Brand Inventory

History

LEGO was founded in 1932 by Ole Kirk Kristiansen in Billund, Denmark. The company
manufactured stepladders, ironing boards, stools, and wooden toys. The name, LEGO was
formed from the Danish words, “Leg godt”, which translates to “play well.” Coincidentally, in
Latin, this also means “I put together,” which epitomizes the way consumers use the plastic
building blocks manufactured today. During the 1940s, LEGO purchased a plastic injection-
molding machine and started to turn wooden brick toys into plastic brick toys. Soon after, they
developed the first “automatic-binding bricks”—the forerunner of the bricks made today. In
the 1950s, LEGO started to sell its first “system of play”, which included 28 sets and 8 vehicles.
In 1958, they patented the “stud and tube coupling” system.

To promote their toys, LEGO opened the first Legoland in Billund, Denmark in 1968 and
released a short, marketing film showing off the new park. This was a huge success. 625,000
visitors came to Legoland in its first season. Today there are five Legolands around the world
and 16 LEGO Discovery Centers. While LEGO entered into the top 10 world’s largest toy
manufacturers in 1990, sales during that decade stagnated and declined and the company
almost went bankrupt. However, during this period, LEGO released new product lines that
continue in popularity today, including LEGO Mindstorms, which was developed out of a
partnership with Massachusetts Institute of Technology, LEGO Star Wars, and LEGO Creator.

Under the leadership of CEO, Jorgen Vig Knudstorp, and major restructuring, especially of
their supply management system, LEGO started to see profit momentum in the late 2000s and
into the next decade. Today, they are the world’s largest toy manufacturer, out-performing
Mattel and Hasbro, their largest rivals. They have over 14,000 employees and operate in 28
different countries with 40 different products. Some of their most popular products include
LEGO Star Wars, LEGO Creator, LEGO Bionicles, LEGO Mindstorms, DUPLO, and LEGO
Friends. LEGO continues to focus on educational programs and partnerships through the
LEGO Foundation in order to achieve their mission “To inspire and develop the builders of
tomorrow” (www.lego.com).

Target Customer Profile

LEGO markets their products to everyone; boys, girls, adults, educators, and businesses. For
much of the company history, their advertising and marketing focus was geared toward boys
though they did manufacture LEGO Dollhouses in the 1970s. Most recently LEGO can
attribute a huge boom in profits to the new LEGO Friends product launched in 2012, and
marketed toward girls. It should be noted that in 1963, Godtfred Kirk Kristiansen, son of
Founder and then Managing Director, devised a list of product characteristics that included
“For Girls and Boys” and “Fun for every age” (www.lego.com). Given these characteristics,
one can conclude that LEGO is meant to be a lifelong toy for all ages and genders.

The company mission is “To inspire and develop the builders of tomorrow,” which could be
geared toward anyone interested in building and using their imagination at any age. In the
2000s, LEGO began to recognize the market potential of adults who had formed online
communities dedicated to swapping LEGO ideas. In 2005, LEGO created LEGO Ambassador
Network (LAN) that has fans ages 19-40. LEGO has also created a secondary customer base
with educational programs, businesses, educators, and schools. NASA has formally adopted
LEGO for their educational mission.

Below are some of the characteristics which represents customer association with LEGO:

• Customers enjoys playing LEGO which leads to construction of blocks

• Customers enjoys imaginative play and creating a structure

• It leads to curiosity of customers

• It can follow directions and has attention to minute details

• It leads to self-entertainment and can be played by only one player

Brand Elements

o LEGO is characterized by it’s classic red square logo and the capitalization of the letters
‘LEGO’.

o The LEGO brick is iconic and dates back to the patent of its “stud and tube coupling”
system from 1958.
 o The yellow LEGO man represents an iconic LEGO figure from the LEGO Classic set
and was the main character in the popular 2014 The LEGO Movie.

o LEGO is known for many other popular brands, shown above, such as DUPLO, LEGO
Star Wars, LEGO Mind storms, and LEGO Friends.
o LEGO has always partnered to license character theme sets from popular movies such
as Star Wars, Harry Potter, Teenage Mutant Ninja Turtles, and Disney.

Brand Portfolio

Toy Products

DUPLO, LEGO Friends, LEGO City, LEGO Nexo Nights, LEGO Star Wars, LEGO
Bionicle, LEGO Dimensions, LEGO Ninjago, LEGO Superheroes, LEGO Mixels, LEGO
Minecraft, LEGO Chima, LEGO Elves, LEGO Jurassic World, LEGO Disney Princess,
LEGO Ultra Agents, LEGO Speed Champions , LEGO Classic, LEGO Teenage Mutant
Ninja Turtles, LEGO Angry Birds, LEGO Hobbit, LEGO Scooby-Doo, LEGO Juniors,
LEGO Pirates, LEGO Minifigures
Beyond Toys/Adult, Older Children Products
LEGO Mindstorms, LEGO Architecture, LEGO Technic, LEGO Ideas, LEGO Power,
Functions, LEGO Factory
Entertainment
 LEGO Fusion, The LEGO Movie, The LEGO Angry Birds Movie, LEGO Books, LEGO
Video Games, LEGO Television Series, The LEGO Foundation, LEGO Ambassador
Network, LEGO Club, Bits and Bricks, Galleries, Message Boards

Communication

o 2016 slogan, “To inspire the builders of tomorrow.”

