Report: An Analysis of Lego's Global Marketing Strategy and Tactics

This report offers a comprehensive analysis of Lego's global marketing strategy, examining its capabilities, product portfolio, and market environment. It utilizes the VRIO model to assess company resources and the PESTLE framework to evaluate market opportunities and characteristics. The report details Lego's market selection process, differentiated targeting, and value-based positioning. It explores the company's mode of market entry, including direct export and Greenfield investments, and analyzes its marketing mix, including product, pricing, place, and promotion. The report also includes recommendations for the company's future marketing efforts and concludes with a summary of the key findings. The report emphasizes the importance of considering cultural factors in marketing and provides insights into Lego's approach to international markets, including its strengths, weaknesses, opportunities, and threats.

Marketing across Cultures

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Company capabilities and product/service portfolio...................................................................3
Market/Environment opportunities and characteristics...............................................................4
Marketing Strategies and Tactics.................................................................................................6
Market selection.......................................................................................................................6
Mode of market entry..............................................................................................................7
Marketing Mix.........................................................................................................................8
Recommendations......................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Marketing across cultures refers to undertaking and completing marketing activities
considering culture of different nations and regions. Different cultures of the country require
organisations to undertake practices in accordance with the culture in order to positively
influence audience and encourage them to buy offerings of the organisation. This is a very
important consideration for a global organisation and this report aims at analysing and evaluating
Lego’s global marketing strategy. Lego is a Danish toy production company founded in 1932 by
Ole Kirk Christiansen and is headquartered at Billund, Denmark. Company was started as a
producer of small wooden playthings and later started manufacturing plastic toys and company
has grown to factories throughout world. Lego is a private company and has 42 offices and to
carry out organisational activities company has employed around 18800 employees. This report
will discuss capabilities and product/service portfolio of the company, market/environment
opportunities and characteristics, marketing strategies and tactics and will also involve
recommendations for the company.
MAIN BODY
Company capabilities and product/service portfolio
In order to understand company capabilities VRIO model can be utilised (Andersen and
Ross, 2016). This is as follows-
Capability/Resource Valuable Rare Inimitable Organisation Competitive
Advantage
Financial Resources Yes No Yes Yes Strong
competitive
advantage
Brand name Yes Yes No Yes Strong
competitive
advantage
Innovation Yes Yes No Yes Strong
competitive

advantage
Knowledge
management
Yes No Yes Yes Sustainable
competitive
advantage
Focus on high quality Yes No Yes Yes Sustainable
competitive
advantage
Product design
creativity
Yes No Yes Yes Sustainable
competitive
advantage
Efficient supply
chain
Yes Yes Yes Yes Sustainable
competitive
advantage
Leadership Yes No No Yes Competitive
advantage
Product portfolio
Company offers several types of toys in different category considering requirements of
customers of different age group. Products of company involve video games, board games, films
and television, books and magazines and children’s clothing (Sommer, 2019). Different Lego
sets and themes have been launched by company to offer wide variety of toys and games.
Market/Environment opportunities and characteristics
In order to identify market and environment important Pestle analysis Framework can be
utilized which is as follows-
Political- this environment includes political and government stability in a country and impact of
political opinion and values and rules and regulations created by government on business
organisations (Bessière and et.al., 2019). For successful operations of Lego it is very important
that countries along with Denmark are having favourable impact on business organisations
through their rules and regulations. In this environment countries with liberal policies for

international organisations are very important opportunity for Lego to strengthen and expand its
operations in international market.
Economical- this consists of factors that have impact on financial capability and success of
Lego. This includes cost of operations, employment rate, GDP, per capita income and disposable
income of population of a country. In this emerging economies are an opportunity for Lego
because of increasing disposable income of population in emerging economies. In addition to
this cost of operations and manufacturing in developing economies is also an opportunity that
Lego can utilise.
Social- social environment includes factors that affect success of an organisation and its products
in its customer and market. It is very important to offer products that are likely to be adopted and
purchased by customers and are according to their taste and preferences (Al Kindi and Ali,
2020). Frequently changing customer behaviour has an significant impact on success of Lego
and its products and this is why it is very important to consider this change as an opportunity and
creating product and services according to changing needs and requirements of customers.
Technological- technological environment includes development of Technology and advancing
Technology and its impact on business organisation and their sustainability. Technology has also
become centre of organisational success and growth and offers several opportunities to Lego.
Lego is a manufacturing organisation and this is why it can utilise advance technology for
manufacturing and create highest quality product at least cost involved. Technology has also
created different ways in which Lego can communicate with its customers and undertake
effective marketing strategies. This is why technology is a very important opportunity for Lego
to utilise.
Legal- This environment consists of all those factors that govern and regulate activities and
operations of Lego. Lego is an international organisation and this is why it gets affected by legal
environment of several countries and specifically those where it operates from manufacturing
units. Legal environment includes elements like employment laws and regulations equality act
industrial regulations customer protection act and several other regulations having impact on
organisational functioning (Gheibi and et.al., 2018). Concerned with legal environment it is very
important to follow all the regulations appropriately in order to avoid any legal complication and
also build and positive image of organization in international market.

