Lego Group, Marketing and Operation Management Report

Topics: Marketing, Lego / Pages: 14 (3302 words) / Published: Apr 25th, 2010
FOUNDATIONS OF MANAGEMENT (PART A)

LEGO Group

Marketing and Operations Management Report

Prepared:

For: LEGO Group

By: Éva Gaál

On: 17 November 2008

Introduction

At the request of the LEGO Company, this report advises the company on the expansion of its operation based on market segmentation, appropriate marketing mix, new product design and development, including total quality management for outsourcing new partners.

LEGO Group is the fifth-largest toy manufacturer of the world and has operated successfully for 75 years; however, it has had some problems in the last couple of years. To solve these problems, LEGO introduced a seven-year strategy plan, which consists of some fundamental changes regarding to the processes, procedures and structure of the company. This strategy so far has been executed successfully as shown in the financial results; however, LEGO is going to face some more challenges in the future. (LEGO Annual Report 2007, 2007).

1./ Market segmentation

‘Market segmentation is defined as the subdividing of a market into distinct and increasingly homogeneous subgroups of customers’ (FM-A, 2004, p.93) and ‘it centres on the assumption that customers demonstrate heterogeneity in their product preferences and buying behaviour’. (Green, 1977, Wind, 1978, cited in Dibb, 1998, p. 394).

‘The business did actively segment its market’ (Dibb, 1998, p. 399), as LEGO identified itself from the very beginnings as a toy manufacturer it therefore automatically determined its marketing segmentation approach. In the children's toy market the primary segmentation base is the age (the older the more complex product); however, the real buyers are the parents (e.g. LEGO Duplo). ‘Such an approach is popular because it is convenient, clear-out, easy to implement and stable over time.’ (Curran and Goodfellow, 1989, p. 23, cited in Dibb, 1998, p. 399).

During the company operation LEGO identified more and more secondary segmentation



References: Dibb S. (1998) Market Segmentation: Strategies for Success. Marketing Intelligence & Planning, 16/7, 1998, pp. 394 – 406. Goldsmith, R. E. (1999) The Personalised Marketplace: Beyond the 4Ps. Marketing Intelligence & Planning, 17/4, 1999, pp. 178 – 185. Green, P.E. (1977) ‘A new approach to market segmentation’. Business Horizons, Vol. 20, February, pp.61-73. Cited in Dibb S. (1998) Market segmentation: strategies for success. Marketing Intelligence & Planning, 16/7, 1998, pp. 394 – 406. Hassan, S.S.,Craft, S., Kortam, W. (2003) Understanding the new bases for global market segmentation. Journal of Consumer Marketing, Vol.20 No. 5 2003, pp. 446-462. HVG (2004) Bajban a LEGO Már nem játék [Online]. Retrieved from: http://hvg.hu/200403HVGFriss77_U.aspx [Accessed 20 October 2008]. LEGO (2007) Annual Report 2007 LEGO Group [Online]. Retrieved from: http://cache.lego.com/downloads/aboutus/annualreport2007UK.pdf [Accessed 19 October 2008]. LEGO (2007) Company Profile An Introduction to the LEGO Group 2007 [Online]. Retrieved from: http://cache.lego.com/downloads/aboutus/LEGO_company_profile_UK.pdf [Accessed 19 October 2008]. Oxford Institute of International Finance (2004) Foundation of Management Part A. London: BBP Professional Education. Peter, J.P. and Donnelly, J.H. Jr (1997), A Preference to Marketing Management, 7th ed., Irwin, Burr Ridge, IL. Cited in Goldsmith, R. E. (1999) The Personalised Marketplace: Beyond the 4Ps. Marketing Intelligence & Planning, 17/4, 1999, pp. 178 – 185. Porter, M. (1985) Competitive Advantage. New York: Free Press. Cited in Oxford Institute of International Finance (2004) Foundation of Management Part A. London: BBP Professional Education. Regani, S. and George, S.S. (2007) ‘Quality and Safety Practices at LEGO’, ICFAI Centre for Management Research (ECCH), Case Study Reference no 607-015-2007. Wind, Y. and Cardoza, R. (1974) ‘Industrial market segmentation’. Industrial Marketing Management, Vol. 3 No. 2, pp. 153-66. Cited in Dibb S. (1998) Market segmentation: strategies for success. Marketing Intelligence & Planning, 16/7, 1998, pp. 394 – 406. Wind, Y. (1978) Issue and Advantages in Segmentation Research. Journal of Marketing Research, Vol. 3 No. 2, pp. 153-66. Cited in Dibb S. (1998) Market segmentation: strategies for success. Marketing Intelligence & Planning, 16/7, 1998, pp. 394 – 406. BIBLIOGRAPHY Economist (2008) Toy story What European toys say about Europian views [Online] Grönroos, C. (1994) From Marketing Mix to Relationship Marketing: Towards a Paradigm Shift in Marketing. Management Decision, Vol. 32, No.2., 1994, pp. 4-20. Harari, O. (1997) Ten Reasons TQM Doesn’t Work. American Management Association, January 1997. HVG (2006) Átalakulóban a LEGO-világ Összerakós játszmák [Online]. Retrieved from: http://hvg.hu/200616HVGFriss1515107.aspx [Accessed 20 October 2008]. HVG (2007) Mégis kell a kreativitás? Túljutott a válságon a LEGO [Online]. Retrieved from: http://hvg.hu/20071118_lego_hagyomanyos_eptoelem_sikeres_uzlet.aspx [Accessed 24 September 2008]. HVG (2008) Búcsú a Flextronicstól A LEGO maga gyárt játékot Magyarországon es Mexikóban [Online]. Retrieved from: http://hvg.hu/20080701_lego_flextronics_nyiregyhaza_mexiko.aspx [Accessed 24 September 2008]. LEGO (2008) Product Quality & Safety [Online]. Retrieved from: http://www.lego.com/eng/info/default.asp?page=safety [Accessed 20 October 2008]. Vas Népe (2008) Ez már korántsem játék [Online]. Retrieved from: http://www.vasnepe.hu/gazdasag/20080703_ez_mar_korantsem__jatek [Accessed 23 September 2008]. Wood, L. (2000) Brands and brand equity: definition and management. Management Decision, 38/9, 2000, pp. 662-669. Yong, J. and Wilkinson, A. (2001) Rethinking Total Quality Management. Total Quality Management, Vol.12, No.2, 2001, pp. 247-258. Kotler’s check-list: segments should be Abratt (1993) attractiveness criteria: ability to reach buyers

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