Case Study: Lego Brand's Inventory Accomplishment and Strategies

This case study examines the Lego brand's accomplishments, focusing on its brand inventory, product strategy, and market positioning. It explores Lego's diverse product line, including preschool, make and create segments, and its iconic brick. The analysis covers brand elements, pricing and distribution strategies, and marketing approaches, including ambassadors and community engagement. The study highlights Lego's brand positioning, emphasizing quality, creativity, and customer experience, while also addressing brand resonance and its ability to connect with consumers. The study also discusses the company's competitive advantages and its approach to market segmentation, offering insights into Lego's enduring brand image and its strategies for long-term growth and customer engagement.

Case Study: Lego Brand

Brand Inventory
Accomplishment may be gauged in a range of methods. That implies soaring sales volume,
global brand recognition, unique licensed relationships, unexpected appeal among females, a
diversified digital business model, as well as an Oscar-nominated soundtrack out of a massively
famous movie like LEGO. As per research from consultant company Brand Finance, it surpassed
Ferrari, becoming the largest and most powerful brand for 2015. The fundamental basis of
LEGO is whether it attracts people of all ages and genders. Children like interacting with the
toys, and adults associate the brand with childhood memories (Neal, 2015). The LEGO Group's
market currently has been the toy sector. It designed toys for children of all ages and
developmental stages. The collection includes items of all ages. Its playing components may
provide significant delight to youngsters aged 0 to 16 (Dhar and Wu, 2015). The brand equity of
LEGO, the importance of innovation, as well as the range of products, are the key attractions for
the present target categories.
Brand Portfolio: Lego has mastered the skill of cooperation and is presently working with a
variety of companies. The pictures of 15 multiple brands linked with the LEGO company have
been shown in the figure shown in Appendices. The LEGO Group's many divisions and
collaborations adhere to several core principles that integrate the company's various divisions.
It has consistently emphasized the importance of high quality in all of its collections, staying true
to its age-old company spirit of "Only the best is good enough." All LEGO products, across all
subsets of the brand, are rigorously tested to ensure that they meet the highest safety and quality
standards. Kids and parents alike have flocked to LEGO items as a result of this strategy.
Creative thinking that is structured all LEGO items is based on the LEGO system that implies
joining and deconstructing in an alternative manner. Apart from the special themes created in the
shape of animals, cars and aircraft. Lego has extended the portfolio by introducing games and
applications, as mentioned by Pratap (2019). A favorable outcome The LEGO Group aspires to
make a positive difference in all aspects of its business. All LEGO components are dedicated to
environmental protection, preserving the society that children will inherit, and motivating and
training tomorrow's entrepreneurs. Lego's diverse and distinctive product line also serves as a
company's competitiveness. The brand's primary item is Lego bricks. Still, it has expanded to
include a huge variety of gadgets and themed packages and internet activities for children and
teenagers, as Wolf (2014) mentioned. Whereas its inventory is lucrative, it is also unique,
unique, and well-organized. The company's product line is responsible for a long competitive
edge. The following are the key sections: Preschool: These are among the segments for
youngsters who haven't begun education. This range of goods helps youngsters improve their
cognitive skills while also encouraging kids to create simple projects using LEGO bricks on their
own. Young builders introduce youngsters towards the globe of LEGO brick construction, as also
mentioned by Mozarella and Hains (2019). This business segment caters to youngsters around 3
to 5. “Lego Duplo Play Sets” and “Building Sets” are examples of comparable items. These are
targeted at enticing youngsters that have a basic understanding of how to construct with LEGO
bricks. Make and Create: The category concentrates on developing, designing, and generating
choices for kids aged six and above, with instances such as "Legodesigner Sets" and "Lego
Technic." These appeal to kids who have a working understanding of how to construct more
complex LEGO models.
Brand Elements: The distinctive LEGO brick is by far the most popular product piece of LEGO.
It may be interlocked with other LEGO brick, whether it was manufactured in the past or in the
current times. Every LEGO brick has the word "LEGO" engraved upon it that dates back to the

