...building blocks at its core, Lego continues to fulfill Ole Kirk Kristiansen’s mission to inspire creativity and innovation in children and adults. The company has come far since 1932, but, because its basic product allows for limitless imagination, there are still endless opportunities it can pursue. The ability to inspire infinite creativity is what sets Lego apart from any other toy retailer. Lego’s competitive advantage is a combination of four factors: its brand equity, merchandise assortment, pricing, and visual merchandising. As a toymaker that has prominent brand equity, opening themed brand retail stores gives its consumers an engaging in-store experience with its unique product. TWINCITIESDAILYPHOTO·3 YEARS AGO Since Lego has been successful in the market for a long time, its brand equity allows the retail locations to give long-time Lego consumers a nostalgic in-store experience and new customers an immersive brand experience. The stores’ visual merchandising and merchandise assortment allow this to happen, making each customer’s visit to the Lego store a unique one. It is this unique experience with the product that drives sales in the retailing industry. Maintaining this competitive advantage in an ever-changing marketplace is difficult. While stores like Toys “R” Us, Target, and Walmart are some of Lego’s competitors, it is interesting to compare Lego to another themed brand store like American Girl. Even though American girl has a somewhat different target...
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...CASE 1 Presentation: “Lego: The fall and rise” MK-210 Principles of Marketing (Section-A) Program: BBA Marks: 5 ------------------------------------------------- There is one company that has made more than 400 billion bricks (62+ for every individual on this planet). It may also be called world’s largest tire manufacturer though in this case ‘bricks’ and ‘tires’ are of blocks made by Lego. This Danish company was registered in 1958 though it had been manufacturing blocks since 1932. It has twice been named Toy of the Century, by Fortune magazine and the British Association of Toys. Lego employees about 10,000 people, is spread in over 130 countries and is world’s fourth largest manufacturer of toys in terms of revenue after Mattel ($5.8bn), Namco Bandai Holdings ($4.5bn) and Hasbro ($4bn). Losses epoch (1998-2004) In 1990s the videogaming era boosted and in 1995 the internet came eventually taking away the share of children’s time from toys. As some analysts said that videogames in particularly were the prime reason for Lego’s eroding sales to the point that in 1998 it suffered losses for the first time in its history, however, it was not for the last time. Its losses reached the highest figure of 1,800 mDKK (million Danish Krone) in 2004 that was when hopes of its survival appeared low as the then newly appointed CEO Knudstorp said that hundreds of our customers wrote to us “Please don’t die”. He was then the major force in bringing the company back on its tracks and...
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...Boys and girls’ toys enforces multiple ideologies on how boys and girls should act and be. When going to any type of toy store, people can clearly see difference between the toys for girls and the toys for boys. Even the simplest of toys are separated by gender just because of the color scheme that it holds. Legos are simple toy blocks, but they have two separate sets, one for girls and one for boys. The appearance of the toy, the activities of each set, and the packaging of the toy reinforces stereotypes and the connotative meaning of boys and girls. One difference between the girl and boy Legos are their packaging. The packaging of the girl and boy Lego sets are almost completely different. The boy packaging has dark colors, such as blues, blacks, greens, yellows and reds. Some of the boy packaging also has just boys playing with the Legos on the front of it. When it comes to the boys’ Legos none of the colors are bright and colorful, but the girls’ Legos...
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...When you think of a gift for a little girl, what comes to mind? A Disney Princess DVD? A mountain of pink cupcakes? A toy convertible for Barbie? These are the things that most of us have come to believe that all girls like. These are also the products marketers have created for girls… Notwithstanding the foregoing, there is an ongoing debate about gender-based marketing and in particular with gender-based marketing being focused on young children. . One of the events that triggered this debate was when LEGO came out with a product line for girls called Friends. The TV ad shows wonderful town of Heartlake where “Stephanie” and her friends get to enjoy “all the things girls love”: interior decorating, getting pedicures and baking cupcakes. The sets feature taller and shapelier feminine figurines that lock into pink, purple and pastel green settings, such as a dream house, a splash pool and a beauty shop. LEGO has created this product based on four years of behavioral research. This research purportedly led them to the conclusion that girls like everything pink, romantic and cute [5]. The product has generated outrage. The company was accused by many parents of feeding kids the gender stereotypes and locking them in to blue and pink roles in very young age. Marketing to children is even more of a grey area than marketing to women. When it comes to child psychology the foundation of any debate is the question as to whether their tastes are a product of either nature or...
