online information of lego

8/10/2019 Online Information of LEGO

1/28

Lego strategic analysis

Introduction:

This essay will consider firstly the position of Lego in relation to both the constraints of the internal

and external environment in the lead up to 2004. The essay will then go on to consider the position ofthe Lego group from 2005 onwards paying particular attention to how the company has reacted toadapt its internal resources in order to meet the needs of the external environment.

The Lego group up to 2004:

In 2004 the Lego group was under the leadership of !" #$eld #ir% #ristiansen& the company faced alarge number of problems including posting a loss for the year of '## (&)00m despite a groupturnover of '## *&2+5m. ,s a result #ristiansen stepped down from the chiromancy and deposited afurther '## )00&000 of personal funds into the company. 'espite these headline figures the problemsfacing the Lego group in 2004 many be considered has having a longer history than the single year of

such great losses and be routed in both problems in the internal and external environment.

-ind out more from # !ssays here/ http/www.u%essays.comessaysestate1managementlego1strategic1analysis.phpix336$5g78

Five Forces Analysis

9orter :2004; outlines five forces which have an impact upon a business coming from the externalenvironment and include the following elements which will now be considered individually/

Level of rivalry 9ower of buyers

9ower of suppliers

Threat of substitutes

Threat of entrants

Level of rivalry

The overall level of rivalry may be seen as relatively intense for the Lego group in the run up until theend of 2004. 8hilst Lego occupies a strong position in the mar%et for construction toys with relativelyfew rivals one must consider that Lego is now competing in boarder mar%et of children


2/28

Power of suppliers

The power of suppliers may be seen as average& Lego


3/28

which may be seen as the focal point of the mar%eting concept :Brassington and 9ettitt 200C;. This canbe clearly seen in the role out of the !xplorer range& in this case the company designed a product whichfailed to appeal to those who were not buying Lego products but subse>uently didn


4/28

Lego brand in relation to computer games and the production of traditional sets which are related totelevision and cinematic spin offs.

"ther structural changes relate to the companies operations& operations in counties with relatively highlabour costs such as !urope and the = have been outsourced to companies in =ingapore and ?exicorespectively. In addition the companyuirements asa minimum in relation to its operations. This raises two concerns in the first case there is the

consideration that all companies should in theory meet these minimum standards in any case and sothis doesn


5/28

Culture/Values:

'espite the changes which have been made since 2004 one may consider that such changes have notbeen at the expense of the companyualitydifferentiated product :7obber 200C; in which the experience of the child as an end user is the %ey

consideration. 'espite branching out into alternative products Lego has maintained its commitment toproduct >uality and %ey concepts such as not promoting war related themes in its product portfolio.-rom a innovation perspective one may see that Lego previous to 2004 had the technical abilitiesassociated with an innovative culture however in more recent years one may see that the company hasbeen much more successful at moving such innovations from the ideas stage into the implementedstrategy stage.

IT/Innovation:

"ne of Lego


6/28

Lego Faces Increasing Competition Marketing Essay

We used many methods in this research and all of them can be taken in the university and the lecturers lesson,which were uite popular! "he most important thing that we used is analysis the market! It was very important tounderstand about business environment of the firm! #ur tools include $ F#%CE&, 'E&", and &W#"! In addition,we used many books, (ournal articles and material from lectures Learning %esource of )edfordshire *niversity togain more knowledge and theories of strategic management! Moreover, we also used some sources on theinternet to find news about LE+# and information that relevant to case study! ll of them will supply in referencepart in this report!Limitation-

LE+# company-+eneral information about LE+# group-

"he company LE+# is one of the most famous corporations in the world when it engages towards children.s toysand has developed since /012! "he LE+# +roup is headuartered in )illund, 3enmark and it was owned by 4irk4ristiansen family! nd it focuses on a key element in growth, development of children.s creativity via playing andlearning by assembling LE+# brick! 5owadays, the company provides their products in more than /16 countrieswith appro7imately /6,666 employees worldwide! In /080, their brick has taken an adventure! #ver the years, theLE+# brick became more perfect and then it was ad(usted a little bit in shape, design and color! "oday.s brick has2,866 different types and have multitude of ways to combine them together so it.s not only attractive, creative andfun for children but also becoming a challenge for adults!

Find out more from *4 Essays here- http-99www!ukessays!com9essays9marketing9lego:faces:increasing:competition:marketing:essay!php;i7


7/28

"he latest product line of LE+# group is LE+# 5in(ago! It is a combination of classic toys and so:called spinnerswere established at the beginning of 26//, beyond e7pectation s and become the biggest product in companyhistory! )esides, other LE+# toys are also on the best:selling list such as- LE+# City, LE+# &tar Wars and soson! In sum, BIt is a highly satisfactory result reflecting a solid growth in profit! +rowth in the 5orth mericanmarket continued undiminished, and also in most European and sian markets we were able to report double digitincreases in sales, @26//A says Dorgen ig 4nudstorp, LE+# +roup CE#!

