The document discusses recommendations for how LEGO can adapt to the digital era and compete at premium toy prices. It recommends that LEGO create a social media campaign to crowdsource new product ideas from customers and develop a free-to-play LEGO mobile game to allow creative building on the go. It also recommends a LEGO rental service with monthly membership plans and unlimited part exchanges to address issues with high individual product prices and children getting bored of sets over time.

1. Team 13

2. Issues
1. How should LEGO adapt to the surging digital era?
2. How can LEGO premium prices compete in the toy
market?

3. Recommendation
How should LEGO adapt to compete in the surging
digital era?
● “Create the next LEGO” Social Campaign
● LEGO free to play mobile gaming

4. Recommendation
How can LEGO premium prices compete in the toy
market?
● “LEGO Rental
● Cross Sell Items

5. How can Lego Improve?
• One potential initiative for Lego to take is “Create the next Lego.”
• Link the initiative to Lego’s social media sites, garnering attention from the friends of
each entrant and therefore increasing traffic to Lego’s social media pages.
• The contest encourages creativity; one particular entrant may have the next “million
dollar idea.”
• Gives customers a chance to become more involved with the company, promoting
brand loyalty.
• It is a proven method of increasing sales for companies in all areas of business; one
prominent example is Frito Lay’s “Do us a Flavor” initiative which boosted their sales

6. Expected Costs
• One of the biggest benefits of this initiative would be the relative low-cost of
introducing it.
• Devote a section of the staff to sorting through ideas
• Devote staff to maintain social media presence of the initiative
• Finally, the biggest cost would be the actual process of creating the new sets, which may
require unique building blocks.

7. Opportunities
• It is difficult to precisely quantify the cost of such an initiative, however, the
potential upside of the venture certainly makes the operation appear worthwhile.
• Lay’s – for example – saw a 5% increase in their market share after launching their “Do us a
Flavor” initiative.
• Tim Horton’s, Orbit Gum, and Air Canada have also successfully created such marketing
strategies.
• Ideally, inviting customers to create new designs - and rewarding them for doing so – could
boost Lego’s market share considerably as it would make it one of the most interactive toy
companies in the world.

8. Recommendation Transferring into the digital age via mobile gaming
Challenges of the digital age
● Physical toys are downtrending for the
current generation of kids
● Digital games (ie. Minecraft) allow for
creativity to be expressed infinitely
without being tied to physical blocks
● Digital game market is becoming highly
saturated and highly competitive
● Digital games can be brought
anywhere, LEGO has a mobility issue
Meeting the Demand for mobility
● Mobile games implement creativity on
the go
● Creating a game that uses LEGO brand
recognition and sense of building can
help introduce more kids to the brand
● Free to Play model keeps initial price
low for consumers while still enabling
profits from in game purchases such as
character models.
● Allows creative department the ability
to implement new ideas without high
overhead costs
We recommend LEGO creating a Free to
Play mobile game that allows creativity on the
go while still maintaining profit margins

9. Concept
Allow players to customize characters to facilitate a
investment into the world
Intricate worlds that enable varying
gameplay experiences

10. Implementation
Free to Play games offer players a portion of the game for free, then place a paywall on certain
aspects of the game. A world building game with buyable characters and block types would allow
average players the ability to enjoy the LEGO brand, while profiting from the more loyal player base.
Advertising is another way to garner profit from a free to play model
Develop a creative
LEGO brand
mobile game with
incentives to keep
playing
Play test
internally to
eliminate
problematic
bugs
Release on
appropriate app
venues
Advertise
appropriately to
grow playerbase
Release time
specific buy-in
items or
incentives that
justify the
money
Deficits from
production begin
to change into
profits
Keep highly
invested and
average fans
happy, to keep
profits and
player base up

11. Cost Analysis
Development Cost
Average Cost for Free To
Play Mobile game is 300,000
dollars
Release and
Advertising Costs
Marketing budget will
vary, but a successful
campaign may take
upwards of 150,000
dollars
Note: Free to Play mobile games
are a 1 Billion dollar yearly industry
Maintenance
100,000 a year in game
and service upkeep to
maintain playerbase.

12. Issue
Why?
1. LEGO sets price range from $20 to $3,000
2. Average customers make one-time purchases since they are
economically derived from purchasing another set
3. After long periods of time, children get bored of playing with
the same set
LEGO Products Premium Prices

13. Introducing: LEGO Rental
How it works:
Choose a membership
plan that is right for you
Choose your set or
customize your order
We ship for free to
your doorstep
Ship back and
receive more sets

14. Monthly Fee $70 $60 $50 $30 30 Days
Free Shipping
Unlimited Exchanges
Small Sets (500 pieces)
Medium Sets (1,000 pieces)
Advanced Sets (2,000 pieces)
Pro Sets (4,000 pieces)
Membership
Plans
Free Trial
Builder
Master
Builder
Advanced
Designer
Expert
Designer

15. 7 Stages

16. Implementation Costs
Warehouse, LEGO Sorter and Sanitation Tools Fixed
Costs
● $500,000
Distribution and Handling Network
● $200,000 per year
Online Website Development and Maintenance
● $50,000 per year
Marketing Costs
● $200,000 per year
“Inspire and develop the builders of
tomorrow”

17. Expected Results
Revenue Growth
● If “Builder”
membership
becomes the
most popular
membership plan
15% 20% 25%
● “Advanced
Designer” and
“Master Builder”
become the most
popular
● Best Case
Scenario
● “Expert
Designer” plan
receives most
popularity
2013 Revenue: $16,014 in DKK million

18. Supplementary Slides