Lego Encounters Increasing Competition Marketing Essay

We used many methods in this research and all of them can be studied in the university or college and the lecturers lessons, which were well-accepted. The main thing that people used is analysis the market. It had been very important to comprehend about business environment of the company. Our tools include 5 Pushes, Infestations, and SWOT. Furthermore, we used many literature, journal articles and materials from lectures Learning Learning resource of Bedfordshire University or college to get more knowledge and ideas of tactical management. Moreover, we also used some sources on the internet to find information about LEGO and information that highly relevant to case study. All of them will supply in guide part in this record.


LEGO company:

General information about LEGO group:

The company LEGO is one of the very most famous corporations on the globe when it engages towards children's gadgets and has developed since 1932. The LEGO Group is headquartered in Billund, Denmark and it was held by Kirk Kristiansen family. And it targets a key factor in expansion, development of children's creativeness via participating in and learning by assembling LEGO brick. Nowadays, the company provides their products in more than 130 countries with about 10, 000 employees worldwide. In 1949, their brick has considered an adventure. Over time, the LEGO brick became more perfect and then it was modified a bit in form, design and color. Today's brick has 2, 400 different kinds and have multitude of ways to combine them together so it is not only attractive, creative and fun for children but also becoming a challenge for men and women.

Current trends:

Over the previous 70 years, LEGO experienced an evolution process, keeping step with the market's needs and the consumer's dreams. The traditional gadgets will be the constructions brick, creative building by unlocking LEGO brick which were developed in 1958. In 1977, gears, gearbox and many kind of things were added for children to develop vehicles or other complex machines. After this era, LEGO acquired a big jump on developing their playthings by merging between classic toys and games with robot technology, so children can able lead to themselves a smart LEGO model.

And now, The LEGO group's center activities are invention, development, marketing and sell play materials. Corresponding to Annual record of LEGO group (2011), the sales of traditional gadgets in USA have a bit decrease. In Southern European countries, market sales decrease sharply while Asia and the rest of Europe also have higher expansion rates. Generally, many people choose modern products to traditional products. Therefore the sales of traditional playthings lowered in 2011 in total.

The latest product line of LEGO group is LEGO Ninjago. It is a combination of classic toys and games and so-called spinners were established at the start of 2011, beyond expectation s and be the biggest product in company history. Besides, other LEGO playthings are also on the best-selling list such as: LEGO City, LEGO Celebrity Wars therefore son. In total, "It is a highly satisfactory result reflecting a good growth in income. Progress in the North American market prolonged undiminished, and also in most Western and Asian markets we were able to report double digit increases in sales, " (2011) says Jorgen Vig Knudstorp, LEGO Group CEO.

PEST and SWOT analyses:

PEST examination:

SWOT research:

Lego - 5 Forces
Threat of new entrants

+ Strong and large circulation network required. If the business does not have a strong distribution networks enough, they will have to pay a lot of money to move and move their product around, and in some cases their product won't get to the end customers or the stores.

+ High Capital: To be able to enter the market, there will be the requirements for considerable advanced of investment. LEGO - The Company has to spend a lot of money in order to compete when they come to the marketplace in the first time.

+ The Brand of the LEGO Company is very important, this is one way to be competitive when the company is entering the marketplace, then other competitors on the market will also need to increase the brand value to be able to be competitive effectively.

+ Advanced technologies: This is one of the barriers that bring many troubles to new entrants and opponents when they come into the market. All technologies have to be developed, and then your company will have opportunities to compete with others on the market.

+ Geographic factor: Existing rivals already have good place and location to allocate their factory and stores within the marketplace. This is absolutely an effort for new comers and entrants, they have a competitive downside and they will have to compete with each other to have a really good spot to have their store, department or factory to be able to run the business and contend.

Threat of substitutes

+ The pressure will high, Substitutes result from the whole toy industry. Substitutes are everything, such as computer games or traditional toys, even outdoors activities. Children are certain to get bored very fast, so they com transition to replace.

+ A lower quality product will be the reason why customers can't stand to change from LEGO to some other product.

Level of rivalry

+ LEGO company occupies a strong position in the top Toy companies with a few rivals. The company has a solid brand commitment and brand among customers; the business also provide high quality of product and charge it in top quality price. Lego also offers advantages with parents because parents will allow their children play with traditional toy rather than spend their children's playtime with video games or watching Televisions.

- Electricity of clients

+ The pressure of the customers is high, with transitioning cost between alternate traditional toys and other substitutes such as video games or Tv sets.

+ The Toy products will be very important to customers, if it's in good quality and satisfactory price such as LEGO playthings, the customer will be dedicated to the company and willing to invest money.

- Vitality of suppliers

+ Most of the LEGO products are making from clear plastic, then there will be a diverse circulation, the company will not have to base on one supplier.

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- Opportunities

+ Many new types of materials and factors such as from videos and films to improve Lego toys. For example: Playthings can base on famous films on the globe such as Celebrity Warfare, the Avengers, Spiderman etc.

+ LEGO main marketplaces are Europe and USA, nevertheless the company has chance to start in many new market all around the globe, for example Asia, SOUTH USA and also some countries in Africa.

- Hazards

+ Nowadays, modern technology are improving and developing very fast, some children tend prefer watching Tv sets or playing computer games with colourful and imaginative world somewhat than play traditional toys and games like LEGO bricks. The substitutes of modern technology in toy market sectors are incredibly strong and can affect the business business.

