Global Branding stratergy group report for Lego.
GLOBAL BRANDING STRATEGY GROUP REPORT FOR...
28 JANUARY 2003
7049 (Summer School 2003)
Topics in Marketing: Global Branding
Lecturer: Dr Jukka M. Laitamäki
Submitted By :
Adrian Chua Soon Teck 1096311
Lawrance Wong Khai Yuen 1096301
Vernon Heng Wee Kiat 1101657
Samuel Wee Han Chearn 1097677
Foo Thien Ming 1097241
TOTAL NO. OF PAGES : 34 pages (excluding cover page)
Contents
. Executive Summary............................................................. 2
.1. Company Introduction ................................................ 6
.2. Industry Surveys....................................................... 6
2. Understanding Global Strategy Readings................................. 7
2.1. Industry Globalization Drivers....................................... 7
2.2. Market Globalization Drivers......................................... 7
2.3. Cost Globalization Drivers............................................ 8
2.4. Government Globalization Drivers.................................9
2.5. Competitive Globalization Drivers.................................. 9
2.6. Global Strategy Levers................................................ 10
2.7. Actual and Target Globalization By Activity...................... 10
2.8. Actual and Target Use of Global Marketing...................... 11
2.9. Competitors' Use Of Global Strategies......................... 11
2.10. Specification of Core Business Strategy.......................... 11
2. Brand Leadership: The Evolving Paradigm............................... 11
3. Brand Leadership Task......................................................... 12
4. Brand Identity Planning Model (Global)..................................... 12
5.1. Brand Essence.......................................................... 12
5.2. Core Identity............................................................. 12
5.3. Extended Identity....................................................... 13
5.4. Value Proposition....................................................... 13
5.5. Relationship.............................................................. 14
6. Brand Identity Planning Model (Global Vs Local)......................... 14
7. Brand Identity Elaboration Model............................................. 14
7.1. Identity-Supporting Programs Audit................................ 14
7.2. Brand Identity Prioritization.......................................... 15
8. Brand Relationship Spectrum................................................ 16
9. Brand Architecture Model / Brand Architecture Audit.................. 18
9.1. Portfolio Roles........................................................... 18
9.2. Product-Market Context Roles...................................... 18
9.3. Brand Portfolio Structure............................................. 19
0. Brand Building - Lessons To Learn From Adidas and Nike.......... 19
1. Role Of Sponsorship............................................................ 21
2. Building Brand - The Role of LEGO.COM................................ 22
3. Brand Building Beyond Advertising - LEGO In Japan Market....... 23
4. Global Brands.................................................................... 25
4.1. Effective Global Brand Management.............................. 25
4.2. Global Brand Planning For Japan Market........................ 26
5. Ten Keys, Seven Steps To A Global Brand.................................... 27
6. Recommendations.................................................................... 29
Exhibit 2.6. Global Strategy Levers................................................ 30
Exhibit 2.7. Actual and Target Globalization by Activity...................... 30
Exhibit 2.8. Actual and Target Use of Global Marketing..................... 31
Exhibit 2.9. Competitors' Use of Global Strategies............................ 31
Exhibit 2.10. Specification of Core Business Strategy......................... 32
Exhibit 3. Brand Leadership - The Evolving Paradigm.................... 34
. EXECUTIVE SUMMARY
LEGO, the toy company, the brand and its brick toys, is unlike any others in the world. The selection of this Scandinavian-based subject as a case for the Global Branding research assignment is a good one, for the thoughtful learning of the team, and for the entertaining read of its reader. True, such an argument might as well be made for the likes of Mattel, Hasbro, and Bandai (each of which, not coincidentally, is a top LEGO competitor). However, most prominently, this company has, since its founding seven decades ago, doggedly stuck with a vision to "nurture the child in each of us" that made it the "Toy of the Century".
It is indeed a most enlightening experience to analyze how such a simple statement pervaded the company's brick toys into the homes of every family in the western world. Notwithstanding its success in North America and most of Europe, research shows that LEGO's position in Asia is not at par with its traditional markets. LEGO's mediocre position in Japan, in particular, is a symptom that shows how the company may have much to adapt to the foreign land of the Far East.
Industry globalization drivers, global strategy levers and global organization factors are all part of the globalization triangle that delivers the benefits and cost of globalization. The bottom line is to help the company to improve its financial performance. The industry globalization drivers for LEGO have offered a very high potential for achieving the benefits of a global strategy. The elements of market, cost, government and competitors that were analyzed for the toys industry showed that LEGO has the need to compete with a global strategy. Except for the government driver, all other drivers prove to be influential to LEGO.
The globalization strategy for setting a global business requires a number of strategic dimensions. The dimensions are global market participation, global products, global location of activities, global marketing and global competitive moves. These dimensions are compared with the benefits of cost reduction, improved quality, enhanced customer preference and competitive leverage. It is also noted that any major drawbacks are also considered. All the dimensions examined are able to carry substantial benefits for LEGO to drive a global strategy.
Just having a global strategy is not enough, the management style of the organization is also very critical to the success of supporting the global strategy. The brand leadership model reflects the need to have a strategic management, broad focus and a driver of strategy. LEGO is currently pursuing brand leadership model. However, their direction has not been focusing on creating brand equity. It is highly recommended that LEGO should be looking strongly into their brand equity. The focus of LEGO on a single brand is rather unique. All their competitors are using house of brand architecture, while it relies on the branded house architecture to its advantage. The driver of strategy is moving towards the brand identity.
The challenges of brand leadership task is to create a brand-building organization, develop a brand architecture and brand strategy and lastly to develop an efficient and effective brand-building programs.
Applying the brand identity planning model globally to LEGO, 'Just Imagine' was identified to be the brand essence. The elements of the core identity include Innovation, Creativity, Safety, Quality and the Promotion of child development and learning. LEGO's brand identity can be extended by its wide Product Scope, Corporate Citizenship, Company Logo and Heritage. There is also equal focus on the functional benefits (innovative, safe and quality toys for a child's play, learning and development), the emotional benefits (fun and excitement) and the self-expressive benefits (having the power to create).
An analysis of LEGO in Japan reveals a few slight adaptations that have been made to the brand identity. In some cases, the emphasis of LEGO has changed from being just an educational toy to a lifestyle product. New activities and promotions have been made to cultivate a market segment made up of trend-setters in their teens and early adulthood. Another example of local adaptation is the launch of a popular product, LEGO Mindstorms, in a Japanese version.
Under the brand identity elaboration model, the identity-supporting programs audit reveals a strategic imperative as the formation and development of LEGO Interactive. One of the proof points is the setting up of LEGOLAND parks. Also under the model, children have been identified as the role models for LEGO. As for the brand identity prioritization, LEGO has always followed the company motto 'Only the best is good enough'. Lastly, the brand has always been associated with the brick that stimulates creativity and imagination and provides fun while promoting child development and learning. This is the major point that differentiates LEGO and resonates with their customers.
LEGO has cleverly used its brand to expand its portfolio from a single type of brick toy to what is today a full range of products that encompass a wide variety of bricks, wears, interactive games, theme parks, learning institutes etc. In this section, we will explore how the branded house approach of LEGO measures up against the house of brands approach of its competitors, and how LEGO exploits the power of its master brand to experiment and nurture sub-brands.
Other than the billion-dollar master brand of LEGO, the company has developed some sub-brands in the brand architecture to suit different product and market contexts. In the section on brand architecture audit, we will analyze and audit the role of each sub-brands and the structure of the brand portfolio, and discuss how LEGO skilfully manage the development of some of these sub-brands into something with its own substantial equity. In addition, we will also discuss why LEGO structure products rigidly in the branded house model, and propose several probable causes to this.