company's inception. The current version of brick was first introduced in 1958; it is offered in a
range of hues. Its interconnecting tubing gives it a one-of-a-kind design and limitless
construction options. (Shcultz et al., 2013). Product Strategy: Lego’s marketing plan is intended to
re-establish its portfolio of brands and build a long-term enterprise. LEGO's enduring brand
image can be ascribed to its long-term advertising strategy. LEGO had a "Balanced Brand
Portfolio," where its line of products was dispersed in a variety of ways throughout several
phases, giving the company a competitive advantage over rival toymakers. Pricing Strategy:
Pricing strategies may be termed as a successful tool in expanding the product reach to the
majority of the customers. The average cost of producing a LEGO brick is around 10.4 cents.
Based on the average price of components vs the pieces in the set, the cost to produce this set
may range from $130 to 140 dollars, depending on distribution and promotion (Allain, 2014). In
addition, the LEGO Company owns and operates seven amusement parks across the globe.
Merlin Entertainments, which is affiliated with Merlin, manages the theme parks and is
accountable for its yearly income. Merlin stated in April 2017 that they might build a theme park
in Nagoya, Japan, as well as others in the coming years, due to a rise in earnings during the
financial year of 2015. Also, the firm is relying on an odd-even pricing strategy. The core market has
a cost, while the collection of auxiliary products has separate pricing. Kids may talk to their
parents to purchase the items more readily if the cost is around $200 to 300 dollars; therefore,
odd-even pricing is employed. Even though "Build Your Dream" is undoubtedly a unique
product for the LEGO Group, there should be no skimming or penetration pricing during the
launch period because the company wishes to prevent any unwanted consequences. Distribution
Strategy: Consumers may buy the latest product straight from the LEGO Group on their site,
which comes under the direct channel method. Similarly, consumers may purchase the latest
items from JUSCO and SOGO, which are the authorized retailers, so LEGO is also using indirect
distribution channels. Cooke (2009) mentioned that LEGO had 55 delivery sources to 11
locations across Europe; however, since consolidating all of its distribution activities into one
site, that figure has been reduced to 11 shipping lines.
Marketing: Many major businesses have achieved great success as a result of their unique
advertising techniques and technologies. Its marketing approach is comparable to those of well-
known companies such as Nike and Starbucks. Lego’s product offering is
distinctive, but Einwächter and Simon (2017) argue that the brand's global popularity is also due
to its advertising concentration. Company’s goods are well-liked all around the world. In view,
the brand's approach against the elderly society seems to focus on a wider segmentation target to
acquire as many consumers as possible inside the existing targeted demographic. LEGO wants to
give kids the ability to construct their own universe using virtual characters from their favorite
movies and video games, boosting confidence and knowledge (LEGO, 2021). In terms of
Ambassadors, Members are appointed from among LEGO lovers from a range of different areas
who are dedicated to enhancing their experience and building abilities with the global LEGO
community of children, fans, and enthusiasts. The LEGO Ambassadors' purpose is to encourage
LEGO builders of all ages throughout the world to make, explore, construct, and build (Botoric,
2015). The LEGO Group's Community Engagement Team is in charge of the LEGO
Ambassador Program. This group is focused on fostering relationships between the company and
its customers. In Lego's new product, the single criterion for segmentation is age. All youngsters
between the ages of 2 and 16 will be Lego's target market because one of the marketing goals is
to expand market share and broaden the target market. Other criteria such as social position,
wealth, and educational level will not be considered when segmenting the market because the
brand's product is suitable for children aged 2 to 16.

2. Brand Positioning
Since its creation, LEGO has aimed at growing the brand beyond its well-known logo, intending
to show LEGO as a guarantee of quality and uniqueness, as well as accomplishing the mission of
"inspiring and nurturing tomorrow's builders." The brand values of LEGO include imagination,
fun, creativity, learning, caring, and quality. The Lego Group employs creativity to come up with
innovative methods to thrill their brand's followers. Lego leverages its bricks products to develop
new playing methods for children of both genders and people with a youthful heart, thanks to
constant innovation and brand devotion ( Lego, 2021). Where Lego uses its bricks to create new
ways to have fun, promote creativity, and bring people closer together. The Lego Group's
positioning sets it apart from its competitors and is a valuable resource for the firm. Customer
experience, marketing, and other aspects like price, product quality, and customer service all
have an impact. Consumer retention and increased sales have increased as a result of Lego's
consumer reputation. A brand image aids the firm's growth and leading position. Furthermore,
positioning is difficult to duplicate and provides a solid, long-term competitive advantage, even
though it necessitates constant attention and refinement. In the instance of the Lego Group,
positioning serves to assist marketing and retain key consumers. The idea of Lego conjures up
images of pleasure, development, learning, and creativity. The overarching positioning approach
is “more for the same.” Customers may get greater value out of our new goods for the same price
as rivals. As stated by Geraghty (2017), “Build your dream is a constructive toy that allows you
to make your own LEGO furniture and build your own dream,” says our positioning statement,
“to interested youngsters who need to define their own style.”
In order to compete with firms like
Electronic Arts. Mattel and Mega Blok's
experts believe LEGO should adopt the
philosophy of "our disadvantages are their
disadvantages." This implies that Lego
should be able to provide more value in
terms of knowledge, inventiveness,
pragmatism, toughness, and so on, putting
rivals at a disadvantage when compared to
LEGO. Since Mega Blok's competitive edge
over LEGO is its item affordability, experts
think LEGO should follow suit and cut
production costs, allowing customers to
purchase more cheap items.
Source: Lego.com

