Due 12/18 at Noon REFER: ‘Notes on Marketing Strategy Research Project’ on

Due 12/18 at Noon

REFER: ‘Notes on Marketing Strategy Research Project’ on Canvas under Modules

T1: moment decided to launch the strategy

T2: 2020, 2022 whether they did a good job

Hook: set up the problem

Explain T1 situation

Fact/Data – Explain the strategy we devised, how was it implemented, State the facts(sales, revenue growth)

Explain T2 situation – whether the strategy was successful or not

Future – now everything is online, is it a problem/threat to LEGO?

How is the world changing? How did innovation impact technology?

Strategy: Blue Ocean(Adults), Collaboration marketing

Research Report (finish bullet points, Monday 11/28, finish draft Thursday 12/1)

12-point Times New Roman Font, single spacing, and 1-inch page margins, and should be within 15 pages (excluding cover page, executive summary, appendixes, references).

In Section II, you should provide a concise summary of your project, highlighting the key findings of your research. Section III of the report should have a structure similar to that of the cases you studied in this course (e.g.,L’Oréal, Renova); you need to describe the market, industry, competition, target firm, its products/brands, consumers, and all other aspects of the firm pertinent to formulating the marketing strategy. In Section IV, you need to lay out the objectives of the firm what the firm aimed to achieve through the marketing strategy.

In Section V, you should explain in detail the marketing strategy the firm decided to pursue (e.g., STP, 4P’s), how the firm made the decisions, and what were the rationales behind these decisions. You will then explain, in Section VI, how and why the strategy is effective or ineffective (what worked and what didn’t), and, if appropriate, how and why the firm should have done it

differently. In Section VII, you should discuss what might be the future challenges and opportunities for the firm, as well as what you think the firm should do next.

You can provide charts, diagrams, photos, tables, and other supplementary materials in Section VIII.

I. Cover Page (Course Section Number, Project Title, and Members)

II. Executive Summary (1 page, 300-500 words):


Lego company is a Danish-based privately held company. The company was established in 1932 as a family business founded by Kirk Kristiansen and is headquartered in Billund, Denmark. Since its inception, the Lego company has focused on developing children’s creativity via learning and play (Lego, 2014). The company is known for its famous Lego brick and majors in producing toys, experiences, and learning materials for children across the globe. Production aligns with the company’s mission of inspiring and developing the next generation. Over the years, the core of products has transformed into theme parks, video games, and apparel. Despite its current improvement the company once almost went bankruptcy that threatened its continuity. Its financial records from the year 2003 highlight that the company incurred large debts approximately $800 million (Davis, 2017). Lego survived the financial crisis by modifying its market strategy and redefining its target audience to include adults and children in their product offering. Increased focus on the adult customers has been successful in generating company revenue. At the end of the fiscal year 2021 the company generated $28.6 billion as 58 percent of adults bought toys for themselves (Gilblom, 2022). However, Lego faces a new crisis that might see the company lose its ideal young customers due to increased focus placed on adult consumers. Since developing marketing strategies targeting adult consumer segments misalign with the company’s mission of developing children through play and learning.

Customers express concern about the company’s current strategies that focus on reaching the adult generation more than children. Licensing deals with brands have made the company’s products expensive for middle class customers. It is because licensing deals increase product cost which is passed on to consumers making brick toys expensive compared to generic ones developed by competitors (Sudhakaran, 2020). The survey highlights that many potential customers prefer Lego imitations produced by other rivals due to their low prices. Therefore, to best serve the young generation while attracting adult customers, the company improves its marketing strategy and introduces quality products at affordable prices.

The company’s marketing strategies target all consumer segments rather than focusing on a specific customer group. Based on surveys conducted by the organization, most of its adult customers are individuals who want to escape stress and free themselves from reality (Bhattarai, 2020). Thus, Lego has introduced different product lines to market products and services to children and adult customers. The company’s product lines in themes such as Lego Duplo and Lego Star war allow the company to market products and services to children and adults separately (LEGO, 2022). Furthermore, the approach aids the organization in developing a marketing strategy for its products and services that aligns with its mission statement and helps meet expansion objectives by attracting adult consumers.

Lego has a diversified pricing strategy to cater to the growing middle-class customers. Many customers that prefer imitated products are middle classed individuals who cannot afford premium-priced products and services offered by the company. Lego group can therefore introduce quality products at relatively premium prices to attract adults from the middle-class group (Christiansen, 2021). Affordable prices will help attract young and adult customers who want to escape reality by purchasing toys from their brand. As a result, the approach helps increase its consumer segment and generate more revenue. Additionally, the strategy aids in creating value for the customers and ensures repeated purchases from the brand.

III. Current Business Situation (3 pages): Soo

Industry Brief Overview

The first toy that came out to the market was the kaleidoscope, invented in 1817 by Scottish scientist David Brewster. It is a picture tube made of metal and brass for children to teach about scientific principles such as the reflection of light. Then, many toys targeting the children, such as Martha Chase dolls, Radio Flyer wagon, and pop-up books, stimulated children’s enjoyment (See Exhibit 1). Then, in 1949, LEGO came out on the market, a new form in which the kids could interlock a set of red and white blocks (See Exhibit 2). After that, the fashion dolls called Bild Lilli were in the industry, which targeted adults (See Exhibit 3), Finally, Mattel acquired the rights of Bild Lilli and began selling products with a new name, ‘Barbie’ (Johnson, N., 2022).

Then in 1972, the video game console came out, which was different from the traditional toy. With the new emergence of media, publicly traded toy companies lost $120 million (Montgomery, D., 2020). This was a massive downside for the toy industry, and LEGO also took a hit and suffered from a huge debt. However, as traditional toys accepted and integrated the technology, it became a new category and grew the toy industry. In 2020 and 2021, when the COVID-19 pandemic hit, the toy industry was one of the strongest industries; People tended to stay home due to the shutdown or fear of the disease.

As the toy industry has gone through many changes, the trend is to integrate toys with media and technology as much as possible. For example, LEGO has released the LEGO movie, and Mattel has released several Barbie movie series and will also release a Barbie movie in 2023 with real actors starring (See Exhibit 4). In addition, the toys integrated with technology can interact with children on different levels. For example, Miko 3 robot can recognize and remember faces and objects and have a conversation with children by reacting to the children’s responses (Howarth, J., 2022, See Exhibit 5).