LEGO Company is aware that even giants falter when building Brands - like Nike and Adidas did. Thus, LEGO placed great emphasis on licensing agreements that parade high profile collaborations with the likes of Lucas film and Steven Spielberg. Equally important to LEGO was growing with kids into the 21st century. LEGO understand that they have to connect with these children on an emotional level, so through its website LEGO.com, LEGO was able to "diagnosis" its visitors and have an insight into what they value emotionally. LEGO entered the new millennium armed with this new knowledge and came up with the "Total Growing Environment" concept that consists mainly of LEGO Play materials, LEGO Lifestyle, LEGO Interactive, LEGO Serious Play, LEGOLAND Parks and LEGO.com for children living in a technological advance and dynamic environment. This concept enables a child to have an all-encapsulating LEGO experience.
LEGO further strengthened their Branding effort by reinforcing their age-old philosophy of nurturing children's creativity and curiosity with sponsorships like "Save the Children" campaign. With these positive reinforcements strengthening the power of the LEGO brand, the LEGO Company was able to bring public relations into the heart of the marketing communications mix, as well as helping to bring greater coherence and focus in all LEGO brand building endeavours to penetrate into new markets. Together with the fact that LEGO is still a privately owned and run company, the Brand is now associated with genuine care and heartfelt concern to children all over the world.
With the influx of e-toys like Playstation, Xbox and Game Cube, LEGO also needs to compete on a digital level now. Thus, LEGO.com plays an important part in carrying the LEGO Brand into a new era by providing a virtual playground that offers interactive play. LEGO.com is a do-all portal that allows access to both the old and new realm of products. The website provides a home for loyalist with a variety of unique games, stories, activities and adventures while doubling as a communication tool up to create synergy with other Branding programs.
LEGO does very little media advertising in the global market that they are presently operating in. They leverage a lot on other forms of media vehicle to build their brand on. This is no different in the Japanese market as they embark on activities including sponsorship, web, LEGOLAND and LEGO League to raise awareness and brand building.
Using the model on "Brand Building Beyond Advertising" and the ten guidelines that goes with the model, we can conclude that LEGO has exceeded what must be found in the guidelines that will make their brand building efforts pay off in Japan.
One of the key elements of this success is that LEGO, although it practices global brand leadership, does take into account certain degree of local adaptation in the Japan market. This is evident in the fact that LEGO has modified their extended identity to target at an older segment of the Japanese market and at the same time positioning the brand to be more of a lifestyle product than merely just a toy.
To further stretch their brand building efforts in Japan, it was recommended that LEGO adapt to the local conditions with successful programs conducted in the other markets, like the developing of the first Asia LEGOLAND within Japan, organizing LEGO League amongst Japanese schools and opening of Brand Stores. This will give it the perceived image that LEGO is a lifestyle product and therefore raise brand awareness.
LEGO practices effective global brand management and this is evident in the model of effective global management. Firstly, sharing good insights and practices, by using generic promotions programs that was successful in other markets and replicating it in another market with a bit of local twist, so that economies of scale can be achieved in media spending and other managers from other markets can learn the good "stuff" from one another. Secondly, they have achieved cross-country synergy in brand communications by assigning the responsibility of delivering consistent and constant brand messages to a top executive officer who runs a centralized brand PR team in London. Thirdly, they try to deliver brand building brilliance by allowing the individual regional brand PR team to manage the programs within their home country, using their local knowledge to make the programs successful. Lastly, putting in place a global brand planning template that is realistic and attainable.
Though we do not have privy to LEGO global planning system, we analyzed and suggested the possible steps that LEGO would have taken in their brand planning in the Japanese market. We concluded that the customer segments that LEGO would target includes older market segment like teenagers, over and above their normal segment of children. Competition for LEGO includes the top three toy manufacturer with special concern to the local manufacturer, BANDAI. However, LEGO has a competitive advantage as their competitors have lower brand exposure as they are only recognizable by product names like Barbie and not the brand name like Mattel.
The brand strategy for LEGO then will be to raise the brand awareness in Japan by tweaking their brand identity to be one of a lifestyle product and using local cartoon icons as a sub-brand. The all important goals to be achieved in Japan that can be measurable would surely be the ability to set up a good distribution network by working closely with a local chain departmental store.
We also focus our attention to scrutinize if LEGO is indeed a well built global brand. We use James Gregory's, "Ten Keys, Seven Steps to a Global Brand" as a guide and checked if LEGO is up to the mark. Through the careful analysis, we found that LEGO did achieved what it takes to be a well built global brand and also corrected areas where there was a problem (creating a Global Brand PR Team headed by a top executive officer).
From all the above analysis on the global branding strategy of LEGO, we can conclude that LEGO as a global brand leader is doing all the right things that justify their seven position in the global ranking of the most recognizable global brands that have children as part of their target group and is on target to realize their CEO's brand vision of becoming "the world's strongest brand among families with children in year 2005".
Although this can be said in their more developed markets in Europe and the US, to be the world strongest brand, they must also corner the Asia-Pacific market. LEGO must start this by entering a peculiar market like Japan and capturing a substantial market share with a longer term interest of the other lucrative Asia-Pacific markets (as they say, if you can be profitable in Japan, you have a golden key to the rest of the Asia-Pacific markets).
In order to be profitable in Japan, LEGO must work a little harder to build their brand there and the following are the group's recommendations on what LEGO must put in place as part of their global branding strategy in the Japanese market. Therefore, it is recommended that LEGO should:
a. To modify and adapt the brand identity, especially the extended identity by focusing the brand communications to include teenagers as a target segment and positioning the brand towards more of a lifestyle product and not merely a toy.
b. Focusing more on brand building programs than media advertising by extending owned sponsorship programs like LEGO League and Save the Children sponsorship program from other countries to Japan.
c. Initiating community and family bonding programs to leverage on local cultural philosophy, where family activities is more important than individual activities. Examples of such programs include Father & Son LEGO creation / building contest.
d. Increase brand awareness and exposure by developing the first LEGOLAND theme park (fostering family activities) in Asia within Japan and positioning LEGO as a lifestyle brand with the opening of LEGO Brand Stores where customers will have a same experience in the stores as when they are playing with the LEGO bricks.
e. Achieving quick acceptance of LEGO products and therefore the brand by having partnership with other Japanese toy manufacturer. This can be achieved through the co-branding with popular Japanese cartoon icons like Hello Kitty, Pokemon, Digimon, Doraemon, etc...into LEGO brick sets.
f. Committed R&D programs in Japan by working with Japanese universities, child psychologists and PC game developers to introduce new LEGO products that are in tune with the Japanese customers and market trends.
.1. COMPANY INTRODUCTION
Most of us while growing up, at one point or another, have played with a set of colourful ...
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e. Achieving quick acceptance of LEGO products and therefore the brand by having partnership with other Japanese toy manufacturer. This can be achieved through the co-branding with popular Japanese cartoon icons like Hello Kitty, Pokemon, Digimon, Doraemon, etc...into LEGO brick sets.
f. Committed R&D programs in Japan by working with Japanese universities, child psychologists and PC game developers to introduce new LEGO products that are in tune with the Japanese customers and market trends.
.1. COMPANY INTRODUCTION
Most of us while growing up, at one point or another, have played with a set of colourful building blocks. The blocks come in different shapes and can be wedged onto each other to create a thing, something and anything. If not to our liking, it then can be easily detached, and reattached. Unlike others, this toy is so simple, that there is no rule whatsoever or, gender and cultural context. At the same time, the only limit to the possibility of the toy is the creativity and imagination of our own. That is the LEGO brick, the only truly global toy there is today.
The LEGO brick is a toy produced by the namesake company, LEGO. It was founded in Denmark exactly seven decades ago, in 1932. With such long heritage and unwavering popularity, there is no doubt as to why the company had been twice voted the "Toy of the Century", by Fortune magazine, in November 1999, and the British Association of Toy Retailers, in January 2000. That must be most gratifying for Kirk Kristiansen, the current Chairman and CEO whose grandfather founded the company, as the company now struggles to react to the onslaught of digital interactive games, led by the likes of Sony, and Nintendo. Yet the company is unfazed. It now has its own interactive product roadmap, with its first launched in mid-2002, Football Mania. There are ten new interactive games scheduled to be release in the near future.
