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Introduction: A short introduction about the LEGO companies history, before starting this case study. It was started by a simple carpenter named Ole Kirk Christiansen and with a few employees in 1932. From today more than 60 years ago they started making wooden toys in his workshop in Billund, Denmark. The name LEGO first used in 1934 came from Danish words ‘leg Godt’ translation this word is ‘ play well’.
But as when plastic came into widespread use, then Ole Kirk begins to realize the huge potential of plastic as a new product existing wooden toys. And the first toy produced was a truck that could easily separate and again re assembled. It was the end of 1940s.
LEGO’s external marketing: To understand the external marketing of any business, it can be done by STEP analysis, “for LEGO external marketing environment can be divided into for main groupings, known as acronym STEP: Sociocultural, Technological, Economic/competitive, and Political. So it’s necessary to now each part of STEP analysis for LEGO. So I explain every separate follows as:
(Frances Brassington and Stephen pettitt P.46, 2003)
Sociocultural: in recent years when customer wants to purchase toy or any item they mostly per fur the product with LEGO brand, this is because of companies motive that they make product according to the needs of customer’s either it’s age gap or gender. For this LEGO company creates good statement in there website, that they are progressively finding innovative ideas for new toy product. LEGO company group its business organisation into four main categories: Play materials in this children’s age upto 0- 16+, family attraction, lifestyle products and media.
Technological: As per LEGO it is world top most toy company with top grand name, and when it comes to the technology they have good technology but most important thing is that they have brilliant people working for them how make good use of technology. The technological environment is continuously changing. As we can see a few years ago toy were made by plastic but today a dramatic changes made in the field of toy, a simple example is robot how works for you.
Economic/competitive: Today just in the market of toys there are huge number of companies are there. So for LEGO Company also have to face competition from other manufacture in the market, but as LEGO has establish a good reputation in the consumer mind, just because of fair policy of LEGO company.
SWOT analysis for LEGO: SWOT analysis is to determine the position of the business, in for four parts:
Strength: Main strength for LEGO is that they have reputation for quality in raw material for making toys and also their processes, as LEGO brand is in the market for long duration, they prepared a good knowledge of the market and made good contacts worldwide.
Weakness: Because of worldwide, so higher means of transportation cost and delay in supply. As some time company do not pay attention to buyers initiate wish.
Opportunity: Advance technological give opportunity to LEGO company. Company makes product according to the needs of consumer which make good relationship between both.
Threats: Main threat is that number of competitors in the market, with huge range of product. And some of business environment also which can accrued at any time, like credit crunch.
Evaluation of decision making process made by LEGO and effective response after the change in demand-
While consumer buying any product from the market there are many guidance which help in decision making. Today fashion is changing very fast which also affects the consumer decision making. Following are some ways of decision making.
Social and educational attraction product- As people always compare with other, so while purchasing toys for their children’s they like to buy the toys which is famous in the society and have a trend at that time and children also buy the same product because their friend might have same one. So LEGO is always follow the same rhythm which is going on and makes product according to needs of consumer with new fashion and trend. LEGO produce product affording to the main target range which is 0 years child to 18years+ boy. They also make product which helping in education for children’s.
Technological attraction product- today world is changing very fast with advance technology. So it also affects the habit of consumer decision making. What new technology they use in their particular product and what new can they do in the fields of games. LEGO use advance technology in their process of making product and with advance computer games. LEGO knows that if it is reverse its changing financial fortunes, its continued commitment to innovation is essential. They mostly targeted two-to-five year olds how favourite characters like Winnie the pooh, Tigger, Piglet which they show in Disney film characters.
Belief and attitudes- Company has simple phenomena that they never change their attitude towards their product making. LEGO always encourage children’s creativity, so they use the theme for them. ” for any company attitude play an important role for consumer while collecting the information or decision making and Williams 1981in summarising the literature, describes attitudes have three different comportments cognitive, affective, co-native” (Williams 1981, P. no. 114, Principal of marketing 3 Rd ).
Gender or age attraction product- gender or age also plays an important role while consumer purchases a new product. LEGO organisation make different product for boys and girls, because wants of every customer is basically different, so they made according to needs. This gender difference starts from the first year of children’s. And the same in the age difference, as child grow their purchasing habit and style changes.
Poor results- With the end of 1998 LEGO organisation has disappointed with the results they got, one of their senior management team realized that it must focus on increasing the efficiency of the business. In that time organisation recorded a before-tax loss of DKK 282 million, its worst ever set of figures. ( case study )
Role of innovation on brand positioning and the marketing strategy-
Due to drastic change in the economy and in the field of technology LEGO have great effect on this brand name, ever fast changing want of Consumer Company also think that what they want in the toys and games. “Targeting young adult is anything but child’s toy. Today’s toys involve highly focused research and the use of sophisticated technology to attract and to appeal to young people. Yesterday’s favourite brand such as LEGO and Biro are now fighting for top-of-the-toy-box status against electronic upstarts.”(by Ron Irwin, http://www.brandchannel.com/features_effect.asp?pf_id=113 )
But in some research it is find that LEGO have to suffer a lot, not in the brand’s but also a loss figures as it is shown in the case study given to students. But as the time passes LEGO stands and get this brand position name and set a good picture in the mind of consumer and force them to buy their product which is best from rest. Today in the market of toys LEGO has become famous and makes an important place in new generation children’s.
One more important definition for LEGO from the same case study “our vision is for people all over the world to experience positive, happy associations every time they see a LEGO logo, see a LEGO element or hold it in their hands. Imagination, exuberance, spontaneity, self-expression, quality-these are some of the words we wish to link with the LEGO name, together with values like development, concern for others and innovation”.
Marketing strategies- LEGO organisation always adopted new and creative ideas for making their products which are currently in trend and in the market. LEGO Company has made an tendency that they use to make server all the time in the business field, so that they get updated every time.
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