However, even if the toys are evolving, the demand for classic toys is also soaring. Traditional toys appeal to adults because they bring nostalgic memories and comforts to them. For example, Tonka Mighty Dump Truck sales increased by 250 percent from 2019 to 2020 (Bhattarai, A., 2020). The change in the demand for the toy indicates that the toy targets adults.

About LEGO

The LEGO Group was founded in 1932 by Ole Kirk Kristiansen and is now owned by Kjeld Kirk Kristiansen, the founder’s grandchild. The name LEGO is an abbreviation of two Danish words, ‘leg’ and ‘godt,’ which means ‘play well.’ The business started with wooden toys in a small carpenter’s workshop in Billund, Denmark; then, plastic bricks took the lead after Ole brought the plastic injection molding machine to the company. After that, Godtfred, Ole Kirk’s son, established the LEGO system in play with the philosophy, ‘the more bricks you have, the more you can build.’ That is how the shape of the LEGO brick we know today was produced and patented in 1958 (LEGO). However, this patent expired in 1978 (Schwartz, R., 2022).

As of now, in the year 2022, LEGO is a global enterprise that is now one of the world’s largest manufacturers of toys. With the company’s mission to inspire and develop the builders of tomorrow, LEGO has been helping all children grow, developing and inspiring children’s potential and creative thinking. The Kirk Kristiansen family, the founders of LEGO, established the LEGO Foundation to help children in education and development. This foundation has 25% ownership of the LEGO group, which means that a portion of the company’s profits goes to the LEGO foundation. It started in 1999 and is still active (LEGO Foundation).

LEGO is a well-known company and is considered a big company; thus, people tend to think the company has always been a successful company that did not face the big challenge. However, Lego was on the verge of bankruptcy in 2003, experiencing 800 million dollars in debt (Davis, J., 2017). To survive the challenge the company faced, LEGO tried out different marketing strategies by re-positioning the brand’s position and re-evaluating the target consumers. This attempt consequently led the company to be the place where LEGO is now today.


LEGO started by targeting children, as it is a toy company. After patenting the LEGO brick design, the company launched the LEGO DUPLO series, the first toddler-focused bricks. This has given the company a chance to expand its target consumers from children to toddlers as well. Since then, to attract its primary consumers, the company has introduced new products, such as LEGO Minifigures, to add an element source for children to play with bricks.

One important thing to note is that LEGO also acknowledges that it cannot communicate and focuses solely on children. Instead, the company focuses on communicating with parents as well since parents are the ones who are paying for the products. LEGO applies the sustainability business model to gain parents’ trust in the company. The firm tests the elements and products to ensure they pass the various chemical, physical, electrical, hygiene, and flammability safety assessments and tests. Also, the third party approves the quality and safety of the products, ensuring every product they produce is parent-approved (LEGO).

While the company focused more on children, AFOLs, the abbreviation for Adult Fans of LEGO, was created. This term was first used in 1995 and was started by adult fans collecting colorful LEGO bricks from different sets (LEGO.com for Kids). This fan base was created online and did not evidently show its existence until LEGO released the collaboration product with Star Wars in 1999 (Austin, D., 2021). However, LEGO’s first impression of AFOLs was unfavorable; instead, the company thought it strange that the adults would react to the toy. Also, the firm’s leaders thought that AFOLs were detracting from the brand. For these reasons, the firm was initially not very responsive to the adult segment.

However, LEGO decided to change its perspective toward AFOLs. With the company experiencing the ‘dark days,’ the firm also faced low design budgets. That is when LEGO started to rethink the brand’s value and re-evaluate the consumers. Eventually, they embraced the adult fan communities rather than excluding them. That is when the company formed an AFOL Engagement Team and started creating events for the community, such as the LEGO convention (Austin, D., 2021).

LEGO has changed its way of marketing after accepting the adult fan base. Now it focuses on not only children but also adults as well. The company created a new marketing motto called ‘Adults Welcome’ and actively released new LEGO sets for adults. These sets now have an 18+ mark to show that the products are exclusively for adults. LEGO also actively used a collaboration marketing strategy with other media franchises, such as Star Wars and Harry Potter, to expand its product lines. Now, the company has become a company that both kids and adults love.


LEGO’s competitors have always been Hasbro and Mattel before and after the bankruptcy. Hasbro began in 1923, known initially as selling textile remnants, expanded into the pencil and pencil cases industry, and eventually became a toy industry. The company made a big hit with Mr. Potato Head, then continually produced other toys that were famous such as G.I.Joe and Furby. Later, Hasbro expanded into the entertainment industry, creating primary hit content such as Transformers (Hasbro, 2018). The firm also recently acquired eOne entertainment, adding a stronger portfolio (Whitten, S., 2021).

The other competitor, Mattel, was founded in 1945, starting as a toy company. The firm released Uke-A-Doodle, the first major hit product, and continued to produce famous products such as Barbie and Polly Pocket. Mattel also expanded into the entertainment industry, airing Thomas and Friends on PBS, which was a big success in terms of airing in 180 countries around the world in 55 languages. Later, the company acquired Fisher-Price in 1993 and HIT entertainment in 2011, adding content such as Barney and Bob the Builder to the portfolio (Mattel.).

Hasbro and Mattel initially targeted only kids, as LEGO did. However, after acknowledging the kidults and how they impact the market, they also started to focus on targeting them. For example, Mattel released Hot Wheels remote-controlled Tesla Cybertruck (Licensing International, 2022), and Hasbro revived the battle game Heroscape in 2004, which vanished from the market (Gilblom, K.,2022).

Besides these two companies, the other competitor to add is Bandai Namco. Unlike Mattel and Hasbro, it is a Japanese company founded in 2005 by integrating NAMCO and BANDAI. This company is known more as a video game publisher, with products such as the Gundam series, Pac-Man, Tamagotchi, etc. Since LEGO is now extending its business into gaming, it cannot be an exception as a competitor (Bandai Namco).


As previously mentioned, the first collaboration marketing LEGO did was with Star Wars. However, LEGO’s attempt at collaboration was not the first try in the toy industry. Hasbro and Galoob Toys already had partnered with Star Wars; Hasbro had an agreement for action figures, and Galoob had an agreement with vehicle toys. LEGO, in this case, had an agreement with the construction toy. The firm made a huge decision to buy the licensing, even though LEGO was worried that this strategy might alienate its core consumers (Pereira, J., 1998). However, this turned out to be not true; LEGO Star Wars became one of the top-selling themes (LEGO, 2022).