.2. INDUSTRY SURVEYS
The LEGO Company has ambition to achieve a grand goal, which is for the LEGO brand to be known as the strongest brand in the world among families with children by year 2005.1 That is not an unrealistic goal. Young and Rubicam undertook a detailed research, "Brandscape: Brand Asset Valuator"2, in year 2001, as an attempt to rank the three hundred most recognizable global brands that have children as part of their target group in the G5 markets. LEGO is already the seventh most recognizable brand.
. Coca-Cola 2. Kellogg's 3. Disney 4. Levi's 5. Fisher-Price
6. Pampers 7. LEGO 8. Kleenex 9. M&M's 10. Nestle
In LEGO's own effort to track the awareness of the brand around the world in year 2000, it discovered that the LEGO brand has almost one hundred percent aided awareness among households with children under the age of twelve.
LEGO has ninety-seven percent brand awareness in the United States, its largest market and the world's trendsetter for toys. That is a compelling lead over its major competitors, such as Mattel, Bandai and Hasbro, in which both have their roots in the US. Among the five wealthiest countries in the world, Japan ranked last for LEGO, which has ninety percent recognition.
There was another survey conducted by Landour Associates among 10,000 representatively chosen adults aged between 18 and 65 to gauge the best brands' 'image power'3. 'Image power' is a measure of brands' impact, where consumers' awareness of the world's leading brands is combined with their judgment of the brands' quality. While LEGO was placed at an impressive fifth in Europe, after four car brands: Mercedes-Benz, Rolls-Royce, Porsche and BMW, it was not placed among the top ten in Japan.
It is undeniable and reaffirmed by many independent surveys, LEGO is among the world's most widely respected brand name. However, it is also obvious that this is not uniformly the case across all countries and cultures. Particularly, the LEGO brand, although well known, has not struck a chord with the Asian consumers and it has much to lose if it does not accelerate its effort to establish in Asian countries. Asia has been the world's main engine of growth for the past three decades and its consumers' rising purchasing power represents a significant market for LEGO. Japan, the second wealthiest country in the world and trendsetter for rest of Asia, is classically an example where LEGO has not been up to mark with its performance elsewhere. The team has found this to be a compelling subject to further explore. It is therefore the objective of this paper to discuss at a high level as to how the global toy, LEGO brick, and its global company, LEGO, could globalize and, at the same time, localize its brand to adapt to the globalization of the toy market, and we would discuss how the company could establish itself better in Japan.
2. UNDERSTANDING GLOBAL STRATEGY READINGS
2.1. Industry Globalization Drivers
The industry drivers for LEGO are being analyzed. The market, cost and competitive drivers have more influence than the government driver does. The components of the drivers are examined. A scale of 0 to 10 will be given where 10 is the most influential.
2.2. Market Globalization Drivers
Common Customer Needs And Tastes (Scale: 8)
LEGO products in general are toys. They can be play on an individual basis or within a small community. Any kid will definitely play with a toy, in most economic developed countries they are the same for any need. The only difference is the lower economy countries may be playing with other form of toys beside LEGO. The need is especially stronger when the product is tying with entertainment releases such as Harry Potter.
Global Customers (Scale: 5)
Being a consumer good in nature, most of the buyers are categorized as "International Customer" and "Free Local Customer". Only a handful are "Global Customer", for an example, Toys R Us, a global toys retail store purchases LEGO products from its local distributor or subsidiary, the purchase order will be issued from the Head Office.
Global Channels (Scale: 4)
Most of the global channels are region-wide. LEGO distributors are typically country or region specific.
Transferable Marketing (Scale: 8)
This is one of the main drivers for LEGO. The brand name requires very little adaptation and highly uniform in using their marketing strategies in any country.
Lead Countries (Scale: 8)
Innovation will be one of the successes for LEGO. The decision to start the interactive division and base the resources in Japan, England and US has become critical. These are leading countries that are developing the best games in the world.
2.3. Cost Globalization Drivers
Global Scale Economies (Scale: 8)
LEGO are offering the same products globally. Their competitors will not be able to achieve competitive economies of scale by entering a single national market. However if there is a loss of share in any country, it will impact on the cost position of other countries which its activities are shared.
Steep Experience Curve Effect (Scale: 6)
Basing on the experience gained from successful co-branding with movies like Star Wars, LEGO are able to capitalize the market share with latest movies like Harry Potter.
Sourcing Efficiencies (Scale: 8)
The centralized purchasing has help to achieve savings in the cost in production. LEGO has their products manufacture in Korea that meets their high standards in quality but with a low production cost.
Favourable Logistics (Scale: 4)
LEGO products can afford the time urgency and has little need for locating near to manufacturing facilities. However this is not the main component of the cost driver.
Differences In Country Costs (Scale: 7)
The concentration of production activities in low cost and highly skilled country has improved cost reductions.
High Product Development (Scale: 1)
Having the same set of global products, the product development cost is not very high compared to technological products.
Fast-Changing Technology (Scale: 2)
The same LEGO bricks that we saw twenty years ago are still the same now. This driver is not so important because technology changes have little impact on the bricks which form the major part of the business.
2.4. Government Globalization Drivers
Favourable Trade Policies (Scale: 5)
Most governments do have high restriction for toys. However they may be some countries that will impose more restrictions in terms of currency and capital flow, for an example Malaysia.
Compatible Technical Standards (Scale: 3)
Being a toy product in nature, LEGO does not subject to any technical standards compatibility problems.
Common Marketing Regulations (Scale: 8)
LEGO bricks are subject to safety standards. The toys must not be able to choke the kids when unintentionally swallowed and the materials must non-toxic that might cause poisoning when chewed.
Government-Owned Competitors And Customers (Scale: 0)
There are no government-owned competitors or customers.
Host Government Concerns (Scale: 0)
There no host government concerns in this component.
2.5. Competitive Globalization Drivers
High Exports And Imports (Scale: 8)
In a toy industry, the level of imports and exports are very high, thus the competition is very competitive.
Competitors From Different Continents (Scale: 9)
A high concentration of toys manufacturer is present from different continents. One of the more noticeable competitors from Japan is Bandai. Global competition between the major manufacturers is intense.
Interdependence Of Countries (Scale: 8)
LEGO is very dependent on its few manufacturing facilities globally. This has helped them to contribute to its overall cost position.
Competitors Globalize (Scale: 9)
LEGO main competitors are global business competitors, noticeably in the global products and global market participation. They are Mattel, Hasbro and Bandai.
Transferable Competitive Advantage (Scale: 8)
The main advantage that LEGO possess is their bricks and brand name. Any one, anywhere in the world can play LEGO bricks.
2.6 Global Strategy Levers (see Exhibit 2.6.)
Global strategy needs to be looked at in different dimensions. The success of the strategy lies in the balancing the right attributes for each dimension that can create a synergistic effect. The key benefits to such dimensions are cost reduction, improved quality, enhanced customer preference and competitive leverage.
Global Market Participation
The main benefit for LEGO in the global market participation is cost reduction. It can achieve economies of scale with the increase in the level of business activities. The supporting benefits are being able to capture ideas and demands from customers and competitors, global presence in any decent departmental store and flexibility for competitive moves. One such example is the LEGO Bionicle. It is so successful that it brought LEGO back into "Black from Red" and they are able to leverage on the Bionicle name. However there can be some draw back as additional resources may be utilized to promote the brand further.
Global Products
Higher quality control and strict compliance with safety standards are part of the key benefits for LEGO. Similar cost advantages such production and inventory cost reduction, global product familiarity and standardization are the other benefits. The safety aspect is very critical for LEGO. If any kid is to choke from a single piece of LEGO bricks, the result from this publicity will be disastrous. The result of global products standardization will means that there is no local product adaptation. For an example, Japan has a long history samurai and ninjas, but there are no such LEGO bricks in this form for the Japanese market.
Global Location Of Activities
By locating the resources strategically, there can be a better management of the resources. LEGO has its Research and Development in their head office in Denmark, production in Korea and the brand management team in London. This has helped them to focus in their core competencies. However there is also a higher risk of currency devaluation, political risk and more complex management of the value chain.
