Part A
How LEGO Reinvents Constantly
The company’s history is important in understanding how it continues reinventing itself and adapting to changing market environment and consumer demands and behavior over time. The firm was started in Denmark in 1932 by a carpenter, Kirk Ole Christiansen. He started designing wooden toys and, later in the 1950s, transitioned to plastic toys. In 1958, LEGO brick was established and became the basis for the toy business firm LEGO Group. The firm is reputable in inventing new products, designs, and vigorous marketing campaigns.
The firm constantly changes its structure. In 1978, the firm restructured to increase sales and establish the firm as a household name by launching LEGO Minifigure (LegoAs, 2021). According to the study, Lego ventured into the construction toy market in the 1990s by introducing LEGO Mindstorms and LEGO Technic. In reaching new markets, the firm has successfully partnered with other firms (LegoAS, 2021). For instance, the business collaborated with Nintendo to create LEGO sets centered on the well-known video game series Super Mario (Gale, 2023). Lego restructures its business to remain relevant and expand business opportunities.
Lego has succeeded and managed to remain relevant through leaders consistently revamping its businesses. LEGO Group reinvents its business constantly by emphasizing consumer and market research. The firm, under the leadership of Knudstorp, has sought to understand customer behavior and desires (LegoAS, 2021). This has been made possible by the company’s inventive use of products, partnerships, and marketing strategies.
Role of Marketing Research
LEGO focuses on market research to stand out as a successful firm. LEGO adapts its product offers to the changing market needs by observing playing children and customer surveys. For instance, the firm started patenting new products in 1999 in response to consumer demands. The strategy led the firm to become the largest toy producer in the world. Also, after observing that kids were using LEGO blocks to fashion guns, the firm introduced LEGO guns (Gale, 2023). This idea helped LEGO enter a newer market and expand its business. Therefore, marketing research has been crucial to LEGO’s commercial success. LEGO can modify its goods to meet the evolving demands and desires of the market by regularly interviewing customers and observing kids at play. This has aided LEGO in becoming the biggest toy maker in the world.
The shift made by LEGO toward making decisions based on thorough vigorous research assured the commercial success of its new products and simplified production. The business introduced the LEGO Friends range in 2011 to increase brand awareness among girls. According to the company’s market study, girls tended to use Lego plastic toys in role-play, whereas boys chose sets with compelling storylines and backstories (LegoAS, 2021). The construction feature of LEGOs was appealing to both girls and boys. The LEGO Friends series provided more models and settings for girls to role-play with their dolls, such as shopping centers and creative studios. The product line was well perceived in marketplaces worldwide, such as China, the US, China, and Germany.
LEGO and Competitors
LEGO Group differentiates itself from market competitors through several key features. First, the firm offers unique product designs which are hard to replicate. The firm designs lasting products using durable and high-quality materials. Also, the firm has a strong brand identity consumers perceive as creative and high-quality. The firm also produces a variety of products designed for different interests and age groups. The firm’s outstanding customer service offers a long-standing reputation.
Ethical Implications with LEGO
LEGO Group uses plastic products to make its products. The sustainability of materials used to produce LEGO products is an ethical concern for the company (Lego, 2020). Plastic materials contribute to environmental pollution. The firm needs to consider alternatives to the use of plastic materials.
The firm has mitigation measures in place. Currently, the firm has mitigation measures aiming for sustainable materials by 2030 and providing leaders with ethical business training (Lego, 2020). Also, the firm considers recycling plastic as the current means of mitigating ethical concerns.
Part B: Situational Analysis
External Environment; PEST analysis
Political
Lego Group operates in different countries under different jurisdictions. The firm adheres to various laws, including tax and environmental conservation measures. The firm has ceased operations in Russia as means of supporting the peaceful co-existence of individuals.
Economic
The two main revenue sources for the business include sales of goods and income from licenses. Lego AS (2021) states that 99.1 percent of the firm’s revenue came from product sales and 0.9 percent from license revenues in 2019. The firm reported an increase in revenue.
Sociocultural
Lego products are cut across different age groups. Findings from LEGO’s 2022 Play Well Study revealed a resounding need for increased representation in playing and more debate on diversity (Gale, 2023). It created a brand-new realm of diverse and authentic LEGO Friends characters. According to Gale (2023), 85 percent of parents agree that toys and play can significantly promote children’s understanding of diversity. Shoppers can expect diverse products from the company.
Adults communicate their work using Lego products. Adults, for instance, combine materials to construct new artifacts out of LEGO bricks (Akaka et al., 2014). In the online community Lugnet, the Adult Fans of LEGO discuss ideas, trade knowledge, and market their unique LEGO creations.
Technology
Lego is moving with technology. The firm develops and produces robots. Mindstorms EV3 is a popular robot developed by LEGO and widely used in different fields (Dong et al., 2023). The use of robots is gaining popularity making the company’s strategy a suitable trajectory.
