Discuss about the Brand Management for Lego Company.
In 2014, Lego group emerged as the largest company in terms of revenue. Many strategies were used by the organization to develop its brand. It was the knudstorp strategy that helped the organization manage its growth and remain sustainable in the market (Andersen et al., 2013). The generic strategy used by the organization is differentiation strategy where the main aim of the organization is to create a valuable product that is different from its substitutes in terms of quality, features, creativity and after sale service. Creation of value for the customers was the top priority of the organization. The competitive strategy used by the organization was a by pass attack strategy. By pass strategy is a strategy where the organization does not directly attacks its competitors but attacks them indirectly. The Lego group of companies established its own retail stores and also started its online retailing and e-commerce.
Consumers are the most important part of an organization. The main target customers of Lego group companies are children of age three to fifteen years. This includes children from both middle and upper class. The customer market is segmented in four categories that is Preschool, pre teen, teenagers and adults. Pre school segment involves customers of age five and below where dolls, figures, and action figures are sold. The pre teen consists of customers aged 6-12 years where construction toys, video games, puzzles and activity games are sold. Teenagers are customer aged 13-18 years where the major concentration on selling sports, video games and outdoor games. Adults are customers that are above 18 years where the concentration is on selling video games and electronic toys (Savolainen, 2015).
Consumer awareness is a method of promoting the products sold by the company. There are various promotion techniques that help in increasing the awareness and knowledge of consumers. Making the consumer aware of the product is essential as it helps in increasing the sale and creating a brand image among its customers. Consumer awareness is also the ethical code of conduct that an industry or a firm should follow. Identification of loyal customers of brand is essential for brand awareness and promotion. Creating a brand awareness helps in building a relationship of trust with its customers. This strategy will help the organization survive at time of tough competitions as the loyal customers are less likely to switch over their brand once that trust is build. The main factor used by Lego group is superior quality and creativity and design of the product (Antorini et al., 2012).
Various methods and techniques can be used in increasing consumer awareness such as advertisements, television, journals, magazines, posting ads on social media networks such as facebook, posting banners and word of mouth. Promotion of products in world of competition is necessary to stand out in the crowd. It is the customers of Lego group that helped the firm reduce its operation cost and survive competition. Customer loyalty is the most important factor in creation of brand image. The logo of Lego groups attracts the customers from all over the world. Its positioning strategy is that the products can be made in anything possible (Hadida, 2013).
The competitors of Lego group of companies are Leapfrog, Automoblox, Vtech and Mecanno. The aim of the organization is to achieve competitive advantage in entertainment and toy brands and manufacturers industry. The brand loyalty of customers helps the organization achieve competitive advantage. The organization uses the strategy of by pass technique to fight with its competitors in the market (Andersen et al., 2013). The number of competitors is high in the market. Hence the consumers have large choice for consumption. It is essential for the organizations to develop such a brand that gives the customers a nice experience that urges them to stay focused in a particular brand. By pass strategy is a strategy where Lego group attacks the consumers in an indirect way. This includes differentiating the products provided by the company on the basis of superior quality, after sales service, creativity and design of the product and the brand image of the firm. To increase its sale and develop a brand Lego group has established its own brand stores in various places worldwide. It has also involved in online retailing of products produced by the Lego group of companies. This has helped the company increase its revue and profit and sustain competition.
The company can use various techniques to promote its brand and increase consumer awareness. The tagline or the slogan of the company plays an important role and acts as a major factor for attracting customers. The tagline of Lego group reads as ‘it’s what you make it” and “what is best is best”. The concentration of the company is on developing products that are of superior quality. Hence the company ensures that the raw materials used in the production process are of high and superior quality. Building the fans of the products is necessary for positioning and promotion. The customer target and segmentation also plays an essential role for deciding the fans of the products and company (Jensen, 2016).
The key competing factors of the company include distribution, packaging, advertising, evolution, price and integration. The key buying factors that encourage the customers to purchase the products are:
The key success factors of the Lego group of companies is its brand name, availability, variety of products that it sells, innovation, brand and product design and the range of accessories.
Strengths:
The technologies used at the industry for producing toys are advanced. This helps the company reduce the cost and time of manufacturing.
The company has a good brand image and name in both national and international market. The logo of the brand is its main attraction. The consumer loves to consume the product of Lego group due to the quality that it supplies.
The company is involved in providing a wide range of products that includes toys, sport games, video games, construction games and other electronic games and products. It should concentrate on increasing its products and diversify its products on online gaming and videos and outdoor sports.
The company has its own brand retail stores and an online retailing website. Establishment of its own store will help the organization attract more customers and achieve competitive advantage.
The company has its own innovation team that is a team of four members. This helps the company create its worn design and a creative product according to the need of consumers.
