LEGO Brand Audit

Melanie Banfield

ComStrat 564

2-14-16

Executive Summary

LEGO is a family-owned, private toy company headquartered in Billund, Denmark. LEGO was founded in

1932 by Ole Kirk Kristiansen and continues to operate under his motto; “Guided by the company spirit:

‘Only the best is good enough’, the company is committed to the development of children and aims to

inspire and develop the builders of tomorrow through creative play and learning,” (www.lego.com).

Today, 75 percent of the company is owned by KIRKBI A/S and 25 percent is owned by the LEGO

Foundation (www.legofoundation.com), which is committed to programs and research that are

“Defining Learning Through Play.” In 2015, LEGO achieved the status as the world’s largest toy

manufacturer, beating out its closest rival, Mattel, after increasing its sales in 2015 by 23 percent. The

operating profit for LEGO was $700 million.

LEGO has come a long way in 84 years from a company that began making wooden toys and step

ladders to a company that was named “The Product of the Century” by Fortune Magazine was inducted

into the U.S. Toy Hall of Fame and has been adopted by NASA to promote its educational mission

(adage.com). LEGO employs over 14,000 people in 28 countries. Their success is due to the consistency

and durability of their LEGO brick that allows for hours of imaginative play as well as learning through

play.

LEGO’s recent global success is in part due to their ability to connect with users through online

communities to better understand how their customers use their product, promote their product, and

collaborate on ideas. With this new knowledge, LEGO should continue to capitalize on the growing adult

market with more products geared toward hobbyists, engineers, and perhaps even consider large scale

LEGOs for backyard play construction or patio furniture. The LEGO Foundation should also consider

offering annual college scholarship opportunities as well as high school and college contests for building

design and engineering. A potential new slogan could be, “LEGO Play, LEGO Learn,” to emphasize the

importance of the LEGO Foundation’s work and the value of LEGO bricks, robotics, and programming

through learning with LEGO.

Introduction

Company Story

LEGO was founded in 1932 by Ole Kirk Kristiansen in Billund, Denmark. The company manufactured

stepladders, ironing boards, stools, and wooden toys. The name, LEGO was formed from the Danish

words, “Leg godt”, which translates to “play well.” Coincidentally, in Latin, this also means “I put

together,” which epitomizes the way consumers use the plastic building blocks manufactured today.

During the 1940s, LEGO purchased a plastic injection-molding machine and started to turn wooden brick

toys into plastic brick toys. Soon after, they developed the first “automatic-binding bricks”—the

forerunner of the bricks made today. In the 1950s, LEGO started to sell its first “system of play”, which

included 28 sets and 8 vehicles. In 1958, they patented the “stud and tube coupling” system.

To promote their toys, LEGO opened the first Legoland in Billund, Denmark in 1968 and released a short,

marketing film showing off the new park. This was a huge success. 625,000 visitors came to Legoland in

its first season. Today there are five Legolands around the world and 16 LEGO Discovery Centers.

While LEGO entered into the top 10 world’s largest toy manufacturers in 1990, sales during that decade

stagnated and declined and the company almost went bankrupt. However, during this period, LEGO

released new product lines that continue in popularity today, including LEGO Mindstorms, which was

developed out of a partnership with Massachusetts Institute of Technology, LEGO Star Wars, and LEGO

Creator.

Under the leadership of CEO, Jorgen Vig Knudstorp, and major restructuring, especially of their supply

management system, LEGO started to see profit momentum in the late 2000s and into the next decade.

Today, they are the world’s largest toy manufacturer, out-performing Mattel and Hasbro, their largest

rivals. They have over 14,000 employees and operate in 28 different countries with 40 different

products. Some of their most popular products include LEGO Star Wars, LEGO Creator, LEGO Bionicles,

LEGO Mindstorms, DUPLO, and LEGO Friends.

LEGO continues to focus on educational programs and partnerships through the LEGO Foundation in

order to achieve their mission “To inspire and develop the builders of tomorrow” (www.lego.com).

World Wide Locations:

Australia

Austria

Belgium

Canada

China

Czech Republic

Denmark

Finland

France Germany

Hong Kong

Hungary

Italy Japan Korea Mexico Netherlands New Zealand Norway Poland Russian Federation Singapore South Africa Spain

Sweden Switzerland Taiwan United Kingdom United States

Customer Story LEGO markets their products to everyone; boys, girls, adults, educators, and businesses. For much of the

company history, their advertising and marketing focus was geared toward boys though they did

manufacture LEGO Dollhouses in the 1970s. Most recently LEGO can attribute a huge boom in profits to

the new LEGO Friends product launched in 2012, and marketed toward girls. It should be noted that in

1963, Godtfred Kirk Kristiansen, son of Founder and then Managing Director, devised a list of product

characteristics that included “For Girls and Boys” and “Fun for every age” (www.lego.com). Given these

characteristics, one can conclude that LEGO is meant to be a lifelong toy for all ages and genders.

