Introduction
Lego is an international toy brand, having selling points all across the globe, in almost 12 dozen states of the world. The brand is known for the plastic building blocks which are used for making toys of the desired shape and form
Lego is an international, company with head office in Bullind, Denmark. The company started in the early 1930’s and has been making progress by leaps and bounds since then. Currently, according to a global survey held in 2012, Lego is the world’s third largest toy selling company. Lego has been making the environment friendly toys almost since a decade. The company produces recycle-able toys using a green factory theme.
Moreover, the company has affiliation with Walt Disney, Harry Potter series, Star Wars makers. The company has also been making educational and electronic toys for children. At the moment, the company sales are at steep rise since more than a decade. It’s the best time for expansion and outlets in the emerging economies, will help it fill the supply and chain gap effectively(Davidson and Simonetto, 2005)..
Lower and Middle class are the major buyers of the competitor products. Elite class already enjoys imported products. Moreover, the basic requirements are brightness and durability along with full entertainment potential which are the distinguishing features of the Lego products.
According to the given scenario, we are asked to audit the actions and strategies of Lego actions, and strategic marketing. This has occurred due to the fact that Lego has effectively and efficiently utilized its brands and products. Lego has to maintain its strong brand, by shaping multiple marketing campaigns to get the large number of consumers and to make loyal and long term relationship with them. Without providing better customer care and improving exposure of its products, Lego can not only, maintain but also, improve its market awareness for grabbing more market share.
Building Strong Brands
Manage Brand Equity for Lego
Brand equity can be defined as the way consumes and buyers perceive a brand keeping its market reputation and exposure into account. The basic for Lego in making strong brand equity lies in making relationship that grows the number of buyers plus improves their market feedback. Conception of the brand and its particular value are the major factors which buyers take into account while making any purchases. The buyer will compensate Lego brand with dollars, assuring future purchases, leading towards organizational growth, given that their model desire stays intact. Lego has worked to the depth for creating brand equity. Lego’s presence since decades, its strong exposure strategies in the market and its social penetration in educational institutes has helped a lot in building unique brand equity(the Guardian, 2014).
In return for customer's brand loyalty, the organization basically promises the buyer that this item will enhance his intellectual abilities inherited in Lego blocks.
Competitive Analysis for Lego:
Lego has been ruling the realm of toys since the day of its inception. Walmart, Toy ‘R’ Us, ‘Target’ and ‘American Girls’ are the major competitors. However, the way Lego has been managing its merchandise assortment is makes it different from the rest. Lego has been working day in and day out for giving visual market exposure to its buyers. The Lego stores are fully themed and the Lego inline clips, movies, fictions and educational use have given it too much exposure in the buyer market. Describing the strategy, the Lego representative says:
“Children are the builders of tomorrow and we value the opportunities we have to engage with them in all physical settings, traditional media and online formats. To mention a few examples, every month the LEGO YouTube channel receives more than 1 billion viewers, every day LEGO.com has more than 25 million unique visits and approximately 5 million children across the world are members of the LEGO® Club (the Guardian, 2014).”
American Girl is emerging as a strong competitor. This is a US based, dolls company operating almost the same way as Lego. They have themed stores and strong brand purpose in the life of the teen age buyers. But, as said earlier, it would take years for these brands to follow all of the visual marketing, merchandize assortment and strong brand equity to give a tough time to Lego.
Shaping the Market Offerings
Current Market Pricing for Lego
Lego has been following a very comprehensive and in depth pricing policy. Though, the Lego products which have technical and electronic origin are costlier than those of competitors but, even here the strong brand trust of buyers plays a significant role in winning more sales and retaining brand loyalty of a majority of the customers (Davidson and Simonetto, 2005).
Other products, of the lower range are available in tremendous variety. So, the buyers have too much of the choices available to them that pricing does not matter more.