'E&" and &W#" analyses-'E&" analysis-&W#" analysis-

Lego : $ Forces-

"hreat of new entrants-

&trong and large distribution network reuired! If the company does not have a strong distribution networksenough, they will have to pay a lot of money to transport and move their product around, and in some cases theirproduct will not get to the end customers or the stores!

=igh Capital- In order to enter the market, there are the reuirements for substantial high level of investment!LE+# G "he Company has to spend a lot of money in order to compete when they come to the market in the firsttime!

"he )rand name of the LE+# Company is very important, this is one way to compete when the company isentering the market, then other competitors in the market will also have to improve the brand value in order tocompete effectively!

dvanced technologies- "his is one of the barriers that bring many difficulties to new entrants and competitorswhen they come into the market! ll technologies have to be developed, and then the company will haveopportunities to compete with others in the market!

+eographic factor- E7isting competitors already have good place and location to allocate their factory and storeswithin the market! "his is really a challenge for new comers and entrants, they will have a competitivedisadvantage and they will have to compete with each other to have a really good place to have their store,department or factory in order to run the business and compete!

"hreat of substitutes-

"he pressure will very high, &ubstitutes come from the entire toy industry! &ubstitutes are everything, such ascomputer games or traditional toys, even outdoors sports! Children will get bored very fast, so they com switch tosubstitute!

lower uality product will be the reason why customers don.t like to switch from LE+# to another product!

Level of rivalry-

LE+# company occupies a strong position in the large "oy industries with a few rivals! "he company has astrong brand loyalty and brand name among customersH the company also provide high uality of product and

Majan College (University College) Page 7


8/28

charge it in premium price! Lego also has advantages with parents because parents will allow their children playwith traditional toy instead of spend their children.s playtime with video games or watching "s!

: 'ower of buyers-

"he pressure of the customers is very high, with switching cost between alternative traditional toys and other

substitutes such as computer games or "s!

"he "oy products will be very important to customers, if it is in good uality and acceptable price such as LE+#toys, the customer will be loyal to the company and willing to spend money!

Find out more from *4 Essays here- http-99www!ukessays!com9essays9marketing9lego:faces:increasing:competition:marketing:essay!php;i7


9/28

In order to enter the mar%et easily and without any problems& Lego company has to be awared of thepolitical situation and other issues related to the political sector. There will be many advantages if thepolitical environmet change the rule that relate to the Lego companys operations.

1 !conomic /

The Toy edicational industry is developing and can be seen to be economically stable in the past fewyears. The economy is improving well so the L!" company also improve their products to gain thebest for their customers.The L!" company not only improve economic of the domestic mar%et butalso the external mar%et in all over the world. -or example& the = mar%et has big opportunities toL!" and other toy companies.

1 =ocial /

L!" company is trying to develop and launch the products to the mar%et and ma%e sure that theirproducts will be accepted by the community and public. The company also want their services are ingood relationship with many %ind of customers in some factors of the society.

1 Technological/

This is one important force in the Toy industry. In order to have new innovations and good product&L!" ompany also has and improving new technologies& also this is the way to compete with manyother strong competitors in the mar%et. L!" ompany ma%es sure they are updated to whathappening in case to ad$ust the changes.

1 Legal/

In order not to lose the customers welfare and the company name& L!" company doesnt want to ris%

by brea%ing the laws in local or international mar%ets. Then& all L!" companies are ma%ing sure thatthey follow all the rules and laws of the mar%et where their transactions are operating in.

!nvironmental /

Lego company is trying to ma%e their products that they sell are proven to cause minimal problems tothe environment. The company also introduced some strategies that aim to decline pollutants andcreate a good environment. The company also invested a huge amount of money in waste system toprotect the environment near companys factories.

Defining problems:

aaaa

L!" -aces Increasing ompetition

,lthough of the L!" ompanys successes& analysts reali3ed that the companys environment wouldchange& and in the past (5 years it has some challenges due to/



10/28

Increasing of the 'igital 8orld/ growth in electronic games& digital toys and much software ma%ecompetition harder

-aster hild 'evelopment/ 6owadays children grow up faster& it ma%e the global mar%et forconstruction toys is restricted because of their changing play patterns.

-ashion Trends in the Toy Industry/ fashions of toys go out and in more rapidly and sometime a fewproducts can ma%e or brea% annual turnover of the company.

'ependence on -amous lobal ?ega1Brands/ In response to fashion trends& toy manufacturers designofferings based on a concept or story :e.g.& =tar 8ars; and several companies offer all toys related tothe similar concept :Earry 9otter& =piderman;.

'ownturns in countrys economies can lead to a reduction in sales of L!" products.

The reaction of Lego ompany to these changes is combining innovation with mar%et adaptation. Theyreleased new digital toys :e.g.& L!" ?I6'=T"G?=J& L!" =9KB"TI=J;. It created virtual

communities to support users and cross1sell to them. They divide their business into each unit&including L!" Interactive :computer1based play materials; and L!" 'irect :catalogue sales;. Theyconcentrated expanded into life1style products& opened new theme par%s :in the .=.& #& andermany;& and cooperated with other famous global brands such as Lucas -ilms& 'isney& ?icrosoft&and 8arner Brothers to develop new product concepts.

