Report on Lego's Marketing Strategies and Expansion in China

This report provides a comprehensive analysis of Lego's marketing strategies in the context of its expansion into the Chinese market. It begins with an executive summary, followed by an introduction that highlights the importance of cross-cultural analysis for organizations. The report reviews Lego's capabilities and product portfolio, followed by an analysis of the market environment, opportunities, and characteristics, including SWOT, PESTEL, and Porter's Five Forces analyses. The discussion then delves into the evaluation of marketing strategies and tactics, including Porter's generic strategies and the Ansoff matrix. The report concludes with recommendations for Lego's marketing approach in China and a final conclusion, supported by references. The objective is to increase sales and enhance brand image by understanding the Chinese market.

Marketing across Cultures

Executive summary
Cross culture analysis involves comparison between cultures; value as well is belief that is
prevailed in two different nations. In reference of organisation, it is significant for them to assess
culture of two nations for aim of smooth running of organisation. In this report, the company
focuses on extending their market into China for attracting large number of user during particular
phase of time period.

Table of Contents
INTRODUCTION...........................................................................................................................4
Review of Lego’s capability and current product/service portfolio.......................................4
Analysis of the Market/Environment opportunities and characteristics.................................4
Discussion/analysis and evaluation of the marketing strategies and tactics...........................8
Recommendations..........................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Cross culture analysis involves comparison between cultures; value as well is belief that is
prevailed in two different nations. In reference of organisation, it is significant for them to assess
culture of two nations for aim of smooth running of organisation. Herein, the company taken is a
Lego operation. It is determined as a Danish toy manufacturing company that is focusing on
satisfying its user. This company was founded in the year of 1932 Ole Kirk Christiansen. In this
report, the company focuses on extending their market into China for attracting large number of
user during particular phase of time period. In this report, PESTEL analysis, SWOT and Porter
five force models is used to analyse the external and internal environment of company. In
addition to this, they also use different market entry option & marketing mix for expanding their
market during particular phase of time period (Alcántara‐Pilarand Barrio‐García, 2017).
 The objective of company is to increase sales by 20% in upcoming 6 months.
The organisation also focuses on enhancing its profit by 10% in upcoming 6 months.
 The vision of company is to establish unique brand image and reputation of company in
front of customer at Marketplace.
 The mission of company is to provide superior quality product and services to its user in
order to satisfy them.
Review of Lego’s capability and current product/service portfolio
The history of Lego operation was beginning in year of 1932 in Workshop of Danish
carpentry and that continues into 21st century as a superior and profitable construction line of
toys and that is connected to goods and services involving retail stores, Lego films, Lego board
games as well as many more. Therefore, it imposes direct effect on different area or culture
during particular phase of time period. In addition to this expansion, the organisation focuses on
conducting their business privately. The organisation focuses on providing superior quality. They
also focus on product and services to its customers in order to satisfy them on using promotional
strategy for attracting large number of user and achieving competitive advantage over rivalries at
market place.
Analysis of the Market/Environment opportunities and characteristics
SWOT Analysis

SWOT analysis is a framework which is used to assess micro environment which
imposes direct effect on growth and success of business organisation. Therefore, the SWOT
analysis which is adopted by Lego operations is going to be mentioned below:
STRENGTHS WEAKNESSES
 Due to strong brand name as well as
reputation, that helps in attracting large
number of user towards product and
services provided by company.
 The Lego operations focuses on quality
as well as safety, therefore it helps in
satisfying its user during particular
phase of time period.
 Due to premium pricing in context of
other players at market place is
determined as a primary weakness for
chosen organisation.
 Lego Operation impacted due to
environment that ruined brand image of
company in front of customer at
Marketplace.
OPPORTUNITIES THREATS
 Lego operation expands their global
presence in market like china as well as
India that is determined as a main
opportunity for organisation.
 In addition to this, they also can focus
on using latest technology for providing
unique quality product and services that
help in satisfying them during
particular phase of time period
 Due to having intense competition from
another toys company & online gaming
segment that is determined as a main
threat for company.
 In addition to this, threat from cheap
imitation as well as counterfeit that
affect operation of business
organisation (Silva and Caetano, 2016).
PESTEL Analysis
PESTEL analysis is used by business organisation in order to assess macro environmental
factor which imposes direct effect on company. Therefore, the Lego operation adopts PESTEL
analysis that is going to be mentioned below:
Political factor Lego operation is determined as well known multinational company that
is affected by political condition in countries in which they are located. They prevail in Denmark