The company works in collaboration and coordination where the departments are allowed to meet and discuss business ideas.
The products help in expanding the education and knowledge of children.
It is an iconic brand that provides goods that are of superior quality.
The product portfolio is strong.
The theme parks by Lego group are a great tourist attraction.
The supply chain is efficient.
The management of the organization is creative and also its leadership style (Findinge et al., 2013).
The prices of the toys made by Lego group are high due to the raw materials that it uses in its production process.
The products that are manufactured by Lego group only attract men and not women. This leads to weak segmentation of the market.
The cost of production is high as the company has to pay hefty prices for getting the permission for licensing the media characters.
The market for toys is limited in the industry.
The main concern is with then limitation of products and brand name.
The rise in the competition reduces the market share of the companies.
The use of technology is limited.
The scope for business innovation is limited due to old establishment of the company.
Outsourcing of the product is costly than concentrating on inmate teams.
Capital investment is high.
The Lego group has an opportunity to expand in the international market. Since its requires less capital investment and also the Lego brand is established and famous expanding its business in international market will be an easy task for the organization. The customers of the Lego brand are spread all over the countries. So it will not be difficult for the organization to establish a new consumer market in countries.
Growth of the middle class in the developed countries is beneficial for the toy company as it gives an opportunity for the business to expand.
The company has an opportunity to diversify its products in other market segments as well.
The promotion techniques help the company expand its product to other market segments.
Rise in use of technology and advancement of technology is beneficial for the organization.
Diversification and promotion can help the company penetrate in new markets.
The main threat is from the rise in the number of competitors. The number of competitors is rising that is reducing the market share of the organization.
Reduction in the purchasing power of customers will reduce the demand for the products.
Digitalization of the world will reduce the demand for toys. Children now a days are more interested in using internet and online games and videos rather than playing with toys. This puts a threat on the company. For this it is advisable that Lego group should launch online games and videos for children that attracts them.
It has threats from internet and outdoor games. People are showing more interest on the outdoor activities such as Olympics, badminton and cricket that is making the toys losse its importance.
Conclusion
The concentration of the Lego group should be on the brand retail stores and online retail stores that it has established. Management of its supply chain channel is also necessary for the timely delivery of the product to the concerned consumers. The focus of the organization is on quality and product innovation. Hence the organization uses various advanced techniques to create innovation and creative products that are attractive for children. Branding is technique of creating a unique brand image of the product or the organization in the entire market or the industry to achieve competitive advantage. The tagline of Lego that says “What is Best is Best” indicates that the primary focus of the organization is on developing a superior quality brand. This is so done to attract more customers. The organization can use techniques such as involvement of celebrity in promotion of advertisements to attract customers. While launching the toy of a particular character the organization can organize stage programme depicting the characters to attract children to purchase the product.
Expansion of the Lego group of company is essential to create valuable brand awareness among the target group of customers. The company should diversify its range of products and concentrate more on outdoor games to achieve large economies of scale and competitive advantage. Creating a unique brand image is necessary in the world of competition that can be creates by using various techniques of packaging, distribution, promotion and branding. Lego Company should concentrate on expanding its business. The toys that are made by the company only attract boys. Hence, it is recommended that the company should concentrate on making more toys that attracts girls and women. This includes Barbie dolls, characters of power puff girls and many more items that are an attraction to girls. The organization should capture the opportunities available to them and utilize it for its benefit. Since it has an opportunity to use advanced technologies that are cost saving and also time saving it should use more of that. Promotion of brands will also help the company create its own brand name. use of social media and internet is recommended for the promotion of products and service that the Lego group provides.
References
Andersen, P. H., Kragh, H., & Lettl, C. (2013). Spanning organizational boundaries to manage creative processes: The case of the LEGO group.Industrial Marketing Management, 42(1), 125-134.
Antorini, Y. M., Muñiz Jr, A. M., & Askildsen, T. (2012). Collaborating with customer communities: Lessons from the LEGO Group. MIT Sloan Management Review, 53(3), 73.
Dinnie, K. (2015). Nation branding: concepts, issues, practice. Routledge.
Findinge, C. P., Lehmann, J., Elmi, A., Kjær, L. L., Kristensen, D. E., Breum, A. S., & From, P. (2013). The LEGO Group: B135.
Hadida, A. L. (2013). Let your hands do the thinking! Lego bricks, strategic thinking and ideas generation within organizations. Strategic Direction, 29(2), 3-5.
Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.
Jensen, M. (2016). The LEGO Group – About Us LEGO.com. Lego.com. Retrieved 13 September 2016, from https://www.lego.com/en-us/aboutus/lego-group
Savolainen, R. (2015). The role of emotions in online information seeking and sharing: a case study of consumer awareness. Journal of Documentation,71(6), 1203-1227.
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