Internal and External Environment; SWOT analysis
Strengths
Lego Group has a global brand presence. The company’s products are available in over 130 countries, operating about 570 branded stores (Akaka et al., 2014). The firm has innovation capabilities. Each year, the firm refreshes its product catalog. The refreshing keeps children waiting for new products each year. Also, the firm conducts licensing deals with various franchises, including Marvel, Harry Potter, Star Wars, and Friends. Such franchises assist the firm in riding with culture waves to make profits. Lastly, Lego operates a robust e-commerce platform apart from its retail stores. The firm has seen an increase in its sales due to its online marketing presence.
Lego has created value propositions in different countries and built a strong brand image. LEGO attempts to alter the synchronization of relationships with its wholesalers and consumers and improve information communication in order to increase customer comprehension of its value creation (Akaka et al., 2014). Establishing the “Build and Re-build” arrangement and initiating the annual children’s holiday “Child Day,” which was already celebrated in many European nations, is socially constructed. The company took representative actions to convey its value proposition to Italian consumers (Akaka et al., 2014). The creation of a value proposition improves brand image.
Weaknesses
The firm has pricing weaknesses. Lego’s licensing contracts are expensive, and the company passes the costs to its consumers, making their products expensive. Therefore, price-sensitive consumers may opt for cheaper brands. Also, the firm’s brands are vulnerable to imitation. Competitors imitate Legos designs to make cheaper counterfeit products of inferior quality. The firm experiences challenges in ensuring legal protection for its innovative designs.
Opportunities
Lego has an opportunity to foster learning and education through its products. Lego Foundation and Lego Education initiatives target fostering learning through playing with Lego toys, particularly bricks (Akaka et al., 2014). Such initiatives are aligned with the company’s objective of inspiring and developing potential builders.
Threats
Environmental pollution measures are a threat to the firm. Lego uses plastic origination from crude oil as its main raw material. The reliance on crude oil for manufacturing plastic products receives opposition from environmental protection groups (Markarian, 2016). Also, the revolution of technology offers substitutes through online games to children, pushing them away from the physical gaming toy products the firm offers. Also, Lego experiences stiff completion from top toy-producing companies. The firm has to ensure more innovation, production, and marketing to outdo its competitors.
Organizational Problem
The firm is facing a challenge due to bribery and corruption from leaders. Lego (2020) states that leaders indulge in corruption and bribery while undertaking their duties. Such acts lead to a loss of revenues for the company and portray a bad reputation. The firm needs to act accordingly to ensure the integrity of leaders. Also, the firm faces a challenge in environmental concerns due to the use of plastic in producing its products (Lego, 2020). Plastic wastes contribute to environmental pollution and are thus discouraged in different countries. The firm needs to look for alternative raw materials for producing its toys and other products.
Alternatives
The firm needs to find sustainable solutions to mitigate its challenges. On the issue of corruption and bribery, the firm should conduct vigorous training for organizational leaders. The company needs to roll out seminars and in-doors meeting to educate leaders on the importance of maintaining integrity in the workplace. Also, the firm can implement punitive solutions to fight corruption and bribery. Individuals found to indulge in corruption should be terminated and sued for their conduct. The company should ensure workers’ integrity to maintain its strong brand reputation.
Recommendations
The use of plastic materials requires a sustainable solution. The environment is negatively impacted by pollution from plastic waste, particularly non-biodegradable wastes, hazardous chemicals seeping into water and soil, and toxic gas emissions into the atmosphere. Lego group should consider recycling plastic waste. New approaches to recycling plastic render the approach a viable solution to managing plastic waste. According to Balu, Dutta and Roy (2022), existing approaches for recycling plastic trash typically result in materials with a lower value than the initial plastic or weak thermal energy recovery. Valorization, also termed up-cycling, is a method that has recently come to light as a viable way to turn plastic waste into products with additional benefits (Balu, Dutta & Roy, 2022). Recycling plastic is the 2030 sustainable goal. Recycling plastic waste can lead to a safer environment.
References
Akaka, M. A., Corsaro, D., Kelleher, C., Maglio, P. P., Seo, Y., Lusch, R. F., & Vargo, S. L. (2014). The role of symbols in value co-creation. Marketing Theory, 14(3), 311-326.
Balu, R., Dutta, N. K., & Roy Choudhury, N. (2022). Plastic Waste Upcycling: A Sustainable Solution for Waste Management, Product Development, and Circular Economy. Polymers, 14(22), 4788.
Dong, C., Povorozniuk, O., Topalov, A., Wang, K., & Chen, Z. (2023). Development of the control system for LEGO Mindstorms EV3 mobile robot based on MATLAB/Simulink elements. Technology audit and production reserves, 1(2 (69)).
Gale, (2023). The LEGO Group supports diversity with the new LEGOA(r) Friends characters. Knowledge Bylanes.
Garber, G. (2015). Learning LEGO MINDSTORMS EV3. eBook Collection (EBSCOhost).
Lego AS. (2021). Company Profile Lego AS. Marketline.
Lego. (2020). Sustainability Progress 2019. The Lego Group.
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