Wednesday 6 April 2016

Lego's marketing efforts


Lego has been a household name for decades, and remains one of the strongest and most popular brands of all time. The Lego brick has had the exact same design since 1958, which makes Lego’s popularity especially impressive. This is because of both the quality of the product and the strength of its marketing. According to Adweek, the key to Lego’s success has been because of the consistency in the brand’s look and feel, coupled with the company’s ability to adapt just enough to “change with the times and broaden its market” (Klara, 2013).

The brands continued success through the 21st century is because of how the company has adapted to changing consumer relationship. Not only has Lego done a great job with traditional advertising to their target market (young boys), but it has also been successfully built and fostered active communities of fans and followers, creating engaging pages on its website with games and marketplaces, and started marketing specifically to both adult fans and young girls.

How did it all start?

The Lego Group was founded in the early 1930s in Denmark, by a man named Ole Kirk Christiansen, the tenth son of a poor Danish family (The Lego Group, 2012). The name “Lego” comes from the abbreviation of two Danish words “leg godt”, meaning “play well”.

Lego started as a small carpenter’s workshop which only had a handful of employees, struggling through World War ‖. Ole and his small workshop produced a variety of wooden toys during the 1930s and 1940s, but they didn’t see much success selling them in a world with poverty and war.

There is not much recorded about Lego’s marketing efforts during the first several decades since its founding. Lego saw a few changes firstly, a plastic injection moulding machine was brought into the workshop which began making plastic toys, like Fergusen Tractor, that sold over 75,000 units (The Lego Group, 2012).


Secondly, Lego started making interlocking toy blocks which is what Lego is famous for. Ole called them “automatic binding bricks”” because they could be stacked on top of each other and locked in place with round studs that it into a hollow rectangular bottom.


By 1948, Lego had 50 employees (The Lego Group, 2012).

By 1950, Lego had a product, but in order to increase their sales numbers, the company needed to put together a marketing plan to promote the product and encourage people to purchase the toy bricks.

In 1952, Ole Kirk planned to expand, it costs DKK 350,000.

In 1954, Ole’s son, Godtfred, became junior managing director at Lego, it was he who discovered the potential of using Lego bricks as a “system for creative play”. He wanted to play off the idea that a child could use Lego bricks to build anything they dreamed of, Lego allowed children to use their creativity and imagination (The Lego Group, 2012).

By 1967, Lego was creating 218 different elements, not counting colour variations and were selling between 18 and 19 million Lego sets each year.

One of Lego’s first major marketing efforts was in 1968, the opening of their first Legoland resort in Denmark, which saw approximately 625,000 visitors in its first season. By 1980, Lego reported that 70% of Western European families with children under the age of 14 years old had Lego bricks in their home (The Lego Group, 2012), the company was starting to make a success.


The next 20 years, Lego ran a variety of marketing projects such as launching the children’s magazine ‘Lego Clicks’ (now called Lego Club magazine), creating a series of children’s books. The Lego brick was named one of Fortune Magazine’s “products of the century” (Chen & Carvell, 1999). However, in 1999 the company found that it needed to change.


Lego created and marketed its famous bricks for 67 years, without looking for ideas, comments or suggestions from its growing number of customers and fans. There were two main reasons for this: firstly, there was concern about making products for children as parents were threatening to sue the company for “stealing” their children’s ideas, as it could have given the company a bad reputation and effect the loyalty of customers. Eventually, the company did not communicate with customers at all. Secondly, before the importance of communicating with customers, there had not been much pressure for businesses to communicate with its customers. Even when the internet came into the picture, it took a long period of time for companies and consumers to adjust to the method of two-way communication.

Marketing Research - Adult fans

In 1999, Lego got a huge wakeup call, with less than two weeks until Christmas shopping season, Lego’s three largest sellers: Walmart, Target and Toys ‘R’ Us, told the company that they didn’t know enough about their customers or target market. Jake Mckee, a leader for Lego’s community team from 2000 to 2006, apparently said, “We just don’t know our customers” (The Lego Group, 2012). Jake Mckee introduce a new brand direct business to consumer (direct marketing) business unit at the company. One of the company’s new goals was to research and empower consumers who were already loyal Lego consumers (The Lego Group, 2012).

After extensive research, the company was surprised at what their research revealed: a large number of consumers weren’t children but adults. Lego marketers spent all their time and effort marketing to children. However, there was a growing number of adult fans, a potential market which the company had no knowledge about due to lack of customer communication and market research.

Adult fans had been using the internet to start their own discussion groups, to share pictures of their Lego creations and even created their own online marketplace to buy and sell Lego pieces and sets. It wasn’t until the company added the business to consumer department and carried about market research that the company discovered these groups.

The company was missing out on a huge marketing opportunity. Research revealed that Adult fans can be just as creative as children, adult fans were building 25 square foot Lego trains in the middle of malls, which thousands of people travelled to (The Lego Group, 2012) this was free advertising for Lego. Lego’s market research also revealed that the average adult fan would spend more money on Lego products per year than the average child. The company used this information to justify selling more expensive sets, such as the $500 Star Wars Millennium Falcon set.