3. Brand Resonance
The company is a well-known brand with a good extent of brand recognition. Despite the fact
that the brand isn't the very first toy business which immediately springs to mind whenever
people seem to think of toys, all have listened of that and is acquainted with what it can do.
When it comes to durability, Lego produces high-quality toys that last for years. Lego also has a
variety of themes to meet the needs of different age groups and to foster creativity in youngsters.
Lego's image is based on building. It produced extremely attractive themes: it is own and
through licensing, starting with bricks that you can easily assemble. Special worlds can be built
using the same bricks. Lego's image has been updated and is still current as a result of the
licensing (Tumbler, 2020). Lego currently boasts a plethora of various ranges and licensing. For
some, the selection is too broad, and the Lego brand may be lost. Lego has also been accused of
becoming sexist by introducing separate lines for girls. Boys and girls might enjoy playing with
the same blocks at first. For others, Lego opens up a world of possibilities, allowing them to
build anything out of bricks, as some artists do it ( Irwin, 2017). It is all about having a good
time for the kids. Hours may be spent building structures, vehicles, and even entire stories with
the multicolored bricks. It's more about nostalgia for parents. They used to play with Legos as
well, and it brings back memories of their childhood. Lego understands just how to entice elderly
Lego fans to return: More detailed ranges, which are still about building but not about toys.
Brand resonance: Lego engages with its consumers, and they respond to Lego, resulting in a high
level of brand recognition (Fogerstorm, 2020). Fans of Lego can construct anything with the
little bricks, as seen by their social media sites, and they love to showcase their creations,
including structures and even movies. Adults, as well as children, are drawn to Lego. If you
played with Lego as a youngster, you would always be a fan of the toy. Parents don't hesitate to
bring their children to LEGOLAND or the Lego flagship shop to spend some time and have fun
in the Lego universe.

4. Issues
The Lego Group pushed diversification to offset a drop in sales of their trademark Lego block
product. For each of their new toy lines, the Lego Group did not calculate the price of materials
or the cost of manufacture, and each of their classic Lego bricks had 130 distinct color palettes.
The Millennium Falcon and the Taj Mahal are two of the more complicated toys, both with over
5,000 parts (Kolb, 2019). These specialized lines' components were not interchangeable with
other toy sets, and sales were limited. The Lego Group's sales forecasting skill was weak, and
they could only anticipate a box's sale with a margin of error of 30 per cent. When sales of a
single product line surged and devoured parts intended for other product lines, bottlenecks and
out-of-stock inventory concerns were typical. Lego Group had to maintain additional inventory
on hand to assure availability, which came at a cost. The emergence of more cost-effective and
efficient toy makers and the shift to online sales produced a more cost-competitive environment
for which the Lego Group was unprepared.
The supply chain of the Lego Group had not kept up with changing market dynamics and just-in-
time delivery techniques (Oliver and Heckman, 2007). The Lego Group did not impose a vendor
standard, instead of allowing engineers to choose their preferred vendor. As a result, the Lego
Group had over 11,000 suppliers, which were nearly double the number utilized by Boeing in its
jet industry.
The Lego Group's corporate procedures were poorly documented. As they began to move
manufacturing and operations to Flextronics, this became clear. The Lego Group entrusted
Flextronics with identifying and documenting critical business processes. It wasn't until the Lego
Group began cutting off long-term employees that they realized how much they lacked. Lego
Group had to maintain additional inventory on hand to assure availability, which came at a cost.
Business procedures have been recorded, and the Lego Group now has a better understanding of
its operations. This will make the transition to a new contract manufacturer much easier, as also
endorsed by (Sommer 2019). Shortening delivery times and lowering delivery costs might be
achieved by locating production and distribution facilities near their main markets. By removing
specialized goods, you may cut down on complexity and single-use parts. Lego Group may
utilize more common parts across product lines by decreasing product complexity. The Lego
Group might consider reducing the number of colors available in its conventional bricks. While
switching colors, this change might as well save cost on products and reduce maintenance on the
injection molding equipment. Companies ought to upgrade its Enterprise Resource
Planning system with a more modern one in order to compete in the market. Lastly, non-core,
non-profitable companies must be divested first, with a focus on goods which have produced and
keep on making a gains. The company may once again be there at the forefront in its industry if
sufficient effort is put into making the necessary changes to their firm. Although the Brand
Lego takes pride in its enormous fan base, it has a hard time attracting African Americans and
Hispanics. There seem to be a number of variables that contribute to this market gap;
nevertheless, it provides The company with a chance to be a market leader in terms of attracting
diverse customers. The considerable buying power of African-American and Hispanic customers
is being driven by recent developments in greater education, higher family income, and general
population expansion. To leverage on their buying power and encourage repeat purchases,
it must interact with this massive public.
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Appendices:

1. Brand portfolio
Source: Lego.com
2. Marketing Communication: Example
The company is merging traditional methods and technologies with contemporary methods and
features that broaden their impact. It has developed amusing games and interactive content in
order to increase customer development and devotion. Ultimately, advertising has aided the
brand in establishing itself as a distinct and exceptional company. By participating in the film
business more lately, the LEGO marketing and communication policy has built an immortal
product. The Lego Movie was a huge hit in 2014, becoming the sixth highest-grossing film in the
United States. LEGO has seen a 32 percent spike in popularity attributable to the film industry.

Source: Lego Ambassador Network