Global Marketing
LEGO uses the same brand name, advertising and marketing mix worldwide. This has allowed LEGO to have lower cost in the production of marketing programs and integrated marketing effort. The entire marketing program can have a synergistic effect on enhancing the customer preference. The only drawback is the lack of local environment adaptation.
Global Competitive Moves
In the toy industry, LEGO has no specific competitor. This is due to its unique characteristic of its product. LEGO has demonstrated its competitive moves by its sequential launches of its LEGO Bionicle to a worldwide scale. In retaliation to its Japanese competitor, LEGO is already planning to build another LEGOLAND in Japan to boost its brand name and product familiarity that traditionally have been conquered by Bandai.
2.7. Actual And Target Globalization By Activity (see Exhibit 2.7.)
Most of the globalization activities are control by LEGO headquarters. The Research and Development are concentrated in one location and the procurement, raw material processing, intermediate production, final production and marketing are based on global agreements, which are controlled by headquarters. LEGO should focus some of its efforts in the research and development with some localization. The selling, distribution and customer service are mostly localized. Appointed agents or subsidiaries companies will need to adapt to the local environment with improved relationship with the customers. The headquarters play a coordination role in these areas.
2.8. Actual And Target Use Of Global Marketing (see Exhibit 2.8.)
LEGO headquarters are having full control of its positioning, brand name and packaging. This is to ensure that there is uniformity in the LEGO brand. The pricing and advertising structures are also relatively uniform. There could be some variations based on the local competitive environment.
The sales structure is definitely supported by its local distributors or subsidiaries. Adaptation to the local environment will give LEGO an advantage over the competitors and this may vary from one country to another. The headquarters must still supervise the coordination. To enhance the efficiencies, LEGO should look into the distribution and customer service to adopt a more uniform approach.
2.9. Competitors' Use Of Global Strategies (see Exhibit 2.9.)
LEGO main competitors are all global companies. We can see from the market participation, all the companies have significant share in major markets globally. In most retail scene, the same type of toys from these companies will be available.
The product standardizations and location of value-adding activities are very similar in many ways. The marketing approach is also similar; all of them make use of their brand names to draw attention and uniform worldwide and the competitive moves are usually integrated across countries.
2.10. Specification of Core Business Strategy (see Exhibit 2.10.)
The worksheet for evaluating the core strategy for LEGO as a global business and how it is adapted locally to the Japan market can be found in Exhibit 2.10.
3. BRAND LEADERSHIP: THE EVOLVING PARADIGM (see Exhibit 3.)
From Tactical To Strategic Management
LEGO strategic visions and organization shows that LEGO brand is moving towards the brand leadership model. With an understanding of the changing environment, children are switching from the tradition bricks to electronic gaming. This has prompt LEGO to set up an interactive division to look into these changes. Furthermore, a reorganization of the management team has been set up to look more closely into brand equity.
From the day LEGO started, it has always been a family owned business. Therefore their conceptual model has been focusing towards the brand image which short-term financial returns are part of the key measurements. On the other hand, to build brand equity contradicts the financial results. The particular dimensions of brand awareness and brand loyalty of the brand equity have been difficult to measure the returns in terms of financial improvement. However to build up these dimensions will definitely reduce the financial returns. LEGO should spend more effort in conceptual model and focus towards the brand equity in the long-term to be a truly brand leadership model and the recent brand building programs such as LEGO League and Save the Children Fund are helping them to steer towards achieving this goal.
From A Limited To Broad Focus
LEGO has been geared towards a brand leadership model with multiple products and markets, complex brand architectures, global perspective, team leader of multiple communication options and an internal and external communication focus. The only dimension that is not in line with the brand leadership model is their focus on a single brand: LEGO. This however gives LEGO the advantage as a branded house rather than a house of brands, where everyone can link the brand to the product.
Driver Of Strategy
It is very clear that LEGO driver of strategy is towards the brand identity. Careful identification of the brand identity elements will able to lead the LEGO brand that differentiates from the competitors.
4. BRAND LEADERSHIP TASK
The elements of the brand leadership task are as follows:
Organizational Structure And Process
LEGO has a Senior Vice President of the Global Brand Communication that heads the Global Brand PR Team in London where the Regional Brand PR Team will be reporting to him.
Brand Architecture
LEGO uses a Branded House model, where the LEGO brand is the master brand and primary driver.
Brand Building Programs
LEGO started the LEGO League and Save The Children fund, develop LEGOLAND theme parks and opening of Brand stores in Cologne and London as part of the global brand building effort.
Brand Identity
Cultivating a child's creativity through learning while play, the brand essence of LEGO is, "Just Imagine".
5. BRAND IDENTITY PLANNING MODEL (GLOBAL)
5.1. Brand Essence
Just Imagine
Practicing the idea of lifelong creativity, imagination and learning through play in the nurturing of children. All LEGO products appeal to children's imagination by offering them unlimited possibilities.
5.2. Core Identity
Innovative
The LEGO brand has always stayed in touch with current trends through continuous product development and innovative contributions to the LEGO universe.
Creative
Stimulating learning through creativity and also the creative development and launch of new products.
Safe
LEGO continuously reviews their environmental and safety procedures to ensure that their minimum standard is at least equal to the most stringent in the industry. The LEGO brick plastic is colour-proof, durable and non-toxic.
High Quality
There is an emphasis on maintaining the highest standards of quality in three main areas: Technical (play materials must be durable, stable, consistent and safe), Consumer (play materials must provide unlimited opportunities and permit children to play in different ways) and Development (play materials must stimulate and develop children's senses, motor abilities, imagination, creativity and intelligence).
Promotes Child Learning and Development
LEGO stimulates learning through creative and imaginative play and psychology experts have shown that this is an important part of child development.
5.3. Extended Identity
Product Scope
LEGO has a wide range of products covering play materials, the LEGOLAND theme parks, lifestyle products (like clothes and watches) and media products (like the interactive games and software). Most of the products are under the LEGO brand while there are also sub-brands like BIONICLE and co-branded products with Star Wars and Harry Potter.
Corporate Citizenship
LEGO supports the international charity called Save the Children. With this source of aid, Save the Children will be able to offer former child soldiers, street children and child prostitutes a program of education and specific projects designed to give them peace, concentration and immersion in personal development.
Company Logo
The word 'LEGO' is immediately recognizable as a company trademark. It is protected and must be written in capital letters.
Heritage
The first LEGO toys were developed in 1932 in Denmark.
5.4. Value Proposition
Functional Benefits
Innovative and high quality toys that are safe for children to play with and at the same time, promote child development and learning.
Emotional Benefits
Playing with LEGO toys generates feelings of fun, friendliness and excitement
Self-expressive Benefits
"I Have The Power to Create"
LEGO toys release the power in children to create. It provides the capacity to stimulate creativity and imagination.
5.5. Relationship
A fun, creative and caring friend that I can play with and learn from as well.
6. BRAND IDENTITY PLANNING MODEL (GLOBAL VS LOCAL)
Local Adaptations For Japan
There is only a slight adaptation for the LEGO brand identity in Japan. All the core identity elements remain the same except for a small difference. This difference occurs in the 6-14 age groups. In Japan, a child's life is split into two parts - academic life and leisure. Japanese mothers will give their kids a greater say in what sort of toys they want as a reward for their studies. If LEGO is promoted as an educational toy to this age group, they will not be interested as they are fed up with study. In Japan, you study to learn and you play to have fun.
As for the elements in the extended identity, the product scope emphasis is more on LEGO Lifestyle. The aim for LEGO Lifestyle is to heighten awareness of the LEGO brand and to promote the sale of other products. It is for providing pleasure, comfort and confidence to children around the world and also to stay true to the spirit behind the LEGO bricks: the colours, the imagination and the fun. In Japan, the LEGO brand has gained trend status with many Japanese teenagers. These young people are buying more and more LEGO products, especially clothing and accessories. Some products which are meant for children (like the LEGO watches) are being bought by adults. LEGO has also started aiming special activities and promotions at this target group.