The Lego Group then had a cultural shift: it was time to build relationships with Lego fans of all ages.

According to Auro Trini Castelli, head of strategy at Gyro, in Advertising Age, “the Lego brand is not competing in the toy business, but has much more of an impact both culturally and societally business of imagination” (Castelli, 2014). Lego’s brand communities continued to be an important part of the company’s market research and product development programs.

In 2009, the Lego Group was the world’s fifth largest toy manufacturers in terms of sales. The Lego Group announced a multi – partnership with Disney Customer Products obtaining exclusive rights to construct toys based on the entire portfolio of Disney and Disney Pixar Properties. Also, Lego launched a completely new product line – Lego Games.

In 2011, Lego hired e2x to help redesign their website. They built separate microsites dedicated to specific product story lines, such as the Lord of the Rings, Disney Princesses, Super Heroes and Star Wars. The website redesign allowed fans to they were only able to do outside communities, such as interact with other Lego fans, play games and share their creations. Assets on the Lego website, such as the Lego factory, helped to encourage users to spend more time on the website. In 2006, visitors to Lego.com spent an average of 28 minutes on the site (The Lego Group, 2012).

Once Lego reconnected with customers, the company began to improve in popularity, recognition and income. In 2012, results showed 8 years of consecutive growth, a 25% increase in revenue to kr 23,405 million (about $4,241 million), a profit before tax of kr 7, 522 million (about $1,363 million) and a market share of 8.6% (Armstrong & Kotler, 2013).

New marketing challenge

A challenge for Lego has always been to target their product at females above the age of 5. This target market is where Lego can find new growth potential. In order to reach this audience, Lego had to gather more knowledge and insight into the preferences and playing patterns for girls above the age of 5. This was done through observations in private homes, questionnaires, focus groups, interviews with girls and systematic feedback from parents of the girls. This resulted in a new product line in 2012, Lego Friends, specifically designed to appeal to girls (Armstrong & Kotler, 2013). Robert Klara wrote “girls create their own environments, develop personal stories around them and even imagine themselves living inside the things they build” (Klara, 2013). Klara (2013) also wrote “the one attribute that is as important to Lego as consistency is adaptability”. 


Finally, in 2014, The Lego Movie hit the big screens, the huge success that became the hallmark of Lego’s marketing efforts. The movie was a box office hit and became the first film of that year to make $400 million globally and the movie gained significant social media attention. According to NewsCred (2014), before the movie came out, Lego’s typical Instagram posts received between 7,000 and 10,000 likes, but after the movie was released, Instagram posts received 15,000 to 22,000 likes. During the Academy Awards, Lego received 47,290 mentions on Twitter with 45% of those mentions being positive (Adweek, 2015).


Many companies have a successful return to their roots, but not after leaving their core in order to keep up with technological developments, this is what makes Lego special. Lego is proof that even though technological and demographic developments pose huge threats to many companies, it is important to not immediately assume that this is the case for all companies. Lego represents one of those companies that experienced high growth and decline, but still managed to find a new source of growth, in Lego’s case the source was not entirely new. It has capitalised on its key strength the Lego brick. Balancing the old and the new has not been an easy task for Lego.

Lego has continued to evolve its marketing efforts and business by embracing fans of all ages and demographics. As well as striking a balance between consistency and adaptability. Finally, Lego accepted its mistakes and taking action to reach their goals and target market. 

References:
Armstrong, G., & Kotler, P. (2013). Marketing: An introduction, global edition. United Kingdom: Pearson Education.

Castelli, A.T. (2014, October 17). From Religious Symbols to Lego Bricks: How to Build an Iconic Brand. Advertising Age. Retrieved from http://adage.com/article/agency-viewpoint/build-iconic-brand/295455/

Chen, C. & Carvell, T. (1999, November 22). Products of the Century In 1900, our homes were dusty, our children were bored, and our paperwork was dangerous. Things have changed since then, thanks to the products on these pages. Fortune Magazine. Retrieved from http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269110/index.htm?iid=sr-link1

Heine, C. (2015, February 23). Lego's Movie May Have Been Snubbed, but It Still Dominated Digital Discussion at the Oscars 'Everything Is Awesome' sparked 47,290 mentions. Adweek. Retrieved from http://www.adweek.com/news/advertising-branding/legos-movie-may-have-been-snubbed-it-still-dominated-digital-discussion-oscars-163101

Klara, R. (2013, April 15). Lego's Consistency Has Been the Key to Its Success Getting girls was the tricky part. Adweek. Retrieved from http://www.adweek.com/news/advertising-branding/legos-consistency-has-been-key-its-success-148553

NewsCred. (2014). How Lego Builds Imaginative Content Marketing. Retrieved from http://insights.newscred.com/how-lego-builds-imaginative-content-marketing/.

The Lego Group. (2012). The LEGO Group History. Retrieved from http://www.lego.com/en-gb/aboutus/lego-group/the_lego_history

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