+Some countries are extremely poor, and then almost people cannot deal with and will not spend excess amount to buy a toy. For instance: some countries in Africa.

http://www. retailgazette. co. uk/articles/00040-lego-uk-retail-sales-up-48

PESTEL Analysis
- Politics

In order to get into the market easily and without any problems, Lego company must be awared of the political situation and other issues related to the political sector. There will be many advantages if the politics environmet change the rule that relate to the Lego company's businesses.

- Monetary

The Toy edicational industry is developing and is seen to be financially stable in the past few years. The economy is increasing well so the LEGO company also enhance their products to gain the best for his or her customers. The LEGO company not only improve financial of the domestic market but also the external market in every over the world. For example, the US market has big opportunities to LEGO and other toy companies.

- Sociable

LEGO company is trying to develop and launch the merchandise to the marketplace and ensure that their products will be accepted by the community and public. The business also want their services are in good romantic relationship with many kind of customers in a few factors of the culture.

- Scientific

This is one important drive in the Toy industry. To be able to have new enhancements and good product, LEGO Company also has and increasing new technology, also this is actually the way to contend with many other strong competitors on the market. LEGO Company makes sure they are up to date to what happening in case to adapt the changes.

- Legal

In order not to lose the clients welfare and the business name, LEGO company doesn't want to associated risk by breaking the laws and regulations in local or international markets. Then, all LEGO companies are ensuring they follow all the guidelines and regulations of the marketplace where their trades are operating in.


Lego company is wanting to make their products that they sell are which can cause minimal problems to the surroundings. The business also introduced some strategies that aim to decline contaminants and create a good environment. The company also invested a huge amount of money in waste system to safeguard the environment near company's factories.

Defining problems:


LEGO Encounters Increasing Competition

Although of the LEGO Company's successes, experts realized that the company's environment would change, and before 15 years it includes some challenges due to

Increasing of the Digital World: development in electronic game titles, digital toys and far software make competition harder

Faster Child Development: Nowadays children develop up faster, it make the global market for structure toys is fixed because of their changing play habits.

Fashion Tendencies in the Toy Industry: fashions of toys go out and in quicker and sometime a few products can make or break gross annual turnover of the company.

Dependence on Famous Global Mega-Brands: In response to fashion movements, toy manufacturers design offerings predicated on a thought or storyline (e. g. , Star Wars) and several companies offer all gadgets related to the similar strategy (Harry Potter, Spiderman).

Downturns in country's economies can result in a decrease in sales of LEGO products.

The result of Lego Company to these changes is combining technology with market adaptation. They released new digital toys and games (e. g. , LEGO MINDSTORMS, LEGO SPYBOTICS). It created electronic communities to support users and cross-sell to them. They split their business into each unit, including LEGO Interactive (computer-based play materials) and LEGO Direct (catalogue sales). They concentrated broadened into life-style products, exposed new theme parks (in the U. S. , UK, and Germany), and cooperated with other famous global brands such as Lucas Movies, Disney, Microsoft, and Warner Brothers to build up new product concepts.

Compare and contrast with main rival < Mega Bloks>

Using Porter's strategies platform, we can easily see that Mega Bloks is a cost leader because they may have increased profits through lowering cost by using different quality of materials to make their products, while Lego runs on the much higher quality resources to make gadgets, This act is grounds why Lego cost of products higher than Mega Bloks, It lead to Mega Bloks profits more market show and take many revenue.

By researching, Mega Bloks acquired found new segmentation, which now could be number 1 seller

in the preschool market.

In the past, products of Lego are centered on narrow scope because the target customer mainly from 7 to 12 years old.

By changing, now Lego more targets differentiation on a wide scope by focusing on several market. Lego must concentrate in long-term progressive products, this way still take its competitive gain in the market being the creator of toys and games that help develop new skills and learning. Like the first model, Lego bricks make children more creative thinking and creativeness. It was crucial for the management team to recognize where to extend Lego's product programs and business procedures, in order to develop a competitive strategy to continue the organization's financial success and dominance in the building toy market in the future


After face numerous problems in market Lego should have clear strategy

+Strategy with communal communication online

Having a solid community is vital for Lego company so Lego company should research more initiatives, both offline and online, to increase react with children and their father or mother. Children like Lego toys however their mother or father are one who can pay for all this. While children can pay $70 a years for Lego, men and women may spend more than $900 per years. Just how to persuade and make them reliable our product also a task for Lego.

Use an online repository for parents where they can react with other family and its make a community of parents who appreciate the worthiness of creative, infinite ideas, or how to learning fun and effective. Within (web, website, site. . . ) Lego can offer information, knowledge how to develop children's creative, picture through their game by professors and analyst. Passionate parents may be provided much useful content or lessons out of this and it make Lego become regular subject in family.

+ Strategy with investment and capital

To make different with another opponents and reliable for customer also display Lego's reputation, Lego can open restaurant with the key theme is Lego world. In some countries, there are few opportunities for kids and their parent way Lego game, so restaurant can be the way to bring in products also make more earnings from other services, not only from sales playthings. Restaurant provides new tendency, innovation point for customers. Brands value, creative are sent to potential customer with a chain of systems connect with restaurant's unique such as new theory theme, eating out area, kids play area, rooms with decor are toy's style, small museum All of those are new experience for customers who are supporters or not.

To attractive more attention and reduce competitive, Lego may use cuckoo strategy. The strategy of the cuckoo allows producing its business by pressing it on that of an iconic head. Many company used this strategy before. Lego should corporate with famous brands in game industry like Nintendo, EA to develop range of customer and market talk about and could be Lego can receive capital from this industry to also create their products in Lego's market segments.

Invest more in type of products. Always change style, idea to suitable with customer in each country. Find cheaper material to produce and avoid bad effect to environment. Research how to incorporate new technology and toys and games.


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