At the moment, LEGO does not support any community projects in Japan. The Save the Children charity is an international group but LEGO supports mainly the Danish arm of the group.
The company logo and trademark remains unchanged in Japan. It still remains as the capital letters in English. However, there is another example of local adaptation for the LEGO Mindstorms product. LEGO Mindstorms was extremely popular in Japan. Thus, LEGO developed a native-language version. All the software and instructions are written in Japanese and it requires a Japanese version of Windows 98 to run.
LEGO also promoted its brand heritage by holding a LEGO exhibition in Parco (a department store for young people) centred on the LEGO brand and history.
In Japan, LEGO also had a brand image of being expensive, imported and only for pre-schoolers. However, that has changed with the interest continuing to increase among the young families and trend set. Many think that European brands like LEGO are cool. LEGO Japan has started cultivating them as a market segment.
7. BRAND IDENTITY ELABORATION MODEL
7.1. Identity-Supporting Programs Audit
Strategic Imperatives
A quick foray into the world of toys and play brings one to the concept of open-end and close-end toys. Today's kid has the option to turn to the Play station, Xbox or Game Cube for entertainment. These so-called 'close-end' newcomers compete against old-fashioned toys like LEGO, which are considered open-end toys as they aim to encourage children to create, assemble and design. In order to compete with these e-toys in the digital age, LEGO had to embrace and incorporate new technology. Thus, LEGO Interactive was formed. Their mission is to create world-class interactive entertainment for 6-12 year old gamers based on LEGO intellectual property and brand values.
LEGO Interactive media collaborates closely with selected partners (like Game boy) in the development of interactive games for children and young people. All games are based on existing universes in the play materials. The objective of the software is to stimulate children's imagination and encourage and challenge them to go beyond their limits and explore places they have not been before. The games will give children a unique experience. This is strategic for LEGO to realize their vision of becoming the world's strongest brand among families with children in the year 2005.
Proof Points
LEGO has a strict set of brand values that includes such rules as all LEGO products must assemble (stimulate creativity and imagination) and no toy shall portray 20th century weaponry (safety).
Another point is the LEGOLAND theme parks which can be seen as an extension of the brand identity. These are family theme parks where children step into an amusing and stimulating world primarily based on LEGO bricks. These are not only appealing tourist attractions but they also provide children with fun and creative play for their development.
Role Models
Children (External role model)
They are curious, creative and imaginative. They embrace discovery and wonder. They are natural learners. These are precious qualities that should be nurtured and stimulated throughout life.
Visual Metaphor
As fun, creative and exciting as the most popular bloke in town
7.2. Brand Identity Prioritization
Owned versus Aspirational Associations
Since the 1930s, the company's motto has been 'Only the Best is Good Enough' and this has been the guiding principle till today. Thus, the toys are known for their high standard of quality and safety. LEGO has managed to keep itself going at the highest levels of achievement. It has managed to stay relevant in a highly competitive and ever-changing toy industry. The company has been moulding its familiar studded bricks since 1949 and is currently the fourth largest toy manufacturer in the world.
LEGO aspires to be the best-known toy brand in the world by 2005. LEGO wants the brand to be visible in the everyday family landscape and always within reach for children all around the world. This will enable children at all times to engage in playful activities that encourage hands-on and minds-on creation, togetherness and the sharing of ideas.
Associations that Differentiate and Resonate
Although LEGO started with wooden toys, the brand today has always been associated with the plastic (red) brick that first came out over 50 years ago and which made the company famous. The distinctive LEGO brick is the 'LEGO System of Play' that differentiates it from other toys.
In 1958, a new coupling system for the LEGO brick was invented. Tubes were added inside the hollow brick that resulted in greater structural stability. This made the combination possibilities almost infinite. LEGO patented this system, thus, there is no other brick like it.
There is no other educational toy like it. The functional and emotional benefits are also points of differentiation that resonate with LEGO customers. LEGO stimulates creativity and imagination while having fun and promotes learning and development. The design and build of LEGO elements provide endless possibilities and are even compatible with those produced since 1958. LEGO encourages children (and adults) to explore, experience and express their own world - a world without limits.
8. BRAND RELATIONSHIP SPECTRUM
LEGO currently uses the branded house model for all its offerings. This has been largely successful for LEGO because the range shares a common brand essence and brand identity. At the same time, LEGO has been nurturing sub-brands, such as Bionicle, and carefully moderating the prominence of the LEGO master brand when any of the sub-brands become established. Bionicle, though successful, is a product that targets the same audience as and explicitly shares the same brand identity as the rest of LEGO products. It is therefore unnecessary to commit to Bionicle as an eventual master brand. Diminishing the LEGO endorsement of Bionicle too much could even risk weakening the sub-brand.
One key aspect of the LEGO brand identity is its appeal to the target age group of those below twelve. As LEGO ventures beyond this segment, it might be worthwhile to consider the use of the house of brands approach, for example, creativity training workshop for adult (Serious Play) and digital interactive games for teenager. Separate master brands with different brand essence and brand identity might enable the company to adapt and appeal better to the different audiences whereas the LEGO master brand could be relegated as the shadow endorser to imply the creativity and quality ingredient inherent in all LEGO products.
In the seven decades of its existence, however, LEGO does not seem to have a single sub-brand or a second master brand that could stand on its own feet. The fact that LEGO to date remains a family business could arguably be the reason for it being committed and conservative with regard to the LEGO brand.
LEGO As Master Brand And Primary Driver
Most of the LEGO core products use the LEGO master brand as the primary driver, which we believe will influence over a buyers' ultimate buying decision, while the sub-brands merely playing the role of descriptors to differentiate the variety of choices.
Additionally, LEGO enters into alliances with some companies to take advantage of the popularity of their franchises. For example, LEGO has had successful co-branding relationship with Nike, in which the popular shoemaker endorses the Bionicle themed shoes; LEGO has offered brick toys with the Star Wars, Harry Potter and other faddish themes. These co-branding relationships provide credibility, and enable LEGO to take advantage of the hypes of the popular themes. We believe LEGO should enter into more of such co-branding relationships to continuously refresh the LEGO brick toy, a fifty years old product. However, LEGO must be conscious that these alliances are non-exclusive in nature and ultimately, what motivates the buyers to select Star War themed brick or Bionicle themed Nike shoes is the value that LEGO itself offers. We estimate that, in such scenarios, the LEGO brand provides seventy percent of the driving factor while the partner brands provide the remainder.
Brand Extension Using Sub-Brands
LEGO has no less than twenty sub-brands across its entire range of offerings. The value that these sub-brands offer to LEGO is that they provide variety, and more importantly, enable LEGO to continuously rejuvenate the fifty years old LEGO brick toy. As mentioned, most of sub-brands use the LEGO master brand as the primary driver, while a selected few have been promoted to take on a co-driver role. Since any of the sub-brands can be inconspicuously phased out at anytime, in parallel, they allow LEGO to carefully nurture those with potential to play a more significant role in the future. Hence, we believe that the advantage of an extensive line of sub-brands outweigh the possibility of any confusion that may arise.
Branded House Vs House Of Brands - Comparison Between LEGO And Competitors
Hasbro, the world's second largest toy manufacturer, uses the house of brands approach. (It is also interesting to point out that both Mattel and Bandai, the two other toy powerhouses, have also adopted the house of brands approach). Hasbro has no less than ten categories of products, which are loose grouping of products that have closely resembled nature of play. Each of these categories does not share a common theme with another and targets at across different market segments. For instance, some of the categories are action figures, creative play, dolls/minidolls, board games, interactive electronics, outdoor play, plush, vehicles etc. In total, the company has no less than a few hundred individually branded products. Some of the notably known products are board games such as Scrabble and Monopoly, Mr. Potato Head and Furby in the Plush category, action figures such as GI Joe and Transformers. The advantage of the house of brands approach for Hasbro is that it facilitates a greater space for market experimentation with new and innovative products, without putting a master brand at stake. This is particularly useful as the toy industry is characterized by the short attention span and fickle-mindedness of children. However, the trade off is that each product or brand will require its own promotional budget and lacks the synergies that can be leveraged off a mainstay brand.