LEGO then actively expanded the line with other media franchises, such as Harry Potter, Friends, and Nintendo, and other major brands, such as Adidas and Airbnb. The company aims to discover many innovative products, gathering people through imaginative play and unlocking children’s potential. When the firm chooses the brand to build a partnership with, it ensures that both brands share the same commitment to creativity and inspiring kids, producing creative outputs (LEGO).

With LEGO releasing the line by collaborating with different brands, the firm is on a high level in terms of dependence. However, this will differ depending on the consumer’s reactions to the products. For example, LEGO will be dependent on top themes such as Harry Potter and Star Wars. In fact, LEGO created its entertainment content, LEGO Star Wars animation, in 2013, which would not have come out if the company was not able to use the Star Wars storyline.

Company Strength

LEGO is a globally known company with approximately 832 stores worldwide. This is a massive advantage for the company since the global presence relates to consumer brand awareness, which gives more possibility to gain more consumers. Additionally, LEGO’s significant brick design that allows consumers to use their imagination to create whatever they want appeals to a wide range of generations.

The strong fan community is also the firm’s strength. After LEGO realized its fans, the firm started to communicate and interact with them actively; a platform called ‘LEGO Ideas’ allowed fans to freely write and send new concepts for LEGO sets. After sorting through the opinions, LEGO built the sets based on the fans’ ideas so that we to write and send the new concepts for LEGO sets freely. Understanding the importance of communicating with the consumers helped LEGO survive from the verge of bankruptcy and end up surpassing Mattel and becoming the world’s largest toy industry (Richardson, B., Huynh, K., & Sotto, K. E., 2020).

Company Weakness

One of the company’s weaknesses is that there are a lot of LEGO copycats. While the LEGO brick has its originality and people recognize its design, the design of the brick is not patented anymore. As mentioned in the company background, the design was patented in 1958. However, the major patent expired in countries including the United States, Canada, and Denmark (Gesley, J., 2018). This implies that there can be a lot of LEGO alternatives at a lower price; the brands Kre-O, MEGA BLOCKS, Sluban, and so on are examples of these (Schoon, E., 2022, See Exhibit 6).

Another weakness of LEGO is its global presence. This is one of the company’s strengths, but this can also apply as a weakness. Inflation and supply chain storage caused some LEGO sets to increase costs by nearly 25%. Even though LEGO uses the diversifying pricing strategy, it still burdens consumers all around the world to pay more and can later affect its pricing strategy as well (FOX TV Digital Team, 2022)

Company Threats

While LEGO is number one in the toy industry, it still needs to improve in the presence of the media industry. As mentioned in the competitor’s aspect, Hasbro and Mattel acquired the entertainment companies, trying to create a competitive edge by producing its entertainment. Not only do these companies use their own resources for entertainment, such as Barbie movies, but also actively engage sources from Fisher-Price as well. For example, Fisher-Price created the digital experience offering the exhibition of classic Fisher-Price toys after Mattel acquired Fisher-Price (Snider, M., 2020).

The company also suffers from LEGO copycats, as mentioned in the weakness of LEGO. Not only do the copycats imitate the LEGO design, but they also copy the LEGO sets. For example, the company called Lepin copied a Star Wars set from LEGO. It also cloned ‘Cafe Corner’, now a retired set and the first LEGO modular. This can confuse the consumers, which may make consumers have a different perception toward the company even though LEGO did not intend to (Davis, J., 2022).

Company Opportunities

While the emergence of technology threatens LEGO, there are still many ways for them to engage its products with the technology. The company is already trying it by creating interactive building toys such as LEGO ‘hidden sides’, which uses an application to catch the costs that appear on the screen, and ghosts appear from the LEGO blocks that were built. LEGO can continue to make this technological advancement for its products and also target the AFOLs for them to enjoy the LEGO products in diverse aspects as well.


Technological influences on Lego

With the development of digital technology, the toy industry, which is mainly about physical products, has always faced enormous challenges. Back in late 1990s and early 2000s, Lego dealt with the digital transformation by producing interactive websites, console games, and computer media (Matt, 2016). However, Lego was not adept at developing games and media and these diverted Lego from its main products. To top it off, the problem of its supply chain and production caused Lego faced a great number of economic losses.

After that, Lego tried to refocus on its physical products and make progress in digital technology by connecting its products with digital media. For example, Lego allowed customers to create Lego brick designs and scanned them into the game. Lego also used crowdsourced strategy to allow customers to create their own brick designs and submit their designs online for vote, the design with the most votes could be considered by Lego as its new product.

Nowadays, because of the evolution of metaverse, Lego’s future opportunity is about creating more interesting experiences for customers on metaverse, combining virtual experience with customers’ physical experience, and allowing customers to be more creative not only with the physical bricks.

Sociocultural trends impact Lego

The rise of environmental awareness is another trend that affects Lego’s development over these years. In 2017, in response to global environmental problems, Lego achieved that its energy use was 100% renewable energy (Sorensen, 2017).

Lego also partnered with the World Wide Fund for Nature for the purpose of reducing the global Co2 footprint of its suppliers. Besides, Lego made short-term and long-term goals regarding addressing climate change. It announced to invest more on the R&D of sustainable Lego raw materials and packaging and setting up a Sustainable Materials Centre for developing environmentally friendly Lego products. In recent years, Lego has been making efforts and innovations for environmental protection, which will always affect Lego’s subsequent production and the development in the future.

IV. Firm’s Objectives (1 page):

Lego company partners with other brands to meet expansion objectives. The leader in the toy production sector has partnered with strong brands such as Adidas, Nintendo, and Airbnb (Davis, 2017). Through collaboration, the company has gained access to new audiences across the partners’ sectors. As a result, partnership with the mentioned organizations assists the company in meeting its objective to expand its customer base.

Lego aims to diversify its customer base by including adults in its product offering. Traditionally, the company focused on producing toys to meet their young customers’ needs (Lego, 2014). However, the decline in demand for toys has encouraged the brand to form the Lego architecture, a new product line that targets the adult audience (LEGO, 2022). Lego company employs promotional strategies that help reach new target audiences. The company uses unique and conventional marketing approaches to successfully promote its products such as the Lego serious play facilitates (LEGO, 2022). The strategy allows for effective product promotion by attracting new audiences to engage in creative thinking practices, creating brand awareness.

