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LEGO Marketing Strategies and Diversification

LEGO has successfully diversified its business beyond plastic bricks into movies, video games, TV shows, and theme parks. Despite the pandemic, LEGO's sales grew 14% in the first half of 2020 due to its strong digital marketing strategy. The document outlines LEGO's six-pronged marketing strategy, which includes entering new markets like China carefully, licensing its brand, engaging customers through social media, partnerships with education, and maintaining its reputation as a parent-approved toy. LEGO's willingness to innovate and adapt its strategy to new digital platforms has allowed it to remain relevant and grow its brand globally.

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107 views5 pages

LEGO Marketing Strategies and Diversification

LEGO has successfully diversified its business beyond plastic bricks into movies, video games, TV shows, and theme parks. Despite the pandemic, LEGO's sales grew 14% in the first half of 2020 due to its strong digital marketing strategy. The document outlines LEGO's six-pronged marketing strategy, which includes entering new markets like China carefully, licensing its brand, engaging customers through social media, partnerships with education, and maintaining its reputation as a parent-approved toy. LEGO's willingness to innovate and adapt its strategy to new digital platforms has allowed it to remain relevant and grow its brand globally.

Uploaded by

Akola Shilp
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Indian Institute of Technology-Jodhpur

International Marketing
End Term Examination
MBA 2020-22
Max Marks: 50 Time: 2hrs

Read the case and answer the questions in the space provided.

LEGO’s claim to fame goes well beyond its famous interlocking plastic bricks. Since the
company’s inception in 1932, LEGO has diversified into movies, video games, television
shows, popular social media channels, and amusement parks. And despite the COVID-19
pandemic and its impact on sale of toys, LEGO’s sales have been increasing and grew by 14%
in the first half of 2020. The popularity of LEGO lies in its marketing strategy, which embraces
digitalization and emphasizes knowing its customers. It has used modern marketing tools to
strengthen its brand identity and remain relevant during the pandemic

The history of LEGO

Founded by carpenter Ole Kirk Kristiansen, the LEGO Group remains a private, family-owned
company based in Billund, Denmark. While Kristiansen originally produced wooden
interlocking bricks, the company continued innovating and experimenting with new designs.
Eventually, the traditional plastic LEGO brick was patented in 1958, offering a timeless design
that endures to this day. Over the years, LEGO bricks have grown in popularity and have been
named “Toy of the Century”—twice.

Lego history in Minifigures.


Although the LEGO brick remains their trademark product, the company experimented into
new ways of making toys and marketing during the 20th century. LEGO designed its new
playsets to appeal to both boys and girls and released more complex products to challenge older
children. Realizing their customer segments included children and adults from older, nostalgic
generations, LEGO adjusted its marketing to communicate with its audiences. Lego has been
able to engage its existing customers to influence new product development and nurture an
entirely new consumer segment.

In the 21st century, LEGO remains a thriving, highly adaptable company. Although its core
brand—offering its customers a way to develop their imagination and creativity through free
play—remains the same, it continues to innovate by researching and adapting the LEGO
marketing strategy to new digital communications.

LEGO marketing strategy

This growth is the result of six key factors in the overall LEGO marketing strategy. LEGO
Group’s willingness to enter new marketplaces, diversify its merchandise, and embrace social
media marketing, and changing their product lines has enabled the brand to maintain its
position. LEGO knows which marketing strategies to pursue and continue, from its educational
partnerships and parent-safe brand, and to use these strategies to develop better customer
relationships.

Marketing strategy 1: Market entry strategy

LEGO products are in 130 countries—but the company is always looking to expand its
operations. LEGO entered China by putting money into opening LEGO stores in major cities
as well as cities that showed demand and interest for their products. LEGO analyzed the new
market, and found that there was no a need to create any Asian-specific product lines as Chinese
consumers strongly valued the traditional LEGO creative play experience. On the other hand,
they also acknowledged the advanced digitization in Chinese play would require them to
continue creating their own digital LEGO products.

This focused strategy paid off, as LEGO saw a 4% increase in profits and sales in 2018. As
China continues to develop a very affluent middle-class numbering in the millions within the
coming years, it represents a significant opportunity for LEGO and its market position.

Marketing strategy 2: Licensing & merchandising mentality

Diversification is an essential part of the LEGO marketing strategy and it has branched out into
multiple mediums to promote its brand.

The LEGO Movie franchise and The LEGO Batman Movie raised the profiles of its licensed
properties while celebrating LEGO’s philosophy of play. LEGOLAND theme parks have
opened in Billund, California, Florida, Malaysia, Dubai, Windsor, Japan, and Germany. These
brand extensions into other categories have helped the brand grow and remain relevant. LEGO,
seeing the growing popularity of digitization, produced video games based on its product line.
LEGO playsets reflect the company’s focus on regular innovation. After research revealed most
of their consumers were boys, LEGO developed their LEGO Friends line aimed explicitly at
relating to girls.
The company also partnered with Disney, Marvel, and DC Comics to create its popular Star
Wars and superhero-themed playsets—which are vital marketing tools since they generate
publicity and drive higher sales. As both young and old LEGO enthusiasts enjoy displaying
their skills as master LEGO builders, LEGO Group became involved in official TV show
competitions such as LEGO Masters to build further awareness of their brand.