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...Part 1: Background info In 2004, Lego found itself losing up to $1 million dollars a day (page 39), a position no big company wishes to find itself in. It had been determined that new leadership was vital to the company’s survival. As a result, Jorden Vig Knudstorp took over as CEO five years later. Knudstorp immediately noticed poor internal organizational structure that ultimately resulted in frustrated retailers and less shelf space (page 39). Knudstorp successfully cut production costs by creating new designs. He also successfully introduced new markets for Lego products, such as movie collection and video game products targeting adults and girls. From within the organization of the company, Knudstorp successfully shifted the culture away from ineffective and costly innovation and geared more towards profit. Some of these organizational changes included incentives for developing cost cutting methods, innovation and sales. He also took the initiative to create new markets in the virtual world through video games and movies (page 40). With these changes brought about by Knudstorp, Lego found itself in a situation where they were successfully developing new technology, new methods and a more simplified information of enterprise systems, all which were cost effective and ultimately brought the company back to success. Part 2 (discussion questions at the back of the book) The key change in business strategy was to cut costs and gear more towards profit. The objective was...
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...action-oriented categories and the girls section has homemaking, beauty and imaginary categories. The baby section is the only one that is not separated by gender. According to the text book Gender is defined as “ psychological, social and cultural aspect of maleness and femaleness”. According to the textbook, “girl toys revolve around themes of domestic, fashion and motherhood.” while “boy toys, are emphasize action and adventure and encourage exploration, competition and aggression”. The four toys that I chose for boys are: Hot wheels, Minecraft, LEGO Train set and Home Depot Deluxe Power Tool Set. The toys that I chose for the girls are: My Little Pony Twilight Sparkle, Barbie, LEGO Friends Dolphin Cruiser and the Wooden Kitchen Center. The Hot wheels cars are different in size and have multiple colors, which are usually dark colors such as black, blue, green etc. The cars can teaches boys how to identify cars and grow up to like them as the boys grow up. Minecraft started out as a videogame that became popular where toys created for boys to play with. The package comes with Steve, Pig, Chestnut Horse, Saddle, two Grass Blocks and two Hay Blocks. The toys mimic the game where boys pretend to be Steve, who is the main character of the game and goes out to the virtual world and builds thing like a house and a farm. It helps with creativity and role-play. With LEGO’s, they are fun and are blocks that children use to build things. The LEGO train set is a motorized train...
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...organization design changes implemented by Knudstorp align with the changes in business strategy? Lego toys were outdated in the present entertainment world with the arrival of modern entertainment devices such as PlayStation etc. In 2004, Jorgen Vig Knudstorp was appointed as the new CEO to overcome the company's failure. He devised strategies in changing organization design and information systems which helped the company see profits within a span of five years. He encouraged architects to reuse components in new products which helped in sparing huge costs to the company. They created product strategy for adults and designed a line of Lego's aimed at girls thus attracting new customer segments. With a strategy to broaden their products they created products based on movies and also created animated Lego characters based on Hollywood movies. They engaged with online communities and blogs featuring Lego creations and embraced the communities who believed Lego as a way to create art, rather than simply building a toy( (keri E Pearlson)). With the competition very rapid in the market and to obtain profits, the culture within the organization changed a lot. Previously, the organization focused more on innovation and creativity but that changed when knudstorp made clear that results i:e profits was all that mattered. There had been a drastic change in the organizational structure too. Lego switched its employee pay structure and incentives were offered for appropriate product innovation...
