Busm2412 Marketing For Managers For Assessment Answers

Answers:

Introduction:

LEGO A/S is a Danish family owned company with the headquarter located in a town called Billund which is in the western part of Denmark. LEGO produce products for the consumer market. Their products, which LEGO both manufacture, market and distribute, to a wide range of wholesalers, is a wide range of traditional toys, interactive toys, games and brick building sets. All of products reflect LEGO’s concept which is “learning and development through play”. (MarketLine, 2016)

Constant care has to be taken since distance become less important day by day due to the technological development.This report will be focused at “Toys and Games” where LEGO A/S will be compared with Mattel, Inc. and Hasbro Inc.what position LEGO has at the moment and what marketing strategies recommended in order to keep the position in the market. 

Methodology

In order to answer the

The report has been conducted by using the following sources:

• LEGO A/S official homepage
• MarketLine (Database accessed through RMIT Vietnam)
• Passport (Database accessed through RMIT Vietnam)
• Theory attained through lessons from the course “Marketing for Managers” held at RMIT Vietnam.
• Theory from the book (KOTLER & KELLER, 2012)
• We will also add different academic and internet sources for adding value to the study

All those sources are seen as valid academic sources. 

Theory

In order to investigate how LEGO A/S strategic position is and how what recommendations will be for LEGO in the future the following theories will be used: 

• PESTEL Analyse
• Porters Five Forces
• SWOT Analyse
• Market Segmentation
• Positioning
• Marketing mix – 4P’s

Empirical work

General market information:

Table 1:  Market presence of toy manufacturers

(Source: marketline.com 2016)

The above figure has illustrated the fact that LEGO A/S have to compete with different other prime competitors in order to create maximum impact on the market. For instance, Mattel Inc. holds greater market share compared to LEGO A/S in the market. Moreover, Hasbro is also very close to capture the similar market share of LEGO A/S. For that reason, it has become essential for the LEGO A/S to analyze the market needs and wants for achieving continues growth in the market.

SWOT Analyse

The SWOT analyse is conducted by using information obtained from (Passport, 2017) and (MarketLine, 2016).The SWOT analysis for LEGO is provided as follows:

Strengths:

• Long successful presence throughout generations in the market for toys for children, LEGO has become a strong brand which people relate to.(Passport, 2017)
• LEGO has partnership / licence agreement with most licensors which mean whenever for example Disney comes out with a new movie, LEGO can benefit from the advertisement spend by Disney, since they are allowed to make toys showing their characters.(Passport, 2017)
• Financial growth, revenue increased by 25% from FY 2014 to FY 2015. This was due to double-digit growth in all markets (com 2017).
• Diversified Geographical Presence, LEGO has minimised operational risk by having operations spread out (reaching 140 countries) and manufacturing plants in Denmark, Hungary, Czech Republic, Mexico, US, Germany and the UK.

Weaknesses:

• Similar products, which expose their risk if the interest for traditional toys change.
• Price, products are expensive which limit LEGO from entering some markets and also limit some customers from buying LEGO’s products.
• Products are easy to copy.

Opportunities:

• Strategic investments such as R&D centers, test-facilities for both manufacturing, production technologies, material development. All which can make LEGO being a first mover and be ahead of others in the industry.
• Increasing sales through E-channels.

Threats:

• Loss of licence agreements with major licensors.
• Additional trade barriers, which can force LEGO to expand with “extra” production facilities and have this extra cost if a attractive market establish tight trade barriers.
• Strong competition whit titan competitors which offer a broader product line.
• Change in rules and regulations for both material and topics.

Market Segmentation 

The market for LEGO is worldwide, in the following there will be taken a closer look at the segmentation.

Demographic Variables:

• Consumers are families with 1 or more kids.
• Middle to high income since the products are relatively expensive compared to other marks, which also was mentioned in SWOT.

Geographic variables:

• LEGO is located in all markets but Europe and North America are the biggest markets.
• LEGO will be in all major cities.

Psychographic variables:

• Motives, is to develop learning through play.

Behavioristic variables:

• End use: kids.
• Benefit expectations: being entertained while getting mentally stimulated as well.
• Brand loyalty: Try to keep brand loyalty high through generations.

Determination of the segment variables:

From the evaluation of the segmentation variables, it can be assessed that LEGO has already established its presence in the global market. However, it still has to focus on assessing all the segmentation variables for achieving continues success in the market. For instance, demographic variables are likely to provide information about the age group of the children who are purchasing the products of the organization. On the other hand, geographical segmentation will allow LEGO to identify best potential market for business expansion. On the other hand, psychographic variables will help to understand the motive of purchasing. Therefore, LEGO will have to focus on using all these segmentation variables appropriately for achieving continues success in the market.  

Advantages and Disadvantages of segmentation

Advantages:By doing a marketsegmentation, LEGO learn their customers to know and identify potential opportunities in the market

Disadvantages: Increased marketing costs

Marketing mix:

Product:

• Toys which is stimulating and encourage creativity.
• LEGO also includes construction toys, online games, video games, robots and educational products for gaining success in the market
• LEGO use different brand names including Minifigure, Mixels, StarWars, BIONICLE, DUPLO, BELVILLE, EXO-FORCE and Ninjago for maximizing the sales volume in the market

Price:

• LEGO use product line pricingsince they offer a whole product line. And how they distinguish is the packet size and price level. (KOTLER & KELLER, 2012)
• LEGO pricing strategy is relatively high, as the company always strives to manufacture best quality toys
• High pricing strategy has restricted many families to purchase toys of LEGO for fulfilling the needs of their children