Niche Marketing analysis - LEGO

1. Presented by : GROUP 1
Nandini Aggarwal
Ankur Arora
Prachi Arya
Vishnu Bhaskaran
Pravin Bokil
Hrinya Bose

2. Agenda
• LEGO History and Evolution
• Product, Positioning, Segmentation and Target market
• Branding and Advertising Strategy
• Brand Extension & Pricing
• Distribution and Retailing
• Competitor analysis and Future strategies

3. INTRODUCTION
• Lego is the world renowned line of construction toys - interlocking
plastic bricks
• Transitioned from a carpenter's workshop to a global enterprise
• Products have undergone extensive development but the foundation
remains the same - the Lego brick which has been named the "toy of the
century" twice
• Infact The name 'LEGO' is an abbreviation of the two Danish words "leg
godt", meaning "play well".

4. NICHE MARKET…
The niche can be defined in two ways:
• Brick based construction toy within the larger toy industry
• Construction toys based learning systems for education

5. Development of Lego
1930s1950s
• Ole Kristiansen starts making wooden toys
• Company is named "Lego" in 1934
• Plastic bricks manufactured first in 1949 and then
with improved design in 1958
1960s
• Introduction of themes and wheels
• Use of a new non-toxic material : ABS
• First Lego-based train system introduced
• Lego Land- theme park with elaborate models of
miniature towns built entirely with Lego bricks
• DUPLO- larger brick system for very small children

6. 1970s
•Focus shifted to young girls - introduction of doll
houses!
•Mini-figures introduced
•launch of the Expert Series
1980s
•Technic series - robot based systems
•Educational Products Department was launched
•Lego World Cup held in 1988
1990s-2
000s
•Introduction of movie based Lego themes - Star
wars, Lord of the Rings, Pirates of the Caribbean
•Books, magazines and Board games introduced
•Films based on Lego Land
•Business Consultancy - Lego Serious Play!!

7. SEGMENTATION
Demographic Segmentation
• Targets both the genders
• Caters to different age groups with the primary
focus on 5-12 years of age group
Geographic Segmentation
• Currently has its major presence in developed
nations such as Western Europe & North America
• Trying to expand its base in emerging countries
such as India and China

8. Psychographic Segmentation
The major target of Lego is People with
following values
•
•
•
•
•
•
Imagination
Creativity
Fun
Learning
Quality
Caring

9. Strengths
Educational
Value
Strong
brand
Image
Quality
Innovation
Single
Category
Focus
High Price
Tag
Weakness
Weakness

10. Opportunities
Phone
Apps
Geographic
Expansion
Threats
Feminine
Segment
Product
Extension
Competition
Switch to
Virtual
Games

12. Product
• Flagship Product- Construction Toys, Licensed products
• Market share: 80% in US, Western Europe, 50% in Japan & Korea, 10% in
India and China and 57% in the world
• ‘Only the best is the best’
• LEGO products last for 40 years with good care
• Licensed products have reaped the rewards
Toys Market
$157 Bn
Video
Games
$74 Bn
Traditional
Toys
$80 Bn
Construction
Toys
$6.7 Bn

13. Positioning
•
•
•
•
•
Continuous Innovation
Cannibalize old with new
Brand Loyalty: Quality, creativity and environment friendly design
Market share of 3rd largest company rise remarkably despite of 2008 economic
slowdown, whereas it dropped for its top 2 rivals Mattel and Hasbro
Highest growth in its category during slowdown

14. Branding & Promotions

15. Brand Equity
Brand Logo
Consumer Based Brand Equity
The LEGO brand is synonymous
with imagination, creativity and
innovation.
Brand Promise
High quality products made of
ABS plastics

16. Advertising & Promotions
• “Just Imagine” to “Play On”
• Simple and imaginative ads. Mostly print advertisings.

17. Brand Asset Valuator

19. Current Brand Strategy
Builders Of
Tomorrow

20. Brand Content Empire
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•
•
•
•
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LEGO Click
LEGO Micro sites
LEGO Club Meetings
LEGOLAND
Brickipedia
Packaging

21. Brand Extension….Continuous Innovation
Lego is expanding to numerous lines of products without loosing identity
How many LEGO toys a family can buy?
• Accessories
• Minifigures (pocket money price –a huge success)
• LEGO Friends
• Games and Puzzles
• Thematic/licensed niches
Lego Duplo
Lego Technic
NinjaGo
Harry Potter etc.
• LegoLand

22. LEGO in Video Games
• Presence since 1997 – released over 40 video games.
1997
2010
2011
2012

23. LEGO Eyes Girls with LEGO Friends…
• Category Expansion

24. More Product Lines…
• Localized and event driven toys
• Minifigures toys
• Collectible trends

25. • LEGO-Theme based theme parks
• Operated by Merlin Entertainments
• LEGO-themed Rides for younger Children
• Educational Elements such as
hydraulophone , Mindstorm etc.

26. Pricing
• Lego’s Company culture – say no to sacrifice quality for profits.
• Charges premium for it’s product.
• www.brickset.com
Rs 325
Rs 19000
Rs 47000
Rs 73000

27. RETAILING AND DISTRIBUTION
• LEGO Brand Store
Direct Retailing
• Modern retail
• Online retail
• Distribution is outsourced
• Collaborating with competitors- Hasbro distributes Lego
brick toys in India.

28. COMPETITION
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•
•
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Chinese and Korean Lego clones- eg CoCo, Bandai Namco
Unbranded brick toys at fraction of the price
Hasbro has stronger presence in the key India through
Funskool.
Video games

29. RECOMMENDATIONS
• Expand presence in India and Latin America
• Use LEGO outlets in emerging markets-Successful in Eastern
Europe and Russia
• Obtain video game licenses- Target group susceptible to age
compression
• Continue innovating- Construction toys for girls, eventdriven toys
• Be flexible on pricing and local sourcing

30. Thank You