The company mission is “To inspire and develop the builders of tomorrow,” which could be geared

toward anyone interested in building and using their imagination at any age. In the 2000s, LEGO began

to recognize the market potential of adults who had formed online communities dedicated to swapping

LEGO ideas (Kolowich, 2015). In 2005, LEGO created LEGO Ambassador Network (LAN) that has fans ages

19-65. LEGO has also created a secondary customer base with educational programs, businesses,

educators, and schools. NASA has formally adopted LEGO for their educational mission (Braukus, 2013).

Customer Relationship

• Enjoys constructing • Enjoys imaginative play and creating worlds but also structure • Curious • Can follow directions and has attention to detail • Self-entertain • Interested in learning more, doing more • Wants something that is evolving, from a static structure to a robotic or powered structure

Brand Inventory

Brand Promise

“Guided by the company spirit: "Only the best is good enough”, the company is committed to the

development of children and aims to inspire and develop the builders of tomorrow through creative

play and learning” (www.lego.com).

“It is the LEGO® philosophy that ‘good quality play’ enriches a child’s life – and lays the foundation for later adult life. We believe that play is a key element in children’s growth and development and stimulates the imagination and the emergence of ideas and creative expression. All LEGO products are based on this underlying philosophy of learning and development through play” (www.lego.com). Brand Personality

Excitement- Collaboration with customers by creating new worlds, robots, and replica models of favorite

real-life structures, people, and characters. Keywords: “Business of imagination”, robotics, innovation.

Sincerity- Committed to sustainability and making a positive impact on the world. Partnering with

customers and educators to create and innovate. “Only the best is good enough.” Keywords: Positive

impact

Ruggedness- The original LEGO brick has been around for 50 years. Adults still have LEGO sets from their

own childhood. LEGOs are built to last and to adapt. Keywords: Durable, Adaptable.

Competence-84 years of proven excellence and global reach. 2015, LEGO became the number one toy

maker in the world. Honored with “Product of the Century” award and “U.S. Toy Hall of Fame.” LEGO

Foundation has educational partnerships that inspire engineers and develop sophisticated building

systems including robotics. LEGO has expanded into digital gaming and also collaborates with its

customers via online communities and with its LEGO Ambassador Network to understand how its

customers use and value LEGO. LEGO partners with prestigious institutions like NASA and Massachusetts

Institute of Technology. Keywords: Educational partnerships, global reach, sophisticated technology.

Sophistication-Lead by the motto, “Only the best is good enough,” LEGO is committed to its values of

imagination, creativity, fun, learning, caring, and quality. This is shown through its numerous awards and

diverse line of 40 products for people of all ages. Keywords: Innovative, adaptable, award-winning.

Brand Elements

LEGO is characterized by the its classic red square logo and the capitalization of the letters

‘LEGO’.

The LEGO brick is iconic and dates back to the patent of its “stud and tube coupling” system

from 1958.

The yellow LEGO man represents an iconic LEGO figure from the LEGO Classic set and was the

main character in the popular 2014 The LEGO Movie.

LEGO is known for many other popular brands, shown above, such as DUPLO, LEGO Star Wars,

LEGO Mindstorms, and LEGO Friends.

LEGO has always partnered to license character theme sets from popular movies such as Star

Wars, Harry Potter, Teenage Mutant Ninja Turtles, and Disney.

Brand Products

Toy Products

Beyond toys/Adult, Older Children Products

Entertainment

Partnerships

DUPLO LEGO Friends LEGO City LEGO Nexo Nights LEGO Star Wars LEGO Bionicle LEGO Dimensions LEGO Ninjago LEGO Superheroes LEGO Mixels LEGO Minecraft LEGO Chima LEGO Elves

LEGO Jurassic World LEGO Disney Princess LEGO Ultra Agents LEGO Speed Champions LEGO Classic LEGO Teenage Mutant Ninja Turtles LEGO Angry Birds LEGO Hobbit LEGO Scooby-Doo LEGO Juniors LEGO Pirates LEGO Minifigures

LEGO Mindstorms LEGO Architecture LEGO Technic LEGO Ideas LEGO Power Functions LEGO Factory

LEGO Fusion The LEGO Movie The LEGO Angry Birds Movie LEGO Books LEGO Video Games LEGO Television Series

The LEGO Foundation LEGO Ambassador Network LEGO Club Bits and Bricks Galleries Message Boards

Legoland Parks LEGO Discovery Centers LEGO Factory LEGO Education LEGO Mindstorms Education EV3 NASA

Brand and Customer Communication 2016 slogan, “To inspire the builders of tomorrow.”