Environment- environment factor has become a very important and prioritised concern for
government as well as Society at large. Manufacturing activities has impact on environment and
its sustainability and because of this different regulations has imposed by government to reduce
negative impact of industrial activities on environment. For the purpose of this organisations are
developing sustainable ways and you can also utilise this opportunity by developing sustainable
practices. In addition to this sustainable practices developed are also likely to have long-term
positive impact on organisation.
Marketing Strategies and Tactics
Market selection
Market selection is a process of organization where they determine and select markets
that they want to serve. This means selection of the markets where company will sell it products.
In order to do this firstly markets are divided on the basis of their similar characteristics and then
organization differentiates them on the basis of profit they will be able to generate and some
other benefits (Tran, 2019). On this basis Lego selects market where they will sell the product
and services. Market selection is based on segmentation, targeting and positioning. This is as
follows-
Segmentation- segmentation is concerned with dividing different segments of customers on the
basis of their similar characteristics. Segmentation is mainly done on the basis of demographic
characteristics that include age gender Lifestyle profession education and employment. Other
than this customers are segmented on the basis of psychographic characteristics, behavioral
characteristics and Geographic characteristics. Segmentation of Lego is based on demographic
characteristics in which it has selected customers below age of 12 years and those who are
middle class and upper middle class.
Targeting-targeting is concerned with selecting a customer segment and providing them product
and offerings of company. Targeting strategy of Lego is differentiated targeting strategy in which
it provides different product according to test and choice of customers. Because of its
differentiated marketing company has a wide range of product offerings for its customers so that
it can satisfy a requirement of every customer.

Positioning- positioning strategy of Lego is value based Positioning in which Lego position it in
its target market on the basis of value that it provides to its customers (Camilleri, 2018). Because
of this positioning strategy pricing of Lego is also premium pricing because it targets middle
class and upper middle class customers. Its positioning strategy is aimed to provide high quality
toys to customers at an affordable price.
As discussed above key markets of Lego our children who are less than 12 years. On the basis of
Geographic segmentation company has its worldwide presence but key markets are UK, US and
Singapore. Other than this North America and Western Europe are key markets of company
which lead to major portion of income and these markets also hold leadership in online traffic of
Lego (Törmer and Henningsson, 2020). Lego is a toy manufacturing company and this is why it
is very important that its key market is based on children however concerned with its marketing
practices Lego also consider parents who are likely to buy toys for children. Earlier Lego had
focus on children but presently it also target adult and in order to remain closed due to its
customer Lego has published Lego factory project where company allows people to create their
own design and order from online stores. This is a very effective way through which it can
provide products required for adults as per their choice and it can maintain significant focus on
products for children.
Mode of market entry
Direct Export- Direct exporting is a way to enter international market by an organisationthrough
directly selling goods to customer in international market. This is easiest and most preferred way
of entering into a international market. This is because it provides benefits in form of low cost
and also inform of simplicity associated with overall process of selling products and services in
international market and international expansion of the company. This is because when company
select export mode off international market entry it does not required putting expense in
establishing operations in a new country. Export requires company to find a way through which
they will be able to distribute their products in international market. Lego has also adopted in this
mode of market entry and by opting this method of market entry they have managed to have
significant existence worldwide and also become easily available to customers (Revindo and
Gan, 2017). There are several advantages of this mode of market entry in which Lego managers
to have higher profit because cost incurred in international expansion is less. In addition to this

one of the very important advantage of export is that company has direct control over different
aspects of transaction. This means that company can decide whether they want to sale their
product in a particular company or not and in this when Legoidentify that one international
market is not very profitable it can easily this continue its sale in that market. There are several
advantages of exporting but it does not eliminate disadvantages of this mode of market entry.
Some of the disadvantages of export is that it requires strong efforts in marketing to establish a
brand in new market without having any significant business presence in new market.
Greenfield Investment- Greenfield investments are a mode of market entry in which a company
starts its operation in other countries as its subsidiaries and invest in in construction of offices
plants sites buildings and products. This enables organisation to manage its operation and
achieve highest level of control over its activities in an international market. This is a mode of
entry that has been adopted by Lego and has developed its manufacturing facilities in countries
like UK, USA, Singapore and China. This is a form of Greenfield investment and with enabled
Lego to have its presence in different international market. There are several advantages of
Greenfield Investments and having high control over quality of product is a very important
advantage of Greenfield Investments. For a company like Lego it is in very important advantage
because it is very conscious about quality of its products (Rienda and et.al., 2019). There are
countries that offers several advantages this is in form of effective and strong infrastructure and
other benefits for manufacturing and this is why by adopting Greenfield Investments strategy for
market entry Lego can utilise this opportunity. Emerging economics are example of such
countries that have developing infrastructure and low cost for manufacturing. Such countries also
have enough natural resources through which their cost is low. Greenfield investments make it
easy for organisations to develop and implement long-term strategy. Some of the disadvantages
of Greenfield investment includes that it requires use amount of capital expenditure. This is
because developing a manufacturing unit is an highly expensive act. Another disadvantage of
this is that organisation when adopts this strategy they have to deal with several terms and
conditions of host country which is likely to create and increase complications for organisation.

