Assignment task:
Questions for the case study below:
Q1. Identify at least one organizational problem that LEGO is currently having or one that you project it will have in the future. Base this on your research and critical thinking.
Q2. Compile three or four potential marketing-related solutions to the problem above. Remember that these are potential alternatives; you will not select all of the alternatives to solve the problem.
Q3. Select one or two of the alternatives above to solve the problem that you identified in this case analysis.
Q4. Discuss your rationale for choosing these and not the others. Include supporting research that will increase the depth of your analysis.
Case Study:
LEGO is one of the world's most recognizable toys. The small, colorful building blocks have spawned countless sets, figurines, video games, and even movies and theme parks. LEGO is built on a very simple concept: Each block fits together with every other block, which creates an endless combination of buildings, robots, cars, and anything else the user can think of. LEGO employs a design-thinking approach to its product innovation, keeping things fresh with new releases that utilize the colorful bricks in creative ways. In 2017, LEGO became the world's largest toy manufacturer and is one of the strongest brands across all industries.
The LEGO company began in 1932, in a small shop located in Billund, Denmark. Carpenter Ole Kirk Christiansen sold wooden toys, stepladders, and ironing boards with his son Godtfred. Two years later, the pair named their business LEGO, short for the Danish words leg godt, which translate to "play well." During the next several years, LEGO expanded its product line to include wooden ducks, clothes hangers, and simple wooden bricks. It wasn't until 1947, when LEGO purchased a plastic injection-molding machine, that it began to mass produce plastic toys that served as the predecessor of the modern LEGO brick. In 1957, LEGO created the interlocking plastic brick, and the following year it introduced the stud-and-tube coupling mechanism that became the model for all future LEGO toys. LEGO bricks became wildly popular among customers, and the company began expanding worldwide in the early 1960s. In 1964 the company started selling sets, which included the parts and instructions to construct a particular model. Soon thereafter, theme sets from movies and books such as the Harry Potter, Star Wars, and Jurassic Park series became some of the most sought-after children's toys in the world.
LEGO's growth and expansion slowed at the end of the 20th century. Birth rates had declined, and children were less interested in toys that didn't offer instant gratification. The many theme parks that LEGO opened around the world failed to turn a profit because of the company's unfamiliarity with the hospitality industry. LEGO began churning out increasingly complex and unique sets to draw in more customers, but sales failed to grow. The increased complexity of LEGO bricks also made production more complicated and inventory harder to manage. Major retailers ended up with large portions of inventory unsold, even during holiday seasons. In 1998, the company suffered its first financial loss, and by 2003, LEGO was on the verge of bankruptcy.
In 2004, Jorgen Knudstorp was promoted to CEO, only three years after arriving at the company. Knudstorp, who had previously worked at McKinsey & Company, began turning the company around and improving businesses processes, cutting costs, and better managing cash flow, which stabilized the company. To revive the popularity of LEGO toys, Knudstorp focused heavily on innovation and emphasized market and consumer research. Knudstorp believed that in order to rekindle the emotional connection between customers and LEGO toys, LEGO had to deeply understand each customer's desires and behavior.
LEGO's shift toward basing decisions on extensive research reduced complexity in production and ensured the success of its product releases. In 2011, the company launched the LEGO Friends line, an effort to attract more girls to the brand. The company's market research led to the insight that girls preferred to use their LEGO sets for roleplay, whereas boys enjoyed strong narratives and backstories, such as those offered by the Ninjago and Legends of Chima sets. Both girls and boys enjoyed the building aspect of LEGOs. The LEGO Friends line offered more sets and locations like shopping malls, juice bars, and creative labs, so girls could use their figurines to roleplay. The line caught on strongly in markets worldwide, including China, Germany, and the United States.
LEGO also established the Future Lab, a secretive research and development team that is responsible for creating some of its most innovative and successful toy lines ever. Future Lab teams are made up of industrial designers, programmers, marketers, and even master builders, who brainstorm to generate modern products. During an annual one-week field trip to Barcelona, Future Lab teams extensively brainstorm and produce prototypes from the bins of bricks, animation software, and professional-quality digital cameras available. The most successful prototypes generated are pursued back in Denmark, where viable ideas are launched into production. LEGO toy lines created by the Future Lab include LEGO Mindstorms, a robotics platform created in partnership with MIT; LEGO Fusion, an augmented-reality application; and LEGO Architecture, collections that model the world's most famous buildings.
In 2017, LEGO surpassed rival Mattel to become the biggest toy manufacturer in the world. Though LEGO has enjoyed great financial success since its all-time low in 2003, company studies have indicated that kids spend less and less time playing with physical toys every year. In an increasingly digital age, LEGO must continue researching its customers and experimenting with innovative product lines to stay at the top of the toy industry.