2002 slogan, “Play On.”

1998 slogan, “Just imagine…”

LEGO actively engages with community of followers on the web

Established LEGO Ambassador Network, to encourage users to share ideas and inspirations

Social Media marketing through Facebook, Twitter, Instagram and other blogs. Started #Build

Your Own Kronkiwong—invites kids to upload video of their Kronkiwong creation

LEGO Clicks magazine

CUUSO crowdsourcing ideas allows fans to vote on favorite LEGO product ideas

2011 LEGO re-designed website to be more interactive with users, which now features games,

product story lines, plots, characters, movies, polls, and quizzes.

Traditional print advertising

LEGO stores and Discovery Centers allow users to interact and build the product in the store

Promotions and discounts are carried out by retailers

Competitor Analysis In terms of size, Mattel and Hasbro are the two main toy competitors. Mattel recently acquired a LEGO

spin-off called Mega-Bloks in order to capture the LEGO market share.

Mattel Brand Promise: Play to grow, play together, play with passion, and play fair.

Mission: “Our mission is to nurture creativity in every child and every family.” (www.mattel.com)

Mattel Vision: “Create the Future of Play.” (www.mattel.com)

POPs:

Many categories of toys including - Dolls - Crafts - Action Figures - Vehicles - Preschool - Construction toys, including newest acquisition of LEGO look-a-like, Mega Bloks

Different materials used to make toys

Many manufacturing suppliers

Many distributers PODs:

Popular/Familiar Toys and Brands

- Barbie

- Little People

- Fisher Price

- Thomas & Friends

- American Girls

- Hot Wheels

- Mega Bloks

U.S. Based company

More price range options

More promotional advertising and coupons

More television programming content

Not focused on products for adults

Market Position:

Number one toy maker in the world until 2014, when LEGO surged ahead.

Recent decline in sales

2015, slipped again, falling below Hasbro

2015, $6 Billion in Sales in 2014 (adbrands.net, 9-3-15)

Communication Strategy/Recent Events

Traditional print and media advertising

Television programming and product tie-ins

2016 talks of merger with Hasbro

Hasbro Brand Promise: “Innovation and continued global expansion. Commitment to Social Responsibility and

giving back.” (www.hasbro.com)

Mission: “Hasbro is a global company committed to Creating the World’s Best Play Experiences, by

leveraging its beloved brands, including Littlest Pet Shop, Magic: The Gathering, Monopoly, My Little

Pony, Nerf, Play-Doh and Transformers and premier partner brands” (http://corporate.hasbro.com/en-

us)

POPs:

Many categories of toys including - Board games - Sports toys - Crafts - Action Figures - Vehicles - Preschool

Different materials used to make toys

Many manufacturing suppliers

Many distributers PODs:

Popular/Familiar Toys and Brands

- Play-Doh

- Monopoly

- Twister

- Nerf

- Tonka

- Preskool

- My Little Pony

- Transformers

- G.I. Joe

- Mr. Potato Head

- Movies

- Digital Games

U.S. Based company

More price range options

More promotional advertising and coupons

More television programming content

Not focused on products for adults

Market Position:

Number 2 and 3 toy maker over its lifetime.

Recent surge in sales, above closest competitor, Mattel.

$4.2 Bill in annual revenue

Communication Strategy/Recent Events

Traditional print and media advertising

Television programming and product tie-ins

2016 talks of merger with Mattel

Insights and Recognitions

SWOT

STRENGTHS

Consistency in design, use, style.

Long history.

Durable.

True creative and imaginative play.

Industry and educational uses.

Broad market: not just for children, but also for adults.

Good licensing partners for sets.

Strong customer relationship set up via websites, forums, discussion boards, blogs, interaction.

Adaptable. LEGO has shown that it has been able to stay relevant into modern times. The “brick” has many different uses from educational to inspirational, to play.

Diverse product lines: toys, games, entertainment, books, education, theme parks and discovery centers.

WEAKNESSES

One main type of product: construction play.

Skill, patience, and time required. Not all children and people can handle that.