-ind out more from # !ssays here/ http/www.u%essays.comessaysmar%etinglego1faces1increasing1competition1mar%eting1essay.phpix336uBD*p

ompare and contrast with main competitor ?ega Blo%sM

sing 9orteruality of materials to ma%e their products&while Lego uses a much higher >uality resources to ma%e toys& This act is a reason why Lego cost ofproducts much higher than ?ega Blo%s& It lead to ?ega Blo%s gains more mar%et share and ta%e manyprofits.

By researching& ?ega Blo%s had found new segmentation& which now is number one seller

in the preschool mar%et.

In the past& products of Lego are focused on narrow scope because the target customer mainly from Cto (2 years old.

By changing& now Lego more focuses on differentiation on a broad scope by targeting more than onemar%et. Lego needs to concentrate in long term innovative products& this way still ta%e its competitiveadvantage in the mar%et as being the creator of toys that help develop new s%ills and learning. Li%e thefirst edition& Lego bric%s ma%e children more creative thin%ing and imagination. It was critical for the

http://www.ukessays.com/essays/marketing/lego-faces-increasing-competition-marketing-essay.php#ixzz3GNuBQ6p3http://www.ukessays.com/essays/marketing/lego-faces-increasing-competition-marketing-essay.php#ixzz3GNuBQ6p3http://www.ukessays.com/essays/marketing/lego-faces-increasing-competition-marketing-essay.php#ixzz3GNuBQ6p3http://www.ukessays.com/essays/marketing/lego-faces-increasing-competition-marketing-essay.php#ixzz3GNuBQ6p3


11/28

management team to identify where to expand Legob

http://www.ukessays.com/essays/marketing/lego-faces-increasing-competition-marketing-essay.php#ixzz3GNuI6xqbhttp://www.ukessays.com/essays/marketing/lego-faces-increasing-competition-marketing-essay.php#ixzz3GNuI6xqbhttp://www.ukessays.com/essays/marketing/lego-faces-increasing-competition-marketing-essay.php#ixzz3GNuI6xqbhttp://www.ukessays.com/essays/marketing/lego-faces-increasing-competition-marketing-essay.php#ixzz3GNuI6xqb


12/28

"he survival of lego in changing environment

"his essay aims to provide an insight into LE+#.s performance in the *4 market and the strategies adopted byLE+# to be acclaimed today as *4.s 1rd largest toy seller! ccordingly, a better understanding will be attainedfrom a consumer.s perspective in the "oys industry! LE+# a brand which was in shambles in late 266 stepped

up to perform tremendously well during recession : =ow did LE+# manage to reach where they are todayJ In thefollowing chapters, a detailed description will be provided on how LE+# set an e7ample for many global brands tofollow in a touch economic situation!

2!6 Company #verview

It all started with one man.s vision! man who believed that good play enriches a child.s development : #le 4irkChristiansen, a carpenter from )illund! =e shifted his production from making wooden furniture for local farmers tochildren.s toys, owing to the great depression in the /016.s! KLE+#. originated from the 3anish words leg andgodt, which means Kplay well.! @"idd and )essant, 2660A! defines LE+# as B "he core product is a rectangularplastic brick, hollow on the inside e7cept for one or more tubes, with rows of studs on the top emblaA

Find out more from *4 Essays here- http-99www!ukessays!com9essays9marketing9the:survival:of:lego:in:changing:environment:marketing:essay!php;i7


13/28

&ince its foundation in /012, "he 3anish Company has great achievements added to its name! =owever, in 266,rumours had it that toy industry giant Mattel were going to buy LE+# since it had faced huge losses! )utrestructuring in management and change in strategy helped LE+# pick up their sales in spite of the recession! Inugust 266?, LE+#.s international sales were reportedly up by 26 in comparison to the year before! In the *4alone, 266> witnessed at 28 rise in sales as compared to 266! @MI5"EL! 266?A

"he latest report that appeared on 5ovember 26/6 in K"he "imes. London edition states that LE+#.s sales havepicked up by $6 per cent this Christmas season keeping both parents and children happy!@ine, 26/6A

Bccording to the +uardian, in 2660 the total sales at the *4 division based primarily in &lough, )erkshire, leapt1$ G a performance that took LE+# to a record *4 market share of 8!/, up from 1!2 a year ago! @Wood,2660A

"he pre:ta7 profits rose ?, which is appro7imately up by N/>/!0> million in the first half of 26/6! LE+# postsstrong sales @"he "imes, 26/6A

LE+#.s financial performance during recession was commendable while other "oy industry competitors like

Mattel, that reportedly faced a /0 fall in second:uarter sales in spite of housing big brand names like )arbie!@Wood, 2660A1!6 Consumer )ehaviour theories applied to LE+#

From the above, it is clear that LE+# has had a successful track record during recession! In this section, a deeperunderstanding will be attained on how LE+# was immune to the recession by placing their consumers in the heartof their business and understanding their reuirements! "o achieve this, three theories have been shortlisted theyare namely

)uying 3ecision Making 'rocess

ttitude Formation and Change

Consumer Identity and %eference +roups1!/ )uying 3ecision Making 'rocess

In order to understand, how LE+# survived through the economic downturn, it is important to interpret the buyingbehaviour of consumers in the "oys industry! )y understanding the dynamics of buying behaviour, successfulinsights can be drawn to help identify the gap between the consumer and company!