LEGO in contrast represents the other spectrum of the branding strategy, i.e. as a branded house. Every single product in the LEGO portfolio carries the LEGO brand. This is possible for LEGO, as the products adhere firmly to five widely recognizable values of LEGO: Creativity, Imagination, Learning, Fun and Quality. In addition, the LEGO brand implies compatibility, that different sets of LEGO toys could be combined as extensions. This is much like the combination of desktop applications between Microsoft Windows and Microsoft Office, which too imply compatibility and integration. The role of sub-brands in the LEGO portfolio plays the role of, initially, descriptor. Depending on the success of the sub-brand, the LEGO brand might be moderated while the sub-brand featured more prominently. For example, when the Bionicle product was initially launched, the LEGO brand was the primary driver and a strong endorser. Eventually Bionicle was proven so successful that the sub-brand began to be featured more boldly as the co-driver for the product.
9. BRAND ARCHITECTURE MODEL / BRAND ARCHITECTURE AUDIT
9.1. Portfolio Roles
Strategic Brand
Throughout the LEGO portfolio, the LEGO master brand has been the sole strategic brand and is expected to remain so in the near future. There is no sign that LEGO is going to diversify from its core business segment in any significant way, which might justify the need of a separate brand with a primary driver role. In addition, we have not been able to identify a sub-brand that currently represents or could potentially drive a meaningful portion of LEGO sales and profit on its own.
Linchpin Brand
In spite of the lack in an alternative strategic brand, LEGO has invested in the development of several linchpin brands: LEGO Club (loyalty club), First LEGO League (annual science competition), and LEGO Learning Institute (children creativity development centre). Each of these caters to the development of children's loyalty to the company.
Cash Cow Brand
LEGO Brick is a fifty years old product of LEGO that require considerably less promotion as compared to other products, while continue to contribute funding to the development of other brands.
9.2. Product-Market Context Roles
Bionicle is the most relevant product in the portfolio to illustrate the product-market context roles in relation to LEGO. In the beginning, the LEGO master brand is the strong endorser whereas Bionicle, a non-brick toy, was the benefit sub-brand. When Bionicle was proven sufficiently popular, the sub-brand gained increase prominence and became a co-driver in its own right. During which the interactive version of the product was subsequently launched, the Bionicle sub-brand became the primary driver. In the context of the launch of Bionicle shoes, the Bionicle sub-brand is the primary driver, with both LEGO and Nike as the endorsers. It would be reasonable to expect that if Bionicle continues its growth and success, LEGO might be tempted to spin off Bionicle as a lucrative and independent franchise. In this case, we can see how LEGO had thoughtfully nurtured a sub-brand from the start, and evolved it to suit two different market contexts, i.e. interactive games and wear.
In a different case, the LEGOLAND theme park, LEGO is the strong endorser and the LEGOLAND sub-brand modifies the associations of that master brand to the theme park context. While LEGOLAND might be diversification from LEGO's traditional toy business, however, the spirit remains the same. It is the LEGO master brand that would drive the human traffic to visit the destination.
Some of the existing co-branding partners of LEGO are, Nike, Star Wars and Harry Potter. The Nike alliance serves an important endorser role to help drive the Bionicle footwear, similarly, the alliance with Star Wars and Harry Potter add variety to the LEGO brick toy. It is the team's believe that such alliances contribute to the continuous rejuvenation of the LEGO brand and extending the variety of the LEGO brick toy. The co-branding approach might also require less investment and pose less risk as compared to developing many meaningful sub-brands from scratch. We would therefore recommend that LEGO continue to explore further co-branding opportunities with popular themes, such as Pokemon, McDonalds, and others.
9.3. Brand Portfolio Structure
In reference to the hierarchy tree in the previous section, we can observe that LEGO groups all of its products within the umbrella master brand of LEGO. It has been careful not to dilute the significance of the LEGO master brand by distracting its audience to many different brands. We can speculate several plausible reasons for this. Firstly, beside LEGO brick, LEGO has not had another winning product that could be completely spun off as an independent franchise. Secondly, LEGO as a family-owned business could have significant emotional attachment to the LEGO brand, thus placing a greater emphasis on its brand image, than brand equity. Thirdly, the company insists that the entire range of products share a common brand essence and core identity. The third reason seemed the most valid and logical of all. While each product is different in terms of product type (e.g. brick, footwear, theme park, interactive games), segment (e.g. children up to age twelve for most products versus Serious Play for adults), or channel (e.g. toy, theme park), they all explicitly share the same value: Creativity, Imagination, Learning, Fun and Quality.
0. BRAND BUILDING - LESSONS TO LEARN FROM ADIDAS AND NIKE
Brand Building Is Not Just Advertising
Just like Nike and Adidas, LEGO Company is aware that to build a Brand it requires much more than advertising alone. Although LEGO Company engaged an advertising powerhouse Young and Rubicam, it was licensing agreements that played a pivoting role for LEGO Company. In 1998, the LEGO Company went hand and glove with Lucas film and creates LEGO-based Star Wars toys. This went on to spawn toys inspired by Bob the Builder, Harry Potter, and Winnie the Pooh as well as a new set series called Bionicle, which is essentially a line of build-it-yourself action figures using computer technology. It also has a high-tech line called Mindstorm, which was developed at the Massachusetts Institute of Technology and actually has computers built into the bricks that look a lot like Robot toys. Future plans include associations with the National Basketball Association (NBA) and Intel.
Fifty years after the sale of the first distinctive and high-quality LEGO brick, the decision to embrace licensing became necessary as flagging sales cannot be further bolster when - and ironically the durability of, the bricks parents still have are being passed down to their children.
Additionally, LEGO Company also rides on free public endorsements from Lugnet (LEGO Users Group Network), a community of LEGO fans, which is completely independent from LEGO. Through its viral marketing LUGNET has promoted the brand as well as LEGO can.
Brand Building Involves Innovation
LEGO Company understands that they have to evolve and mature together with the changing curiosity of a new generation that calls for an even wider range of products. Thus, LEGO Company embarks on a "Total Growing Environment" concept with:
* LEGO Play - LEGO Explore (for young children below the age of 6), LEGO Bionicle (fantasy), LEGO Creator (Interactive), LEGO Belville (young girls) and SCALA (older girls), LEGO TECHNIC and LEGO Mindstorms (more difficult constructions for older kids).
* LEGO Lifestyle - LEGO Wear, Watches and Clocks, Books and Board Games.
* LEGO Interactive - media-interactive software as well as TV programs, books, magazine, videotapes and music.
* LEGO Serious Play - an adult learning tool that engages in play with the purpose of uncovering insights about business which is designed to transform strategic planning into a process of continuous strategizing.
* LEGOLAND Parks - family parks showcasing buildings and landscapes in mini land with exhibitions and shows while exploring the world of LEGO play materials. LEGO Company has LEGOLAND parks in Billon (Denmark), Windsor (Great Britain), Carlsbad (California) and Deutschland (southern Germany).
* LEGO.com - Provide a virtual home for loyalists. It allows children, parents and enthusiasts of all ages to play and experience the values and ideas of the LEGO Company in a variety of unique games, stories, activities and adventures.
Products Are Key To The LEGO Brand
LEGO Company knew that their Brand could only be as good as their LEGO products. Therefore, the LEGO play materials maintain the highest standards on quality regardless whether is it Technical, Consumer and Development (as mentioned under Brand Identity Planning Model).
LEGO Connects With Customers On An Emotional Level
LEGO Company understands customers' values change with time and culture thus, through innovation and adaptation they launches new product with great success even in a tough foreign market like Japan because they listen and communicate with their customer on an emotional level.