Marketing Mix
Product- Lego is one of the biggest brands in in block toys in the world however big biggest
front in block toys does not Limited offerings and it also has several other product offering for it
customers. Product offerings of the company include video games in this games like store Star
Wars Indiana Jones Batman and marvel Superheroes are included. Board games of Lego include
Minotaurus, Creationary, Ramses Pyramids. Other than this products of Lego includes films and
television and this suggest that product of Lego extends to games and also include movies and
books and magazines (Fagerstrøm and et.al., 2020). Lego also offers children’s clothing in which
clothes to children less than the age of 12 are provided.
Price- As Lego targets children under age of 12 and middle class and upper middle class families
its pricing strategy is based on quality and value of the product. This means that product and toys
of Lego are not very cheap because they are manufactured with Precision and high quality
material. After manufacturing process, toys of Lego go through strong test to ensure its quality to
be sold in market and because of this high costs is incurred by Lego. This is the reason that Lego
has adopted premium price strategy however products are not that expensive that cannot be
afforded by customers. This means that through its premium price strategy Lego ensure that its
customers are able to afford high quality toys.
Place- headquarter of Lego is in Denmark and key manufacturing facilities and units are in UK,
US, Singapore and China (Langaro and Martins, 2020). It has its 132 retail stores worldwide
however presence of Lego is not limited to its retail store and extends to its presence on different
online channels. In addition to this product of Lego can also be found at places like movie
theatres amusement parks and popular departmental stores and toy stores. Products of Lego are
exported throughout the world so that they are accessible to more people. Products of Lego are
also available on its website and website also offers extra services like catalogue of product and
related information and also instruction booklet. Lego has strong and effective distribution
network.
Promotion- Promotion is how company communicates with its target audience and informs
about its product and value that it provides to its customers. Lego has adopted a marketing and
promotional strategy that includes several activities and to gain brand recognition Lego utilizes
advertising why television online mediums print advertising through magazines and in store

efforts (Naujoks, 2020). In order to gain brand exposure Lego also have actively participated in
several events. For the purpose of promotion company has also launched to my Lego network for
social networking in which badges ranks blueprints and items can be earned by undertaking in
completing certain task and trophies. This means that Lego has adopted conventional
promotional strategies and in addition to this unique strategies have also been adopted by Lego
to create its brand image and enhance brand exposure.
Recommendations
Expansion of its operations in emerging economies- This is first recommendation for Lego
that they should consider expansion in developing countries. This is because presently company
E has strong focus on USA and UK and these are developed countries where growth become
stagnated. In developing countries there are several benefits that you can utilise (Emerole, 2018).
These benefits are in low cost of manufacturing because resources are available in such countries
at comparatively low cost. Developing infrastructure of such countries is also an opportunity that
quality of manufacturing will not be affected negatively. In addition to opportunity in
manufacturing increasing income of population in developing countries is also an opportunity for
Lego to expand its business and increase its market share. This recommendation can be utilised
by company in next 5 years.
Increasing its Stores- Presently operations of the company are limited in form of its stores. This
is a recommendation for the company to increase its stores. This means that has its presence in
several forms that are online and through different popular departmental stores and its own
website. But presence of physical store is likely to have more significant impact and having more
stores in international market is also a way through which it can create and build its brand image.
Increasing stores is a very important step that Lego can utilize to increase its operations and
activities.
Product Development- This is also a recommendation for Lego that they should develop
products for adults. This means that there are several types of games that are designed and
developed considering adults and their interest and requirements and this is why company can
also consider development of products for adult customers (Cooper, 2019). Presently Lego
develops products mainly for children under age of twelve years and as per this recommendation
company should develop games for adult customers and there are several ways in which it can

create games for adult customers. This ways include mobile games and video games. In addition
to developing games as Lego also offers films and television Company can develop them
according to perspective of adult customers and on the basis of their taste and choice. This is
because due to technology adult customers are also taking interest in games and this is why they
are a very important opportunity that Lego can utilise. However so is may not be useful for adult
customers but games that company developed can surely be develop according to adult
customers and their taste.
Creating Joint Ventures- This is another recommendation for Lego that it should create and
operate through joint ventures full stop this is an very important method and strategy through
which it can expand and increase its operations in in international market easily (Jiang and et.al.,
2018). This means that having support from a local organisation can facilitate expansion and
developing brand image of company in international market. This is because directly entering
into an international market without any support requires more effort and even though does not
guarantee any success for survival and growth of Organisation in international market. Through
joint venture organisation get an effective support of local organisation to survive and grow in
international market.
CONCLUSION
On the basis of above discussion, it can be concluded that Lego is leader in its industry
and have managed to gain from market share. On the basis of report it can be concluded that
marketing environment provide several opportunities to Lego that it can utilise to enhance its
existing brand image and increase its market share. Later market selection of Lego was discussed
and it can be concluded that company target children under age of 12 and middle class and upper
middle class customers. For the purpose of international market entry company have utilised two
method that are direct export and Greenfield investment. Report also discussed marketing mix of
company and on the basis of discussion and Research undertaken some recommendation were
also provided for Lego.

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