Lego is one of the leading names in the world of toys. It is a family owned brand whose foundation was laid by Kirk Kristiansen in 1932. What started as a small carpenter’s workshop has come a long way in these almost 85 years to become a global enterprise. Core product of the Lego group is the Lego brick which was launched for the first time in its current format in 1958. These interlocking bricks are meant to offer fun and learning experiences for both kids and adults. Lego has twice been named the Toy of the Century. In 2018, the toy industry has seen significant disruptions. Apart from the disruption of the retail chain, increased digitalization has also set a new course and nearly changed the toy industry landscape. The environment has become more challenging for Lego but the company’s business remained stable despite these challenges in 2018. It achieved modest top and bottomline growth in the last year. As growing digitalization is changing the Toy industry, Lego also introduced new digital experiences in 2018 to engage its customers and followers.
Read a marketing mix of Lego highlighting the four P’s including Product, Place, Price and Promotion.
While the Lego bricks are the core products of Lego group, the company has brought a large range of toys and games for young kids. It makes products for kids in different age groups and has designed several forms of activities to engage them. From simple building ideas for very young kids to somewhat more complex and bigger sets for kids above ten, Lego has enough to keep young builders busy. It has also brought several themed sets based on special themes like Star Wars, Lego Movie, Toy Story, Batman etc. Product categories by lego include animals, Cars, Boats, aircrafts, STEM, Coding and Robots as well as construction material and trains. It has created products for kids from 1 year of age to those older than twelve. Apart from the huge variety of products that the company has brought to engage the imagination of young builders, there are several games too by Lego that can be played online.
There is also a nice range of education products created by Lego for kids. The company has also created a nice large collection of video games to engage both young and older users. With growing use of digital games, Lego too could not remain behind in the race to engage users online, it built several web apps, web games and video games for its customers. Other attractions from Lego include Legoland Parks and Legoland Discovery centers. The Legoland discovery centers that include miniland, 4D cinema, factory tour, creative workshops and several more attractions are located in various countries including U.S., UK, Japan, China, Australia and Canada.
The Lego Group is headquartered in Billund, Denmark. The company also has other head offices in Enfield, USA, London, UK, Shanghai, China, and Singapore. THese are the five global hubs from which Lego operates its business. Apart from these, the company has five global manufacturing sites and several local offices and retail locations. In China alone, the company has more than 60 stores in 18 cities. Its retail channels are supplied by several warehouses located in various corners of the world. The locations of the company’s factories include Monterrey, Mexico, Nyíregyháza, Hungary, Kladno, Czech Republic, Billund, Denmark and JIAXING, CHINA. Moreover, the company sells its products online and through other e-commerce channels.
In terms of pricing, while the company has maintained a premium pricing strategy, higher competition has led to Lego using more offers and discounts to attract customers. The brand has overall used a premium pricing strategy. It incurs heavy costs on the quality of material it uses, as well as in marketing and other areas. Moreover, it is a popular brand which also allows it to charge premium prices. However, to grow its penetration and customer base, it also offers several kinds of deals and discounts.
There are several factors based upon which the company decides the prices of the Lego sets. These factors include number of pieces in the set, the number of new and unique molds required, and the cost of licensing characters from other companies and brands. Apart from that country specific prices also depend upon several other factors which include statistical data about a country’s population, transportation costs, currency exchange rates, local laws and taxes and the prices of other toys. Based upon these factors, prices of Lego products can also differ from country to country.
Lego is a well recognized brand. Apart from high level popularity, it also enjoys very high level of brand recognition globally. While the company invests a significant sum in marketing, it also utilizes a varied mix of channels for connecting with its customers and to grow brand awareness. Sales and distribution expenses of the brand which include its advertising and promotion costs amounted to 2.7 billion Danish Krone in 2018. Its own website, physical stores as well as Legoland parks and resorts also act as major marketing and promotion channels for the brand. With growing level of digitalization, Lego is using digital channels heavily for promotions and user engagement.
Social media is also among the most important channels of marketing for the brand. The number of Lego followers on Facebook is higher than 13 million. It also uses YouTube for video marketing, Its number of YouTube followers in around 7.7 million. The brand also uses other types of promotional strategies including public relations and media for brand promotion and awareness. In May, 2019, the company announced a partnership with Ocean Heroes Bootcamp, a youth leadership program co-founded by award winning non-profits Lonely Whale, Captain Planet Foundation and Point Break Foundation. Such partnerships while they allow it the opportunity to invest in socially responsible projects, they also help the brand strengthen its image.