MKT333)Case Study #7 – LEGOLEGO is a family-owned toy maker that was founded by the Kirk Kristiansen family in Billund

INTRODUCTION TO MARKETING (MKT333)Case Study #7 – LEGOLEGO

is a family-owned toy maker that was founded by the Kirk Kristiansen family in Billund,Denmark in 1934. The word LEGO is a contraction of two Danish words leg and godt meaningplay well. It wasn’t until 1958 that the modern-day plastic brick was developed.Through the 1960s LEGO continued to expand the brand through specific themed sets and theintroduction of the DUPLO system for younger children. In 1980 the LEGO group establishedthe Educational Products Department (named DACTA) to expand the educational opportunitiesof their toys. In the following years, many LEGO series were developed:

INTRODUCTION TO MARKETING (MKT333)Case Study #7 – LEGOLEGO

Technic series, Expertseries, LEGO City sets, LEGO Star Wars, LEGO Ninjago, and the Legends of Chima line.By 2000, technology was changing the way children spent their time. Computers, video games,and cable television appeared likely to destroy the market for LEGO products. The companyhad long catered to what it called “the joy of building” and the “’pride of creation” and it wasn’tclear if the LEGO brick with its basis in unstructured, imaginative playtime could thrive in thedigital age. In its quest to be consumer-driven, LEGO rolled out toys that required littleassembly and others brand extensions like Lego Star Wars (video-game), Mindstorms(programmable robots), Creationary (board games), and iPhone apps like Life of George. Inaddition, programmable bricks sold under the name LEGO Mindstorms were created and abusiness consultancy group fostering creative thinking called LEGO Serious Play wasdeveloped.

INTRODUCTION TO MARKETING (MKT333)Case Study #7 – LEGOLEGO

By 2004, LEGO was one of the top ten toy makers in the world but was losing theequivalent of $180,000 each day.In 2004, LEGO appointed Jorgen Vig Knudstorp as CEO, the first leader outside the KirkKristiansen family. Knudstorp confessed, “If I’m honest, I didn’t know what the strategy was.LEGO had done what so many companies had done, which is to stretch the brand, and I wasn’tsure if the financial crisis was because LEGO had stretched too far, or if it was just a very hardstrategy to execute.”LEGO’s competitive advantage is in precision. LEGO has its own term for the click-fit: clutchpower. Clutch power enables the bricks to be locked and unlocked with ease and retain the“locking” ability for several generations. The tolerance (in engineering terms) of the LEGO studis 1/50th of a millimeter – 10 times finer than a single hair.LEGO’s more advanced sets were skewed towards boys. There is definitely a “LEGO phase”for school-age boys similar to the “princess phase” for girls. However, unlike tiaras and pinkchiffon, LEGO play develops spatial, mathematical, and fine motor skills, and allows kids tobuild almost anything they can imagine.In 2011, LEGO launched LEGO Friends, a new line of building sets aimed at girls. To developLEGO Friends, the company did extensive research into how children play. In spite ofnaysayers within LEGO and women’s groups opposed to stereotypical girls’ toys, LEGO Friendshas been a huge success – exceeding all expectations.

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INTRODUCTION TO MARKETING (MKT333)Case Study #7 – LEGOLEGO

In just the first year, LEGO Friendsbecame the fourth best-selling line behind Star Wars, Ninjago, and LEGO City. LEGO Friends isexperiencing growth rates in sales well above the company average. LEGO reports that LEGOFriends has tripled the number of girls in the U.S. who are building with LEGO bricks. Therehas been a significant shift in the gender split among LEGO users.In 2012, net income rose to a record $993 million. Sales increased 25% over 2011 – outpacingboth Mattel (the world’s largest toymaker) and Hasbro (the second largest). LEGO Friends hasproven to have a global appeal with a 35% increase in sales in China in the first 6 months of2013.“Adapting as a business can mean moving to a new technology or it can be achieved throughacquisition,” explained Knudstrop. LEGO’s fundamental technology – snug stud-into-tube bricksthat hold fast but come apart easily – hasn’t changed since 1958. LEGO has never beeninvolved in an acquisition and its foray into technology was a dismal failure. “For us,” Knudstropsaid, “the challenge is in some ways bigger: to take known constructs and organize them in newand surprising ways.”Discussion Questions:1. Do you think LEGO should try to compete with more technologically-advanced toys?Why or why not?2. Identify briefly the marketing mix (4Ps) strategies for LEGO.3. What does Knudstrop mean by saying “take known constructs and organize them in new andsurprising ways”?4. Why do you think creating a series targeting young girls was important to LEGO?5. Why do adults like to play with LEGOs? https://charteredessay.com/the-citcos-current-stock-price-is-35-at-t0-at-the-end-of-the-year-t1-the-stock-price/

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