LEGO Company recognizes that the best brand management is that which speaks the organization's value and relies on a continuous two-way communication to understand its consumer. Thus, through its website www.LEGO.com, LEGO Company was able to "diagnosis" its customers and have an insight into what they value emotionally. Ms. Trine Nissen, communications consultant for the LEGO Company, says that an average visitor to the site spent about 48.5 minutes and the LGEO site offers "a place where children can leave their thoughts about LEGO..."
1. ROLE OF SPONSORSHIP
Become Part Of An Event/Customer Bond
In November 2001, LEGO Company and the Danish arm of an international charity, "Save the Children", signed a 5-year agreement involving support to the value of DDK 1 million a year to the work "Save the Children" - primary outside Denmark. LEGO Company is now synonymous with "Save the Children" campaign.
An agreement has been made under a rolling aid programme that sees children in "Save the Children" focus on Bangladesh, Ethiopia, Guatemala and Uganda on a rotation basis.
Provide An Experience
Monies from this fund goes into helping former children soldiers, street children, child workers and child prostitutes with educational programs and specific projects to give them peace, concentration and immersion in personal development. These children have endured and suffered great traumas at an early age and LEGO Company intends to pursue their 70-year-old belief of ensuring that the precious qualities of curiosity, imagination and creativity in children all over the world are given a chance to embrace new discovery and wonders. These children should be provided an equal opportunity; as natural learners, to be nurtured and stimulated throughout their childhood - regardless whether they are a paying customers or otherwise.
This provides children under this program a childhood that encompasses play and learning - a concept which both the LEGO Company and "Save the Children" know are crucial to the continuing development of a growing child.
With this source of financial aid, schools will be build, teachers can be trained, new school materials can be developed, educational and care projects can also be promoted.
Demonstrate New Products/ Technologies
With no disrespect or any ill intended motives to the "Save the Children" program, LEGO Company introduced new LEGO products and put them on "trial" in the Play and Learning project (under the "Save the Children" program). Behaviors and reactions of the children were monitored and studied to ensure that LEGO play material continue to focus on stimulating children's imagination and creativity by encouraging them to explore, experience and express.
The LEGO Company wants to ensure that these qualities are not been diluted by their move into an interactive and virtual playing environment; a quantum leap from the first LEGO brick that pioneers educational and creative play.
Create Brand Exposures
LEGO Company and its advertising agency - Young and Rubicam, were able to leverage off the positive publicity from its sponsorship of the "Save The Children" program to good use. The LEGO brand is now a familiar name in countries like Bangladesh, Ethiopia, Guatemala and Uganda. And even if language was a problem amongst these low literacy countries, the all familiar red LEGO brick symbol has even more prominence now than before and is probably synonymous with the hope that the Red Cross symbol that offers.
LEGO rides further into building brand awareness by jumping on the bandwagon of the widespread campaigning arms of the Danish International charity organization.
Develop Brand Associations
With the successful sponsorship of "Save the Children" program, LEGO Company has further strengthen their age old company philosophy of nurturing children's creativity and curiosity.
LEGO Company has always play down their corporate image and with the charitable sponsorship of "Save the Children" and the fact that they are still a privately owned and run company helps make their mission statement more genuine and heartfelt.
With these positive reinforcements strengthening the power of the LEGO brand, the LEGO Company is able to bring public relations into the heart of the marketing communications mix, as well as helping to bring greater coherence and focus in all LEGO brand building efforts to penetrate into new markets.
2. BUILDING BRAND - THE ROLE OF LEGO.COM
LEGO.COM Creates A Positive Experience
The likelihood of baby boomers who are parents now buying open-end, traditional toy brands (probably purely for nostalgic reasons), is getting smaller and smaller. If open-end toy brands are to survive, they will have to use the same or comparable marketing and brand building techniques as their high-tech competitors by leveraging the Internet to make sure that parents, who are more and more concerned that their kids get a leg up on the neighbours, are reassured.
LEGO Company is well aware of the fact, and with that came along the birth of LEGO.com which is intended to be a virtual LEGO Land - it is actually one of the most intensive LEGO brand experiences one can have apart from spending a day in the LEGOLAND theme park.
LEGO.com provides an all-encompassing positive experience. This comprehensive site is heavy on the content and games. LEGO.com is a do-all portal that allows access to both the old and new realm of products including software, watches, pens, clothing, books and In Motion.
Recognizing that today's child spends as much time in front of the computer monitor as the television screen, LEGO Company formed partnerships with Game Boy and Warner Brothers to develop and publish children's media-interactive software. Bionicle, one of these games, was created to appeal to an older audience of 10 to 12 year-olds and is also featured in French and German.
One of the site's best features is LEGO Studios. The brand's foray into show business is a co-branding effort endorsed by director Steven Spielberg, created to spur the imagination of fertile young minds, with proceeds of product sales going to charity. This nifty feature allows kids to use LEGO bricks to create mock films like "Jurassic Bark." One part that was particularly amusing was a LEGO rendition of Monty Python's "Knights of the Round Table." To further encourage use of the product, the site accepts submissions from the junior filmmakers they hope to engage.
The Build area is a how-to section, displaying inventive LEGO configurations and the way to achieve them, like how to make a LEGO Mona Lisa. Play Jr. features interactive games for small children who would sooner eat LEGO then play with it. Worthy of honourable mention is Create N' Race or LEGO technic, a more sophisticated product new line of race cars that little boys (or girls) can build.
It Reflects And Supports The LEGO Brand
Children today have access to the Internet almost on a daily basis to a world that baffles many parents but enthrals children. In LEGO Company, the responsibility is on them to make this world as safe and as rewarding as possible for these children.
With an engaging design, sophisticated interactive components and extensive product information, LEGO.com is an accurate portrayal of its philosophy - an enhanced experience where you can play while you learn.
Provide A Home For Loyalist
LEGO.com is much more than a mere catalogue for LEGO products. It is actually a "sand box" for the Brand that allows children, parents and fans of all ages to play and experience the values and ideas of the LEGO Company in a variety of unique games, stories, activities and adventures.
LEGO.COM Also Looks For Synergy With Other Communications Programs
LEGO.COM serves as launch pad for new products, creates awareness, provide in-depth details that is not available on the packages of the toys.
Finally, LEGO.COM also provides one of the biggest "on-line" clubs to build a community for its fans to interact.
3. BRAND BUILDING BEYOND ADVERTISING - LEGO IN JAPAN MARKET
LEGO does very little media advertising in the global market that they are present in. They leverage a lot on other forms of advertising to build their brand as we have seen in earlier sections, amongst which includes, sponsorship, web, LEGOLAND and LEGO League. This approach is also deemed feasible in the Japanese market and we shall now look at how LEGO will embark on Brand building beyond advertising programs in Japan. We will now discuss the ten guidelines from the model that LEGO should use to build their brand in the Japanese market as follows:
Clarify the Brand Identity, Value Proposition and Position
The global brand essence of "Just Imagine" and the core identity of Creativity, Imagination, Learning, Fun and Quality will remain unchanged in the Japanese market as children are the same whatever nationalities, race or religion they are, as LEGO stimulates a child's creativity, imagination and learning when the "red square brick" is left to a child's discretion and play. However, the extended identity of LEGO needs a little refinement or adaptation as LEGO is also targeted at the older market segment i.e., teenagers and the emphasis on communications of the brand is geared towards more of a lifestyle product than merely just a toy.
The functional, emotional and self-expressive benefits found in the value proposition of the brand will not changed but will be emphasized to show that LEGO is a good, safe product to play which invokes many hours of fun and excitement that culminates with the satisfaction of building "something from nothing"...the self-expressive benefits of "I am a builder/creator!"
Brand positioning for LEGO in Japan will move towards a more lifestyle product...more than just a toy. This shift in the brand image of LEGO will not blur the original brand essence of LEGO as the brand identity is still the same except that the image and the emotional benefit of owning a LEGO product is now seem to be more of a lifestyle desire than a mere physical product.
