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LEGO – Brand Analysis, Strategy & Recommendations
MSEP14CMM12 | Harish Vasudevan
Prelude
The current trend of any marketing strategy starts with this fact, people don’t buy just products (stuff) anymore
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They buy on emotions and later justify them with logic
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So what a brand needs to do is
to sell emotions + experience and not just the functional products
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Introduction to the brand: LEGO
LEGO is an acronym of two Danish words that says “leg godt” meaning “play well”
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The company was initially using wooden bricks interlocking to each other to make
a toy but later shifted on to plastic that sells millions now
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The company started selling established plastic commercial toys in the late 50’s and introduced the
concept of “LEGO – SYSTEM OF PLAY” along with the concept of “play and learn”
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Partnering with
MIT Media lab in 1984 led Lego to develop educating teaching materials, the prominent one being
“LEGO Technic Computer Control”
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The brand saw a big transformation by launching the “Lego Learning Institute” in 2002 that comprised of experts
researching into a child’s creative, imaginative and academic front
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The sales started declining, there was a huge deficit on the table, and the leadership was under pressure
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LEGO- Brand Framework
The LEGO brand framework was primarily based on the concept that Innovation was the key parameter that will drive the
industry
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In a time when toys were crafted to a model and then given
in the hands of a kid, LEGO wanted to give kids the instruments to creatively build a toy
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Pride of creation
Planet Promise
Positive impact

Partner Promise
Mutual value creation
People Promise
Succeed together

Spirit

Only the best is good enough

Values

Imagination - Creativity - Fun - Learning - Caring - Quality

As we can see from the figure above, LEGO focussed a lot on the Brand Identity and experience component and their
model of 4 P’s was a successful strategy the market looked upon
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If we have a close look at the Target Segment of the firm, they divided the same
into:

Primary Target segment:
3-18 year old boys and girls subdivided into Pre-School, Pre-Teen and Teenagers – For pre-school, Dolls and Plush
figures
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For Teenagers, Outdoor, Sports games and video games
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Secondary Target segment:
Adult Fans of LEGO or AFOL as LEGO likes to call them whom, irrespective of their age, like creative building games and
different concepts of role playing
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The diagram below explains how:

One of the biggest success reasons for LEGO is because of the fact that it was able to position itself on a unique WOW
Factor that clearly differentiated itself from many other competitors including that of Mattel and Hasbro
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LEGO – The Innovative parameter
Lego has always been a brand that has innovated itself from time to time to move ahead of the market and understand
the customer wants better
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So the scope of incremental innovation was out of question since Lego had to come up with
something new and transformational every time to compete in the market and that’s exactly what they did
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In terms of financials, LEGO is the second
largest toy manufacturer in the world after Mattel, which swept the world with the launch of Barbie doll
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LEGO – BCG Model & Product Lifecycle
In the BCG Model, LEGO is pretty well positioned in terms of its products moving from one cycle to the other
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LEGO is pretty clear about its innovative
components and so whenever it sees an opportunity in the market to expand and to satisfy a customer need, it utilizes
the chance
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The brand does have a “Balanced Brand Portfolio” where the products are
diversely distributed across different phases and are not concentrated on a single side giving them, competitive
advantage over the other firms
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LEGO has been successful in maintaining a singular brand identity with respect to its Position, Image, Product and
Stakeholders well in sync with each other
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There is NO SPECIFIC BUSINESS MOAT as such for
the brand since it’s in the toy manufacturing industry
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With an impressive operating margin of around 30%
before tax, the company is all set of rise high in the coming years
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What happened there? How did the firm manage to
turnaround a huge loss of 2
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There was little or no growth back in 2001
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Many innovative ideas such as the “Wrist watches” and other
things was scraped
Attempts to refocus and revitalize the core brand values failed
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The firm, positively looked at a hint of recovery in 2002 with a small profit increase of 822 DKK with a relatively smaller
increase of 0
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Many promises were made for the brand to rise up again but only until 2003 came
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Sales fell by around 30%
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Competitors caught up with the LEGO trends and
choked the firm into huge losses
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There were many reasons as to how the revitalization happened and the following were the main ones:
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-

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The most important part of the change was the change in Leadership
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Once he joined the firm, he gave 2 important principles that should take control of the
situation
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These were launched under the umbrella of
“LEGO ‘Light’ project” that allows the firm to respond quickly to the changing market
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The product line picked up great momentum after media traction
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The rebranding
strategy for the LEGOLAND was placed emotionally coupling with very affordable prices that attracted many
customers
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From
this point, LEGO was never looked upon as a brand that just sold toys but rather as a brand that was emotionally
connecting, innovative and one that helped many kids learn and still have fun using creativity
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LEGO, later used a diversification strategy where it
ventured more into software, learning concepts, Lifestyle products, Books, Magazines and many others to add on
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So following below are
my main recommendations to LEGO to become a Super-Cool brand in the future:
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Focus highly on the new product line in terms of transformational innovation using better R&D methods and
techniques with cutting-edge technologies
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Provide an insightful value leap, increasing value by better
promotional strategies and effective branding
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Try to work on the “Planet” part of the P’s and give back something to the society
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Concentrate on being more “Glocal” in the approach since Local adaption is as important to expand into the new
markets as Global integration
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Proper attention to the feedback given by the customers is very important
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Focus on becoming the “Masters of the Mould” with over 50 Billon LEGO piece targets every year
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Emphasis on the new potential market expansion of the Creative entertainment industry into the markets of Latin
America & Asia

References
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“The LEGO Toys”, http://www
...
com/lego-group-in-toys-and-games/report
“Media & Entertainment – LEGO”, http://www
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com/brandguide/media-and-entertainment/5962-lego
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files
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com/2013/04/strategicmanagement_lego_10dec12
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thelegocasestudy
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pdf
"The LEGO Group, A short presentation," LEGO, 2012
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"The European Toy Market," ICTI and The NPD Group, Inc, 2011
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Oliver, E
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Heckmann, "Rebuilding Lego, Brick by Brick," Strategy+business, Autumn 2007
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Available: www
...
com
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"Merlin Entertainment," [Online]
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merlinentertainments
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[Accessed Dec 2012]
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Available: http://www
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com/art/3d-printed-legocompletes-chipped-rock/
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