LEGO as we know it today first came into being in 1949 when Godtfred Kirk Christiansen used a “new” material – plastic – to create simple four and eight stud building blocks. Today, LEGO has turned into one of the most famous toy brands in the world. The aim of this case study essay is to asses the macro and micro environment in which LEGO is performing today.
Micro Marketing Environment
The micro marketing environment is defined as “the forces close to the company that affect its ability to serve its customers – the company, market channel, firms, customer markets, competitors and publics, which combine to make the firm’s value delivery system” (Kotler, Wong, Saunders and Armstrong, ...view middle of the document...
It also makes the consumer believe that the product is more personalised to them. The development of target markets over age groups may also help keep the consumer for longer, and so encourage the consumer to form a greater bond with and more loyalty to the product.
There has also been considerable extension of the brand to outside of the toy market. One of the main ways the brand has branched out is through the introduction of LEGO based theme parks in several countries, including one in Windsor in UK. The company has also entered into co-operative agreements enabling them to supply other licensed products, such as bed-linen, shampoo, children’s wear etc., whose combined effect is hoped to increase overall sales for all LEGO lines. The coupling of the LEGO brand with “brands” such as Winnie the Pooh or Star Wars furthermore helps enhance the strength and the popularity of the brand.
As of late, the company has also entered into the more technologically focussed market. First, it has set up a website where LEGO products can be purchased and information about the theme parks can be found. Second, it has created a line of goods titled LEGO Media Products which includes a range of children’s software, videos, books and music. However, these continued extensions of the brand could also be detrimental for the company. As LEGO moves further and further away from the simplistic blocks for which it is famously known, the appeal of the toy may disintegrate as the products it produces become more like substitutes for other toy products. In addition, it cannot be guaranteed that brand extensions will be successful as the “fit” with the original block product decreases.
The product report also mentions that sales of the brand have now mushroomed. In a world of increasing population, one would assume that sales should also increase. This is therefore an indication that LEGO is no longer what the child demands in a toy and its popularity is decreasing. An additional problem may have resulted from the fact that the firm needed to recall a rattle-snake product.
Attention is also brought to the disappointing results of the company in 1998, which is attributed to lack of efficiency. Specifically, the report draws attention to difficulties in co-ordinating production with demand for the most popular LEGO lines. This implies problems in the production line. Furthermore, mention is made that the company intends to solve this inefficiency problem by cutting the size of the workforce. Although this may lead to greater efficiency, it may also lead to a negative effect from a “social” point of view as a result of the negative views create if mass unemployment results.
The lack of efficiency, coupled with the increased competition the company faces may help to explain the reduced sales that were seen in parts of Europe (Germany and France). However, there were also trade increases in countries such as Poland and Britain which indicates that LEGO is being...