lab, which brought together designers from around the world and encouraged them to experiment and, through a trial-and-error approach, create toys that were truly sought-after. It has a flagship product Lego which consists of interlocking plastic blocks and small objects which can be connected to each other and build a structure to your imagination. Lego, the Danish toymaker, first entered the Chinese market in the 1980s and has since grown to 140 stores across 35 cities, but with plans to expand its retail estate to 220 stores by the end of this year it recognises it must adapt to local tastes. Lego has also offered toys based on popular characters as a part of its physical toys. Working at a campaign level can transform the effectiveness of your marketing. Through intellectual rigor and experiential learning, this full-time, two-year MBA program develops leaders who make a difference in the world. 4th Module was little bit confusion although it was a great time doing the course. 2758 Words12 Pages. By preserving this spirit of creativity and exploration, it has secured its place in our homes for years to come. It is a family business originally founded by Ole Kirk Kristiansen; today, his grandson, Kjeld Kirk Kristiansen, runs the company. Let us start the Lego Marketing Strategy & Mix to understand its product, pricing, advertising & distribution strategies: The product strategy and mix in Lego marketing strategy can be explained as follows: Lego is one of the biggest block toy brand in the world. This focused strategy paid off, as LEGO saw a 4% increase in profits and sales in 2018. The company had rebounded after troubled times at the beginning of the century, and was on an upswing, with innovative new products like the Bionicle line, collaborations such as with . Set the trigger rules and the settings of the exit intent pop up(s), Tip #1: make sure you have ticked the third box The visitor has added smth to basketTip #2: You can even add advanced rules such as add filters from specific visited urls, or purchase behavior. With an 88-year history, LEGO has accumulated some veryimpressive statistics, including: The success of the LEGO Group may seem like a phenomenon. As Jonathan Ringen says in his 2015 article on the firms revitalization, LEGO became 'the Apple of toys.'. Lego believes it has a role to play in equipping children with the skills they might need in a future job market set to be disrupted by automation. Last modified March 30, 2023. The popularity of Lego fan-based . Although, he added that the company would not be aiming . At the same time, the Global Insights division was created, the purpose of which was to research market trends and find out what parents and children wanted to see. CEO Niels Christiansen announced that 80 new stores would be launched in China during 2019, adding to the existing 60, and giving it a presence in 35 cities. Moreover, if someone looks at its surroundings and its (social) networks as well, there is a tremendous amount of LEGO-related user-generated content which also continuously validates that this toy is, maybe, one of the healthiest, most educative, and most beneficial addictions of its life. November 25, 2022. It produces clothes for children until the age of twelve. Learn more about admission into these programs and explore how your Coursera work can be leveraged if accepted into a degree program at https://degrees.giesbusiness.illinois.edu/idegrees/. Being ahead of these trends will allow us to inspire future generations of children, Christiansen told Retail Insight Network. During our tests, we didnt detect such a tactic at Legos website. In a smart bit of branding and a better bit of business, Lego sought to regain the narrative and re-assert its long-held positive reputation by undertaking an ambitious suite of sustainable goals . The companies are not associated with MBA Skool in any way. Aside from being a multi-billion dollar industry, it delivers some of the most innovative products year in and year out.. Unless otherwise indicated, any images used on this site are licensed for use by Attest (on an irrevocable, worldwide, non-exclusive and royalty free basis) via either: Furthermore, due to . So Lego operates on this knife edge of pushing innovation to create customer value, but also keeping an eye on costs. As China continues to develop a very affluent middle-class numbering in the millions within the coming years, it represents a significant opportunity for LEGO and its market position. The PR . Non-degree programs for senior executives and high-potential managers. You can minimise risk with thorough consumer research and brand tracking, especially gathering consumer insights that let you gauge both interest in your brand among native shoppers and any cultural differences youd need to adapt to. New Look: The Marketing Strategy Behind the UK Fas Farfetch Case Study: Analyzing The Strategy of the Why ASOS is the Absolute UK Ecommerce Success Stor Get Ecommerce Insights Right In Your Inbox. Today, LEGO regularly engages children in the process of character development, storytelling, and providing feedback on new playset ideas. Lego Product Strategy: The product strategy and mix in Lego marketing strategy can be explained as follows: Lego is one of the biggest block toy brand in the world. The patents have expired, and many companies can do the required plastic molding even to Lego's very strict specifications. LEGO's products can contain hundreds or even thousands of pieces, are very detailed, and can be complex. Thank You! For me, Lego was one of the most fascinating corporate stories of all time, and the story continues to evolve and get more interesting with each passing year. Lego's very close to failing as a company in the early 2000s but managed to strategically renew itself through great leadership and through its dynamic capabilities. "They became convinced that if all they offered was another box of bricks, they would become a commodity," Robertson said. We began with shops in the major cities and are now looking to reach more children by establishing stores in more cities as we see increasing interest and demand for our products, said Trangbaek. Thanks to the LEGO Groups willingness to enter new marketplaces, diversify its merchandise, and embrace social media marketing, their product lines are better suited to adapt in beneficial ways. The study examines how interest towards toys turns into playful and productive activities at adult age, through actual manipulation of three types of contemporary playthings: dolls, soft toys and action figures. The company has also partnered with Disney, Marvel, and DC Comics to create its popular Star Wars and superhero-themed playsetswhich are vital marketing tools since they generate publicity and drive higher sales.