3 min read

We love Lego! 😊🙌

Why? Because it's adaptable. 

You can build a monster creation made of those famous interlocking plastic bricks
 and then decide that you want it change it completely the next day. It's easily changeable and can be restructured however you like, whenever you like. 

Worth $7.571 billion since 2017, Lego celebrated its 60th anniversary in 2018 and has crafted the Lego brick as a timeless component of children’s lives for generations.

It is through the adaptability and changeability of the not only the humble Lego brick but also the Lego brand that allowed the company to reshape and rebuild its business strategy.

Called the greatest turn around in corporate history, Lego’s revival after its 30% annual loss of sales and $800 million debt threatened the viability of the company between 1998-2003. Despite the disconcerting performance however the still family owned Lego Group overtook Ferrari in 2015 as the most powerful brand globally.

How did Lego do it?

Willingness to recognize mistakes and adjust company posture

Diversification is an important strategy utilized by the Lego Group today to vary its product profile and appeal to a large portion of the market. However, this diversification is exactly the strategy that almost led Lego to bankruptcy. Following the lead of profitable Mattel, Lego’s production of jewelry, clothes and even opening of a theme park confused the brand message, invested dollars into businesses Lego had no expertise in and spread the company resources dangerously thin. Vig Knudstorp’s leadership in 2001 was imperative in rationalizing production, limiting the products Lego manufactured and reaching out to consumer’s directly to get a better idea of consumer desire.

In most recent years Lego has maintained this re-assessment and adjustment mechanism, changing operating functions and removing hierarchical structures within its development teams. In this way the company has improved decision making flexibility and allowed its innovators to be more directly responsive to market signals.

Embrace innovation

The non-digital nature of Lego may seem threatened by the rise of technologized toys and online entertainment, but the positive posture towards innovation adopted by the toy manufacturer has been imperative in keeping their product in the forefront of parents’ and childrens’ wish-lists.

As stated by Chief Marketing Officer Julia Goldin: “One of the big questions that I'm always asked is the question of digitalization — is that a threat to Lego (or) is that an opportunity. We believe digitalization is a massive opportunity … Technology has been part of integration into Lego experience for a long time now.”

Lego’s recognition that the rise of the digital has changed the nature of play, how kids spend their time and modernized the family lifestyle has been strategically integrated into the company’s marketing system, moving beyond the brick into digital accessories and movies. Encouraging online interaction through Lego Life and the release and immense success of Lego Movies has worked to generate desire for the Lego as well as generate the Lego Group significant revenue through digitized mediums.

Remained responsive to changing interests

With the highest grossing Lego set of 2018 being a 7500 piece Millenium Falcon, Lego has come a long way from the first set released in the late 1950’s, a town plan designed to help children learn about road safety.

This evolution and reinvention of the Lego Group is due to the companies’ awareness that in a toy market successfully competing for attention requires Lego to remain applicable, useful and relevant to the changing nature of childhood.

Vice President of Digital Consumer Engagement at Lego Peter Kim is only too aware of this requirement: “It would be easy to be arrogant and just say that everyone knows the brand … but it’s always, hey, what do consumers want, how do we get there?”

Conducting one of the largest ethnographic studies in the world, the effectiveness of Lego’s R & D was reflected by its success in cracking the girl’s market with Lego Friends. Finding out what children and their parents want is the secret to Lego’s success, and according to Lego the answer is novelty with 25-30% of annual sales generating from new products.

The Lego Lesson

The ability of Lego to reintroduce itself as a predominant player in the children’s toy market is an example of careful marketing awareness, prowess and willingness to evolve. Striking a careful balance between maintaining product integrity whilst growing with changing consumer needs is a difficult marketing strategy but is one that is needed in an increasingly competitive market. Through rationalizing business operations, embracing and innovating with competition and informing businesses choices by consumer demand the Lego Group has engineered one of the most successful brand recoveries of the 21st century.

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