The company aims to increase its market share by developing products that add value and meet customer needs. Lego co-brand’s products such as shoes and apparel through its partnership with the Adidas brand (Davis, 2017). Co-branding products enables the company to generate products and services that meet the needs of kids and adult customers to increase their market share. Collaborating with Nintendo allows the company to fuse innovation in creating products that meet consumer gaming needs (Davis, 2017).

Lego Group creates value for its customers by offering quality products at comprehensive and premium prices to ensure affordability. The company’s product strategy also aims to strengthen its value proposition and increase revenue generated. Lego has strengthened its value proposition by venturing into the gaming and film sector, where it markets popular movies and games (Christiansen, 2021). Hence, the company increases market share by diversifying its products.

According to Lego’s Annual Report over the years, Lego Group aimed to stabilize its business, create more demands, and expected continued sales growth as its market was expanding every year before 2017. Since 2017, Lego’s objective was to expect single-digit revenue growth every year in line with its continued innovation and expansion, and gradually became ahead of the global toy market.

V. Marketing Strategy and Implementation (3 pages) – ZQY

V. Marketing Strategy and Implementation

Lego’s position of fame dates back beyond the interlocking of plastic bricks. Since its founding in 1932, LEGO has been involved in movies, video games, TV programs, famous social media outlets, and even major amusement parks. Despite the devastation caused by the COVID-19 epidemic, Lego’s sales in the first half of 2020 were up 14% compared to the same period in 2019, and operating profit increased 11% to $622 million (Julia Horowitz). Much of this success may be attributed to LEGO’s marketing strategy, which embraces digital and promotes consumer awareness. LEGO has managed to keep ahead of the competition by maintaining faithful to the brand identity it built in its early days and blending it with current marketing strategies. Accordingly, cutting-edge marketing techniques have enabled the company to overcome societal changes and grow even during economic challenges.

Recent years in the company have seen it enter into massive brand collaborations beyond its field. The company has successfully gained exposure to new audiences and expanded of customer base through collaboration. The recent partnerships with Airbnb, Adidas and Nintendo have all positively impacted the company (Biagini & Benini, 2021). With the view of having a shoe model with LEGO bricks incorporated, the company partnered with Adidas to have co-branded products, including shoes and apparel for both kids and adults. With this collaboration, customers from both Adidas and Lego will feel optimistic and included in the two companies.

Additionally, the company partnered with the Japanese Nintendo to innovatively blend the physical and digital playing ways (Qian, 2022). The company, therefore, gets new customers from the collaborations who get exposed to the Danish brand through the partners’ websites. Generally, the partnerships have guaranteed Lego increasing revenue and wider brand awareness.

The company has concentrated on diversifying its audience. With effective positioning and brand, the company has also considered developing its target audience. Unlike its sole business of creating toys for children since its inception, the company has considered adults who, for a long time, expressed interest towards the company’s products. Through the adult fans of Legos (AFOLs) audience, the company has incorporated adults who can now submit and vote on suggestions through LEGO ideas (Ali, 2021). This has helped the company collect new customer ideas, including theme sets such as Ghostbusters. Additionally, the company partnered with Chicago-based architect Adam to form a new product line, Lego Architecture, to focus on an adult audience. Considering the marketing techniques of the company and classifying them into the 4Ps of marketing, the results are as follows;

Product strategy

The product strategy of the Lego company is dynamic. Lego is one of the biggest block toy brands globally. The company has not restricted itself to dealing with toys but other products. Although the company started as a manufacturing company, it has now thrived as a major marketer of other products. Some of the products and services offered by the company include; toys, games, media and entertainment, theme parks, and games, among others. To begin with, toys, which include blocks, are the most popular product for the company (Schwab, 2022). Secondly, the company has diversified into Video games, including Lego Island, Star Wars, Batman and Marvel superheroes, and board games such as Ramsey Pyramid. In the media and entertainment sector, the company has invested in releasing popular movies such as Adventure of Clutch Powers, which have significantly contributed to the company’s revenue due to huge amounts of pre-orders (Team, 2021). In addition to sets of toys and various media to promote its brand, Lego toy sets also reflect the company’s focus on conventional innovation. After discovering that the majority of its customers were boys, LEGO developed the LEGO Friends to deliberately appeal to girls. Furthermore, as LEGO enthusiasts of all ages enjoy demonstrating their talents as LEGO masters, the LEGO Group engages in competitions on official TV series such as LEGO Masters to further raise brand awareness. Other products include theme parks, books and magazines such as Star Wars. Lego has earned a place in the video game and film market to strengthen its historical value proposition. For instance, the recent Lego Batman, Jurassic World and Star Wars games are some of the trending games from the company. Additionally, the Lego movie was one of the best in 2015 and was nominated for an Oscar for having the best original song.

Pricing strategy

Lego’s primary market for its products and services is children up to 12 years. The company’s toy products are not cheaply sold due to the use of high-quality materials in the making. Therefore, the company utilizes a slightly competitive and premium pricing strategy to price its products (Team, 2021). This ensures that the toys are also affordable to middle-class families. The company’s pricing strategy has given its customers great value, enabling repeat purchases. Apart from diversifying its products, the company has also diversified its prices (Schwab, 2022). The company has two pricing strategies which are cost and margin oriented. The company has both medium and high prices products with its wide range of toy products. The company’s products range from $ 10 for block games to $ 150 for premium Lego sets.

Place and distribution strategy

The company’s headquarters are in Denmark, and most of its products are in the UK, USA and Singapore. First, the company has a phenomenal market entry strategy, which has enabled it to thrive over the years. Currently, the company sells its products in over 130 countries and is always looking to expand its market (Team, 2021). For instance, when entering the Chinese market, Lego concentrated on opening new stores in major cities and places which indicated an interest in its products. Lego also invests in studying new markets, acknowledging the contribution of Chinese digitization to creating its products. Generally, this strategy led to success as there was an overall 4% increase in their profits registered in 2018 (Planetmedia, 2022).

Additionally, the development of China market, predicted by the increasing middle-class population, implies an increasing market for the Lego company. In Lego, retail stores, movie theatres, amusement parks and toy stores are useful in distributing its products. Additionally, the company exports its toys globally through several sites, including Amazon and eBay.