and they plan to build their organisation in China and they are ready for manufacturing by 2017.
Therefore, the Lego operation focuses on advertising their toys in order to increase profit margin
in future period of time. Due to having a favourable political condition of country, it imposes
positive effect on operations and activities of company. In addition to this, due to having high
corporate tax in country named as Denmark that imposes negative effect on growth and success
of business organisation (Barmeyer and Franklin, 2016).
Economic factor herein, economic factor involves unemployment, inflation, deflation as
well as many more that imposes direct effect on organisation. The Lego operation focuses on
generating public health and enhances their spending on toys as well as games that increases
sales of business organisation in future period of time. In addition to this, the euro area is
determined as a major market of Lego is under debt crisis that imposes negative effect on sales
of Lego operations. Therefore, it is necessary for a company to provide superior quality services
to its user for satisfying them that help in increasing sales in future period of time.
Social factor include taste, preferences and living standard of individual person during
particular phase of time period. Therefore, the Lego operation focuses on providing product and
services as per demand of customer that help in enhancing profit margin of company in future
period of time. In addition to this, due to frequent change in the taste and preferences of
company it is difficult for Lego operation to conduct their operation in an appropriate manner.
Hence it also erodes profit of organisation in future period of time.
Technological factor Technology is very significant for Lego operations and they focus
on adopting latest technology which is used by kids in order to increase their sales in future
period of time. In addition to this, the innovative 3D printing technology that is adopted by Lego
operations is copied by rivalries decreases sales of company.
Environmental factor Lego operation focuses on corporate social responsibility and
emphasized on executing various CSR initiative that help in increasing brand image and
reputation of company in front of customer at marketplace. Apart from this, Lego operations
products will sell in plastic that increases pressure to organisation to provide protection to its
environment that affect company negatively.
Legal factor involves laws, regulation, legislation and many more which impose direct
effect operation of company. It is necessary for Lego operation to follow all rules and regulation

in order to conduct their business operation in china in an appropriate manner. But due to
frequent change in laws, it is not possible for firm to change their policy accordingly that
imposes negative effect on company.
Therefore, PESTEL analysis is used by business organisation in order to assess macro
environmental factor which imposes direct effect on company (De Mooij, 2019).
Porter five force analysis
Porter five force analysis is used by Lego operation for providing strategic direction to
take decision that help in increasing profit margin of company in future period of time.
Therefore, the Porter five forces model is adopted by Lego operation that is going to be
mentioned below:
Threat of entrance since innovative toys is regularly entering into market with higher
brand, so that threat related to entrance is higher. Therefore, the Lego operations is famous or
well known for international, so it is not easy for new entrants to copy their ideas in short period
of time. Therefore, the chosen company focuses on providing unique quality of toys to its
customer in order to satisfy them. It is also helpful in increasing profit margin and sales of
company in future period of time.
Bargaining power of suppliers the supplier of Lego is determined as a Chinese sub
contractor and there are large numbers of Chinese supplier who provide product in different
industry. Thus, the level of dependence of Lego is determined as a low. And Lego production is
different from other that help in decreasing switching cost of buyer is low and it is also helpful in
achieving competitive advantage over rivalries at marketplace.
Bargaining power of buyers since the goods or services which is provided by Lego
determined as a specific and that is not copied by other supplier. Due to have a unique quality
product helps in achieving good brand position at market place. The bargaining power of
consumer is determined as the moderate because Lego operations focus on maintaining a
superior relationship with retailer during particular phase of time period (García Vizcaíno, 2017).
Threat of substitutes herein, the kid’s focuses on spending their time in digital products
but Lego focuses on defying this trend they increases their sales. The focus is on implementing
technology in their product in order to achieve competitive advantage over rivalries at