14/28

'arents being one of the prime target audiences in this industry also play a ma(or role in the buying behaviorprocess! LE+# appeals to this market as it has the element of Kcreative play. and parents are assured that it is nota waste of time as compared to watching television or spending time on Facebook! 'arents therefore wouldchoose to buy LE+# as they want their children to learn while they play! &omething that most other toys or videogames have failed to achieve @MI5"EL, 266?A!

5eed for retro products during recession

nother interesting point to note is how consumers chose retro products during times of crisis due to itsestablished legacy! 3uring recession, parents actually found the need to invest in products that are of high ualityand are long lasting in nature as opposed to (ust purchasing a cheap toy! +errick Dohnson, toy:industry analyst at)M# Capital Markets made a comment stating that PIn tough economic times, youQll often see retro productscome back! 'arents spend money on stuff they know works! %ather than going to 3isney World or on a trip, youget a 16 LE+# set!P @Faris, 26/6A5eed for up:to date toys and gadgets

3uring a time when their prime target audience were more inclined towards computer games, LE+# constantly

kept innovating and updating their offerings to suit the needs of this market that is faced by such rapid growth andevolution!

"he company steadily launched new products which resulted in three:uarters of its yearly sales! In 2666, the)ritish ssociation of "oy %etailers along with Fortune magaA

%ecogni


15/28

"oday LE+# is the fourth:largest toy manufacturer after Mattel, )andai:5amco, =asbro and the fifth position heldby "#MR:"akara @LE+# +roup, 2660A! In the case of activity toys like LE+#, consumers would potentially askthese uestions! 3oes the product benefit my child learning abilityJ Is the product safe and of supreme ualityJ

Mc 3onalds.s once used LE+# in the *& as a part of one their sales promotion campaign! 1> billion bricks were

distributed over four weeks out of which only a doA!1!/! 'ost:'urchase Evaluation-

When LE+# was voted as Marketer of the Rear in 2660, one of the comments by a user from 3allas commentedBI have to vote LE+#:for continuing to provide a top:uality product in line with their brand, staying relevant andusing new technologies to create new customer e7periences in a kidsQ toy market thatQs moving away from brandswith a Plow:techP heritage! "his is a company that inspires others to a higher standard! Who can vote for acompany that continues to drive uality down to get to a cheaper priceJ @Creamer, 2660A! "hese testimonialsprove that consumers overall have been happy after purchasing the product!1!2 ttitude formation and change

#ne of the aspects involved in the psychological factor of the decision making process, is attitudes! "heseattitudes are either formed on e7perience or interaction with other people! n attitude of a consumer towards afirm and its products tends to have a great influence in the firms marketing strategy @&oloman, 2660A!1!2!/ Efforts made my LE+# to track attitudes

For strategic decision making that is driven by insights, it is essential to track attitudes! It could be trackingchanges in different age groups, scenarios about future, identify emerging trends etc @&oloman, 2660A! LE+# hasrealised the importance of tracking changing attitudes and the following findings can be drawn in this regard-&cenarios about future

http://www.ukessays.com/essays/marketing/the-survival-of-lego-in-changing-environment-marketing-essay.php#ixzz3GNuh4dhihttp://www.ukessays.com/essays/marketing/the-survival-of-lego-in-changing-environment-marketing-essay.php#ixzz3GNuh4dhihttp://www.ukessays.com/essays/marketing/the-survival-of-lego-in-changing-environment-marketing-essay.php#ixzz3GNuh4dhihttp://www.ukessays.com/essays/marketing/the-survival-of-lego-in-changing-environment-marketing-essay.php#ixzz3GNuh4dhi


16/28

#ne of the most significant changes that LE+# has taken up this decade is that it has begun listening to itsconsumers and their changing attitudes! In today.s social networking era, it is highly essential to monitorbehaviour and attitudes! It was through the efforts made by LE+# on social media, that they realised their fanbase was not (ust limited to children but adults too! Courtesy the KF#L.community G dult Fans of LE+# G LE+#now has some specialist ambassadors who communicate with them and provide feedback! LE+# also involvesthese ambassadors in their product development! "hey began monitoring blogs and got a deeper understanding

on culture, desires of both potential and e7isting consumers and changed their strategy accordingly! It wasthrough this initiative that LE+# decided to make sets based on movies like K&tar Wars. or KIndiana Dones. andnow these deals make up more than half of their sales @dvertising ge, 2660A!