Promotion and advertising strategy

Lego becomes famous through conventional marketing and unique marketing strategies. By attaching themes to the Lego sets, the company has promoted and expanded its activities from toys and plays to include items, ranks, and trophies for its customers. The company has also incorporated Lego products into movies whereby movie characters are made of Lego bricks (Team, 2021). Promotion and advertisement are also through competitions such as “Lego Serious Play”, which challenges the users’ creative thinking capabilities and enhances the company’s identity. Additionally, the company promotes its products through online platforms, TV, and print media. Thus, the company utilizes various promotional and advertisement strategies to reach its audience.

Co-Branding Strategy

In recent years, confronted with an ever-changing market and with the assistance of the Internet, Lego has experienced the benefits of co-banding due to the rapidly soaring sales and marketing. Co-banding has been used in all areas of industries, whether it be gaming or animation or the integration of two or more other sectors, the strategy continuously generates products with fresh image to satisfy the marketing goals of both parties. This type of collaboration not only strengthens both sides, but it also attracts more new customers and considerably enhances brand recognition. Faced with an increasing number of customers with strong purchasing power, LEGO is currently utilizing co-branding marketing strategy to improve its influence and brand awareness.

One of the most noteworthy co-banding collaborations is Lego and Harry Potter, which is undoubtedly one of the most successful cooperation products of Lego. Harry Potter has spanned a huge period of time and has a large devoted fan base. What it represents is not just a simple story and the magical world behind it, but the youthful memories of a generation. The overall setting of the wizarding world gives fans room for secondary creation, making Hogwarts a secret place for them to maintain their childhood innocence forever. Furthermore, the continuous popularity of Harry Potter IP is also dependent on the ever-expanding derivative peripheral products. Based on the IP’s strong recognition, rational arrangement and development of content derivatives may instantly engage the attention of fans while allowing both LEGO and IP to achieve long-term development. Lego arouses consumer emotions through the success of continuous co-banding products launched, resulting in a trend.

VI. Analysis and Evaluation of the Marketing Strategy (3 pages): Mei

Competitive Analysis

LEGO’s branding strategy differs from competitors through licensing across various mediums beyond toy sets. Its success is demonstrated by LEGO’s position as the current global leading brand in toys valued at over $6 billion, with Bandai Namco in a distant second place at $1.7 billion (see Exhibit 7). LEGO’s primary competitors in the toys market are Bandai Namco, Mattel, and Hasbro. Regardless, LEGO is the global market leader in terms of revenue, capturing 30.5% of the toy industry. All LEGO competitor parent brands utilize sub-brands and brand extensions to segment toy consumers by gender, age, and product type. Prominent sub-brands include Bandai Namco Gundam™, Mattel Fisher-Price™, Mattel Barbie™, and Hasbro Nerf™ (Haigh, 2022). LEGO’s unique strength stems from its prominent central brand, visible across all products and all market segments.

Expansion into ancillary product areas like video games and film put LEGO among new sets of competitors. Although many of these developments have been successful, they require high capital investment and dedicated business units for continued survival. The LEGO video games are a profitable division, but LEGO only represents less than 1% of the total available market (Statista, 2022). Significant additional resources are required to capitalize on the expansion of these digital media ventures. LEGO has a considerably less competitive advantage as a small player and must incur additional costs to gain brand awareness and credibility in this space. But should the objective simply be awareness and not expansion, LEGO has been successful in garnering billions of impressions across all media channels.

Licensing & Merchandising Analysis

LEGO’s licensing strategy can be evaluated through its recent digital media success. Concerns were initially raised with licensing because products may be priced too high for the target market. The LEGO Movie was released in 2014 to unprecedented box office performance, with $468,266,122 in worldwide earnings. The 2014 annual report notes that “a significant contributor to sales growth in 2014 was THE LEGO® MOVIE™ product line” with 13.0% overall revenue growth in 2014 (LEGO, 2015). LEGO video games also performed exceptionally well as an early digital medium, with over 90 million copies of licensed games sold (Radić, 2021). Most recently, LEGO affirms this strategy’s success with the 2022 release of LEGO Star Wars: The Skywalker Saga garnering 5 million copies sold (Doolan, 2022). The continued growth of LEGO video games and films alongside key strategic partnerships with multimedia franchises proves the enduring success of its digital diversification strategy.

Another key strategy LEGO has been implementing for the diversification of its target market is merchandising through co-branding. The matching trendlines identified in Google search volume demonstrate how LEGO’s licensing strategy leverages the surging popularity of popular film franchises like Star Wars and Harry Potter (see Exhibit 11). Released in 1999, LEGO Star Wars has been among the top five best-selling themes for 20 years in a row (LEGO, 2021). Data supporting the success of its co-branded merchandising is the LEGO Harry Potter theme. This theme made consistent appearances among the top 5 selling themes during the years a Harry Potter film was released, reaching an audience that primarily purchases fan merchandise but not necessarily other LEGO sets. Regardless of the higher price of co-branded sets, consumers flock to purchase these sets as a testament to the success of this strategy.

Market Segmentation Analysis

Instead of using subbrands to target specific market segments, LEGO utilizes various product lines called “themes” (LEGO, 2022). Examples of enduring LEGO themes include LEGO Duplo for children as young as 18 months and the ever-popular co-branded LEGO Star Wars theme. Analysis of LEGO’s reported top-selling themes each year reveals a successful shift in positioning to fill a gap in the adult toys market.

LEGO seeks to reengage an entire generation of children in early LEGO markets like Western Europe and North America that grew up with its products, now ranging from 18-60 years of age. The toys segment primarily serves a highly saturated market of 0-15 years of age. LEGO’s wanted to capitalize on the blue ocean of the adult segment, repositioning itself towards a much wider audience. Starting in 2020, LEGO curated a collection of premium sets on its own site dubbed “Adults Welcome” (LEGO, 2022). Each set is labeled for ages 18+ and contains complex designs with hundreds or thousands of individual bricks. Unlike sets targeted towards child audiences, adult sets range in higher prices from $50 to over $800.

These sets are sorted into themes of entertainment, vehicles, art, science and tech, sports, and Star Wars. LEGO positions itself to capitalize on the nostalgia of the plastic bricks themselves and nostalgic themes like Back to the Future and even a replica model of the Atari® 2600 game console. The repositioning of the Star Wars core theme as part of its Adults Welcome product category demonstrates a strategic shift in the LEGO target market demographic segmentation. Another key theme under the umbrella of Adults Welcome is the LEGO Creator Technic product line, which serves 18+ adult hobbyists in new form factors like model replicas and potted plants (see Exhibit 8). The LEGO Creator Technic line immediately skyrocketed in sales to become a top 5 selling theme in 2020 and the number 3 top-selling theme in 2021 (LEGO, 2022).


