Introduction
Lego is the 6th largest toy company for children. Its main product contains colourful interlocking clear plastic bricks which can be assembled to construct items such as vehicles, building etc.
The concept of LEGO was made by Ole Kirk Christensen a carpenter from Denmark, who began making wooden toys and games.
- In 1934, the companies name LEGO was established
- In 1940 LEGO started producing plastic toys and games.
- LEGO in Danish means "Play Well".
- LEGO's mission declaration is "Only the best is sufficient".
LEGO (2008) says "It really is LEGO school of thought that "good play" enriches a child's life - and its subsequent adulthood. With this in mind, the LEGO Group has developed and marketed a variety of products, all founded on the same basic school of thought of learning and expanding - through play. "
The LEGO Brick pieces that were manufactured in 1958 will still interlock with the bricks that are created today. LEGO estimate's it has sold over 400 billion LEGO Bricks since its start.
This case study analysis talks about The LEGO Teams strategic direction and the fight of the block makers in particular Mega Bloks. The case study has been summarised for clear understanding of the issues raised.
Summary
LEGO is one of the very best toy manufacturers' on earth. Its interlocking vinyl bricks have made the business a feeling for the world's most ground breaking toy creators through learning and expanding while participating in.
Each season LEGO produces 14 Billion vinyl bricks to distribute surrounding the world for children that can be played with. Until Mega Bloks appearance LEGO acquired a competitive gain as the only real toy machine of interlocking plastic material bricks. Mega Blocks as its major rival challenged this by launching similar products as LEGO.
Mega Bloks who are located in Montreal, Canada makes interlocking plastic bricks that cost less than LEGO products. LEGO however, is convinced that the high quality of its product justifies its prices, because it uses a higher quality of resin which is found in paints and vanishes. Mega Blok however uses commodity-grade resin.
LEGO continues to be typically the most popular plastic brick toys with the 7 to 12 12 months old segment of the market, however Mega Bloks is gaining its market show through the preschool market. The Mega Blok toys and games are much larger and softer compared to the Lego products, users of the toys and games think Mega Bloks toys are easier for younger children that can be played with. In response to the, LEGO unveiled the Duplo Type of oversized blocks created from the same material as its original design.
Mega Blok also released a new series called Micro which is targeted at 7 to 12 calendar year olds or immediate college set. This new line is interchangeable with the LEGO lines. LEGO needed Mega Blok to Court in Canada over the problem that Mega Block possessed copied its brick design, however the Courtroom ruled that the brick design is useful and eligible for trademark safeguard.
Mega Bloks sales doubled between 2000 to 2003. Lego reported its first loss ever before of $44 million in 1988. LEGO was at serious threat of losing its main brick market to Mega Bloks if it did not come up with a strategy to package with the challenge of how to get back the market talk about it was dropping to Mega Blok. LEGO chose to demand new sources of growth beyond the key stop category. This solution gave them a fresh line of original automatic robot action figures known as "Bionicles". The Bionicles were LEGO's best retailer in 2003 which led to a primary to DVD animated feature which was released by Miramax. Lego also developed alliances with Walt Disney Company and Lucasfilms, the inventor of Star Wars. LEGO possessed its Harry Potter play pieces which in 2003 LEGO were still left with huge amount of money of unsold products. This is relatively blamed on the retail situation and the dollar's weakness compared to the Danish Krone. In 2003 LEGO submitted a lack of 166 million. LEGO, in a eager aim to gain back profits, unveiled an array of new products aiming at the preschool market and a new range aimed at young girls.
Questions
What is the most crucial decision currently facing Kjeld Kirk Kirstiansen?
Ole Kirk Christiansen created LEGO which was popular in 1934 when there was no other product similar available. However LEGO did not recognise the changing environment and the changes to the needs and needs of consumers. Among the most crucial decisions facing Lego/ Kjeld Kirk Kirstiansen is deciding who its main market is and how to target that market, using data to execute a segmentation of different needs and needs of that market and become the main toy owner again.
In 2004, LEGO continuing its entertainment promotional and product tie-ins with the new Harry Potter and Spiderman films. Do you think this is the right strategy?
With LEGO confirming a loss in 2003 and with proof that the sales of Harry Potter play places going down, this was not the right strategic decision. Harry Potter films use and out of fashion, they are just popular as the videos are popular. Choosing to stick to a product that is popular all season could have been the better option for LEGO. This displays the need to have a strategy that'll be successful in the long run, which will be a competitive gain, rather than load its short-term demand.
An example is LEGO's Mindstorms Robotics Technology system that allows users to generate computer-controlled animals. This fulfils LEGO's school of thought that the users of its product play while learning because the users are managing the creature they creative, which uses the child's creative thinking somewhat developing a action body that has already been created and has limited use when it comes to enhancing the creative thinking about the child in terms of creating and making the product.
Mega Bloks is an expense leader because they have increased gains through minimizing cost by using different quality of materials to make their products then LEGO, who uses a much higher quality resources to make its products, which increase their cost, making their products higher in price than Mega Bloks. Therefore Mega Bloks gains a larger market show.
Mega Bloks through research had found a distinct segment, in which it is currently the main retailer, in the preschool market. They developed bricks that are bigger and softer which makes them easier and safer to play with according to parents. Mega Bloks launched new type of bricks for 7 to 12 years of age that can be interchanged with LEGO bricks.
LEGO before Mega Bloks showed up was more differentiation focused on the narrow opportunity since it mainly targeted one market. 7 to 12 season old.
LEGO now targets differentiation on a broad scope by focusing on several market. For example the preschool market.
LEGO is trying to be popular through having movie action figures for example Harry Potter play packages which sales for this transpired whereas the Harry Potter movie was still popular. LEGO must target more on long term innovative products like that it can still keep its competitive advantage in the market place as being the creator of toys and games that help develop learning and new skills. As the initial LEGO bricks performed where children would make things with the bricks which involves using the children's creative thinking and creativity.
Conclusion
Lego was founded by Ole Kirk Christiansen who a carpenter commenced making wooden gadgets. In 1934, the companies name LEGO was founded. Lego is the 6th largest toy supplier for children. Its main product includes colourful interlocking vinyl bricks which can be assembled to create items such as vehicles, building etc.
LEGO (2008) says "It is LEGO school of thought that "good play" enriches a child's life - and its subsequent adulthood. With this in mind, the LEGO Group has developed and marketed a variety of products, all founded on the same basic beliefs of learning and developing - through play. "
Mega Bloks challenged LEGO brick market by having similar products as LEGO but concentrating on a fresh market, the preschool market.
Mega Bloks products are also cheaper to buy then LEGO because Mega Blok uses commodity grade resin where LEGO uses a much higher quality resin which is why LEGO is more costly then Mega Bloks.
Through many ups and down of LEGO, it acquired to make proper decisions on what it wanted for its future and where they wanted to see themselves in the toy market.
The solution varied but what it needs to do is retain in mind their idea and make innovated products that will assist the children learn and develop new skills while participating in.