)y doing so LE+# gets inputs from probably the most loyal customer base and thus adress unhappy customersor fill any gaps in the market place! "hese insights drove their strategy and helped them survive in an atmospherewhere the only words heard off were lay:offs and losses! LE+# is one such e7ample of a brand that hasbenefitted by working in partnership with their consumers and predicting the future @+arfield, 266>A!Changes in different age groups

LE+# has a very ambitious mission statement of Keach and every child in the world to own one cubic metre of

LE+# bricks.! @=arris and Mc3onald, 2668A Children globally are treated the same by marketers no matter whichculture they belong to! =owever, even if they are treated the same their attitudes may differ due to their upbringingand e7ternal environment! "hough most of the concept and product development occurs in the )illundheaduarters, LE+# has trends watching department in their offices in Munich, Los ngeles and "okyo! Infact, toensure that LE+# is an international product that suits ever child needs, the creative team is composed of /26designers G /$ different nationalities @LE+# +roup, 2660A!



17/28

+ender is a crucial element in consumer behaviour! boy may perceive different things from a girl! "his can beproven with an e7ample of how LE+# researched playing habits amongst boys and! "he findings were that girlswere more likely to build living areas while boys built cars! LE+# introduced a new version of its product for girlscalled K'aradise. which emphasiA

"herefore, one may ask how much role does nostalgia play in triggering what baby boomers and generation O buyas toys for their childrenJ %etro favourites are gaining popularity owing to the fact that they have provided realuality and value over time, and one of the reasons all these new fans have emerged is through nostalgia!ccording to the @"elegraph, 26/6A, LE+# has performed well in recession as parents due to nostalgia have

shifted to trusted brands! 'arents don.t intend to buy toys that their children would throw aside in months, insteadthey would rather invest in toys that children of all generations would go back to!1!1!1 Children 'ester power v9s parent power

'ester 'ower is a term used to define a child.s influence over the parent in the buying process @"urner et al,266A! ccording to "urner, children can be easily influenced by advertising and marketers use this as a mediumto entice children to nag and purchase the product of their desire!

B"he key factors that influences a child.s pestering behaviour is the family type, family communication pattern, theperson accompanying the child to shopping, intent of going for shopping and advertising! @enkatesh and +hai,26/6A! ccording to the report by Mintel, 266?, Blthough adults are the primary purchasers, kids are the ultimatearbiters of success and failure across much of the market G nearly four in ten parents cannot say no to their kids!

LE+# partnered with 4ellogg.s in 266> to create LE+# brick shaped candy called KFun &nacks.! "his createdhype amongst parents as they had spent valuable amount of their time telling their children not to swallow LE+#bricks! LE+# went on to the e7tent of advertising in between children.s " shows, placing the product at thebottom of the shelf spaces in order to make it accessible for childrenH thereby making children nag for KFun&nacks. @Fran


18/28

could conduct an annual conference or workshop, whereby all these designers meet up and brain storm with keydesigners and managers on how to improve LE+# and keep up with changing trends!

2! Christmas accounts for around half of the year.s sales for LE+#! 4eeping this in mind, LE+# should launchtheir new products or special Christmas edition toys as nearly seven in ten consumers buy toys and games forChristmas! @MI5"EL! 266?A nd after all, who would refuse the latest Christmas edition of LE+#J

1! n emerging trend is gifting new born toys : up from /1 in 2661 to 2 now! Considering this trend, LE+#could launch its own collection of Kteether. toys meant for new born! "his could range from a simple brick softchewy toy to its very own =arry potter collection for newborns!

8! 'hone applications seem to be the ne7t big trend that is picking up! LE+# already has its own &tar Wars LE+#I phone game version! LE+# must continue entering markets where gaming is a hype!

$! LE+# should push the product more using the Kscientific. connection! ccording to @"urkle and &mith, 2660Aplaying with LE+# helps children enhance their problem solving and discovery skills! "his makes a child think in ascientific, problem recognition and solving approach that most engineers, scientist and designers use! "urkle

claims that the toys that children play with have a great impact on their future careers! &ome children may try andcreate unrealistic structures, while some may follow instructions, some keep their constructed sets as awardswhile some (ust break themH different children behave differently with LE+#! =owever, each role play is good toidentify traits about your children and which direction they are progressing towards!

Most of LE+# consumers are not price sensitive! "hey buy LE+# because of the brand and the uality! s aconsumer, you can either buy the simple bricks or a special version of LE+# to add it to your collection!"herefore, LE+# can afford to release a premium end version of the toys that are suitable to kids that belong torich households!

?! LE+# for grey market: %esearch has shown that playing with LE+# for an hour or two can help old peoplefight memory loss and problems that occur due to degeneration like dementia and l


19/28

In /018, the companies name LE+# was established In /086 LE+# started producing plastic toys! LE+# in 3anish means P'lay WellP! LE+#Qs mission statement is P#nly the best is good enoughP!

LE+# @266?A states PIt is LE+# philosophy that Pgood playP enriches a childQs life : and its subseuent adulthood!With this in mind, the LE+# +roup has developed and marketed a wide range of products, all founded on thesame basic philosophy of learning and developing : through play!P

"he LE+# )rick pieces that were made in /0$? will still interlock with the bricks that are made today! LE+#estimateQs that it has sold over 866 billion LE+# )ricks since its start!

