LEGO, as the world’s top toy manufacturer, has evolved through years of development. It has released thousands of product lines since it is founded. This list shows those product lines that sells the best in 2010 and 2011. Although we want to know exactly how much revenue each product provided, unfortunately LEGO did not release the information in public. Our the question is : How many of them are LEGO’s generic brands? And how many of them are licensed? In fact, the answer is like this. So, obviously, 6 out of 10 products lines are licensed. As we know from the case that it is very likely that LEGO will lose control over license agreements, we strongly urge that LEGO should develop their own brand
LEGO receives great brand reputation among consumers due to its creativity in design. They have demonstrated strong product design power over the past 50 years. Although we realized from the list that most popular product lines are licensed, but in 2011, the one who generates the highest revenue for LEGO is this line: Ninjiago, which is totally designed by LEGO. So we have reason to believe that LEGO has the ability to overcome the licensing difficulty by leveraging its designing power. More generic brands could be published and advertised in many other forms, such as Cartoon serials, Comic books and online games to attract consumers, at the same time these approaches will also bring recurring revenue to LEGO.
The second point I want to raise is experiential features. Our customer’s demand for product development is endless, especially in this digital world. But what do they want? According to the research by TIA. Toy industry association. We found several important trends as following:Generation App We are living in a world of Apple, especially the kids. But we have to realize that technology is not replacing the physical toy. Technology is used to enhance traditional play patterns. Traditional toys should be developed with the ability to interact with popular tech devices like smartphones and iPads that are already in so many homes Many Ways to Play! New Toys should engage kids on multiple levels. Toys should grow with a child and they can play differently depending on their age. Toys that combine multiple play patterns toserve many different needs. Toys have depth and allow kids to play differently each day, depending on their moods or interests. These aren’t “watch me” toys – they are truly dynamic. Save ‘n’ SplurgeToy industry data released by The NPD Group in early 2012 showed that consumers are increasingly making “purchasing trade-offs”.As a result, a top trend for 2012 is thatconsumers have demonstrated that they are willing to loosen their purse strings a bit and spend more on products that pack a high play value punch or have a certain “WOW” factor. Affordability was still a consideration as a sub-trend, and this sub-trend will persist in 2012 as parents and other shoppers have really come to expect big play value at affordable prices.
Magic Wand. This kit allows you to build an ATOMS magic wand that can turn on your nightlight, move a toy, or close a door with a shake of the wand. This set also includes an exploding brick - pretty cool when you want to blow up your LEGO house just as your sister leans in for a closer look. iOS Control Set: The 18-room, 4-car garage Italian villa you just built with your LEGOs would be a lot cooler if those garage doors would open, cars could drive out, and the third floor would shake when Henry the Ghost haunts it. This kit allows you to control your ATOMS modules with an iPhone, iPad, or iPod touch that has Bluetooth 4.0.
The LEGO Group achieved double-digit sales growth rates on nearly all markets in 2011. One exception is Japan, which was hit hard by the natural disaster at the beginning of the year, but nevertheless showed growth. In the rest of Asia, which is still a relatively small market for the LEGO Group, sales growth in 2011 by far exceeded expectations. The English-speaking countries are, however, still the most significant growth drivers and have all exceeded the expectations for the year. Direct sales to consumers, accounting for some 10% of the LEGO Group’s total sales, also saw considerable growth in 2011. Finally, increased management focus meant that the LEGO Group’s sale of products to the educational sector nearly doubled in 2011; however, from a relatively small base. Thanks to the growth generated during the year, the LEGO Group’s global market share at the end of 2011 amounts to approximately 7.1%.
Lego presentation slides
Burhan Saiyed Hung Phan Hongyu Hua Siddharth VenkatramanaPresented by Team Diversity
Recommendations Overall strategy: Product differentiation and alternative market Product development through innovation Expand global market share Enhance social interaction
Agenda LEGO strategic position Product innovation Global positioning Technology to build the future Conclusion
LEGO strategic position Strong Revenue Growth with 5-year CAGR of 15.5%. Costs are controlled well as Net Profit grew 23.6% for 5 years. Value 18,000(mn of DKK) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2006 2007 2008 2009 2010 Revenue Operating Profit Net Profit
LEGO strategic position Restructuring efforts have led to better margins and company growth is in control 0.50Millions DKKper employee 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 - 2006 2007 2008 2009 2010 Net Profit Per Employee
Despite lower total revenue compared to Mattel & Hasbro, LEGO boosted a higher operating cash flow thanks to efficiencyMillions of USD Revenue Operating cash flow 7,000 6,266 6,000 5,000 4,285 4,000 3,500 3,000 2,000 1,000 690 665 376 396 3 0 Lego MEGA Mattel Hasbro
LEGO strategic position • Robust internal operation • Strong position compared to competitors Where should LEGO go next?
