The Lego Group Ltd

Executive Summary

The Lego Group is a multi-national company based in Denmark. It started as a wooden toys manufacturers until 1958 when it started making brick-made toys for children. With time, Lego Group expanded through its effort in creativity from a local carpenter workshop to a multinational company known for manufacturing children’s toys. This study aims to conduct market research of the Lego Group to understand the nature of toys (digital, physical, or blended) that would be appealing to children in the next 5 to 10 years. In simple words, this study seeks to research how the interest of children in toys changes over time. Further, this company is about to launch a process of recycling plastic bottles and using them in making bricks. This study will therefore seek to research which is the most feasible market strategy for promoting this eco-friendly idea. Lastly, Lego Group is planning to expand its retail network. However, the company is undecided whether to expand and if it has to expand, it needs a feasible location. This study will further research the most feasible location that the company may expand its retail network.

The Lego Group (Lego) Research Proposal

Background

The Lego Group which is headquartered in Denmark was launched in 1932 and registered under two Danish words “leg godt” which means play well. Since its inception, the company majored in making wooden toys until 1958 when it started making brick-made toys for children. With time, Lego Group expanded through its effort in creativity from a local carpenter workshop to a multinational company known for manufacturing children’s toys.

Besides, the toy industry globally has been growing while some such as China, Brazil, and Australia are experiencing extreme growth and thus, reducing the market size of countries such as Canada and the USA. In terms of sales revenue, the Lego Group is ranked number three with Mattel and Bandai-Namco as the leading competitors. In comparison to its competitors, the Lego Group commands a significant market share. The global sales of games and toys are influenced by economic conditions as they are not necessarily a primary item. According to Yuan and Zhang, (2017) approximately 60 percent of the annual purchases are done during the period surrounding Christmas. Recently, the competition has been heightened by the emerging giant game producers such as Sony, Microsoft, and Nintendo. With the shrinking market share, Lego is considering adopting an augmented reality strategy to improve its play experience. However, the company is uncertain of the long-run success of this technique.

Statement of the Problem

As aforementioned, toys and video games cannot be categorized as primary needs goods. The basic reasoning is that their demand depends on factors such as annual seasons and the availability of personal income (Chalmers, 2017). Further, sometimes toys are bought as a gift to children, and thus, the decision to purchase might be based on social emotions. In this industry, Lego has focused on differentiation as a marketing strategy where, unlike other toy manufacturers, its toys are made of plastic bricks. In addition, to reduce the risk of targeting a single market, Lego deals with a diversified product portfolio while investing more on digital and eCommerce platforms. For instance, to grow products demand, Lego is considering integrating augmented reality in their video games experience. However, they are uncertain of how successful will this strategy be in the future. In this study, it will important to understand children’s choices on the type of toys they want to play with using a different types of toys (Jones, 2017).

Aim of the Research

Based on the above discussion, the main aim of this research will be:

• To assess and understand the nature of the product (digital, physical, or blended) that would be appealing to children in the next 5 to 10 years.

Purpose: To develop an overview on the characteristics of a product and other market factors description that would a product children more interested on the company’s products in the next 5 to 10 years.

• To research the most feasible marketing strategies that can be implemented to promote the use of recycled plastic bottles to manufacture bricks.

Purpose: To develop a marketing avenue that can be used to create awareness on the importance of recycling plastic bottles and putting them into productive usage such as producing bricks for children’s toys.

• To conduct market research that will help on deciding on which area the company can expand its retail store network

Purpose: To identify market gaps and especially in a region where there are unexploited opportunities in the toy industry and come up with a specific location where the company may expand its retail store network. According to Rossie, (2019) Africa markets are one of the emerging markets for toys and present an opportunity for Lego to expand.

Literature Review

Children’s Toy Choices

According to a study conducted by Dinella, Weisgram, and Fulcher, (2017) on developmental literature, children tend to develop an interest in toys that are traditionally stereotyped to be for their gender. Thus, the preferences of sex-typed toys have been widely used in studies of understanding children’s play and children have been given a choice to select their favorite toys. Further, since children tend to influence the behaviors of their peers in making toy choices, the study will investigate how children determine the toys that their peers would prefer.

Toy Preferences and Gender Theories

Most of the gender theories such as social learning theory, gender schema theory, and cognitive development theory have demonstrated that at different developmental stages, children have different patterns on toys gender-typed preferences (Hines and Davis, 2018). However, each theory provides a different argument on how children develop these preferences. This study will evaluate the literature of each theory to understand how children’s preferences on toys change and differ.

Global Gender Population Growth

The fact that children’s toys preferences differ with gender, thus, in 5 to 10 years from the gender population growth in different global locations would have changed significantly (Cohen, 2020). With this, the male gender of children will influence the demand of certain nature of toys compared to female genders. This makes gender growth and changes a key consideration in this study. The data provide provided by the United Nations (UN) Department of Economic and Social Affairs will help predict possible trends in gender changes globally (Santos and Souza, 2019) and (Chambers and Humble, 2017).