o 2002 slogan, “Play On.”
o 1998 slogan, “Just imagine…”
o LEGO actively engages with community of followers on the web
o Established LEGO Ambassador Network, to encourage users to share ideas and
inspirations
o Social Media marketing through Facebook, Twitter, Instagram and other blogs.
Started #Build Your Own Kronkiwong—invites kids to upload video of their
Kronkiwong creation
o LEGO Clicks magazine
o CUUSO crowdsourcing ideas allows fans to vote on favourite LEGO product ideas
o 2011 LEGO re-designed website to be more interactive with users, which now
features games, product story lines, plots, characters, movies, polls, and quizzes.
o Traditional print advertising
o LEGO stores and Discovery Centres allow users to interact and build the product in
the store
o Promotions and discounts are carried out by retailers

Profile of No.1 competitor

In terms of size, Mattel and Hasbro are the two main toy competitors.
In 2016, Mattel acquired a LEGO spin-off called Mega-Blocks in order to capture the LEGO
market share.
About Mattel
 Brand Promise: Play to grow, play together, play with passion, and play fair.
 Mission: “Our mission is to nurture creativity in every child and every family.”
(www.mattel.com)
 Mattel Vision: “Create the Future of Play.” (www.mattel.com)
POPs of Mattel:
  Many categories of toys including dolls, crafts, action figures, vehicles, preschool,
construction toys, including newest acquisition of LEGO look-a-like, Mega Blocks
 Different materials used to make toys
 Many manufacturing suppliers and distributers
PODs of Mattel:
 Popular/Familiar Toys and Brands like Barbie, Little People, Fisher Price, Thomas &
Friends, American Girls, Hot Wheels
 U.S. Based company
 More price range options
 More promotional advertising and coupons
 More television programming content
Market Position of Mattel:
 Number one toy maker in the world until 2014, when LEGO surged ahead.
 Recent decline in sales
 2015, slipped again, falling below Hasbro
 2015, $6 Billion in Sales in 2014 (adbrands.net, 9-3-15)
Communication Strategy/Recent Events:
 Traditional print and media advertising
 Television programming and product tie-ins
 2016 talks of merger with Hasbro

Brand Exploratory
Customer Knowledge Structure
In 2015, LEGO scored high on several measures and was ranked as the world’s most powerful
brand (Dill, 2015). A powerful brand is described as a brand demonstrating profound influence
on its target audience, competitors, market as well as the whole consumerism. A brand is made
powerful by the contributions of awareness that the brand has among the consumers, loyalty of
the clients, industry reputation and satisfaction levels of the employees (Brand Finance, 2016).

The consumer awareness of LEGO is high. The consumers consider it to be a toy that is
immersive and uniquely creative, children like the abilities of constructing their own colourful
worlds that are provided by LEGO. In a world which is increasingly becoming saturated by
technology, the “back-to-basics” creativity that LEGO provides is encouraged by the
consumers mostly the parents. Thus, it has an appeal that is cross-generational. Consumer
awareness has been created by LEGO by making use of packaging, traditional advertising for
their target market mostly consisting of young boys and by creation of website pages that are
highly engaging with marketplaces and games.

The CBBE Pyramid

Brand salience: Lego has a high brand awareness. Everyone has heard about it and knows
what it does.

Brand performance: Lego provides quality toys which last for years. Lego also offers many
different themes to answer the best children’s expectations and to develop children’s creativity.

Brand imagery: Lego built its image on construction. They have licenses for production of
LEGO blocks. With these same bricks, special universes can be created. Lego modernized its
image through continuous updating of license and is up-to-date.

Brand judgements: Lego has so many different ranges and also different licenses. Lego offers
so much possibilities: creating anything from bricks as some artists do.

Brand feelings: For children, it is about fun. Hours can be spent playing with the colourful
bricks and creating buildings, vehicles or even long stories. For parents, it is more about
nostalgia. They used also to play with Lego and it reminds them their childhood. Lego knows
exactly how to attract again older Lego player: ranges with more details, they are still about
construction but not about toys.
 Brand resonance: Lego interacts with its customers and they answer to Lego and so it gets a
high brand resonance. Lego don’t only attract children but also adults. If you played with Lego
during your childhood, then you just love Lego forever.

Conclusion & Recommendations

1. SWOT

STRENGTHS WEAKNESSES

o Consistency in design, use, style o One main type of product:

o High durability of toys construction play
o Used in industry and educational uses o Skill, patience, and time required
o Broad market: not just for children, but also o Not all children and people can
for adults handle that.
o Good licensing partners for sets o High market price toy
o Strong customer relationship set up via o Costly in Indian market
websites, forums, discussion boards, blogs, o Less variety in toys
interaction o Customer longevity and loyalty is
o Adaptable very important while purchasing
o The “brick” has many different uses from Lego toys
educational to inspirational, to play
o Diverse product lines: toys, games,
entertainment, books, education, theme
parks and discovery centres.

OPPORTUNITIES THREATS

o More customizable themed sets and o Growing use of electronic

marketing. gaming and devices
o Always growing partnerships and licensing o Look-a-like companies, such as
of characters and themes. Mega Blocks
o Growing technology and educational
market.
o Robots and drones
o Entertainment programming via Netflix,
Amazon, movies, and gaming.
o Board games
o Big construction blocks

2. S-T-P Model

Segmentation –
LEGO targeted four segments:

1. Pre – school
2. Pre – teens
3. Teenagers
4. Adults

Targeting –

LEGO targets age group of 9 - 40. LEGO has also created a secondary customer base with
educational programs, businesses, educators, and schools. NASA has formally adopted LEGO
for their educational mission.

Positioning –

LEGO has positioned itself as a premium segment toy provider. LEGO scored high on several
measures and was ranked as the world’s most powerful brand.