WCCC 2012: The Lego Group - UBC


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This is the winning competition deck for the 2012 West Coast Case Competition at UBC. It was created by Ben Cappellacci, Helge Ratvik, and Paul McLaughlin.

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  • All most all of us have fond memories of discovering our first lego set with our parents or childrenIn 50 years few competitors have posed a serious threat to LEGO The global toy market is Transforming Grew revenue by 50% when the market grew by 30%In 2010 LEGO took market share from competitors and turned a profit It’s time to look at the next avenue for growth
  • WCCC 2012: The Lego Group - UBC

    1. 1. Building Strategy
    2. 2. Just six bricks can be combined 915 million ways
    3. 3. AgendaIntroductionAnalysisStrategyImplementationRisks and MitigationsConclusions
    4. 4. “A competitive strategy to continue the organization’s financial success and dominance in the toy market” Licensing New competitors Commoditization challenges taking market of Lego productinfluencing product share Expanding dominance in a toy market with opportunity and uncertainty
    5. 5. Uncertainty in Disney Licensingpresents a challenge to future contracts Lego has Lego Star considerable Wars, Spider investment in Man, Indianalicensed building sets Jones Disney’s recent Marvel hadacquisition of Marvel Disney favoured agreements withgives it rights to over partner is Mattel Hasbro to produce 5000 characters toys Future of Disney Hasbro has a New Kre-O product Hasbro’s multiple licencing strong past launch could product lines opportunities is relationship to increase royalty might act as unclear Marvel payment tolerance stronger incentive
    6. 6. Hasbro’s introduction of Kre-O is a significant threat to market shareHasbro’s brand powerEnlarged marketing budgetGuaranteed Shelf SpacePopular Transformers brandCompatible with LEGO blocksLEGO has considerable product brand valueHasbro cannot mention LEGO in its promotion
    7. 7. Failure to protect LEGO brand fromcompetitors has lead to commoditization MEGA blocks has All competing Lego must focus challenged the products will be on its brand control over the compatible with values brick ecosystem LEGO
    8. 8. Brick Ecosystem to Lego Ecosystem Brand Engagement • Connect to consumers on multiple platforms Innovation Focus • LEGOs leadership in the market drives responses Develop Experiences • Focus on delivering value beyond blocks
    9. 9. “A competitive strategy to continue the organization’s financial success and dominance in the toy market” Licensing New competitors Commoditization challenges taking market of Lego productinfluencing product share Expanding dominance in a toy market with opportunity and uncertainty
    10. 10. High profile brand licensing is an easy revenue generator Low Risk • Pipeline of opportunities Proven Integrated • Spiderman: $100 Competition million toy sales • Disney, Hasbro, MEGA Blocks Focus on Western Brands
    11. 11. License Brands in localized areas to increase product awareness • Unproven brandsLock in untapped • Higher risk potential licenses • Lower competition means discount purchasesPurchase smaller • Animebrands in specific • Cartoons and Movies area • Popular Media
    12. 12. Strategies to focus on New Growth Build Avoid Brand Products Popular New Licensing Licensing Customization Standardization
    13. 13. Expand beyond North America Create an on the LEGO stores a Bring to emerging ground brandproven concept in markets with experience to North America localized content engage new customers
    14. 14. Build Foundation with Lego Stores Core Products Special • LEGO Themes Products • LEGO Games • Localised Content • Collectables Media Interactive • PC Games • Play Booths • Ipad Apps • Building set • Comics Projections • Personalisations
    15. 15. Engaging the Consumer: Virtual Media Mirroring virtual Average 6-year old World is going content is essential has access to a virtual to continued mobile device success
    16. 16. Engaging the Consumer: Virtual MediaMobile Application• Augmented Reality• Stories/comics from licensed/non-licensed products• GamesPartnerships with Zynga for Facebook games
    17. 17. Engaging the Consumer: Point SystemLocalisation and customization tied to LEGO brand with Point SystemAdd value to all LEGO branded productsNetwork Effect – Each new product adds value to the system
    18. 18. Engaging the Consumer: Point System • Buying products • Completing video game achievements Gaining points • Use of mobile app/Zynga Facebook games • Any LEGO Theme Park purchases
    19. 19. Engaging the Consumer: Point System Buy products Exclusive DLC online or at a LEGO store Customization Theme Parks of products Why collect points?
    20. 20. Engaging the Consumer: Lego AccountEngage with online community• Upload pictures/videos of LEGO creations• Discussion boards• Share creative ideasTrack and manage pointsConnect with LEGO
    21. 21. How is fits togetherGet Points Add Points Spend PointsLego Packs Personalised -Lego CharactersGame Achievements Enter via: Collectable Content -Special EditionsComic Purchases QR Codes Downloaded Content
    22. 22. Engaging the Consumer: Point SystemCreates unique LEGO experienceAllows LEGO to tap into the creativity of its usersGives LEGO consumer data that is hard to get through vendors
    23. 23. Risks and MitigationsInability to procure • This would be a big problem new licensing • Mitigation would require extensive investments into agreements LEGO’s innovative capacityCompetitors copy • Hasbro’s Kre-Os do not have sufficient brand power our strategies • First mover advantage • LEGO grew revenue by 37% when the marketCompetitors steal increased by 13%our market share • Ecosystem will further mitigate brand switching
    24. 24. Implementation TimelineItem F M A M J J A S O N D JDevelop ObjectivesContract DevelopersProduct DevelopmentProduct TestingTest ReleaseFeedback ImplementationProduct ModificationsStore ModificationsNorth American Launch
    25. 25. Assumed CostsOnline content development • Agency at $500kOnline content management • $500k per yearStore build-out costs • ($200-400k per store) * (50 stores) = $10 millionMarketing costs for emerging markets • ($250k year) * (40 markets)New licensing agreements • ($1 million each) * (1 per market) = $40 million
    26. 26. Metrics of Success Vs. Generic • Change in sales after Blocks rollout • Click through rate on pointNetwork Effect system Local • Total sales of localised Engagement content
    27. 27. Revenue Growth Expectation 20% 25% 30%• No further • Estimated • Best Case licensing impact given Scenario our strategy 2011 Revenue: 20,818mm DKK
    28. 28. Non-Licensed Building Sets Mobile Licenced Content Building Sets TheOnlineWebsite LEGO Video Games Group Stores and Board Games Merchandise Theme Parks
    29. 29. “Our ultimate goal is to inspire and develop childrento think creatively, reason systematically and release the potential to shape their own future – experiencing the endless human possibility”