Source: http://online.wsj.com/articles/SB10001424127887323549204578317603729616028
Objective for Lego Pricing Strategies
Lego should have to follow and set the pricing strategies according to their segmentations and to get maximum profitability for all services and products which could be sold all over the world. Pricing strategies could be used to defend and modify an existing market from new entrants, to increase market share within a market or to enter a new market. Lego marketing strategy has helped shielding the market from a lot of competitors. Lego may benefit from lowering or raising prices, depending on the needs and behaviors of customers and clients in the particular market(Davidson and Simonetto, 2005).
Lego should follow the different models of Pricing, which are as follows,
- Creaming or Skimming.
- Decoy Pricing.
- Freemium Pricing.
- High Low Pricing Strategy.
- Limit Pricing Strategy.
- Loss Leader Pricing.
- Marginal Cost pricing.
- Market Oriented Pricing.
- Value Based Pricing.
For educational and electronic products, Lego should go for Value Based Market pricing in order to give tough time to its competitors.
Delivering Value for Lego
Lego Distribution Strategy for their product
Distribution management can be defined as the process by which firms design and manage the supply chain in order to find out correct stability in between inventory and transportation. Finally, manufacturing cost is controlled by matching demands and supply under improbability by positioning and managing inventory effectively and efficiently.
Currently, Lego follow typical distribution management systems, which are very commonly used in multiple corporations and industries. Typical distribution management systems are
Distribution Channel Marketing Campaigns Pricing Sales Process
For further progress, Lego needs to follow different distribution strategies for selling their products or services. Lego has been following the below mentioned types of distribution strategies:
- Direct sale
- Sale through sales representatives
- Mail Order Sale
- On-line Sale
- Events
- Whole sale
- Retailer
Many businesses realize it’s much more cost-effective to trade by means of other individuals as an alternative to ensure immediate access to the end-user. A new stapler company probably will sell the company products to the wholesaler or as an alternative to particular persons like stationery retailers. Even agencies work with partnering strategies like a carpet-fitter operating alongside a rugs dealer.
Lego uses an effective distribution strategy, enabling it to make use of its own gross sales channels correctly and also take full advantage of income from retailers. Focusing on a small amount of gross sales channels helps in spending money on each phase properly and also in developing sturdy associations having key intermediaries. Whatever route it makes use of, Lego has been handling these individual routes adequately. It indicates Lego has been investing in in-house methods and workers, and also constructing good operating relationships together with brokers and suppliers. Effective logistics and powerful transmission usually are critical in order to make best use of the current sales channels (Ind and Bjerke, 2007).
Communication Value
Creating Word of Mouth for Lego
Word-of-mouth advertising and marketing is vital for every company, because each and every happy consumer tends to boast off and spread the craze to as many people as possible putting them on path towards more sales of the brand. It is also the most trustworthy sort of advertising and marketing near consumers. Buyers update their online status suggesting others to enjoy the same products.
- Lego needs to follow the needs and wants of their customers
- Lego needs to follow simple marketing and advertising strategies, which require and make the message simple as clean as possible.
- Lego needs to offer comparison needed
- Lego needs to be different and unique from its competitors in its online campaigns
- Lego needs to offer as many online buying spots on the social media as possible(Akyol, 2013)
Increase Market Share
In order to increase the market share, Lego needs creating market strategies to get different form market trends. Lego is the market leader having focus on its USP “Unique Selling Product”. Lego uses different market campaigns to get the attraction of the user or their target audience. Lego needs to promote or advertise their brands by their word of mouth using Social Media. Different researchers have discovered 13 manufacturer traits which encourage WOM, particularly,
- age of the brand in the marketplace
- type of good
- complexity
- knowledge about a brand
- differentiation
- relevance of a brand to a broad audience
- quality - esteem given to a brand
- premium
- visibility
- excitement
- satisfaction
- perceived risk
- involvement
- So, in order to cash out further from Lego’s historical success, there is a need to spread the word of mouth marketing technique (Akyol, 2013).
