Problems with Lego

Topics: Target market, Toy, Lego Pages: 4 (950 words) Published: June 21, 2011
Situation Analysis:
* The construction toy market is worth $600 million
* Lego is a $1.6 billion business in the construction toy market spread across 130 countries * Lego enjoys 80% of market share in the North American market * Lego is as an esteem brand and is looked upon not only as a toy company but also a company with toys that develop learning and new skills * Due to competitors like Mega Bloks Inc., Hasbro etc. Lego started losing market share * Some of the major reasons for the shift in loyalties were: * Mega Bloks products were lower priced than Lego

* Mega Bloks introduced larger brick sizes and hence were preferred for preschoolers * The bricks created by Mega Bloks could be used interchangeably with Lego Bricks * Lego started losing market share and hence suffered a loss of $44 million in 1988 and $166 million in 2003 * Lego tried following strategies to restore its profitability * Introduced Duplo, for young preschoolers

* Introduced Bionicles “small robo figures”
* Created an animated movie to promote the Bionicles range * Introduced Mybots, construction blocks with computer chips which had lights and sound * Lego partnered with Walt Disney and Lucasfilms for franchising Harry Potter merchandise * Introduced Quattro, aimed at the younger kids

* Introduced pastel coloured bricks for young girls

Problem Area:
* For Lego the journey from being the one the major players and market leaders to having loses has been an exponential one * Major reasons being lack of innovation, no diversification to newer segments also over confidence on their loyalists * Thus, there were certain gaps created, which were identified by competitors * Thus the major problem faced by Lego is to find solution to attain Sustainable growth. * To devise a strategy so that they can regain their market leader status along with maintaining and increasing profitability * Lego needs to devise a plan to...
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