The pivot to capture the adult market and implement co-branded themes was not without hiccups. In 2017 LEGO reported the first year of negative revenue change in more than a decade. This was due to a production surplus, resulting in a strategic choice to significantly cut its product SKUs and clean up the remaining inventory. This shift enabled LEGO to increase margins on its production and make room for new product lines, especially those targeted at adults.

Based on combined positive growth factors in product sales for the segment and overall revenue, LEGO was still overwhelmingly successful with its blue ocean strategy. The contemporary LEGO brand retains its longstanding brand equity while staying relevant across various media outlets and successful digital transformation. When retail slowed during the COVID-19 pandemic, its digital sales channels helped it double profits in 2021 (Wood, 2021). LEGO CEO Niels Christensen noted that he “attributed the success to a wide product range that appealed to all ages and interests” (Wood, 2021). Sets that were particularly successful in capitalizing on this external force include LEGO Creator Technic, LEGO Star Wars, and LEGO Super Mario.

The continued upwards trajectory of LEGO’s financial performance is also bolstered by its highly engaged community. The typical consumer lifespan in children’s toys ends at 15 years of age, but LEGO has cultivated a lifetime of repeat purchases from its consumers. AFOLs provide direct feedback and expand LEGO’s marketing reach through user-generated content. Crowdsourced ideas for LEGO sets also reduce R&D costs, allowing voters to give LEGO the market intelligence necessary to select winning product designs time and time again.

Although LEGO’s strategic implementation has been largely successful, it begins to stray from the organizational mission of “inspire and develop the builders of tomorrow” (LEGO, 2021). LEGO’s identity is rooted in its child audience with key associations like “parents”, “fun”, and childhood” (see Exhibit 12). As LEGO strives towards its growth objectives through its adult audience it may weaken its core brand targeted towards children. This strategic shift creates a contrasting dialectic in LEGO’s objectives going forward, where it must decide how to best serve each consumer segment while retaining the equity of the master brand.

VII. Future (3 pages)

​​Lego Group is one of the most successful toy production and manufacturing companies. For a long time, the company has integrated internal and external systems to gain competitive advantage and sustainability in the industry effectively. However, the company must utilize some strategic directions to maintain its competitive advantage and ensure sustainability. Although the company’s current state indicates a great reputation and success, the company needs to apply more effort and unique strategies to remain an all-time winner in the entertainment industry. Some of the efforts entail streamlining the strategic management and marketing aspects.

First, the company should focus primarily on international opportunities to expand its digital systems and markets and product range, and to enhance its online distribution strategy. The upcoming e-commerce trend provides an opportunity for the company to effectively distribute its wide range of products to consumers. In addition, an enterprise-level strategy that promotes international coverage and product diversity will help the company achieve more profits and sales (PlanetMedia, 2022). Constantly revising its current strategy can also help it improve its marketing strategy. For example, the company should focus on expanding its international markets and seizing opportunities from across borders. A good approach to this strategy would be to ensure the distribution of toys to all countries around the world where there is a growing demand for toys in households, especially in China and India. In the 2020 annual report, Lego’s full-year retail sales increased by 21 percent year-over-year compared to 2019, and revenues increased by 13 percent compared to 2019. This figure also confirms that Lego made the right choice in shifting its product marketing target from Europe and the United States to Asia. During the epidemic, the LEGO Group increased its investment in the omnichannel retail ecosystem to support the growth of its retail channel partners and its own platforms. 2020 saw the number of visitors to the LEGO.com e-commerce platform double compared to 2019, while at the same time the Group continued to expand its physical stores worldwide. In 2020, the LEGO Group opened 134 retail stores, 91 of which are in China. The rising consumption level of the middle class in China and other populous countries will bring rapid growth to Lego’s performance.

Additionally, the current economic dynamics are highly influenced by technological changes, meaning that in order for Lego to continue excelling, it has to invest in digital systems and strategies to meet the changing needs of its consumers in the modern era (Douglas, 2020). To fully implement its digital strategy, the company should ensure that all of its products have electric features that will help them adapt to the ever-changing technological landscape. Furthermore, in order to effectively distribute its products online for both producers and consumers, the company should invest in extensive research to enable new developments in the market, including customer preferences. For example, Lego launched in May 2020 the Wukong Little Warrior set based on the legendary Chinese Monkey King, and Christiansen hinted that other culturally based characters are in the works. He added that the company has made efforts in what it calls “fluid play,” blending physical and digital elements, such as physical characters like Lego Super Mario that connect to the app via Bluetooth. All of this is a sign that Lego’s digital transformation is in its launch phase. “Many of the major trends shaping our industry, such as digitalization and e-commerce, are accelerating as a result of the pandemic. We saw strong growth in digital and traditional play, a rapid shift to e-commerce and the importance of having a truly global operating model,” (Lucy Handley,2020)

Social media and content marketing strategies also prove to be effective in engaging clients and distribution channels for the company’s products. While Lego is already considered a leading brand, incorporating its activities with social media such as Facebook and YouTube will help it excel in its marketing activities (Douglas, 2022). Currently, the company’s Facebook page indicates a massive following; approximately 13 million followers are on the page, indicating excellent user engagement. Concentrating on promotional, educational and how-to videos will help the company promote its brand to online users. Thus, the company should utilize its acceptance on social media pages to promote and build brand awareness for its brand.

The company’s current focus on strengthening its integrated customer experience has enabled the sustainability of its operations. At the moment, the company handles its digital platforms to fulfill various customers’ needs and demands, guaranteeing an exclusive customer experience. For instance, the company utilizes comments on Lego Life to build its brand and encourage customer interactions among younger users (PlanetMedia, 2022). Similarly, the company has factored the Lego Ideas contributed online by adult users to come up with creative ideas that automatically enhance the company’s sustainability. Lego adult fans can even share their creativity on the Lego ideals platform. The company should therefore realize the contribution of user-generated content to its customers. Apparently, the content should be used to steadily validate the usefulness of Lego toys in children’s lives.

