The presentation was prepared within a Marketing Management course and deals with the well known Lego Case Study on its turnaround from 2003 - 2013

1. LEGO Group – Building Strategy
ISS 509E Marketing Management – 05.11.13
Fatih Coban, Yusuf Oktay, Vanessa Schuller,
Jasper Schwenzow

2. Structure
1. Lego – The Company
2. SWOT Analysis
3. Strategy Analysis
4. Recommendations
5. Lego – Now

3. LEGO – Timeline 1
1932 Foundation
by Danish Ole Kirk
Kristiansen
wooden toys
1934 Name LEGO
12 Employees
„only the best is
good enough“
1947 first plastic
injection molding
machine
1949 LEGO bricks
invention
1960s
Expansion to EU,US,CAN,JPN,AUS
Focus on LEGO bricks
First LEGOLAND theme park
1970s
Product differentiation and
variation
>2500 Employees
New CEO
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4. LEGO – Timeline 2
1980s
Educational line
LEGO magazine
1990s
>7.000 employees
LEGO stores
computer games
One of top 10 toy manufactures
2000s
Acquisition of licenses
more product lines
Virtual online LEGO universe
Now 2010
>9000 employees
4. largest toy manufacturer
Annual sales 3.7 billion US$
Net profit 0.86 billion US$
Internal problems
4 out of 7 years loss
-> production process optimization
-> reduction of suppliers
-> reduction of design variety
-> distribution optimization 4

5. SWOT – Internal
Complex structure
Patents lose value
Compatible competition's building sets
Reduced product design possibilities
Broad differentiation & new computer games
Strong brand image & media presence worldwide
Several branches & touching points
Improved company‘s structure
Products fun & valuable
High quality products
Improving key figures
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6. SWOT – External
Huge market & building sets‘ fast growth
Lego market leader
Usage of new computer technologies
Growing markets worldwide
Design no longer protected
Strong and growing competition
Disney controls entertainment licensing
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7. SWOT Focus Competition
Hasbro:
- 2. largest toy maker
- Long-lasting success
- Holds licenses
- Kre-O to be launched
- Net revenue 4 billion US$
- Investment (property etc.) 0.23 billion US$
- Investment (intangible assets) 1.6 billion US$
- Net earnings 0.4 billion US$
MEGA Brands:
- Main rival competitor
(building sets)
- Won court battle
- LEGO Compatible system
- Net earnings 0.13 billion US$
- Investment (property etc.) –
0.1 billion US$
Mattel (indirect):
- Largest toy maker (revenue
5.8 billion US$)
- Popular products
- Holds many licenses
Disney (Licensor):
- Acquisition of Marvel
- License monopoly
LEGO key figures
Revenue 3.7 billion US$
Net earnings 0.86 billion US$
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8. SWOT – Complete Analysis
Strength:
- Strong brand
- Valuable, differentiated
products
Weakness:
- Complex structure
Threats:
- Direct & indirect
competition
- License market
Opportunities:
- Market growth
- New technologies
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9. SWOT – Change Over Time
NOW
Main problem: external threats
- Strong, growing competition
- License market
- Trademark protection loss
PAST
Main problem: internal weaknesses
- Costly designs
- Inefficient production,
distribution, sales
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10. Corporate-level Strategy –
Business Units
Business Unit Important Features
Non-licensed Building Sets Company's main product
Licensed Building Sets Company's main product
Video Games Non-violent, recent growth
Board Games
Theme Parks Important touching point
Stores and Merchandise Touching points, discounts
Online Website Innovation possibilities
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11. Corporate-level Strategy –
Segmentation & Targeting
Target Market Applied Products
Examples
Communication
Channels
Children under 5
(Buyer ≠ Consumer)
Duplo Via parents
Children & Teenagers Building sets, Video
Games
Magazine, TV
advertisement,
Website
Fans (adults) Special products Different Websites,
LEGO shops
Educational market Extra line for schools,
Mindstorm
Probably Website
Families Theme Parks, Board
Games
Mouth to mouth,
media advertisement
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12. Corporate-level Strategy –
Positioning
Goals:
1. Maintain market dominance in building toy market
2. Financial success
3. Expand and develop product lines
Mission: „Our ultimate purpose is to inspire and develop
children to think creatively, reason systematically and release the
potential to shape their own future – experiencing the endless
human possibility“
Motto: „Only the best is good enough“
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13. Business-level Strategy –
Building Sets
LEGO against competition
• High quality and safe products
• High customization and adaptation
• Educational aspects included and forwarded
• Strong media presence
Dangers of current strategy:
• Costly
• Losing market share by competitor‘s low
price policy
• Suppliers dependency (Star Wars)
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14. Recommendations 1
Problem: License monopoly
Idea: LEGO Toy producer  LEGO Entertainment producer
Strategic implementation:
• Developing own stories
• Promotion via movies, magazines, internet
 finding partners (e.g. Google)
• Adaptation of Merchandising
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15. Recommendations 2
Problem: Competitor‘s building sets are compatible
Idea: Enhancing community / network effect
Strategic implementation:
• Stronger dependency between business units
 discounts in Theme Parks
 codes in building sets for website offers
 segmentation of communities
 further supporting community events
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16. Recommendations 3
Further recommendations to maintain LEGO‘s
leading status
• Acquisitions of smaller toy producers
• Keep prices steady, just careful discounts on
special occasions
• Enhance position in developing markets (Asia)
 if needed adapt products
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17. LEGO NOW
• Own story lines (Chima)
• Strong growth in new markets, new
headquarter in Singapore
• Forwarding environmental and social
issues
Key figures 2012
• Revenue 4.1 billion US$
• Net profit 1.0 billion US$
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18. Thank You For Your Attention!
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19. Sources
• Case Data
• Internet sources
• http://www.shareholder.com/visitors/DynamicDoc/document.cfm?Do
cumentID=2935&CompanyID=HAS&zid=4d6301e3 (28.10.13)
• http://www.megabrands.com/sites/all/files/media/pdf/corpo/en/repo
rts/Financial_Statements_2010-2009.pdf (28.10.13)
• http://aboutus.lego.com/de-de/lego-group/annual-report (28.10.13)
• http://aboutus.lego.com/de-de/sustainability/our-approach (28.10.13)
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