marketplace. The focuses on providing superior quality product and services according to need
and wants of customer that helps in retaining customer for a longer period of time.
Competitive rivalry there are different competitors of Lego operation such as the bandai
NAMCO, mattel and many more. Therefore, it is important for chosen organisation is to provide
product and services according to need of customer in order to satisfy them that increases sales
of company in future period of time.
Discussion/analysis and evaluation of the marketing strategies and tactics
Porter generic strategy
Porter generic strategy is adopted by Lego operation is determined as a multinational
organisation and targets its customer during particular phase of time period. Porter generic
strategies adopted by organisation in order to achieve competitive advantage over rivalries at
marketplace and also help in increasing profit margin in future period of time (Kim and
Aggarwal, 2016).
Cost leadership strategy includes providing superior quality product and services to its
customer at minimal cost in order to increase profit margin as well as sales of company in future
period of time. They focus on providing superior quality goods and services to its user at
relatively less cost in comparison to Competitor Company that is useful during particular phase
of time period.
Differentiation is determined as a strategy that helps in achieving competitive advantage
over rivalries at marketplace. The organisation named as Lego operation focuses on providing
differentiate or unique products and services to its user at relatively low cost for increasing profit
margin in future period of time.
Focus strategy targeted niche market and they focus on providing superior quality
product and services at less cost in order to attract large number of customer by providing them
goods according to their needs.
Herein, the organisation adopts differentiation strategy for providing better services to its
user and retaining them for a longer period of time.
Ansoff matrix
The Lego operation has successful in global operation and their organisation depend upon
choices of strategic growth as well as decision. Therefore, the Lego operation adopt Ansoff

matrix in order to become leading giant of beverages at global level. The Ansoff Matrix is
adopted by Lego operation is going to be mentioned below:
Market penetration strategy is adopted by organisation to increase growth of prevailing
product at market place. The focus is on increasing or enhancing production capacity that helps
in attracting large number of customer in similar market. The chosen organisation also focuses
on enhancing its investment in marketing as well as activity related to advertisement that helps in
increasing sales of company in future period of time. In addition to this, the chosen organisation
focuses on providing existing product in same market in order to reduce operational cost and
enhance competitive pricing (Machiels and Orth, 2019).
Market development in this strategy, the Lego operation focuses on increasing its
growth by launching existing product in innovative market. Therefore, their focus is on in
making investment in research and development to access possible market for providing superior
quality product and services to its customer in the market of china.
Product development herein, the organisation provide innovative product in existing
market in order to satisfy its customer. They focus on launching or modification in previous
product to provide user innovative offering. This increases sales and profit margin of goods in
future period of time.
Diversification: The Company focuses on providing innovative products and services in
new market. Herein, the organisation adopt promotional strategy for attracting large number of
user towards products and services provided by firm
Therefore, the organisation focuses on adopting market development strategy in which
they expand their products in China market.
STP
STP signifies segmentation, targeting as well as positioning that provide elements for
improvement of specific strategy of marketing. Therefore, the Lego operations focus on adopting
STP analysis that is going to be mentioned below:
Segmentation Herein, the Lego operation focuses on segmenting its market on small
parts in order to satisfy its consumer during particular phase of time period. They segment their
market according to age group of individual person such as age of between 3 to 8 that help in

increasing sales and profit margin of company in future period of time. The business
organisation focuses on segmenting its markets for satisfying need and want of its user.
Targeting herein, the organisation focuses on targeting large number of customer by
analysing their need and providing them goods and services according to their need. It will
increase profit and sales of company in future period of time (Mthatiwa, 2020).
Positioning herein, the organisation focuses in positioning its product and services in
order to increase brand image and reputation of company in front of customer at marketplace. It
also helps in retaining customer for a longer period of time. Their main focus is to provide
superior quality products and services to its user for satisfying their need.
Marketing entry option
Market entry strategy defines a deliberate contribution and it also delivery procedure of
services and products for fresh purpose market. This becomes necessary and convenient section
to an administration so that they can acknowledge spreading up their trade in a fresh Market
strategy. There are various market entry strategies which are adopted by management team to
expand their trade universally. All those plans which consists franchising, joint venture,
licensing, strategic alliances as well as many more It becomes necessary for Lego operation to
choose correct and risk free market entry option to expand their trade in very efficient and
fortunate manner and having least complexity.
Necessary and convenient strategies under market entry are mentioned below:
Market entry mode
Franchising: For expanding its operation in China through franchising, there are
different kind of risk is confronted by selected organisation which is going to be mentioned
below:
The main advantage or benefit of adopting franchising like an international mode of
entry is less risky and the primal disadvantage which is confronted by company is adopting
franchising as entry mode that is wrong franchise and affect goodwill of organisation (Reaiche
de Zubielqui and Boyle, 2016).
Joint venture is a determined as appropriate strategies adopted by company to take
entrance into international market and take ownership with other organisation. There is different
benefit which is going to be mentioned below:

There are advantages of technological competencies that attract ample of user. The
disadvantages of it are costly in comparison to another mode.
Marketing mix
The Lego operations are famous organisation in world of toys. Core product which is
provided by chosen company to its user is launched in 1958, and then it will rename as toy of
century in year of 2018. Therefore, marketing mix which is adopted by Lego operation that
involve product, price, place, promotion, process, people, physical evidence and many more that
is going to be mentioned below:
Product the Lego brick is determined as a core product of company in which there are
different toys as well as game is included for young kids. They offer goods for kids of various
age groups for satisfying them. Therefore, there is different product which is provided by Lego
operations such as cars, boats, aircrafts, robots as well as many more in order to satisfy its user.
They generated product for kids of age of 1 year from 12 year (Riley and Paugh, 2018).
Price There is different variety of products provided by Lego operation in order to satisfy its
user and achieve a competitive advantage over rivalries at marketplace. They focus on expanding
their market in China and use different online app for attracting large number of customer.
Place the Lego group is located in Denmark there are different offices of Lego operation in
USA, London, China as well Singapore. Therefore, the main focus is to marketing is goods by
using online sources and e-commerce channel that help in enhancing profit margin and sales of
company in future period of time. Their main focus is to provide product conveniently to its user
for retaining them for a longer period of time.
Price in context of pricing, the organisation focuses on adopting premium pricing strategy in
order to achieve competitive advantage over rivalries at market place. They focus on providing
superior quality of products and services at less cost for attracting large number of user during
particular phase of time period. There are different types of discounts as well as deal provided by
organisation for retaining its customer for a longer period of time and it increases experience
level of user during particular phase of time period.
Promotion Lego operation is determined as a well recognised organisation that provides
superior quality products and services to its user at Marketplace. They use different kind of
promotional techniques such as sales promotion, personal selling as well as advertisement in

order to satisfy its user. They use promotional channel for promoting its goods and services in
front of customer at Marketplace. They use so YouTube, Face book for attracting large number
of user at Marketplace.
People the Lego operations hire competent employee who provide superior quality services
to its user in order to satisfy them. Their main focus is to provide training session to them for a
satisfying their needs during particular phase of time period. It also assists in enhancing profit
and sales of company in future period of time.
Process Lego operation focuses on making ensure that its goods are always available at
retail outlets to its user in order to satisfy them. They use effective delivery process in order to
satisfy its user during particular phase of time period. They focus is on analysing need and want
of customer and take feedback from them in order to provide them services according to their
need (Russell,Thompson and Sobo, 2020).
Physical evidence the chosen organisation marketing it product in unique colour packaging
that is identified by its user that help in managing sales of company in future period of time.
They focus on provide elements to customer to view its goods in superior quality images that
help in attracting them towards services provided by them.
Recommendations
There are various recommendations which can be provided to Lego operations for
conducting operations and functions of company in an appropriate manner. Therefore, there are
several recommendations that is going to be mentioned below:
 Lego operation expands their global presence in market like china as well as India that is
determined as a main opportunity for organisation. In addition to this, they also can focus
on using latest technology for providing unique quality product and services that help in
satisfying them during particular phase of time period.
 The management team of chosen organisation providing training session to its staff
member so that they provide better services to its user and that helps in increasing sales
of company in future period of time.
CONCLUSION
On given report, it is assess that cross culture analysis involves comparison between
cultures; value as well is belief that is prevailed in two different nations. In reference of