"his case study analysis looks at "he LE+# +roups strategic direction and the battle of the block makers inparticular Mega )loks! "he case study has been summarised for clear understanding of the issues raised!&ummary

LE+# is one of the top toy manufacturersQ in the world! Its interlocking plastic bricks have made the company asensation for the worldQs most innovative toy creators through learning and developing while playing!

Each year LE+# produces /8 )illion plastic bricks to distribute around the world for children to play with! *ntilMega )loks arrival LE+# had a competitive advantage as the only toy maker of interlocking plastic bricks! Mega)locks as its ma(or competitor challenged this by introducing similar products as LE+#!

Mega )loks who are based in Montreal, Canada makes interlocking plastic bricks that cost less than LE+#products! LE+# however, believes that the high uality of its product (ustifies its prices, because it uses a higheruality of resin which is found in paints and vanishes! Mega )lok however uses commodity:grade resin!

LE+# is still the most popular plastic brick toys with the > to /2 year old segment of the market, however Mega)loks is gaining its market share through the preschool market! "he Mega )lok toys are larger and softercompared to the Lego products, users of the toys think Mega )loks toys are easier for younger children to playwith! In response to this, LE+# introduced the 3uplo Line of oversi to /2 year olds or immediate school set!"his new line is interchangeable with the LE+# line! LE+# took Mega )lok to Court in Canada over the issue thatMega )lock had copied its brick design, however the Court ruled that the brick design is functional and entitled totrademark protection!

Mega )loks sales doubled between 2666 to 2661! Lego reported its first loss ever of 88 million in /0??! LE+#was at serious risk of losing its core brick market to Mega )loks if it did not come up with a strategy to deal withthe problem of how to regain the market share it was losing to Mega )lok! LE+# chose to call for new sources ofgrowth beyond the core block category! "his solution gave them a new line of original robot action figures knownas P)ioniclesP! "he )ionicles were LE+#Qs best seller in 2661 which led to a direct to 33 animated feature whichwas released by Mirama7! Lego also formed alliances with Walt 3isney Company and Lucasfilms, the creator of&tar Wars! LE+# had its own =arry 'otter play sets which in 2661 LE+# were left with millions of dollars ofunsold products! "his was relatively blamed on the retail situation and the dollarQs weakness compared to the



20/28

3anish 4rone! In 2661 LE+# posted a loss of / million! LE+#, in a desperate aim to regain profits, unveiled awide range of new products aiming at the preschool market and a new range aimed at young girls!UuestionsWhat is the most important decision currently facing 4(eld 4irk 4irstiansenJ

#le 4irk Christiansen created LE+# which was popular in /018 when there was no other product similar

available! =owever LE+# did not recognise the changing environment and the changes to the needs and wantsof consumers! #ne of the most important decisions facing Lego9 4(eld 4irk 4irstiansen is deciding who its mainmarket is and how to target that market, using data to conduct a segmentation of the different needs and wants ofthat market and become the leading toy seller again!

In 2668, LE+# continued its entertainment promotional and product tie:ins with the new =arry 'otter and&piderman movies! 3o you think this was the right strategyJ

With LE+# reporting a loss in 2661 and with evidence that the sales of =arry 'otter play sets going down, thiswas not the right strategic decision! =arry 'otter movies go in and out of fashion, they are only popular while themovies are popular! Choosing to stick to a product that is popular all season would have been the better option for

LE+#! "his reflects the need to have a strategy that will be successful in the long term, which will be acompetitive advantage, rather than fill its temporary demand!

n e7ample is LE+#Qs Mindstorms %obotics Invention system which allows users to build computer:controlledcreatures! "his fulfils LE+#Qs philosophy that the users of its product play while learning because the users arecontrolling the creature they creative, which uses the childQs creative thinking rather having a action figure that hasalready been created and has limited use in regards to improving the creative thinking of the child in terms ofbuilding and making the product!

*sing 'orterQs generic strategies framework, compare and contrast LE+# and Mega )loks in terms of theirrespective pursuits of competitive advantage! Mega )loks is a cost leader because they have increased profitsthrough reducing cost by using different uality of materials to make their products then LE+#, who uses a muchhigher uality resources to make its products, which in turn will increase their cost, making their products muchhigher in price than Mega )loks! "herefore Mega )loks gains a bigger market share!

Mega )loks through research had found a niche, in which it is now the number one seller, in the preschool market!"hey developed bricks that are larger and softer which makes them easier and safer to play with according toparents! Mega )loks introduced new line of bricks for > to /2 years of age which can be interchanged with LE+#bricks!

LE+# before Mega )loks arrived was more differentiation focused on the narrow scope because it mainlytargeted one market! > to /2 year old!

LE+# now focuses on differentiation on a broad scope by targeting more than one market! For e7ample thepreschool market!

LE+# is trying to be popular through having movie action figures for e7ample =arry 'otter play sets which salesfor this went down whereas the =arry 'otter movie was still popular! LE+# needs to focus more on long terminnovative products that way it can still keep its competitive advantage in the market place as being the creator oftoys that help develop learning and new skills! s the original LE+# bricks did where children would make ob(ectswith the bricks which involves using the childrenQs creative thinking and imagination!



