Lego Consumer Behaviour
Essay by TrudieSamworth • December 22, 2017 • Research Paper • 5,186 Words (21 Pages) • 2,134 Views
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The LEGO group, founded in 1932, is a privately held, family owned Danish company producing creative toys for children (Lego, 2016). It was voted the most powerful brand in 2015 (Forbes, 2015)
As a consumer specialist, explain and analyse the success of LEGO.
The Danish company LEGO is one of the most famous brands in the world and since founding in 1932, now sells over $1 billion of its iconic toy building blocks annually (Besanko et al. 2009). It all began in Billund, Denmark, by a Danish carpenter Ole Kirk Christiansen, who invented the interlocking pieces we know today as LEGO. While LEGO is now a global sensation, their performance hasn’t always been so smooth. Estimated to be losing €250,000 a day, LEGO had made losses four out of the seven years from 1998 through to 2004 (Oliver, Samakh & Heckmann, 2007). Many argued that the company had moved too far away from their core values, and suddenly there was too much focus on technology and over diversity of its product lines (Stadil & Tanggaard, 2014). Others believed this was due to low cost producers in China and increased pressure from video games that swayed children away from traditional toys like LEGO (Dahlen, Lange, Smith, 2010). However drastic changes were made and the process began of rebuilding the brand from the ground up. Retuning back to its traditional values and using the theory of consumer behaviour to develop a marketing mix that was more in line with the needs of its consumers, LEGO has made an extraordinary turn around, with its revenue increasing from 0.8 billion in 2004, to 5.1 billion in 2015 (Statista, 2017). Additionally in 2016 alone LEGO introduced an additional 335 new products, driving revenue growth and innovation (Trangbaek, 2017).
Consumer behaviour is the ‘study of individuals, groups or organisations in obtaining, using and disposing of products and services, including the decision process that precede and follow these behaviours’ (Gilber & Nelson, 2003, p.1). As there is a constant change in fashion, trends and technology, consumer behaviour is influenced by a number of aspects, including individual and social cultural factors, as seen in Figure 1. It is therefore essential that companies like LEGO study consumer behaviour so that they can create better products, promote products more effectively, and develop marketing plans that foster sustainable competitive advantages (Kardes, Cronley & Cline, 2015).
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Whilst all these factors are influential on consumer behaviour, when analysing LEGO’s success, we can see that perception, learning, attitude, culture and identity have been the main contributors. It is important to state that I am defining LEGO’s success based on their product sales, profits, reputation and international prestige.
Perception, learning and memory
Perception is the ‘process by which (an individual) selects, organises and interprets physical sensations (such as sights, sounds, smells, tastes and textures) to a meaningful and coherent picture of the world’ (Jiang, 2017). It is one of the most influential factors on consumer behaviour as the way in which a business portrays itself can have the power to drive a sale, or prevent it. Perception is part of the hierarchy of communication effects, as seen in Figure 2 and while it is a key aspect of our buying behaviour it cannot be formed without exposure first.
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Exposure will have always been a significant task for marketers at LEGO, especially back in the 1930s when their toys were brought to market. During its introduction stage very few people would have been aware of the brand, and exposure would have been essential in getting their toys known to consumers. One of LEGO’s earliest attempts at gaining exposure was its 1955 Lego System Commercial. Around this time Godtfred Kirk Chrisiansen, the founder’s son recognised that the toy market was primarily comprised of ‘one off products’ (Schwass, 2005). He filled this gap in the market and launched the ‘LEGO System of Play,’ which was followed by a very simple advert being released to increase the publicity of this line. The video was in black and white and very much aimed at engaging its target audience (being 5-12 year olds). For example the advert opens with ‘Lego is here. Hey Kids look, a whole new world to build’ followed by children making a variety of objects from the Lego in front of them. It’s important to note here that LEGO’s advertising was still very simplistic at the time, however it was still effective and managed to expose the brand to kids across the country, helping the company make its stand in the toy industry.
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