Marketing and Lego
Executive Summary
Since LEGO Group’s (LEGO) inception in 1932, the world-famous toy maker overcame numerous challenging obstacles to become the leader in the building toy segment. By 2010, LEGO had witnessed all-time high annual sales of over US$3.7 billion to become the fourth-largest toy manufacturer in the world. Upon analysis of LEGO’s strengths through Resource-Based View, LEGO holds few key competitive advantages attributed to their success: strong brand name and innovative culture. These traits are not imitable or easily substitutable.
However, the competitive landscape has drastically increased in the building toy industry as analyzed with Porter’s Five Forces. Essentially, the deteriorating barriers to entry from loss of trademark protection, Disney’s acquisition of Marvel for greater control of entertainment licensing, and increased rivalry among existing firms from little product differentiation are the main drivers of high competition in the observed market. Therefore, in order to uphold the market leader position in the building toy market and ensure financial success in the years ahead, it is strongly believed that the combination of differentiation and first-mover strategy will best allow LEGO to capitalize on the opportunities available in this growing industry while mitigating the threats from the changes in the market. Although several viable alternatives are present in order to address the mentioned concerns, expanding to the adult market with specialized LEGO sets for hobby and professional purposes is the most suitable. By tapping into this huge demographic consisting of many previous LEGO users, LEGO will diversify its product lines, gain a new channel for revenue generation, protect its brand from competitors’ similar products and maintain high brand recognition from wider targets.
Problem Statement
The LEGO Group (LEGO) is facing new threats emerging in the toy industry from company acquisitions, intensifying competition in the building
Since LEGO Group’s (LEGO) inception in 1932, the world-famous toy maker overcame numerous challenging obstacles to become the leader in the building toy segment. By 2010, LEGO had witnessed all-time high annual sales of over US$3.7 billion to become the fourth-largest toy manufacturer in the world. Upon analysis of LEGO’s strengths through Resource-Based View, LEGO holds few key competitive advantages attributed to their success: strong brand name and innovative culture. These traits are not imitable or easily substitutable.
However, the competitive landscape has drastically increased in the building toy industry as analyzed with Porter’s Five Forces. Essentially, the deteriorating barriers to entry from loss of trademark protection, Disney’s acquisition of Marvel for greater control of entertainment licensing, and increased rivalry among existing firms from little product differentiation are the main drivers of high competition in the observed market. Therefore, in order to uphold the market leader position in the building toy market and ensure financial success in the years ahead, it is strongly believed that the combination of differentiation and first-mover strategy will best allow LEGO to capitalize on the opportunities available in this growing industry while mitigating the threats from the changes in the market. Although several viable alternatives are present in order to address the mentioned concerns, expanding to the adult market with specialized LEGO sets for hobby and professional purposes is the most suitable. By tapping into this huge demographic consisting of many previous LEGO users, LEGO will diversify its product lines, gain a new channel for revenue generation, protect its brand from competitors’ similar products and maintain high brand recognition from wider targets.
Problem Statement
The LEGO Group (LEGO) is facing new threats emerging in the toy industry from company acquisitions, intensifying competition in the building