Research Objective

To bring products close to consumers and promote brand experience, the company has launched Lego-branded retail stores to replace most of the non-operation chain stores that used to sell Lego products. In the year 2020, the coronavirus pandemic extremely affected Legos’ product demand reaching the lowest sales revenue in a decade (Mantovani et al., 2021). As a result, the company is concerned about “how it can increase its market share and maintain growth in the toys industry.” For example, in mid-2021, the company successfully managed to launch a plastic bottle recycling project from which it will be using recycled plastic to create its bricks. This recycling plastic project will be the production technique two years from now. Further, it aligns with Green World ideology and in the long run, it will be more environmentally friendly compared to the use of oil-based products (Hahladakis and Iacovidou, 2019).

Research Questions

This research will seek to answer the following research questions:

1. What nature of children’s toys would be appealing to in the next five to 10 years?
2. What are possible marketing strategies that would be suitable to promote the use of recycled plastic bottles over oil plastic in producing bricks?
3. Are the African toys market suitable for Lego to expand its retail store network?

In the first research question, the study will focus understand the changing behavior of children over time and how it affects their preferences with toys. Further, these questions will also look at the population growth between 5 to 10 years from now and how it will affect demand for its products. For instance, high growth for the female gender will mean that feminine toys will be in high demand. The second research question addresses the new eco-friendly project of recycling plastic bottles that Lego is about the launch in two years. In this question, the focus will be on understanding a marketing strategy that would engage key stakeholders in the toy industry and inform how Lego products are eco-friendly (Babayemi et al., 2018). Lastly, the third research question seeks to provide a solution to the current problem facing Lego of deciding which market or location it would expand its retail store. According to Foulds and Bucuvalas, (2019), Africa is one of the toy markets with unexploited opportunities. To answer this question, the research attempt to find some of the reasons why the suggested market is feasible for Lego.

Research Design

The main objective of this study is to understand the pattern of children’s behavior in selecting toys and how it changes over time, how to promote the ideology of renewable plastic bottles, and how Lego can expand its retail network. The study will utilize three research designs depending on the research questions. These research questions include causal research, descriptive research, and exploratory research. The casual research attempts to answer the questions of what causes an element to react or change in a particular manner (Siedlecki, 2020). I.e. it helps in understanding the relationship between the cause and effect element(s). The research design will be used in answering research question one and help in responding to what could make toys more appealing within a time frame of 5 to 10 years. Descriptive research focuses on defining or describing a particular phenomenon while aligning with the requirement of research question two. Thus, descriptive research will help in identifying a suitable market strategy for promoting the use of recycled plastic bottles (Doyle et al., 2020). Lastly, exploratory research will be used to answer research question three as it is commonly used while testing a feasibility study.

Research Method

This research will use both qualitative and quantitative data which will either be obtained from primary or secondary sources. Then, using the analytical tools, the qualitative data will be quantified to interpret and derive meaning. The variables of the research questions can well be interpreted if they are presented in a quantitative form. Further, qualitative data helps in getting depth insight into the presented questions as not every detail can be presented in a numerical form. Further, given the timeframe and the size of this company, it would be possible to collect primary data for some research questions. For instance, studying the behavior of children and how they make toy choices, preferences, and how the pattern of their behavior change over time, will require a long-term observation (Mansor, 2021). It is for this reason that the study will rely on secondary data from studies that have been done by other scholars on the same topic.

Data Collection/Fieldwork

The Lego Group customers are spread across the world and thus, an online method of data collection will be more preferable. In this sense, the study will use a well-structured online survey form sheet targeting its customers as well as the customer of the competitors (Evans and Mathur, 2018). However, this method will be more selective on the participants of the study as the largest number of toy customers are children. Given the fact that children cannot take part in the study, the study will target parents who buy toys on behalf of their kids. As aforementioned, there will be no data to be collected in response to the research question that is determining the patterns of behavior change for children. Therefore, the online survey questions will revolve around the other two research questions. I.e. the type of market strategy it will apply to promote the ideology of using recycled plastic bottles and the most feasible location where the company will expand its retail network.

Participants and Sample Size

The study target population size of 3,000 participants who are Lego customers and mostly those who do online shopping. With this population size, the sample size of the participants will be 350 given a 5% margin of error and a common significance level of 95%.

Sampling Method

According to Etikan and Bala, (2017) is one of the methods that provide every participant an equal chance of taking part in the study since the population contains people sharing a common characteristic or quality. This means that everyone who has ever purchased a product of Lego online can be a population. The participants will be randomly sampled from the company’s website traffic and customer portal. On the company’s website, the customers who shop online are required to register and fill in visitors sheets that contain contacts and identification details of a customer. Further, while registering customers can either choose whether to be receiving updates and notifications from the company or not. Thus, it will be easy to contact these customers and request them to take part in the study by answering an online form sheet that has a specific type of questions. For this research, it might be difficult to understand whether the population represented the population interest if non-sampling methods will be used (Cho, Dutta, and Shim, 2017).

