LEGO RESEARCH STUDY: Analyse Lego's macro and micro marketing environment
LEGO as we realize it today first came into being in 1949 when Godtfred Kirk Christiansen used a "new" materials - cheap - to generate simple four and eight stud building blocks. Today, LEGO has turned into one of the very most famous toy brands on earth. The purpose of this case study article is to asses the macro and micro environment where LEGO is carrying out today.
Micro Marketing Environment
The micro marketing environment is defined as "the forces close to the business that affect its potential to provide its customers - the business, market channel, businesses, customer markets, opponents and publics, which incorporate to make the firm's value delivery system" (Kotler, Wong, Saunders and Armstrong, 2005)
One of the most notable things concerning the micro environment of LEGO is that it's viewed as a strong brand. It been part of the toy market for so long, that grandparents and parents can keep in mind using the toy as a child, and so often feel they have a romantic relationship or bond with the product. The brand has also infiltrated many marketplaces world-wide, and its popularity is instrumental in its extended success. The case study states, it is the only Western european company to enter in the worlds Top Ten toy manufacturers.
The product also has a unique selling point. The toy of LEGO is aiming to capture a creativity and also enable it to stick out on the market of dolls, vehicles, computer games etc. It is promoted as a "system of play", that can be a strong feature when looking to compete with educational toys.
Another positive facet of the micro environment of LEGO is the broad of products it provides and its capacity to produce products for children of all ages. That is coupled with different products are targeted at different target market segments (determined by age). This might help ensure that consumers (the kids) do not stop purchasing because they feel they may have "grown" from the product. It also makes the buyer believe that the product is more personalised to them. The introduction of target markets over age groups may also help keep carefully the consumer for longer, therefore encourage the buyer to form a greater bond with and more loyalty to the merchandise.
There in addition has been considerable extension of the brand to outside of the toy market. Among the main ways the brand has branched out is through the benefits of LEGO based theme parks in a number of countries, including one in Windsor in UK. The company has also got into into co-operative agreements enabling them to provide other certified products, such as bed-linen, hair shampoo, children's wear etc. , whose mixed result is hoped to increase overall sales for many LEGO lines. The coupling of the LEGO brand with "brands" such as Winnie the Pooh or Star Wars furthermore helps improve the durability and the acceptance of the brand.
As lately, the company in addition has entered in to the more technologically focussed market. First, it has set up an online site where LEGO products can be bought and information about the theme parks can be found. Second, it has generated a type of goods titled LEGO Media Products which includes a range of children's software, videos, catalogs and music. However, these continuing extensions of the brand may be detrimental for the business. As LEGO moves further and further away from the simplistic blocks that it is famously known, the appeal of the toy may disintegrate as the products it produces become more like substitutes for other toy products. In addition, it cannot be assured that brand extensions will achieve success as the "fit" with the initial block product lessens.
The product article also mentions that sales of the brand have finally mushroomed. In a world of increasing population, you might suppose that sales also needs to increase. This is therefore a sign that LEGO is no longer what the child wants in a toy and its popularity is decreasing. Yet another problem may have resulted from the actual fact that the company needed to remember a rattle-snake product.
Attention is also taken to the unsatisfactory results of the company in 1998, which is attributed to insufficient efficiency. Specifically, the survey draws attention to complications in co-ordinating development with demand for typically the most popular LEGO lines. Therefore problems in the production line. Furthermore, mention is manufactured that the company intends to resolve this inefficiency problem by trimming the size of the workforce. Although this may lead to higher efficiency, it may also lead to a negative impact from a "social" viewpoint consequently of the negative views create if mass unemployment results.
The insufficient efficiency, in conjunction with the increased competition the business faces can help to clarify the reduced sales which were seen in elements of European countries (Germany and France). However, there were also trade increases in countries such as Poland and Britain which indicates that LEGO has been successful in a few areas.
Macro Marketing Environment
The macro marketing environment is defined as "the larger social causes that affect the whole microenvironment - demographic, economic, natural, technological, politics and cultural makes" (Kotler, Wong, Saunders and Armstrong, 2005).
In terms of the macro marketing environment, the primary problem facing LEGO is the cultural change that is occurring in society as a whole. Nowadays, children are much more drawn to the digital and scientific world. Despite having the release of Media product, it is hard to see how LEGO could contend with companies such as Sony or Apply in producing products that appeal to the child market.
The company in addition has faced appreciable reductions in sales in a number of countries that have seen a downturn in their economic environment. For example, in Korea, the economical crisis induced a 52% decrease in sales of LEGO products to suppliers and distributors. There have been stock reductions by the retail trade which includes lead to a DKK150-200 million sales drop.
The technical environment has also progressed. Where 50 years back, the utilization of plastic in a toy might have been seen as a highly innovative idea, today the buyer is a lot more drawn to technologically innovative gadgets. An area which LEGO is not known for.
Strengths Something with a history also to which all years feel attatched. Unique feature - "capture a creative imagination", "system of play", "peaceful oasis far from the tensions and problems of culture" Famous brand worldwide. Something that has sub-groups of products permitting it to attract a larger consumer bottom part. Has successfully introduced line extensions, that ought to help strengthen the brand
Weaknesses LEGO is beginning to produce products whose "fit" is far from the original blocks, and so the new products might not be as successful in the market. Insufficient efficiency in production Creation of faulty products which require recall. Complications in co-ordinating creation with demand for typically the most popular LEGO lines.
