Marketing and Lego

The use of LEGOs is an extraordinary thing, but it is shocking to see exactly how controversial a small toy can become. People of all ages have been found to enjoy this toy. Companies and organizations such as MIT and NASA have even found a use for them. The toy has become known as a child’s imagination tool and has not been exclusively used for adults. The documentary shows that adults come together to compete in competitions on who can create the greatest LEGO sculpture. Many people may not know just how big this toy is used around the world.

1. From early 1990s to 2004, the Lego Group, a long successful toymaker with a world-renowned brand, fell into the edge of bankruptcy. Compared with the highest revenue in 1999, the revenue in 2014 decreased by 35.6% while the net profit was negative, seven times less than that in 1999, the lowest in the past ten years. Its net profit margin and ROE were also the lowest. The gross margin and inventory turnover were all lower than its competitors. The strategic moves in the two main periods “growth period that wasn’t” (1993-1998) and the “fix that wasn’t” (1999-2004) lead to its poor performance.

This paper aims to outline the history of Lego since its start up within the last 100 years all the way to its financial crisis and verge of collapse in the early 2000s (see appendix for History of Lego). The Economic analysis and evaluation aims to argue whether Lego has a monopoly position in the global toy industry or whether it moves into

just building blocks.  Due to the different segments that make up the toy industry, buyer power is

The competitive rivalry in the toy industry is intense. Organizations try to sell through their own retailers and online instead of solely through other retailers. Flexibility and responsiveness to the market are

Many issues arise from Lego’s target market being largely children. The first problem is moving from a child wishing to buy a Lego product to a parent paying for the product. Many ethical and legal issues must be addressed when marketing to children. One possible way of dealing with these sensitive issues is to allow parents to customize the web site and pre pay purchases using gift cards. Two advantages result from this strategy; the first is giving parents control over what products and information is available to the children. For example, a

Technology, like LEGO toys, is combining materials and techniques with a spark of idea to accomplish a certain objective. Since the first industrial revolution started in the 18th century, the gross productivity in the world has dramatically rocketed to a higher level than ever before. People will be astonished about how the technology has profoundly changed different aspects of life, especially in those innovations that can bring numerous possibilities to the future generations. In fact, the innovative technologies have impacted actively on different aspects of life, such as improving efficiency in agriculture, changing education patterns and using sustainable energy.

For about a century ago, the Lego Company has been a dominant player in the world of toy making that, aside being a household name, it has become synonymous with fun, creativity and learning. Starting off as a result of a Danish carpenter’s passion, Lego has risen to capture the hearts of millions of kids, teeming youth and fanatic adults in the form of creativity and games. However, managing the company itself has not been all fun as Lego’s history includes a myriad of failures, bankruptcy, innovations and counter-innovation. The journey to global dominance in the manufacturing of toys was enmeshed in several strategic decisions that young managers needs to learn from in decision making and implementing of innovation in organizations.

First I will review the Play Promise. LEGO provides play materials to children, and the best interest of the child is at the core of their values. Children’s rights are extremely important to LEGO which means never compromising the quality and safety of our products and safeguarding the children they engage directly with. Also, LEGO recognizes their unique position to support some child rights proactively – and the main focus is Children’s development and the importance play has in this connection. The second part is the Partner Promise. It is required that the suppliers and close partners treat their employees respectfully and promote responsible sourcing. Suppliers and close partners sign a Supplier Code of Conduct and engage in dialogue and based on risk evaluations they conduct third party audits to monitor its implementation. The third part is the Planet promise. LEGO strives to minimize the negative effect and provide a positive impact on global society and the local communities impacted by their operations and presence. A respectful stakeholder dialogue underpins their work, and ensures that they engage constructively and openly with the stakeholders affected. The six stakeholder groups that LEGO is geared towards are as follows: consumers, customers, employee, business

The Lego group was established in 1932 by Ole Kirk Christiansen in Billund, Denmark. Lego today is one of the most recognizable brands in the world. However, that does not mean that they haven’t had to make some changes along the way to reach and stay at that position. Lego needed to change because of increased expansion of their product line which lead Lego to the brink of going bankrupt. In the year 2000, the Lego group had a huge sales growth. By 2004, they were projected to lose somewhere around two billion dollars. This lead to talks about bankruptcy, breakup of the company, or even the sale of the company. Regardless of the talks, it was quite obviously that something had to be done before any of that talk became a reality

“set amount of a good or service can be produced on a larger scale yet having less input costs” . This can be the case for Lego due to to its long term factory moulds, its specialisation in producing building brick and its unique history and brand concept. For a competitor to enter the market it would have a high Economies of Scale. To exemplify this if Lego wanted to produce x units it would cost $y. If a competitor wanted to produce the same amount of units (x) its cost would be $Ky with K being the constant. It would prove to be more costly for the competitor.

“Strategy is the long-term direction of an organization” (Johnson, Whittington and Scholes, 2011, p.3). The LEGO Group started with the manufacture of stepladders, ironing boards, stools and wooden toys and has grown into one of the top five toy makers in the world (Johnson, Whittington and Scholes, 2011).

This study shows the market of traditional toys and their positioning in the United Kingdom market place and identifying the practices that helps the organization to come up with the new products into the existing market quickly and efficiently, which it should

* In the 1970’s, GCK designed the “ten lego characteristics” which today represents the guidelines for development and policy, and has become the foundation for current company values

Creating the number of successful commercialized innovations which can be available in the toy industry;