21/28

Conclusion

Lego was founded by #le 4irk Christiansen who a carpenter began making wooden toys! In /018, the companiesname LE+# was established! Lego is the si7th largest toy manufacturer for children! Its main product consists ofcolourful interlocking plastic bricks which can be assembled to construct ob(ects such as vehicles, building etc!

LE+# @266?A states PIt is LE+# philosophy that Pgood playP enriches a childQs life : and its subseuent adulthood!With this in mind, the LE+# +roup has developed and marketed a wide range of products, all founded on thesame basic philosophy of learning and developing : through play!P

Mega )loks challenged LE+# brick market by having similar products as LE+# but targeting a new market, thepreschool market!

Mega )loks products are also cheaper to purchase then LE+# because Mega )lok uses commodity grade resinwhere LE+# uses a much higher uality resin which is why LE+# is more e7pensive then Mega )loks!

"hrough many ups and down of LE+#, it had to make strategic decisions on what it wanted for its future and

where they wanted to see themselves in the toy market!

"he solution varied but what it needs to do is keep in mind their philosophy and make innovated products that willhelp the children learn and develop new skills while playing!%eferenceFromme D! @2661A! +ames &tudies- Computer games as part of childrenQs culture! %etrieved from-http-99www!gamestudies!org9616/9fromme9

4eegan, W!D!, V +reen, M!C! @266$A! +lobal Marketing! @8"= ed!A! *pper &addle %iver, 5, D- 'rentice =all! p! $2!

Mind "ools! @2660A! 'orter +eneric &trategies! %etrieved from-http-99www!mindtools!com9pages9article9new&"%T?2!htm

LE+#! @2660A! bout us- company information! %etrieved from-http-99www!lego!com9info9pdf9LE+#TcompanyTprofileT*4!pdf

Wikipedia! @2660A! LE+#! %etrieved from- http-99en!wikipedia!org9wiki9Lego Wikipedia! @2660A!

Mega )rand! %etrieved from- http-99en!wikipedia!org9wiki9MegaT)loks&truggling with your essayJ

LE+# Case &tudy- nalyse LegoQs macro and micro marketing environment

LE+# as we know it today first came into being in /080 when +odtfred 4irk Christiansen used a Bnew material Gplastic G to create simple four and eight stud building blocks! "oday, LE+# has turned into one of the mostfamous toy brands in the world! "he aim of this case study essay is to asses the macro and micro environment inwhich LE+# is performing today!

Micro Marketing Environment



22/28

"he micro marketing environment is defined as Bthe forces close to the company that affect its ability to serve itscustomers G the company, market channel, firms, customer markets, competitors and publics, which combine tomake the firm.s value delivery system @4otler, Wong, &aunders and rmstrong, 266$A

#ne of the most notable things concerning the micro environment of LE+# is that it is viewed as a strong brand! It

been part of the toy market for so long, that grandparents and parents can remember playing with the toy as achild, and so often feel they have a relationship or bond with the product! "he brand has also infiltrated manymarkets world:wide, and its fame is instrumental in its continued success! "he case study states, it.s the onlyEuropean company to enter the worlds "op "en toy manufacturers!

Find out more from *4 Essays here- http-99www!ukessays!com9essays9marketing9lego!php;i7


23/28

company intends to solve this inefficiency problem by cutting the si


24/28

"hreats &o many toys on the market, many of which have more functions and are more sophisticated than LE+#and its associated products! %eaction of public to unemployment they may cause in aim of achieving greaterefficiency! =i:"ech products and companies, such as &ony and pple! 3ownturns in country.s economies can leadto a reduction in sales of LE+# products! &tock reductions by the retail trade )igger names such as Warner

)rothers and 3isney who have progressed much further in creating childhood entertainment empires!

3anish company Lego, the world.s si7th largest toy maker, has transformed the processes of its design function inrecent yearsH and these changes have streamlined product development and the processes developed by the in:house design function are now being used as a method to enhance innovation across the entire business @3esignCouncil, 266>A! In the clichd Kglobal village. we live in, there is no system that can survive in isolation! Especiallywhen considering a business system, which is integrally dynamic and constantly evolving!

"he fundamental concept to become familiar with when managing a business such as Lego, is the idea that thebusiness has a creative personality in its own right! =ence it is important to understand the advantagees,disadvantages, and creative implications of such a separate creative personality, as it entails for all the

participants both internal and e7ternal, a distinct creative position! "he simplest form of business enterprisesutiliA elaborate the uniueness with the Lego development case, by criticiA!

Find out more from *4 Essays here- http-99www!ukessays!com9essays9marketing9lego!php;i7


25/28

"he basic element of creative production being at the forefront always, one would go by the notion of innovation!=owever, wanting to produce novel products, even though a dire need for the product may not be there, yet thedemand for it would have to be created! nd the crucial word here is Kcustomer.! new Lego product is notsomething that would have a potential buyer everywhere! "his reuires a certain niche of buyers, with a certainamount of style and balance in their preferences and likes to accomplish the needful!