LEGO strategic positionTop 10 Country represent 2/3 of the global toys revenue. UnitedStates represent the largest market share for a single country. 30% 26.30% 25% 20% 15% 10% 7.50% 6.70% 5.40% 5% 0%
Overall Strategy Product differentiation Global Expansion Asia & Australia
Product Innovation Build LEGO’s own brand TOP Product lines Super HerosTM Lord of the RingsTM Hero FactoryTM Pirates of the CaribbeanTM Star WarsTM HOBBITTM NINJIAGO CHIMA CITY 60% FRIENDS Licens
Product Innovation LEGO ≠ Movie toys manufacture Success from LEGO generic brands Develop More generic brands Cartoon Serials Comic books Online games
Product Innovation Build LEGO’s own brand Experiential features 2012 Toy Trend (Researched by Toy Industry Association) Generation App Many Ways to Play! Save ‘n’ Splurge
Product Innovation ATOM Express Toys ATOMS is a system of plug-n-play sensors, motors and logic blocks. Magic Wand iOS controlSource: http://www.kickstarter.com/projects/atoms/atoms-express-toys
Product Innovation Build LEGO’s own brand Experiential features Toy to live
Product InnovationGamer ProviderNintendoPlay Station $XBOX 74Billion…WiiSmartphone
Product Innovation Integrate LEGO characters into other platforms LEGO bricks = Access to play a video game
Global Positioning Innovation ProductLEGO strategic position
Global Positioning Global toy industry market value Global toy market growth by regions Market saturation Amount spent per child No of children
Expected market value of $100 billion by 2015 Global toy industry market value 2011 $84.07 2010 $83.91Year 2009 $79.55 2008 $77.22 2007 $78.08 Recessio n $76.00 $78.00 $80.00 $82.00 $84.00 $86.00 USD Billionshttp://www.statista.com/topics/1108/toy-industry/
Toy spending per child 500 486 450 400 365 350 317 312 307 300 284 247USD 250 2009 2010 200 401 361 150 296 308 288 280 244 100 59 50 23 51 20 6 6 0 Australia UK Canada Japan France USA Germany Brazil China Indiahttp://www.statista.com/topics/1108/toy-industry/
Sno No of Kids Country Spending/ki (millions) d1. 352.8 India $62. 238.3 China $233. 62.4 USA $2844. 53.3 Brazil $595. 16.9 Japan $3126. 12.0 France $3077. 11.00 Germany $2478. 10.8 UK $3659. 5.4 Canada $31710. 4.0 Australia $486http://www.statista.com/topics/1108/toy-industry/
Global Positioning Invest and expand in Canada, Australia, Brazil Explore opportunities in India, China &Japan Culturalization of games
Technology to build the future Global Positioning Product Innovation LEGO strategic position
Technology to Build the Future Aid to Global Presence Building Alternative Sources of Revenues Nurturing A Community rather than a Corporate Brand
Adopting Social MediaSource: MarketingProfs, Internet World Stats, 2012
Not just a brand… a CommunitySource: www.rebrick.lego.com
Do’s and Don’ts DO: Unrestricted access Content Verification and Recognition Hold competitions for the NEXT BIG THING! DON’T: Controlcontent Market your products Idea factory for …
LEGO MUSEUM Currently has prime location at Rockefeller Center Extension of Idea: LEGO Museum of Modern Creations!! Draw talented individuals hold yearly competitions in downtown Manhattan to garner media press and foreigner interest
VIDEO GAMES ARE HERE TOSTAY SKYLANDERS MANIA!! Recorded $1 Billion revenue as of Feb’11 2013 Target Age: 3-8 year olds Toy To Life Category Founders Source: VentureBeat “Skylanders crosses the $1 Billion revenue mark with over 100 Million toys sold. Jeffery Grubb.
LEGO VIDEO GAMEPROPERTIES Indiana Jones Batman Marvel Avengers Lord of the Rings Star Wars Own Brands ALL TOGETHER!!!
ConclusionProduct development through innovationExpand global market shareEnhance social interaction
6050 48.1403020 18.1 17.7 17.5 13.310 9 8.3 6.3 5.3 0 USA Japan Greater Italy France UK Germany South Korea Mid East China