Discuss about the Brand Audit of LEGO.
The tendency that exists in consumer behaviour today has given the organisations a wake-up call as they can improve their business if they understand the consumer behaviour in a proper way (Solomon, 2006). This is vital when associated with the understanding as well as development of the brand identities. The customers of today expect more from the brands and do not get satisfied with the standard products that fulfil their basic necessities. If a particular brand is not able to offer the customers with something special they might switch over to the competitors. The brands that evolve as the strongest ones are those that keep their promises. Branding that is good results in sincerity while collapse results if the company does not make use of the principles of branding (Nicholas, 2003).
The aim of this report is to investigate the perceptions of the consumers with respect to the brand LEGO by carrying out a brand exploratory and determining the brand’s competitive positioning as well as conducting an in-depth SWOT Analysis and finally provide recommendations on the basis of those findings. The report will be linking the theoretical concepts with the practical findings while conducting the brand audit of LEGO.
The perceived brand globalness of a brand has an influence on the brand association by means of brand awareness. The degree of sensitivity of the consumers worldwide to the global brands and their preference for global brands can be understood by the marketing managers so that they can formulate strategies for strengthening the brand associations of the consumers (Baek et al., 2010).
Each year thousands of the top brands in the world are put to test by Brand Finance, a leading consultancy for “brand valuation and strategy” for determining the brands which have proved to be the most powerful as well as the most valuable to the customers. In 2015, LEGO scored high on several measures and was ranked as the world’s most powerful brand (Dill, 2015). A powerful brand is described as a brand demonstrating profound influence on the its target audience, competitors, market as well as the whole consumerism. A brand is made powerful by the contributions of awareness that the brand has among the consumers, loyalty of the clients, industry reputation and satisfaction levels of the employees (Brand Finance, 2016).
The consumer awareness of LEGO is high. The consumers consider it to be a toy that is immersive and uniquely creative, children like the abilities of constructing their own colourful worlds that are provided by LEGO. In a world which is increasingly becoming saturated by technology, the “back-to-basics” creativity that LEGO provides is encouraged by the consumers mostly the parents. Thus, it has an appeal that is cross-generational. The critical as well as the commercial success of the LEGO movie helped in propelling LEGO from being a brad that is well-loved to being the most powerful lone in the world (Blindell, 2015). Consumer awareness has been created by LEGO by making use of packaging, traditional advertising for their target market mostly consisting of young boys and by creation of website pages that are highly engaging with marketplaces and games. It also started marketing to young girls and adult fans (Kolowich, 2015).
Brand associations play a significant role in the purchase decisions of the consumers. They form the brand loyalty’s foundation and assist the consumers in both searching as well as dealing with the information (Chen et al., 2013 ; Boisvert & Burton, 2011).
The consumer association of the LEGO brand is high as they able to associate it with their childhoods and have a lingering nostalgia for it. (Blindell, 2015). Besides this, LEGO has a packaging design that has been made specifically for its bricks. “The Tower” packaging cannot be thrown away like other packages but is an essential component of it. it is durable and customisable. From the perspectives of the consumers, the packaging has improved the brand awareness and helped in building brand associations that are positive and has resulted in brand loyalty. The logo of the company that is placed in the corner is often visible clearly and the use of box during the play creates a direct association with fun and hence whenever, it is customers want to purchase new toys particularly bricks, the first thing which comes into their minds is LEGO (Esko, 2013).
LEGO, is considered to be the undisputed king of construction toys and in the previous five years the company has managed to double its profits and most are among the top sellers especially during the holiday season. However, competition has been encouraged by the success of LEGO as well as the fact that in 2010 it lost a trademark battle related to interlocking bricks that had been going on for a long time (Beem, 2016). Larger toy makers such as Mattel, Hasbro and Spin Master have also switched over to construction toys in order to provide a boost to their sales. On the other hand smaller companies such as OYO Sports, Cobi and Bridge Direct have also made entry into this field which has increased the pressure on LEGO. Besides this, the interest that the construction toys have shown has also resulted in the development of secondary market for the brick rentals. The competitors of LEGO are trying to distinguish themselves from LEGO which is their largest rival. MEGA Brands is attempting to come up with something beyond rectangles and squares for competing with LEGO (Schmidt, 2015).
SWOT Analysis is the technique for gaining an understanding of strengths and weaknesses and identifying the opportunities and threats (Ommani, 2011).
In 2015, LEGO was named as the most powerful brand in the world.
The products of LEGO are unique which have educational features incorporated for development of key skills in the younger children. It also encourages problem solving as well as goal oriented play in children.
Brand name is very strong and enjoys a reputation worldwide as the 5th largest maker of toys.
Most of the customers are very loyal as well as engaged.
Although the products are expensive, they are perceived to be of more value than those of the competitors. This is primarily due to their associations with powerful and beautiful memories.
The product portfolio is very strong and the products are of excellent quality and of good value. The customer base is very large which has further increased with the diversification of the brand into merchandise, movies and TV and video games.
Advertising and TVCs have put brand recall at the top of the minds.
The products are being imitated which is a concerning factor.
The production is costly and it is mostly present in the high cost nation and the fixed costs are high, resulting in the products being high priced.
There is a lack of focus on the customers.
Attention on the core product which is the LEGO brick is less.
Formulation of strategy is a concern that LEGO faces.
The LEGO Group has achieved success with their product lines related to e-commerce, but with the technological advances taking place in the internet domain, it is also essential that the website of the Group match up to the fast paced world of computer technology today if dominance in the toy market has to continue.
LEGO should look towards attracting the attention of more customers by diversifying into other segments also. Different exercises of branding can be conducted for getting new segments.
Innovations can be implemented.