Similarly, business information from partnerships is also crucial in acquiring lessons on achieving and maintaining a sustainable competitive advantage in its business activities. The current business environment is more dynamic and requires access to business information. With this strategy supported by effective organizational management, Lego Group will achieve excellent results in its future operations. Correct identification of information systems and resources will be helpful for the company’s collection and gathering of clients’ information, which will help address their needs.

One of the major threats facing companies is the increasing changes in the digital world. There is a growing demand for brand innovation, with a major emphasis on the younger generation. In addition, the company has successfully addressed an older audience that has developed an interest in crafting by innovating more complex Lego sets. Although the company has the right components for growth, digital challenges may limit its ability to grow (Douglas, 2020). For example, in 2017, the company acknowledged that it faced limited sales for more products it produced, resulting in financial losses. To overcome such similar challenges in the future, the company should consider standardizing its production lines and reducing its workforce to meet current market demand. Perhaps, families do not need these toys every year; therefore, the company should consider this in its production process. But come 2022, the increasing changes in the digital world will lead to an increase in children’s desire and demand for toys as well. A continuous supply chain is also a major aspect for LEGO to consider. Many of the LEGO Group’s supply chain issues have arisen from the company’s commitment to innovation. Innovation is not profitable. The LEGO Group allowed product developers the freedom to innovate, resulting in significant inefficiencies in sourcing, production planning, and distribution covers. For example, product innovations regarding colors only add significant costs to the company, but do not actually add more value to the company. So Lego should focus the company on cutting costs and improving efficiency while retaining innovation.

Another major challenge that the company may face in the future is the environmental challenge. Currently, most companies are advocating environmental sustainability, which includes changing the materials they produce. This is a major challenge for Lego, as most of its products are made of plastic materials. As the world becomes more aware of the environmental impact of plastics, the company should shift its production materials to utilize plant-based materials as a strategic way to become more sustainable by 2030, as already agreed in 2019 (Walkow, 2019). While the company agrees that customers are now more conscious of their purchases and therefore moving away from plastic products, it does not agree that its various plastic products cause pollution. To overcome these threats, the company should focus on packaging. The company’s conflict of interest in using plastic materials to make building blocks may raise environmental concerns in different countries. But as of 2020, LEGO has produced a total of 98,674 tons of LEGO building block pellets and already has more than 100 different types of LEGO product components made from sustainable materials. LEGO’s goal is to achieve 100 percent sustainable materials in all packaging by 2025, including single-use plastic bags used to package building block pellets. In 2016, LEGO and WWF set a goal to increase the efficiency of the LEGO Group’s operational management by 10 percent by 2020. although this goal was only reached by 5.8 percent in 2020, they noted that by 2025, all LEGO Group stores and factories will no longer produce waste that needs to be landfilled. To date, 91 percent of all LEGO Group factories’ waste is already recyclable, including 100 percent of plastic waste from injection molding equipment.

To reach LEGO’s goals, I think they can continue to invest in sustainable materials research to reduce the carbon footprint of LEGO products and packaging and make their business operations more recyclable. Secondly, relying on the “Engage-to-Reduce” program launched by the LEGO Group in 2014, the LEGO Group continues to deepen supplier collaboration to guide and help suppliers reduce their environmental impact. At the same time, they also need to maintain a clear exchange of information with suppliers to achieve no signs of product surplus. Further, the LEGO Group needs to improve energy efficiency in its operations to increase the use of renewable energy in production, ensuring that 100 percent of their factories, offices and stores use renewable energy. In terms of market expansion, the LEGO Group needs to focus more on national markets, especially developing countries. The significant increase in consumption levels in developing countries will further boost the LEGO Group’s sales. At the same time, the LEGO Group should increase its investment in renewable energy in its operating regions and strive to achieve its carbon emission and operating targets in the next five years. Finally, the LEGO Group should maintain their original intention of following higher environmental standards in the design of their offices and factories, with the goal of having all new construction projects certified LEED Gold.


Bhattarai, A. (2020, October 30). Classic toys are making a comeback during the pandemic. The Washington Post. Retrieved December 16, 2022, from https://www.washingtonpost.com/road-to-recovery/2020/10/29/holiday-toys-classics-2020/

Davis, J. (2022, January 16). The many shades of grey in the questionable world of Lego knock-offs and alt-bricks. The Many Shades of Grey in the Questionable World of Lego Knock-Offs and Alt-Bricks. Retrieved December 16, 2022, from https://paperwave.substack.com/p/the-many-shades-of-grey-in-the-questionable

Doolan, L. (2022, June 18). LEGO Star Wars: The Skywalker Saga Now Has 5 Million Players Across The Galaxy. Nintendo Life. Retrieved December 2, 2022, from https://www.nintendolife.com/news/2022/06/lego-star-wars-the-skywalker-saga-now-has-5-million-players-across-the-galaxy

Douglas, F. (2020, December 9). LEGO’s plans for future brand experiences will include digital elements. Campaign UK. Retrieved November 25, 2022, from https://www.campaignlive.co.uk/article/LEGOs-plans-future-brand-experiences-will-include-digital-elements

Gilblom, K. (2022, June 17). Toys for adults a growth spot for LEGO, Razor, and Mattel. Bloomberg.com. Retrieved November 23, 2022, from https://www.bloomberg.com/news/articles/2022-06-17/toys-for-adults-a-growth-spot-for-LEGO-razor-and-mattel

Google Trends. (2022). Compare | Google Trends. Google Trends. https://trends.google.com/trends/explore?date=all&geo=US&q=starwarsmovie,legostarwars

Grębosz-Krawczyk, Magdalena. (2019). Magdalena Grebosz-Krawczyk ATTITUDES OF YOUNG CONSUMERS TOWARDS INTERNATIONAL NOSTALGIC BRANDS -THE COMPARATIVE STUDY. Economics and Sociology. 12. 181-191. 10.14254/2071-789X.2019/12-3/12.

