Here’s a brainteaser for you: How many Lego bricks do you think exists in the world? Millions? Billions?
According to the Lego Website, there are 86 bricks for every human being on earth!
Lego is a successful story of the modern times. In 2014 it surpassed Mattel (the maker of Barbie dolls, figurines and board games) to be the largest leading toy manufacturer in the world.
However, times were not always so bright and sales as big as they are now. See the Financial Review.
As Jorgen Vig Knupstorp explains, when he took over as CEO in 2004, the company was losing $1m a day. David Gram (Head of R&D) says that they brought in consultants who advised on increasing the product portfolio. “We did action figures and all kinds of other toys and what happened was that actually the company almost went bankrupt,’’ The company had embarked on a business strategy of innovation. The issue with innovation is it can go in all different directions (Miller & Nobles 2013). Customers in 2004 no longer knew what the brand stood for. In other words, in a race to innovate, Lego lost sight of their core identity.
So how did Lego Re-Build?
Lego firstly got back to basics. They carried out research to discover their identity of what customers’ perceptions are that make them unique. To their surprise, the research team discovered the importance customers placed in the value of the brand bringing creative play that is conducive to learning.
Lego spent many months with teams of researchers carrying out research using observations and interviews. They wanted to discover how kids played and the interaction of play between children and parents.
The use of primary research allowed Lego to hone into the specific areas which had not been researched before and get into the details of what children liked (Iacobucci 2014).
Lego’s research into their primary target market which was boys at the time discovered that their product strategy was all wrong! Lego had been dumbing-down on products so that products could be build faster – they incorrectly interrupted in 2004 the trends in computer games meant consumers wanted instant gratification. What the observational research actually discovered was that kids responded to scoring, ranking and levels of play, i.e. the value of mastery.
Lego responded by bringing back their older and popular product lines such as the JCB diggers and fire engines.
The research also informed how these old favourites should look to complete the product over-haul to meet the expectations of the consumer. As Knupstorp comments in the clip below, product creation is best viewed from the ‘design (creating) products through the eye of the user, not the eyes of the company’ – in other words, giving customers what they want to buy.
After the success of learning from boys, the next big target market Lego wanted to crack was Lego for girls. Starting in 2007, Lego sent out their team to observe how girls played.
The first startling revelation they discovered was that the traditional yellow Lego head with a painted face was not appeasing to girls.
Girls were looking for beauty. The focus groups and interviews with parents identified that there were differences in play between boys and girls (Rasmussen 2015). This information was turned into knowledge to design products with friendlier stories, Lego ‘figure girls’ they could identify with and colors that appealed. In 2012, Lego released the product line Lego ‘Friends’.
Lego’s remarkable turnaround is largely attributable to understanding what the customer wants. Using primary research methods they overhauled their product range to be the biggest toy seller by revenue.
Blog by David Wan, (Deakin Username/WordPress : wadavi)
Financial Review, Lego Brink of Bankruptcy to 2015s Most Powerful Brand, Retrieved 15 April 2016, http://www.afr.com/leadership/lego-brink-of-bankruptcy-to-2015s-most-powerful-brand-20151006-gk2bf3
Miller, G, & Nobles, K 2013, ‘Innovating in Times of Change’, NACE Journal, 74, 2, pp. 35-39, Education Source, EBSCOhost, viewed 18 April 2016.
Hellar M 2015, Lego’s research of Kid’s Play Plays Off, Retrieved 14 April 2016 http://ww2.cfo.com/strategy/2015/03/legos-research-kids-play-pays-off/
Iacobucci, D 2014, Marketing Management (MM4), South-Western, Cengage Learning, Mason.
Lego Website, Educational Pages, Retrieved 16 April 2016, https://education.lego.com/en-au/about-us/lego-education-worldwide/lego-facts
Lego Website, About Us – Annual Reports, Retrieved 16 April 2016, http://www.lego.com/en-us/aboutus/lego-group/annual-report
Rasmussen M 2015 Strategy + Business, Lego’s Serious Play, Retrieved 14 April 2016 http://www.strategy-business.com/blog/Legos-Serious-Play