Data Analysis

As aforementioned in the research design, the study will utilize descriptive research data and one of the scientific tools for analyzing this data is SPSS. This is a scientific software to which survey data is exported to perform statistical and descriptive analysis. Further, SPSS will help in developing predictive models of the descriptive analysis (Zou, Lloyd, and Baumbusch, 2020).

In this study, the data from the online survey will be analyzed using SPSS. First, the online survey sheet will be tested for reliability and validity before submitting it to the respondents. This will help in reducing the interpretation gap between the respondent and researcher as well as increasing consistency overtimes. For closed questions of the survey sheet, there will be some scores for each answer option. For instance, Strongly Disagree = 1, Disagree = 2, Neutral = 3, Agree = 4, Strongly Agree = 5. In conditions where there will be negative questions, the scores will be reversed such that 5 changes to 1.

Descriptive Analysis

Atmowardoyo, (2018) noted that a descriptive research analysis is data that helps in showing, describing, or summarizing simplified data points in a manner that there is a pattern responding to a certain problem in writing. Kemp, Hollowood and Hort, (2018) further added that a descriptive statistical data analysis develops a conclusion given data distribution and thus, it helps the researcher in identifying similarities in variables and detecting outliers and typos. The common measurements in this descriptive statistics would be median, mean, standard deviation, and mode. The essence is to get an interpretation of the data collected by changing them from ordinal data into numeric data. In this research, through descriptive analysis, it will be possible to develop a two-way or cross-tab tabulation to show values of component propositions. For example, the research might tabulate the proportion of customers that highly recommend the use of recycled plastic bottles to make bricks and those who think it is not a good idea. This means that there will be a cross-tab of those who support the recycling plastic idea and those opposing it. The output will be showing the two groups of respondents which gave a similar pattern of response either agreeing or disagreeing with the research questions. This is a simple cross-tabulation that will help in getting a more clear comparison between different responses of the respondents.

Regression Model Analysis

One of the most common models is the multiple regression model that will be analyzed using SPSS. The research questions are intending to predict an outcome and thus, a multiple regression analysis will help in predicting an outcome of a suitable marketing strategy and also that of a new retail network. To complete this statistical analysis, this study questions will identify several variables which will help in running a multiple regression. Thus, in this research, regression analysis will help in determining the overall fit of the variables in this research question and the relative contribution of each variable to the final prediction (Daoud, 2017).

Reporting

For this research study, the first interim report and a fully completed report will be submitted to the board of Lego Group as soon as each is completed. The interim report will be aimed at the briefing and giving the members of the board a Snapchat of what is expected in the final report of the study. The interim will provide a summary or a proposal of how the final research will be conducted. Thus, the interim report will only present chapter one (Introduction), chapter two (Literature Review), and chapter three (Research Methodology). In a nutshell, the interim report will not provide nether the findings, conclusion, or recommendations.

Further Research

The central focus of this research is to understand the changing behavior of children’s interest in toys within a time frame of five to ten years. However, in the current knowledge in cognitive theory of children’s behaviors, there is a gap (Murnen, 2018). Most of the studies have focused on children’s interest in toys depending on the gender differences. However, there are limited studies that have considered how interest in toys can be influenced by other factors such as children’s family background, origin, race, and culture. These are some of the factors that future research needs to put at the center of the study. Further, future research may focus on using sample groups to collect study data. The sample group will spend time documenting the behavior of children both the product and the process. This approach will require a multi-method approach which may use observation, filling learning journals, collection of visual videotape, and digital images.

On the other hand, the final report will contain all chapters of the research. Further, the report will be expected to demonstrate how the problem identified for the study has been approached and how it was analyzed to get possible solutions. The bottom line of the report will be to recommend the Lego Group of the actions that can be implemented to solve the current problems.

Timeframe: Timeline Estimation

Gantt chart

Four months = 17 Weeks (Jan – April)

Budget

Conclusion

Based on the above discussion, this study can be summarized based on the three research questions.

Firstly, assessing and understanding the nature of the product (digital, physical, or blended) that would be appealing to children in the next 5 to 10 years, the study will rely on previously completed studies. This means that the study will depend on the literature review on the possible results of how children’s behavior change over time. Secondly, researching the most feasible marketing strategies that can be implemented to promote the use of recycled plastic bottles to manufacture bricks, the study will rely on online surveys. Lastly, identify market gaps and especially in a region where there are unexploited opportunities in the toy industry, and come up with a specific location where the company may expand its retail store network. Several scholars such as Rossie, (2018), Haniff, et al., (2020) and Parnett-Dwyer, (2018) have conducted studies on why Africa markets might be one of the emerging markets for toys and why it presents an opportunity for Lego to expand its marketing networks.

Research Organization and Researchers

Company: Lego Group Ltd

Market Research:

1. To assess and understand the nature of the product (digital, physical, or blended) that would be appealing to children in the next 5 to 10 years.
2. To research the most feasible marketing strategies that can be implemented to promote the use of recycled plastic bottles to manufacture bricks.
3. To conduct market research that will help on deciding on which area the company can expand its retail store network.

Researcher: Undergraduate Students

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