Haigh, R. (2022). Toys 25 | Brand Value Ranking. Brandirectory. Retrieved December 2, 2022, from https://brandirectory.com/rankings/toys/

Howarth, J. (2022, October 13). 7 trends driving the toy industry in 2022. Exploding Topics. Retrieved December 17, 2022, from https://explodingtopics.com/blog/toy-industry-trends

Johnson, N. (2022, January 24). Evolution of play: How toys have changed over time. Buffalo News. Retrieved December 16, 2022, from https://buffalonews.com/lifestyles/parenting/evolution-of-play-how-toys-have-changed-over-time/collection_648a8861-1e28-5b41-b04f-20a82f3249b2.html#9

IMDb. (2023, July 21). Barbie. IMDb. Retrieved December 17, 2022, from https://www.imdb.com/title/tt1517268/?ref_=tt_mv_close

IMDb. (2022). The Lego Movie (2014). IMDb. Retrieved December 2, 2022, from https://www.imdb.com/title/tt1490017/

LEGO. (2014, July 16). How it Works – LEGO Ideas. YouTube. Retrieved November 27, 2022, from https://www.youtube.com/watch?v=j1L49BWDJb4

LEGO Group. (2006). Annual Report 2005 LEGO Group. Lego. Retrieved November 24, 2022, from https://www.lego.com/cdn/cs/aboutus/assets/blt6eacf5a8b7af1359/Annual_Report_2005_ENG.pdf

LEGO. (2015, February 16). THE LEGO GROUP – ANNUAL REPORT 2014 1 The LEGO Group CVR: 54 56 25 19. Lego. Retrieved December 2, 2022, from https://www.lego.com/cdn/cs/aboutus/assets/blta425337e673c7461/Annual_Report_2014_ENG.pdf

LEGO. (2022). LEGO® Sets for Adults | Adults Welcome | Official LEGO® Shop US. Lego. Retrieved December 2, 2022, from https://www.lego.com/en-us/categories/adults-welcome

LEGO Group. (2021, March 3). Annual Report 2020 – The LEGO Group. LEGO. Retrieved November 27, 2022, from https://www.lego.com/cdn/cs/aboutus/assets/bltdee53df07dda2287/Annual_Report_2020_ENG.pdf

LEGO Group. (2022). The LEGO Group – Annual Report 2021. Lego. Retrieved November 27, 2022, from https://www.lego.com/cdn/cs/aboutus/assets/blt248041929be3b572/Annual_Report_2021_ENG.pdf

LEGOLAND®. (2022). LEGOLAND® Parks and Hotels. Retrieved December 2, 2022, from https://www.legoland.com/

Lucy Handley (2020, September 2). LEGO CEO says toymaker’s digital future is a 10-year journey, From https://www.cnbc.com/2020/09/02/LEGO-ceo-says-toymakers-digital-future-is-a-10-year-journey.html

Miko 3. (n.d.). FAQ. Miko 3. Retrieved December 17, 2022, from https://miko.ai/store/miko3

Montgomery, D. (2020, July 22). Toys video games drain sales from traditional toy lines. Buffalo News. Retrieved December 16, 2022, from https://buffalonews.com/news/toys-video-games-drain-sales-from-traditional-toy-lines/article_c09feb74-7e6d-5da9-b7bb-a59241ceac69.html

PlanetMedia. (2022, February 20). The Toy Industry Giant – marketing strategies of LEGO. Retrieved November 25, 2022, from https://planetmedia.com.au/blog/marketing-strategies-of-LEGO/

Radić, V. (2021, November 29). Best Selling LEGO Games Ranked With Sales Numbers VGChartZ. Game Rant. Retrieved December 2, 2022, from https://gamerant.com/best-selling-lego-games-ranked-sales-numbers-vgchartz/

Schoon, E. (2022, June 28). 7 LEGO Alternatives that still work with Lego Bricks. Review Geek RSS. Retrieved December 16, 2022, from https://www.reviewgeek.com/35594/7-lego-alternatives-that-still-work-with-lego-bricks/

Snider, M. (2020, October 15). Fisher-price opens a virtual museum on Instagram to celebrate 90 years of its toys. USA Today. Retrieved December 16, 2022, from https://www.usatoday.com/story/money/2020/10/15/virtual-toy-museum-fisher-price-instagram/3644507001/

Statista. (2022). Video Games – Worldwide. Statista. Retrieved December 10, 2022, from https://www.statista.com/outlook/dmo/digital-media/video-games/worldwide#revenue

Tighe, D. (2022, July 27). Revenue of major toy companies worldwide 2021. Statista. Retrieved December 2, 2022, from https://www.statista.com/statistics/241241/revenue-of-major-toy-companies-worldwide/

Tighe, D. (2022, September 22). Value of the leading global toy brands 2022. Statista. Retrieved November 27, 2022, from https://www.statista.com/statistics/399131/value-of-the-leading-global-toy-brands/

Walków, M. (2019, March 20). LEGO’s CEO outlines his building blocks for the company’s future, from engaging a ‘bored’ audience to still using plastic in an eco-friendly environment. Business Insider. Retrieved November 27, 2022, from https://www.businessinsider.com/LEGO-ceo-says-it-has-no-plans-to-stop-producing-plastic-blocks-2019-3?r=US&IR=T

Whitten, S. (2021, March 10). Lego sales soared in 2020, helped by e-commerce and China growth. CNBC. Retrieved December 2, 2022, from https://www.cnbc.com/2021/03/10/lego-sales-soared-in-2020-helped-by-e-commerce-and-china-growth.html

Wood, Z. (2021, September 28). Lego doubles profits as demand soars beyond Covid-19 lockdown. The Guardian. Retrieved December 8, 2022, from https://www.theguardian.com/lifeandstyle/2021/sep/28/lego-profits-covid-19-lockdown-christmas-stock


Exhibit 1. Kaleidoscope, Martha Chase Dolls, Radio Flyer Wagon, and Pop-up Books

(Johnson, N., 2022)

Exhibit 2. First LEGO set (Johnson, N., 2022)

Exhibit 3. Bild Lilli (Johnson, N., 2022)

Exhibit 4. Barbie 2023 Movie (IMDb., 2023)

Exhibit 5. Miko 3 Robot (Miko 3)

Exhibit 6. LEGO Alternatives (Schoon, E., 2022)

Exhibit 7. Value of leading toy brands worldwide (Tighe, 2022)

Exhibit 8. LEGO Adults Welcome Product Examples (LEGO, 2022)

Exhibit 9. LEGO Financial Performance 2004-2021 (LEGO, 2022)

Exhibit 10. Toys Industry Concentration Ratio (Tighe, 2022)

Exhibit 11. Keyword Search Volume Comparison, 2004-present (Google Trends, 2022)

Exhibit 12. Word cloud of consumer associations for LEGO (Grębosz-Krawczyk, 2019)