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...10/21/2013 Case Study #5 – LEGO Discussion Questions: 1. Do you think LEGO should try to compete with more technologically-advanced toys? Why or why not? Yes they should. World has been changing as technologies improved. People needs are expected to be higher to the point where the technocracies are matched. For example, TV gamers had to get together in one game machine to play the game ten years ago. Now days, they are able to match a game through internet without being together. 2. Identify briefly the marketing mix (4Ps) strategies for LEGO. Product Lego is almost unique as a brand in that the positive associations consumers have with it start to form at a very young age, such that when those children become parents themselves, they are very well disposed towards it. This is a huge asset, but also a big responsibility for the brand. It is important to remember that all the activities are generic and therefore could vary between industries. LEGO was among other things, saved by entering into strategic partnerships with companies such as Lucas Arts and Warner Bros, who hold the licenses for Star Wars and Harry Potter respectively. Place A change in any of these factors can create new opportunities or threats, which the organization will have to corporate to create a successful business. Since the LEGO group is a multinational organization then it is important that all relevant countries will be analyzed to give a credible evaluation of the LEGO group’s macroeconomic...
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...model 4.1 Bringing Back the Bricks 4.2 Improving Quality and Logistics 4.3 Lego Turnover 4. Conclusion 5. Recommendations 6. References Executive summary: 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. This report will includes the aspects such as new product launch strategies, new collaborations which contributed to the creation of superior value and changes to the business model. It also provides the solutions for Lego’s continues competitive success and recommendations for the future based on what will sustain competitive advantage. Introduction: In 2003, the Lego group was about to bankrupt, as many of its innovative efforts like Clikits crafts sets which were introduced for girls, theme parks and Galidor, an action figure supported by the television show were all unprofitable and were failed outright. The Lego group had a loss of over 400 million dollars on its annual sales with just over 1 billion dollars. The Lego group was compelled to take a look at its every operations including overheads, costs, marketing, sales, margins and product offers. The company also sold off its non – performing assets like Legoland parks. Then, the company started to bring new business models and innovations with the new management, which leads the Lego...
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...* What were LEGO’s fundamental problems? Consider both external and internal factors. Fad toys rising, product life cycles declining; less unscheduled time to play, demand shift towards technology, give up traditional toys for videogame & online activities 2 “the impact of new product introductions was muted by rapid imitation and limited protection of intellectual property” 2 “retailers focused on profit per square foot and consequently considered margin, turn, and product space requirements” 2 “Kjeld felt that the company’s sustained growth required new bricks” 3 Before had a trip on the market and unmet demand so graduatlly added new products and could control sales growth 3 Birth rates in core markets declined, household spending on toyus declined, retail channels consolidated, mass discounters featured toys more aggressively, less unstructured play, shorter attention spans, want instant gratification 4 Potential seemed to be everywhere; felt had huge untapped potential; tailred products to different untapped markets ilke southern Europe 4 Branched out to family leisure park, videogame software, children’s ware, watches, robotic bricks “There seemed to be potential everywhere” “our brand must have huge untapped potential” 4 Ploughman: moved managers around, “’Fitness Program’ included measures to steamline production, reduce organizational layers, and increase responsibility and customer focus, all to build a simpler, more responsive, global business system”...
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...Chapter 1 LEGO Case Write-Up My key takeaways are 1) Company should combine business strategy, organization strategy and information strategy together in order to make a good innovation. 2) Keep uniqueness and develop new product to attract new segments is very important in a hypercompetitive environment. 3) A strong information management system can be very helpful. 1. How did the information systems and the organization design changes implemented by Knudstorp align with the changes in business strategy? After Knudstorp changed Lego’s business strategy changed, Lego changes its organization structure. They encourage product innovation and sales by offering incentives. They decrease coast by move manufacturing factories to cheaper places. In order to attract more consumers, they develop new series for new segments and extend virtual world and movie business. They also engaged the communities who had already set up thousands of Web sites and blogs. Which also related to IT technology improvement. The information systems of Lego changes too. They develop new technology to support the product design and development, also the virtual and video games. They use the technology to insist the real-time feedback from customers. They created a modularized and standardized architecture for their information systems, making it possible to expand more quickly and add capacity and functionality, as it was needed. They implemented an integrated enterprise system as well. These systems helps...