High market price toy. Not many sets under $20.

Not a lot of variety in the toy if you do not “hook” a child or get them interested. LEGO tends to make “life-long” customers so getting kids interested early is important to their customer longevity and loyalty.

OPPORTUNITIES

More customizable themed sets and marketing.

Always growing partnerships and licensing of characters and themes.

Growing adult and girl market.

Growing technology and educational market.

Robots and drones.

Entertainment programming via Netflix, Amazon, movies, and gaming.

Board games.

Big construction blocks.

Furniture.

THREATS

Growing use of electronic gaming and devices.

Look-a-like companies, such as Mega Bloks.

Small construction toys companies, marketing to girls and STEM, such as Goldiebox and Roominate.

Insights/Recommendations: 1. While LEGO has significant market share with only one type of toy product, in order to stay

competitive, LEGO will need to continue to innovate and diversify. Two areas that LEGO

could consider growing is their entertainment division with either more television shows

and digital role play game and worlds. Another idea is to manufacture larger scale

construction toy for adults, such as backyard play equipment or patio furniture.

2. LEGO should continue to grow its educational partnerships, sponsoring more national high

school and college contests for building design and also an annual college scholarship

program. LEGO might even consider more government partnerships in design and

engineering especially in the drone area. LEGO has done an excellent job in recent years of

connecting with their customers and growing their adult customer base, continued outreach

to this base through education would increase their life-long loyalty.

3. Perhaps consider a new marketing slogan of “LEGO Play, LEGO Learn” as much of their

recent outreach and marketing has been to show the value of LEGO bricks, robotics, and

programming through learning with LEGO.

References

1. AdBrands Weekly Update. 11, February 2016. Retrieved from

http://www.adbrands.net/us/mattel_us.htm

2. AdBrands Weekly Update. 4, February 2016. http://www.adbrands.net/us/mattel_us.htm

3. AdBrands Weekly Update. 3, September 2015. Retrieved from http://www.adbrands.net/us/mattel_us.htm

4. Braukus, Michael and Santoro, Amanda. 5, June 2013. NASA Partners with the LEGO Group for

Design and Build Contest. (Press release). Retrieved from

http://www.nasa.gov/home/hqnews/2013/jun/HQ_13-173_Lego_NASA_Competition.html

5. www.hasbro.com

6. www.lego.com

7. www.legofoundation.com

8. www.mattel.com

9. Degun, Gurjit. 29, April 2015. Lego launches Facebook campaign that asks kids to create a

kronkiwongi. (Blog article) Campaign Live. Retrieved from

http://www.campaignlive.co.uk/article/lego-launches-facebook-campaign-asks-kids-create-

kronkiwongi/1345019

10. Klara, Robert. 15, April 2013. Lego’s Consistency Has Been the Key to Its Success. Getting girls

was the tricky part. (Article) AdWeek. Retrieved from

http://www.adweek.com/news/advertising-branding/legos-consistency-has-been-key-its-

success-148553

11. Kolowich, Lindsay. 10, August 2015. Building a Playful Brand, Brick by Brick: The History of Lego

Marketing. (Blog article) HubSpot Blogs. Retrieved from

http://blog.hubspot.com/agency/history-lego-marketing

12. Milne, Richard. 2, September 2015. Sales jump secures Lego’s crown as world’s biggest

toymaker. (Article) Financial Times. Retrieved from http://www.ft.com/cms/s/0/f03d0188-513d-

11e5-9497-c74c95a1a7b1.html#ixzz40AEmWWwV

13. NASA. 21, October 2015. LEGO® Bricks, formerly known as NLO-Education-2 (LEGO Bricks).

Retrieved from http://www.nasa.gov/mission_pages/station/research/experiments/8.html

14. Parnell, Eric. 16, June 2015. Toy Wars: Mattel vs. Hasbro. (Blog article) Seeking Alpha. Retrieved

from http://seekingalpha.com/article/3261325-toy-wars-mattel-vs-hasbro.

15. Schmidt, Gary. 20, November 2015. Lego’s Success Leads to Competitors and Spinoffs. (Article)

The New York Times. Retrieved from http://www.nytimes.com/2015/11/21/business/legos-

success-leads-to-competitors-and-spinoffs.html?_r=0

16. Trangbæk, Roar Rude. 02 September 2015. 18 PERCENT GLOBAL SALES GROWTH IN THE FIRST

HALF OF 2015. (Press Release) Retrieved from http://www.lego.com/en-us/aboutus/news-

room/2015/february/lego-group-2014-annual-results