Interactive Market Campaign
Marketing is regarded as the life blood of today’s organizations. Lego has been conducting rigorous marketing campaigns, already. However, there is the need to start campaigns which ensure direct interaction between the buyers and improve buyer’s confidence in the Lego products. Lego should come up with both online and offline referral marketing campaigns, going from PC to PC, Cell to Cell, Tab to Tab online and door to door offline campaigns. Lego can also take big advantage of its website by offering coupons and rewards after winning the online Lego games and puzzles(Akyol, 2013).
Paid referral marketing has been playing key role in spreading the message to as many people as possible. Lego should come up with its own social media platform, offering coupons and discounts on all of the major activities and direct referrals. This marketing strategy has been winning too many customers for various small business organizations. Lego should also come up with such a platform or should at least partner with such organizations.
Customer Focused Marketing
As said above, Lego should look into coming up with a platform that serves as social networking websites and a place for rigorous Lego marketing. Lego should offer bonuses, discounts and gift coupons for all of the major activities. Those who join and refer others should get points which should either be paid to the subscribers in the form of dollars or should be sent as equal amount gifts to the houses. If not on daily basis, Lego should start doing it on weekend basis or during special offer hours (Ramaswamy, 2009).
In addition to that, Lego should start partnering with the online education platforms for the sake of passive marketing. This can also help Lego in increasing its corporate social responsibility graph to a great extent.
Creating Successful Long term Growth for Lego:
Social Responsibility:
In order to perform better in terms of social responsibility, Lego needs to attach some social service factor with its products. It can go for offering scholarships for educational institutes. Lego can also offer internship jobs at its various stores. Lego has a very vast range of spectrum to choose from where it should go for social marketing. Lego can partner, sponsor and even co-create with any of the services or companies relevant to its toys and play stations. Growing social is necessary for keeping the position of market giant in hands (Makasi, Govender and Munyoro, 2014).
Furthermore, Lego has already been making it possible that it does not become a cause of children’s health deterioration in any way. It’s clear and very considerate about its marketing message. Explaining the fact, the Lego representative says:
“For example, as a member of the Responsible Advertising and Children Programme, we commit to complying with the International Chamber of Commerce's Code of Advertising and Marketing Communication Practice. Also, we use the US Children's Online Privacy Protection Act as our global standard for data privacy towards children (the Guardian, 2014).”
In addition to that, Lego has been conducting researches and sharing research knowledge from other authorities as well so it can lead a guide’s role in the children’s life.
“We have also benefitted from the experience and knowledge of our partners such as the UK-based Safer Internet Centre who help the LEGO Group to learn about the realities of a child's online life(the Guardian, 2014).”
Keeping all this in mind, Lego has been playing an effective social corporate role, already. It just needs to focus on the other side of the picture by growing social in the informal way.
Evaluation of Lego for marketing efforts:
Lego has been running a rigorous marketing campaign for assuring its firm footing in the market. However, the review shows that it has been lacking in the social responsibility, effective social media and word of mouth strategies for marketing. It needs to expand its social presence so that it can effectively counter the competitors like Walmart and American Girl.
References
Akyol, Ş., 2013. Social Media and Marketing: Viral Marketing. Academic Journal of Interdisciplinary Studies.
Davidson, A. and Simonetto, M., 2005. Pricing strategy and execution: an overlooked way to increase revenues and profits. Strategy & Leadership, 33(6), pp.25-33.
Ind, N. and Bjerke, R., 2007. The concept of participatory market orientation: An organisation-wide approach to enhancing brand equity. J Brand Manag, 15(2), pp.135-145.
Makasi, A., Govender, K. and Munyoro, T., 2014. The Effects of Corporate Social Responsibility (Csr) on Corporate Brand Positioning. Mediterranean Journal of Social Sciences.
Ramaswamy, V., 2009. Co-creation of value — towards an expanded paradigm of value creation. Marketing Review St. Gallen, 26(6), pp.11-17.
The Guardian, 2014, LEGO builds up their online marketing strategy with respect to child rights. [online] the Guardian. Available at: http://www.theguardian.com/sustainable-business/lego-online-marketing-respect-child-rights [Accessed 20 Nov. 2014].
