LEGO- Niche MArketing

Presented by : GROUP 1 Nandini Aggarwal Ankur Arora Prachi Arya Vishnu Bhaskaran Pravin Bokil Hrinya Bose

Agenda

• LEGO History and Evolution

• Product, Positioning, Segmentation and Target market

• Branding and Advertising Strategy

• Brand Extension & Pricing

• Distribution and Retailing

• Competitor analysis and Future strategies

INTRODUCTION

• Lego is the world renowned line of construction toys - interlocking plastic bricks

• Transitioned from a carpenter's workshop to a global enterprise• Products have undergone extensive development but the foundation

remains the same - the Lego brick which has been named the "toy of the century" twice

• Infact The name 'LEGO' is an abbreviation of the two Danish words "leg godt", meaning "play well".

NICHE MARKET…

The niche can be defined in two ways:

• Brick based construction toy within the larger toy industry• Construction toys based learning systems for education

Development of Lego

• Introduction of themes and wheels• Use of a new non-toxic material : ABS• First Lego-based train system introduced• Lego Land- theme park with elaborate models of

miniature towns built entirely with Lego bricks• DUPLO- larger brick system for very small children

• Ole Kristiansen starts making wooden toys• Company is named "Lego" in 1934• Plastic bricks manufactured first in 1949 and then

with improved design in 1958

1930s-1950s

1960s

•Focus shifted to young girls - introduction of doll houses!•Mini-figures introduced•launch of the Expert Series

1970s

•Technic series - robot based systems•Educational Products Department was launched•Lego World Cup held in 1988

1980s

•Introduction of movie based Lego themes - Star wars, Lord of the Rings, Pirates of the Caribbean•Books, magazines and Board games introduced•Films based on Lego Land•Business Consultancy - Lego Serious Play!!

1990s-2000s

SEGMENTATION

Demographic Segmentation• Targets both the genders• Caters to different age groups with the primary focus on 5-12 years of age group

Geographic Segmentation

• Currently has its major presence in developed nations such as Western Europe & North America• Trying to expand its base in emerging countries such as India and China

The major target of Lego is People with following values

• Imagination• Creativity• Fun• Learning• Quality• Caring

Psychographic Segmentation

Strengths

Innovation

Quality

Educational Value

Strong brand Image

Weakness

High Price Tag

Single Category

Focus

Weakness

Opportunities

Feminine Segment

Product Extension

Geographic Expansion

Phone Apps

Threats

Competition

Switch to Virtual Games

Product• Flagship Product- Construction Toys, Licensed products• Market share: 80% in US, Western Europe, 50% in Japan & Korea, 10% in

India and China and 57% in the world• ‘Only the best is the best’• LEGO products last for 40 years with good care• Licensed products have reaped the rewards

Toys Market$157 Bn

Traditional Toys

$80 Bn

Video Games$74 Bn

Construction Toys

$6.7 Bn

Positioning• Continuous Innovation• Cannibalize old with new• Brand Loyalty: Quality, creativity and environment friendly design• Market share of 3rd largest company rise remarkably despite of 2008 economic

slowdown, whereas it dropped for its top 2 rivals Mattel and Hasbro• Highest growth in its category during slowdown

Branding & Promotions

Bran

d Eq

uity

Brand Logo

Consumer Based Brand Equity

The LEGO brand is synonymous with

imagination, creativity and innovation.

Brand Promise High quality products made of ABS plastics

Advertising & Promotions

• “Just Imagine” to “Play On”• Simple and imaginative ads. Mostly print advertisings.

Brand Asset Valuator

Builders Of Tomorrow

Current Brand Strategy

Brand Content Empire

• LEGO Click• LEGO Micro sites• LEGO Club Meetings• LEGOLAND• Brickipedia • Packaging

Brand Extension….Continuous Innovation

Lego is expanding to numerous lines of products without loosing identityHow many LEGO toys a family can buy?• Accessories• Minifigures (pocket money price –a huge success)• LEGO Friends• Games and Puzzles• Thematic/licensed niches Lego Duplo Lego Technic NinjaGo Harry Potter etc.

• LegoLand

LEGO in Video Games

• Presence since 1997 – released over 40 video games.

1997 2010 2011 2012

LEGO Eyes Girls with LEGO Friends…

• Category Expansion

More Product Lines…

• Localized and event driven toys• Minifigures toys• Collectible trends

• LEGO-Theme based theme parks

• Operated by Merlin Entertainments

• LEGO-themed Rides for younger Children

• Educational Elements such as hydraulophone , Mindstorm etc.

Pricing• Lego’s Company culture – say no to sacrifice quality for profits.• Charges premium for it’s product.

• www.brickset.com

Rs 325 Rs 73000Rs 47000Rs 19000

RETAILING AND DISTRIBUTION

• LEGO Brand Store Direct Retailing• Modern retail• Online retail • Distribution is outsourced • Collaborating with competitors- Hasbro distributes Lego

brick toys in India.

COMPETITION

• Chinese and Korean Lego clones- eg CoCo, Bandai Namco• Unbranded brick toys at fraction of the price• Hasbro has stronger presence in the key India through

Funskool.• Video games

RECOMMENDATIONS

• Expand presence in India and Latin America• Use LEGO outlets in emerging markets-Successful in Eastern

Europe and Russia• Obtain video game licenses- Target group susceptible to age

compression• Continue innovating- Construction toys for girls, event-

driven toys• Be flexible on pricing and local sourcing

Thank You