Production of toys can be extended to countries with low toys.
New technologies as well as trends need to be taken into consideration by the company so that new trendy toys can be introduced (Claufficious, 2015).
More networks should be looked into for supplying products in an effective manner to new as well as emerging nations.
Competitions can be held in schools for attracting the attention of the children to the toys of LEGO.
LEGO possesses the impressive ability of transforming the latent potential in cultures which are popular through their innovative ideas. The blocks can be used for building “The Death Star” from the series of “The Star Wars” or “The Tower of Orthanc” from the “Lord of the Rings”. This connection with the popular culture is an extremely big opportunity as cooperation with these brands can help in luring young customers (Cayenne Apps, 2016).
LEGO faces threat from similar other companies which might be offering toys at lower costs. New competitors might also emerge due to the loss of trademark protection battle.
Competition is already intense and very strong leading to a high degree of brand switching. New competitors are continuously entering the toy markets and this
coupled with the expiration of the design patent of LEGO Group clearly indicates a lowering of barriers of competition in the toy market.
Progress of LEGO can be hindered by new legislations.
The purchasing power of the customers has been decreasing due to increasing toy rates.
The number of cartoon channels has increased. Video games in shops as well as online channels have increased which can decrease the interest of the customers in the products of LEGO. The use of internet among the children has increased which leaves little time for playing with toys.
Saturation in the markets have increased.
Conclusion
The LEGO brand is indeed the most powerful brand as it is able to evoke emotions that are very strong and which no other brand is able to do. Customers are able to associate the brand with the fond memories of their childhood. This is an asset that is possessed by the Group and which nobody can overestimate. The company was able to overcome the biggest crisis that they faced as a result of this very basic foundation and made it double its profits in the previous five years. The continuous rise in profits still continues but times are changing and it is important that the company also changes in accordance with the time and seek the opportunities available to it with the help of the following recommendations.
The above SWOT analysis is an indication that several strengths are possessed by LEGO but it also has its share of weaknesses. It also shows that although opportunities exist for the Group, threats are not far away. Thus, the details that have been presented above indicate that LEGO needs to formulate a corporate strategy, use products that have uniqueness, be recognised for offering the best quality of products, focus on satisfying the customers but should also focus on its core value which is the LEGO brick. At the same time, in order to optimise costs as well as production, the Group needs to outsource and invest the production to the lower cost nations such as China. The prices of the products are driven by a small product selection and are high relatively. In the developed nations such as Australia and the United Kingdom this is not problematic as the parents have the capacity of spending high amounts in purchasing toys for their children but the prices of the LEGO products are too high for the parents in the developing nations and they are not able to afford it. Thus, even though the market is very promising in the developing and emerging nations, parents are unable to afford the products.
For addressing the external competition that arises due to increase in the competition in the toy industry, more efforts have to be concentrated by LEGO for the creation of products that are innovative and which are able to match the changes in the demand of the customers. A majority of the customers of LEGO are in the children belonging to the age group of 5 to 12 years. This is the market that is large and comes with a large potential but it is also a market that is finite. As the customers become older, they start to lose their interest in the LEGO products. However, this interest again increases when these children become grown up and become parents themselves. This gap that exists between the children belonging to the small age group and the grown-up parents can be easily noticed and is currently being filled by the industry of video games. LEGO needs to come out with innovative products for filling this gap and products that can keep the customers engaged so that they are not distracted by online as well as video games.
References
Baek, T., Kim, J., & Yu, J. (2010). The differential roles of brand credibility and brand prestige in consumer brand choice. Psychological Marketing , 662-678.
Beem, R. (2016, January 28). Billion Dollar Lego Patent. Retrieved September 12, 2016, from Beem on Patents: https://www.beemonpatents.com/2016/01/billion-dollar-lego-patent/
Blindell, S. (2015). How to build a brand. Retrieved September 12, 2016, from https://howtobuildabrand.org/branding/lego-lesson-powerful-brand/
Boisvert, J., & Burton, S. (2011). Towards a better understanding of factors affecting transfer of brand associations. Journal of Consumer Market , 57-66.
Brand Finance. (2016). Lego Overtakes Ferrari as the World’s Most Powerful Brand. Retrieved September 12, 2016, from https://brandfinance.com/news/press-releases/lego-overtakes-ferrari-as-the-worlds-most-powerful-brand/
Cayenne Apps. (2016, September 11). LEGO Group – SWOT Analysis. Retrieved September 12, 2016, from Cayenne Apps: https://blog.cayenneapps.com/2015/05/27/lego-group-swot-analysis/
Chen, T.-Y., Yeh, T.-L., & Jheng, W.-s. (2013). Factors influencing brand association. African Journal of Business Management , 1914-1926.
Claufficious. (2015). Lego’s Outsourcing Swot Analysis – Business Strategy Case Study Part 2. Retrieved September 12, 2016, from Claufficious: https://www.claufficious.com/2015/06/legos-outsourcing-swot-analysis.html
Dill, K. (2015, February 19). Lego Tops Global Ranking Of The Most Powerful Brands In 2015. Forbes .
Esko. (2013). Packaging Innovation: Fun Packaging Ideas that Create Positive Brand Associations. Retrieved September 12, 2016, from https://www.packaginginnovation.com/brand-equity/fun-packaging-ideas-that-create-positive-brand-associations/
Kolowich, L. (2015). Building a Playful Brand, Brick by Brick: The History of Lego Marketing. Retrieved September 12, 2016, from https://blog.hubspot.com/agency/history-lego-marketing#sm.00001jp5ygir9odwlxgoikikqvorq
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Schmidt, G. (2015, November 20). Lego’s Success Leads to Competitors and Spinoffs. The New York Times: Business Day .
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