For establishment of a new product market for Lego, the first step would be to engage the e7isting customers ofthe company! If the buyer has used one product of the company and is seemingly satisfied, there is everyprobability that he can be allured into another one! In such and event, a database for the current clients can beconsidered crucial! "his is because Lego would want to create and capture new markets, at the same time itwould not like to lose on e7isting brand loyalty! "hen, based on the features of the product, a market sample couldbe acuired as to who can be the future lot with possible interest in the product! "hat area of the population wouldthen be targeted by means of conventional marketing tools involving print and electronic media! It is important tocreate the demand, that the necessity and difference of the new product be highlighted to the ma7imum!

'erhaps the most important venture would be getting involved in a one:to:one method of communication with the

customers! #nce the target areas has been established, then the sales and marketing people, using methods ofemails, telephones, letters and even workshops, would endeavor to convince the potential customer in apersonali


26/28

ntroduction- short introduction about the LE+# companies history, before starting this case study! It was startedby a simple carpenter named #le 4irk Christiansen and with a few employees in /012! From today more than 6

years ago they started making wooden toys in his workshop in )illund, 3enmark! "he name LE+# first used in/018 came from 3anish words Qleg +odtQ translation this word is Q play wellQ!

)ut as when plastic came into widespread use, then #le 4irk begins to reali


27/28

#pportunity- dvance technological give opportunity to LE+# company! Company makes product according tothe needs of consumer which make good relationship between both!

"hreats- Main threat is that number of competitors in the market, with huge range of product! nd some ofbusiness environment also which can accrued at any time, like credit crunch!

Evaluation of decision making process made by LE+# and effective response after the change in demand:

While consumer buying any product from the market there are many guidance which help in decision making!"oday fashion is changing very fast which also affects the consumer decision making! Following are some ways ofdecision making!

&ocial and educational attraction product: s people always compare with other, so while purchasing toys for theirchildrenQs they like to buy the toys which is famous in the society and have a trend at that time and children alsobuy the same product because their friend might have same one! &o LE+# is always follow the same rhythmwhich is going on and makes product according to needs of consumer with new fashion and trend! LE+# produceproduct affording to the main target range which is 6 years child to /?years boy! "hey also make product which

helping in education for childrenQs!

"echnological attraction product: today world is changing very fast with advance technology! &o it also affects thehabit of consumer decision making! What new technology they use in their particular product and what new canthey do in the fields of games! LE+# use advance technology in their process of making product and withadvance computer games! LE+# knows that if it is reverse its changing financial fortunes, its continuedcommitment to innovation is essential! "hey mostly targeted two:to:five year olds how favourite characters likeWinnie the pooh, "igger, 'iglet which they show in 3isney film characters!

)elief and attitudes: Company has simple phenomena that they never change their attitude towards their productmaking! LE+# always encourage childrenQs creativity, so they use the theme for them! B for any company attitudeplay an important role for consumer while collecting the information or decision making and Williams /0?/insummarising the literature, describes attitudes have three different comportments cognitive, affective, co:native@Williams /0?/, '! no! //8, 'rincipal of marketing 1 %d A!

+ender or age attraction product: gender or age also plays an important role while consumer purchases a newproduct! LE+# organisation make different product for boys and girls, because wants of every customer isbasically different, so they made according to needs! "his gender difference starts from the first year of childrenQs!nd the same in the age difference, as child

Find out more from *4 Essays here- http-99www!ukessays!com9essays9marketing9lego:case:study:analysis:marketing:essay!php;i7


28/28

3ue to drastic change in the economy and in the field of technology LE+# have great effect on this brand name,ever fast changing want of Consumer Company also think that what they want in the toys and games! B"argetingyoung adult is anything but childQs toy! "oday.s toys involve highly focused research and the use of sophisticatedtechnology to attract and to appeal to young people! ResterdayQs favourite brand such as LE+# and )iro are nowfighting for top:of:the:toy:bo7 status against electronic upstarts!@by %on Irwin,http-99www!brandchannel!com9featuresTeffect!aspJpfTidX//1 A

)ut in some research it is find that LE+# have to suffer a lot, not in the brandQs but also a loss figures as it isshown in the case study given to students! )ut as the time passes LE+# stands and get this brand position nameand set a good picture in the mind of consumer and force them to buy their product which is best from rest! "odayin the market of toys LE+# has become famous and makes an important place in new generation childrenQs!

#ne more important definition for LE+# from the same case study Bour vision is for people all over the world toe7perience positive, happy associations every time they see a LE+# logo, see a LE+# element or hold it in theirhands! Imagination, e7uberance, spontaneity, self:e7pression, uality:these are some of the words we wish to linkwith the LE+# name, together with values like development, concern for others and innovation!

Www!lego!com

Marketing strategies: LE+# organisation always adopted new and creative ideas for making their products whichare currently in trend and in the market! LE+# Company has made an tendency that they use to make server allthe time in the business field, so that they get updated every time!

Find out more from *4 Essays here- http-99www!ukessays!com9essays9marketing9lego:case:study:analysis:marketing:essay!php;i7

online information of lego

Documents