History of LEGO Group:

LEGO Group’s mission is to “Inspire and develop the builders of tomorrow” (LEGO, 2016). As a company focused around kids, LEGO Group operates under four promises and six key values with the aspiration to globalize and innovate the LEGO system in play.

Promises (LEGO, 2016):

1. Partner Promise: Recognizing that the market is rapidly shifting through globalization and digitization, LEGO Group understands that maintaining partnerships is essential to meeting those challenges. The three big partner promises are to customers, suppliers, and intellectual property partners. The customer promise is to continually work to build stronger bonds with customers who hold similar values and those who help LEGO Group meet their mission and aspirations. The supplier promise is to keep building strong relationships in all industries ranging anywhere from raw material suppliers to consulting firms. The intellectual property promise is where LEGO group and other companies either collaborate or exchange licensing around intellectual property and products.
2. People Promise: LEGO Group strives to execute the business strategy and foster the long-term health of the company. LEGO Group makes a promise to the people they are serving but also to their employees. There are four pillars that define a LEGO employee: purpose driven, systematic creativity, clutch power, and action ability. Purpose driven entails that the employee experiences pride and commitment to the mission of LEGO Group. Systematic creativity requires the employee to combine experience and imagination. Clutch power taps into the family oriented side of LEGO Group by collaborating with LEGO communities across the world. Action ability holds employees accountable to keeping the best interest of the company at heart. These pillars help employees support and maintain the mission and vision of LEGO Group.
3. Planet Promise: LEGO Group keeps a long term perspective and therefore not only focuses on current but also future generations. They believe that by continuing to increase their aspirations and foster the trust they have with their stakeholders, they will continue to grow as a company and make a positive impact in the world. In dealing with the challenge of globalization, LEGO Group has made the promise to keep making that positive impact with children as their central role models. To do this, LEGO Group has focused on the social and environmental impacts they are making as they globalize and continue to grow.
4. Play Promise: LEGO Group centers their mission around children. The play promise recognizes the importance that childhood play has on the long term development of the child. It also recognizes the impact that adults have in their children’s lives. LEGO Group strives to connect children with parents to keep children learning and having fun while also letting them bond with their parents.

Values (LEGO, 2016):

1. Imagination: Dreaming is the first step. This is where ordinary becomes extraordinary. Imagination is the foundation for creativity.
2. Creativity: Combining logic and reasoning with playfulness and imagination.
3. Fun: Being active together, experiencing adventure, and the joyful enthusiasm of children.
4. Learning: Being curious, experimenting, and collaborating.
5. Caring: The desire to make a positive difference in the lives of children, partners, and colleagues.
6. Quality: The challenge of continuous improvement to be the best play material.

Sales (LEGO, 2016):

• Total LEGO elements sold per year : >75 billion
• LEGO tyres produced per year : >730 million
• Number of colors used in production : 67
• Number of different LEGO shapes : 3,700
• Nationalities represented in the LEGO Group : 80
• Children reached through LEGO Foundation activities : 635,000
• Children reached through local Community Engagement : >100,000

Facts and figures (LEGO, 2016):

• 18 million monthly unique visitors to LEGO.com
• 4 million LEGO Club members
• 131 LEGO Brand Retail stores
• >600 LEGO products available
• 300 new sets and 13 digital experiences
• 250 LEGO designers, representing over 40 nationalities

Top 5 best-selling LEGO products (LEGO, 2016):

1. LEGO Star Wars™ Millennium Falcon™
2. LEGO Friends: Amusement Park Roller Coaster
3. LEGO Technic: Porsche 911 GT3 RS
4. The Disney™ Series — Minifigures
5. LEGO CITY Fire Station

Best-selling LEGO Themes (LEGO,2016):

• LEGO City
• LEGO Star Wars™
• LEGO Friends
• LEGO DUPLO
• LEGO NINJAGO

Competitors:

1. Mattel. Mattel makes Mega Bloks and are owned by MEGA brands, who has rights over Star Trek, Teenage Mutant Ninja Turtles, Despicable Me, and Pokemon. Mattel has a little over 10% share in the block construction industry. Mega Bloks are similar to Lego’s but the bricks are skinnier and more fragile. Another key difference is that the characters are more realistic and lifelike than the Lego characters are.
2. Hasbro. Although they are not huge into the building block industry, they compete with Lego on putting products on the shelf. They have a partnership with Disney and already have many of the symbolic kids toys including Nerf, Play-Doh, GI Joe, Mr. Potato Head and many other classics. They compete with Lego on products targeted at youths. Similarly to Lego, Hasbro has made a name for themselves that has lasted 3+ generations. Toys like the Mr. Potato head have been passed on from grandparents, to parents to kids. This long term brand trust is always hard to compete with, especially with Hasbro’s wide range of kids products.

MEGA Bloks Charaters:

Description: Mega Bloks characters are much more accurate and not defined by a simple set of bricks. They vary in size and look depending on the set that you purchase.

LEGO Group Charaters:

Description: Lego characters almost always have the same build with the leg base, the upper body, and the simple head with variations in the details on the pieces.

Marketing Strategy:

Luckily, Lego has turned into a genericized trademark, its common to say Lego instead of a ‘toy building block’. Some of their recent marketing strategies include making the lego movie, making animated and real time lego shorts on the website, the lego youth products for kids under 5, lego cities, and lego computer games. Lego has continued to focus on the youth but they still have a extremely long range of customers that experience or buy Lego product.

Challenges:

1. Increasing competition from competitors. As Mattel and Hasbro continue to grow they will only compete more for shelf space in the childrens toy aisles. Mattel has a product very similar to Lego but it is usually sold at a lower price. This will cause a continued price competition between the two top toy brick manufacturers.
2. Continuing innovation to keep products appealing and engaging. This is a challenge because the Lego blocks are so simple. The structure of Lego character has not changed in 50+ years. It will be crucial for Lego to continue to partner with popular movies like Star Wars, and seek other opportunities outside the movie industry.
3. Competing with the digital movement of the 21st century. Technology is being implemented into different aspects of people’s everyday lives. It isn’t uncommon to go out for a meal and see a family with one of their children using an iPhone or an iPad. Contending with computer games and fun apps where instead of carrying around a bag of plastic blocks, all you need one device that provides instantaneous entertainment.
4. Reaching foreign markets. Almost all of sales come from the U.S. and Europe, there is untapped potential in many other countries, especially China. The partnerships that lego has are popular in Asia and the products would do will if they were properly exposed and marketed overseas. This will be a challenge to explore new areas if they have only ever targeted European and American consumers. They will need to find products that appeal to Asians.

Expectation Economy:

Rising quality:

LEGO Group highlights their social responsibility on ethical business conduct. They have had zero product recalls for seven years. They also are constantly promoting high health and safety standards for the product. They have strict regulations on the chemicals used in the manufacturing of the products

Positive impact:

LEGO Group is very concerned about their environmental impact. To address climate change they have focused on reducing emissions through energy efficiency. They are trying not to use resources and materials faster than they are being regenerated. They want further generations to benefit from the same resources that our generation has been able to. LEGO Group wants to be a leader in promoting responsibility towards children.

Personal expression:

LEGO Group has always done a great job at personal expression, it comes along with the limitless creativity of Lego products. Not only can you build the set but you can change it and personalize it to your liking. Lego products are very popular to collect and with collection comes pride of collecting the product. LEGO Group also emphasizes the value of playing and creating your own designs.

LEGO Group has the largest market share in the block building industry, they have always had a strong lead in the industry. They have been creating a solid product for dozens of years. More recently their steps to promote their social and environmental responsibility have helped them succeed in the 21st century. As highlighted above, they are doing extremely well in the three strands of the expectation economy.

The Future:

Lego’s will be successful for a very long time because of the simple idea of incorporating physical play into children’s everyday lives. Lego’s are great building blocks for children to develop certain creative, visual, and problem solving skills they will benefit from later on in life. Being able to create several variations of designs from the same set will continue to remain relevant. LEGO Group has done a great job at shifting into the expectation economy, they have shown their ability to be socially and environmentally responsible all while continuing to create a lovable product. LEGO Group has not had a product recall in over 8 years and the quality of their product is going up.