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...Lego Case Study -Avinash Mavireddi 1. After Knudstorp has taken the control of Lego, the first thing he stressed on was the Supply Chain Management. Earlier, the components produced by Lego were primarily used for only one pattern or model. So the prototype designers were asked to use the same blocks for more than one design. This was the first step taken by Knudstorp that resulted in reducing the production of Lego components to almost half of what they were producing before. It also helped in reducing the expenses on the components mold significantly. The new approach has generalized the Lego components and this gave children an unlimited ability to think and create different models and design beyond what they can imagine. On the whole it even widened the range of products that Lego had. Another strategy that Lego employed was to induce the themes of films that were a huge success like Indian Jones and Star Wars. They didn’t stop at this and started to carefully maneuver into the Video games which featured animated Lego cast. All this growth in the company created a pressure on the Information Systems. Order management and fulfillment were the two sectors that were impacted severely and in turn it resulted in missing the customer demands. To overcome this situation, Employee management systems were widened by adding new employees to the stability and growth at many new locations. Product design and development were the other two modules which needs to be concentrated now...
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...There are three of the popular toys in the 1990s, which are Tamagotchi, Barbie, and Lego. The first digital toy is the Tamagotchi Tamagotchi means a handheld digital device, which can be cared for as a digital pet including feeding, playing, and cleaning up after it. For example, the first Tamagotchi was created in Japan by Bandai in 1996. It went on to sell 76,000,000 units worldwide by 2010 (“Tamagotchi,” 2015). It was quite cheap with the price depending on the different versions available, in total there were 11 different variations, with prices ranging from $10 for the cheapest and up to $70 for the most expensive (“Tamagotchi Price,” 2015). The device was aimed at young children around the age of 6. It was aimed to promote nurturing instincts as the children would actually care for the digital pet, and if they failed at this the digital per would die (Baguley, 2013). Moreover, as there were strict laws governing ownership of pets in some countries, the Tamagotchi was an excellent solution for families unable to buy real pets for their children. This is why the device sold so many units. Some of the devices had communication abilities, which allowed children not only to play but also linguistically interact with the toys. This was seen as an educational component to the toy. As the toy was completely non-violent it became a popular choice for parents as a suitable toy for their children’s development. In summary, the Tamagotchi is the first digital toy. The second popular...
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...its fame over the time. When Lego was a startup company it was in profits, it Gradually failed to turnout its customers, by implementing his strategic plan, credibly he manufactured almost 90% of products with same components and built the products to attract the customers. It was Successful and it gradually gave a rise in using of the Lego toys all over again. Designers were made to reuse the components in the new products. In this way he cut-shorted the number of products from 13,000 to 7,000. This reduction saved a significant amount to the company. He followed an expression which says “managing at eye level,” meaning his ability to talk to people on the factory floors, to engineers, marketers at home. He emphasized the importance of performance. Knudstorp followed a principle that everyone need to build a mind-set where non-performance is not accepted because there is no place to hide if performance is poor. Lego has introduced computer games with building blocks characters with playing heroes and villains. He introduced theme based building of games. The core theme of Knustorp’s plan is “nourishing a child”. 2. Which of the generic strategies does Lego appear to be using based on this case? Provide support for your choice. Lego was formulated with mainly three business strategies organizational, business and information systems strategy. The Line of Lego mainly aimed at girls. The fact behind this is to attract...
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...1. Introduction LEGO is a combination of the Danish words “leg” and “godt”, meaning “play well”. As their name and ideal, Lego has been beloved by the children as well as the parents for decades. Not only as plastic toy bricks, but also effective educational tools, the LEGO Company enjoyed continuous growth and broaden the global brand value. The LEGO brand moved to third place in 2002/2003 with only Coca-cola and Kellogg having greater respect among families with children. Even though as the overall toy market faces challenges, LEGO’s revenue and profits are increasing rapidly, especially since 2005. This profitability didn’t change even in the current recession in the global market. The LEGO Group achieved record-breaking profits in 2011 that secured the health of the company. Interestingly, not far from this climb, the LEGO Group had a deep retreat in the late 1990s and the beginning of the 2000s. Major strategic efforts such as theme parks, Clikits craft sets (marketed to girls), Galidor (an action figure) couldn’t respond to management teams’ goal, and brought failure. As a result the LEGO group created bad financial results: their profit margin was -2.5 and Return on equity was -3.5 in 1998. What intrigues me, as one of thousands of enthusiastic users of its products, is a simple curiosity about what kind of sustainable efforts could enable the LEGO to survive from the turbulent recession and gain even better market share. In order to observe the effective management...
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