Lego collaborates with well-established brands to offer affiliated products, such as the Batman
Movie.

Marketing strategy 3: Social media marketing strategy

LEGO’s popularity on Facebook, Instagram, and YouTube highlight the effectiveness of using
social media channels to engage with customers. LEGO’s Facebook page has over 13 million
followers and regularly updates the page with photos and videos of new LEGO releases and
innovative creations. Their Instagram page offers similar content, and posts receive numerous
likes and comments, showing excellent user engagement.

LEGO is also YouTube’s most popular channel from June 2020, with 10.04 billion views.
Their channel offers promotional, educational, and how-to videos that promote the company’s
brand. Its popularity on social media has encouraged fans to create their own LEGO fan
channels, such as “Beyond the Brick,” a YouTube channel with over 821,000 subscribers who
promote additional awareness of LEGO’s brand independent of the company’s marketing
efforts.

Marketing strategy 4: Integrated customer experience which generates User


Generated Content

LEGO uses its digital platform to provide each segment of its consumer audience with an
integrated customer experience. LEGO Life, a social network app aimed at children under 13,
lets users share photos of what they made with LEGOs and leave comments on other people’s
creations. The online community has over 10 million members, offering an effective way of
increasing brand awareness by enabling younger audiences to engage through social media.

LEGO also has a sizeable adult consumer segment who can join its ‘LEGO Ideas’ online
community and become part of its creative process. This community lets members share their
LEGO creations’ images and offer proposals for new LEGO Ideas sets, where members vote
on for the company to produce. In 2017, journalist Maia Weinstock’s “Women of
NASA” LEGO idea gained the necessary 10,000 votes from supporters, was produced, and
became a top-selling product on Amazon.

On LEGO’s social networks, there is a tremendous amount of LEGO-related user-generated


content which also continuously “validates” that this toy is, maybe, one of the healthiest, most
educative, and most beneficial addictions of its life. This is something that no other brand has
ever achieved. It has been able to create organic customer engagement, which is important
aspect of its branding strategy.

Marketing strategy 5: Strong partnerships with the education sector

LEGO has always promoted its plastic bricks as educational toys that empower children to
become imaginative, engaged learners through play. The brand extends its commitment
through strong partnerships with the education industry. In 2020, the LEGO Foundation
committed $24 million in educational aid for schools, foundations, and educational programs
in multiple countries.
Lego offers a combination of blended, flipped, distance/virtual/online approaches to support
learning.

LEGO’s stand-alone education company, LEGO Education, has been offering schools
educational products since 1986. Its website offers many LEGO-based building products
specifically designed to help students build STEAM (Science, Technology, Engineering, Art,
and Math) confidence in primary and middle school. Other sections offer home-school and
distance learning resources for children learning during the pandemic.

Marketing strategy 6: LEGO remains “parent-approved”

Although kids remain a key target audience for LEGO, the company also understands LEGO’s
marketing strategy needs to appeal to their parents, who are the ultimate decision makers. By
continuing to promote the educational value of their toys and market them as a way to nurture
a child’s interest in STEAM, LEGO ensures its products are “parent-approved.” This approach
incentivizes parents to keep buying, which’s been key to the LEGO marketing strategy.

Q1. Analyse LEGO’s market entry strategies? (15 marks)


Q2. Discuss LEGO’s challenges in marketing its products in China? How does the cultural
environment affect the company’s product strategy? (15 marks)
Q3. Discuss the marketing communication strategies of LEGO in improving brand’s
positioning in different countries. How does standardization of communication strategy help
in building a global brand? (20 marks)

Common questions

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LEGO's digital marketing strategy plays a crucial role in maintaining its popularity and brand engagement, even amidst the challenges of the COVID-19 pandemic. By embracing digitalization and leveraging modern marketing tools, LEGO focused on engaging with customers through various online platforms such as Instagram, Facebook, and YouTube. LEGO's Facebook page has over 13 million followers, where it regularly showcases new releases and innovative creations, while its YouTube channel captures promotional, educational content, amassing 10.04 billion views by June 2020 . Additionally, the LEGO Life app allows younger audiences to interact and share their creations, enhancing brand interaction . This integration of digital engagement ensures that LEGO remains relevant and continuously grows its consumer base despite global disruptions.