Opportunities Has successfully introduced collection extensions, which should help fortify the brand. More child-oriented products could be introduced under the brand name. With the impressive focus of the company, focus should be put on further infiltrating the multimedia market, which is one of the major competition in children entertainment. The business has a strong team of innovators The continuous release of new toon characters and years as a child personalities gives the ability for LEGO to make in addition licensing agreements
Threats So many toys on the marketplace, many of which have more functions and are more sophisticated than LEGO and its associated products. Result of general population to unemployment they could cause in aim of achieving higher efficiency. Hi-Tech products and companies, such as Sony and Apple. Downturns in country's economies can result in a decrease in sales of LEGO products. Stock reductions by the retail trade Bigger labels such as Warner Brothers and Disney who've progressed much further in creating child years entertainment empires.
Danish company Lego, the world's 6th largest toy manufacturer, has changed the procedures of its design function lately; and these changes have streamlined product development and the functions developed by the in-house design function are now used as a strategy to enhance creativity across the whole business (Design Council, 2007). Within the cliched 'global village' we reside in, there is absolutely no system that can survive in isolation. Especially when considering a business system, which is integrally active and constantly changing.
The fundamental notion to become acquainted with when managing a business such as Lego, is the idea that the business has an innovative personality in its own right. Hence it is important to comprehend the advantagees, negatives, and creative implications of such a separate creative personality, as it requires for all the participants both interior and external, a distinct creative position. The easiest form of business enterprises employed by companies is to operate in their own talents; for Lego this means steady development and technology within its own genre.
Oliver, et al (2007) elaborate the uniqueness with the Lego development case, by criticizing that intricacy and focus on detail displays Lego's culture of workmanship, but also its disregard for the costs of innovation. The business designers seem to be fantasizing up new playthings without considering the price of materials or the expenses of production. This sort of carefree imagination is unsustainable and difficult to uphold in the current global toy market, where cost pressures are a regular concern.
Both nationwide as well as international issues have a very strong bearing on the direction of the businesses management in a business. In particular, when it comes to the task of Multi Country wide Businesses, one cannot stay oblivious of the circumstances that are widespread globally, as the whole world stands as their local customer. Lego has continuously progressed its system of bricks and applications ever since its invention, wherein the initial system elements have been extended in various ways to include, for occasion, people and special parts to allow the engineering of moving vehicles and working teach collections (Design Council, 2007).
Lego has been a step in advance in its endeavour for creativity. As soon as 1999, computer scientists claimed a simple computer-based form of progression had succeeded in designing Lego structures without the assistance from humans (Research Daily). This became the first successful leap from current day's computer-aided design in to the futuristic realm of fully computerized design, and the first primal step toward the manufactured intellect community's longstanding imagine evolutionary robotics, where robots might eventually choose some type of evolution.
Should Lego land victim to the growing competition at the risk of redundant designs, then this would bring about issues that would be beyond the controllable restrictions of the parent or guardian company, therefore making the business operations vulnerable to the ever-changing international scenario. Wyetheville (2006) argues on a single lines by elucidating that representation on the successes, failures, and past experiences of a business needs to be used with an on-going basis to set-up an ever-renewing corporation, which ends up guaranteeing success as well.
The basic element of creative creation being at the forefront always, you might go by the idea of innovation. However, attempting to produce book products, even though a dire dependence on the product might not exactly be there, yet the demand for it would have to be created. And the crucial word here is 'customer'. A new Lego product is not something that would have a potential buyer all over the place. This involves a certain market of clients, with a certain amount of style and balance in their preferences and likes to attain the needful.
For establishment of a new product market for Lego, the first rung on the ladder would be to engage the existing customers of the business. If the buyer has used one product of the company and is relatively satisfied, there is every probability that he is able to be allured into a different one. In such and event, a repository for the current clients can be viewed as crucial. This is because Lego would want to create and capture new markets, at exactly the same time it would not like to reduce on existing brand commitment. Then, predicated on the top features of the product, market test could be purchased as to who can be the future great deal with possible curiosity about the product. That area of the populace would then be targeted through classic marketing tools concerning print and electronic digital media. It's important to produce the demand, that the necessity and difference of the new product be outlined to the utmost.
Perhaps the most crucial endeavor would be getting involved with a one-to-one method of communication with the customers. Once the goal areas has been established, then the sales and marketing people, using ways of emails, telephones, words and even workshops, would try to convince the possible client in a individualized and customized way, making them believe that this product was made in the first place for his or her convenience. For a more international clientele regarding Lego, electronic marketing would naturally be adopted. The moment a client starts to feel special, the product is 50 percent sold. This also covers the credibility, consistency and after sales issues for the customer if initially, they are being contacted as special someone.
Klassner (2002) purports that based on the sophistication of the assignments, the Lego program has much developed since its advantages to become cost-effective platform worth awareness as a supplementing programming environment to traditional Personal computer coding. As more work is done on view source community to address the unaddressed criticisms, the Lego platform's infrastructure viability is only going to improve. To this end, Lego should work on extending the basic firmware to add support for targeted communication passing and create a system for distributing computation inside a robotic network as well. Only this may possibly ensure the ever-growing status of Lego within an ever-growing market.
- Design Council. (2007). Design at Lego. Eleven Lessons: managing designs in eleven global brands.
- Klassner, F. (2002). A RESEARCH STUDY of LEGO Mindstorms 'TM Suitability for Artificial Intelligence and Robotics Training at the College Level. National Research Foundation.
- Oliver, K. et al. (2007). Rebuilding Lego, Brick by Brick. Strategy + Business.
- Science Daily (1999). In First Case Of Fully Automated Design, Pcs Form Lego Bricks Into Various Designs Without Individual Input.
- Wyetheville, C. (2006). Firm Renewal Through Participatory Involvement.
- Kotler, P. , Wong, V. , Saunders, J. , Armstrong, G. (2005) Rules of Marketing, Fourth European Addition. Pearson, Prentice Hall.
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