LEGO's successful blend of traditional product lines with digital innovations reflects its adeptness in adapting to evolving consumer landscapes while maintaining a loyal customer base. By keeping the iconic LEGO brick central to its brand, LEGO preserves nostalgia and tradition, yet complements it with digitalization through products like video games and online platforms such as LEGO Life . This strategy engages both long-time fans who value the tactile LEGO experience and tech-savvy younger audiences who interact digitally. Insights into LEGO's method highlight the importance of balancing legacy elements with cutting-edge technology to cultivate versatile and engaged communities that drive brand continuity and growth.

LEGO strategically transformed its marketing efforts by integrating social media channels such as Facebook, Instagram, and YouTube, significantly enhancing its global brand image. By curating engaging content—like sharing user creations and behind-the-scenes looks at new products—LEGO has strengthened its community engagement . With over 13 million followers on Facebook and massive video views on YouTube, LEGO harnesses these platforms to maintain brand relevance and reach broader audiences . This transition from traditional marketing not only extends brand visibility but also facilitates organic interaction with fans, bolstering LEGO’s image as an innovative, customer-focused global brand.

LEGO’s licensing and merchandising strategy significantly contributes to its brand diversification and resilience by extending its presence beyond traditional toy markets. Partnerships with well-known franchises like Disney, Marvel, and DC Comics allowed LEGO to create popular theme-based playsets that appeal to broad demographics and generate additional publicity . The expansion into movies and theme parks, such as The LEGO Movie franchise and LEGOLAND parks worldwide, not only enhanced its brand appeal but also secured new revenue streams . By continuously innovating and branching into video games and sponsored TV shows like LEGO Masters, LEGO leverages its brand identity and heritage to remain competitive in a rapidly changing industry.

LEGO faces the challenge of balancing cultural preferences with its core product offerings in tailoring its marketing strategies to China. While Chinese consumers value the traditional LEGO play experience, LEGO must also accommodate the country's advanced digital landscape, necessitating the creation of digital LEGO products . Moreover, navigating the cultural nuances of the Chinese market without developing specific Asian-themed lines requires careful strategy to ensure products align with national interests while maintaining universal appeal. This dual focus involves continuous market analysis and adjustments to remain culturally relevant and resonant with local audiences.

LEGO ensures its brand remains 'parent-approved' by highlighting the educational value of its products, which are designed to foster STEAM skills and creativity among children, aligning with parental priorities and educational standards . This aspect is critical to its marketing strategy as it targets parents who often make purchase decisions based on perceived developmental benefits for their children. By positioning itself as a trusted educational partner, LEGO strengthens its brand image, encourages repeated purchases, and garners parental loyalty, which plays a significant role in sustaining long-term sales and market presence.

LEGO's market entry strategy in China effectively contributed to its financial growth by aligning with Chinese consumer preferences and acknowledging local digitization trends. The company chose not to create Asian-specific product lines, respecting Chinese consumers’ appreciation for the traditional LEGO creative play experience . Instead, LEGO emphasized advanced digital products to resonate with the country's rapid digitization, which resulted in a 4% increase in profits and sales in 2018 . By investing in LEGO stores across major and interest-driven cities, LEGO tapped into China's growing affluent middle-class, positioning itself for long-term growth in a significant market. This focused strategy showcases LEGO’s ability to adapt to cultural nuances and leverage market opportunities effectively.

User-generated content plays a pivotal role in enhancing LEGO’s brand loyalty and customer engagement across various age groups by fostering a community-driven environment. Through platforms like LEGO Ideas, where members can submit and vote on new set proposals, LEGO not only gathers product inspiration but also creates a sense of ownership among consumers. The success of ideas such as the 'Women of NASA' set, which became a top-seller, demonstrates this engagement strategy’s effectiveness . Furthermore, LEGO Life—a social networking app for children—allows younger users to share their creations, stimulating creativity and peer interaction . These platforms help build lasting connections with users, converting brand enthusiasts into ambassadors who propagate lifelong brand loyalty, enriching LEGO's community of enthusiasts.

LEGO's collaboration with the education sector solidifies its position as an educational toy brand by emphasizing the teaching and development aspects of its products. LEGO Education, a dedicated arm since 1986, partners with schools to provide tools that build STEAM skills, fostering creativity and critical thinking among students . Additionally, the LEGO Foundation's commitment of $24 million for global educational aid underscores its focus on learning advocacy . These initiatives align LEGO’s offerings with educational goals, making its products appealing to both educators and parents seeking developmental benefits for children, thus reinforcing LEGO’s market position as a leading educational toy provider.

LEGO differentiates its product lines by targeting gender diversification and inclusivity, key to broadening its consumer base. The development of LEGO Friends aimed specifically at engaging girls shows LEGO's response to gender preferences highlighted during market research . Additionally, by collaborating with major franchises like Star Wars and Marvel, LEGO creates gender-inclusive products that appeal to both boys and girls. The promotion of creative play experiences through gender-neutral strategies ensures broader appeal and inclusivity, fostering a welcoming environment for all users and expanding LEGO’s market reach.

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