Find the Sweet Spot
The deep relationship that LEGO has built with her customers and one that resonates with them is the word "IMAGINATION". This is a powerful metaphor as one's creativity to build something invariably always starts with a dream or a vision. From there, a person will build upon this vision by imagining all the possibilities before it is finally turned into something physical. This is the essence of LEGO and the sweet spot that will resonate with LEGO's customers and they have even emphasized this sweet spot by creating a slogan "Just Imagine", which incidentally, is also their brand essence.
Find the Driving Idea
The unique driving idea for LEGO is the symbol of the "red square brick". Everyone that has come in contact with LEGO products will always remember that it is a red square brick that can be joined together before it is a Harry Potter or a Star War series. This is a strong universal recognition of LEGO as a brand as everything from LEGO always starts with a "red square brick". In fact, we can observe that LEGO have leverage on this driving idea and use it as it's backbone in brand building program, e.g. LEGOLAND.
Involve the Customer
LEGO has many brand building initiatives that allows a potential customer to experience what the brand can offer. Some examples includes having an interactive website, LEGO.com (discussed in earlier section), bringing LEGO to life in the form of an interactive theme park, LEGOLAND and allowing children hands-on experience in science projects using LEGO bricks in LEGO League competition. These initiatives will be extended to the Japanese market with some local cultural adaptations.
Surround the Customer
In the Japan market, LEGO should attempt to surround her customer with inter-locking brand building program to enhance the brand image of LEGO. These would include, developing a first Asian LEGO Land theme park within Japan, opening of Brand Stores in major Japanese cities (this will bring out the lifestyle identity of the brand), organizing LEGO League amongst Japanese schools, community / family bonding activities like Father & Son LEGO building contest and holding LEGO exhibition in department stores.
Define the Target
In order for LEGO to resonate with customers in Japan, it is essential that the brand building programs be focused on the correct customer target or segments. As we have seen from earlier discussion, the target segment for LEGO in Japan are families with children, be it families with young children or teenagers.
Break out of the Clutter
For LEGO to break out from the clutter from other toy manufacturers, LEGO have to be innovative in their brand building programs and already have an advantage as they have the expertise of developing and running an interactive theme park in LEGOLAND and this expertise can be transferred and replicate in Japan, the organizing of LEGO League, which cannot be easily replicated by other competitors as this is an owned event and finally, creating innovative and surprising promotions to shock, surprise and delight their customers in LEGO Brand stores around Japan.
Link the Brand Building to the Brand
The LEGO brand is the centrepiece of all brand building programs in Japan. The advantage that LEGO already possesses is that they owned sponsorship program like the LEGO League which is difficult to replicate by competitors and builds on the LEGO brand; the opening of LEGO Land in Japan will definitely out run competition in brand awareness and exposure as visitors to the theme park will inadvertently link the experience of the visit to the LEGO brand.
Strive for Authenticity and Substance
The brand association that LEGO wants to engage with their customers in Japan is that products from LEGO has a long heritage of toy making / manufacturing since 1932 and that LEGO understands what a child wants in a toy. In addition, LEGO prides itself with their strict quality control and toy safety in their manufacturing process and is a genuine European product, which is cherished by Japanese customers as a lifestyle product and considered cool.
Stretch the Program - Give it Legs
Apart from the entire brand building program described above, LEGO can leverage on these programs and stretch them beyond the core segment so that more brand exposure can be achieved. This can be done by organizing mini-LEGO League within cities and municipalities schools of all levels (pre-school, primary and secondary schools), gaming competition using Bionicle as the platform, joint promotions with fast food companies like McDonald's to give away LEGO bricks (as a series to build a Bionicle hero figure) as part of a child's meal.
4. GLOBAL BRANDS
4.1. Effective Global Brand Management
LEGO practices global brand leadership and do not profess themselves to be a global brand as there are many factors that deter them from being a truly global brand, especially the need for LEGO to be localized in their brand communication efforts in Japan. LEGO does create an organization in global brand leadership in Japan that has the following attributes as follows:
Sharing Insights and Best Practices
Generic promotion programs flaunting the lifestyle aspects of the brand deemed to be successful in their brand stores in London and Cologne will be replicated in the Japan brand stores, although certain localization aspects will be considered e.g., posters, point of sales materials to be in the kanji language. Another example is the customer service levels which is usually high in Japan will be shared with other counterparts around the world.
Global Brand Planning Process
To be discussed in the following section 14.2.
Assigning Responsibility for Creating Cross-Country Synergy
Although the regional brand PR team to be set-up in Japan is responsible for the local aspects and nuances of the brand communications in Japan, however, LEGO has created a centralized Global Brand PR Team in London, headed by a Top Executive manager to look after all the global brand communications so that messages sent out concerning the brand will be consistent.
System to Delivering Brand Building Brilliance
The regional brand PR team in Japan will champion brand building programs in Japan with the support and resources from the Global Brand PR team. Local programs will be done with the local flavour and nuances taken into consideration without any dilution or confusion to the global brand. This will be keenly watched by the Global Brand PR team so that brand dilution or brand confusion will not take place unconsciously.
4.2. Global Brand Planning For Japan Market
LEGO is a brand that practices global brand leadership. They have implemented a global brand planning template that is consistent across markets and products. Although we do not have privy to LEGO global brand planning system through open literature, we will now try to analyzed and suggest the type of brand planning system LEGO should embark on in the Japan market.
Strategic Analysis
(i) Customer Analysis - The target market or segment is the same globally or in Japan for LEGO i.e., families with children. The value proposition that is held centrally by customers in Japan will remain as the power to create and the satisfaction of building "something from nothing".
(ii) Competitor Analysis - Competitors for LEGO in Japan will include traditional rival toy manufacturers like Mattel, Hasbro and the home-grown Bandai. Though competition is intense, however, LEGO is in an advantageous position as their competitors have lower brand exposure. As an example, consumer will recognize a Barbie doll but hardly will know that Mattel produces them, thus a consumer only recognize a product name and not the brand. This is advantageous for LEGO as the brand resonates with customers and any product extension e.g., Bionicle, will be readily accepted as customers knows LEGO as a brand they recognize and subsequent affiliations with the extension will become easier for the product to be accepted.
(iii) Brand Analysis - The LEGO brand image and awareness in Japan is relatively weak compared to other developed LEGO markets in US or Europe (as indicated in earlier section). As LEGO do not engaged in heavy advertising spending and rely a lot on sponsorship and publicity for the brand building, the imperatives is for LEGO to quickly leverage their strength in other brand building programs in Japan so as to build up awareness. Besides, LEGO is pitted against a home grown toy manufacturer in BANDAI that has enjoyed strong customer associations as being a Japanese manufacturer as well as being in tune with Japanese customer's needs.
Brand Strategy
The brand strategy that LEGO must adopt in Japan will be the same globally with a slight local modification. As discussed in the earlier section, LEGO will tweak its brand identity to allow the brand to be a lifestyle brand and will also cater to teenagers. However, LEGO brand will still be maintained as the strategic brand with offering of sub-brands using localized cartoon icons, e.g., POKEMON together with internationally recognized cartoon or movie icons that is already marketed by LEGO e.g., Harry Potter, Star Wars.
Though the brand identity is adapted to the local market, however, the emotional and self-expressive value proposition of the brand will have to remain unchanged, together with the "red brick" LEGO symbol/logo that will not be modified to the kanji language.
Brand Building Programs
The brand position of LEGO in Japan is that it is a lifestyle product and the goals of brand building programs must be geared towards raising the brand awareness of LEGO. Some brand building initiatives to realize this goal includes:
(i) Develop and build the first LEGOLAND in Asia within Japan.
(ii) Extend the LEGO Save the Children fund sponsorship program to cover street children, former children soldier and child prostitutes from Asian regions.
(iii) Sponsor the first Asia LEGO League championship using Japan as the launch point and creating and owning a LEGO League World Cup using Japan as the host country following Japan's successful hosting of the soccer World Cup finals.
(iv) Create community and family bonding programs by introducing the first Father & Son LEGO creation / building contest in Japan.
Goals & Measurement
Although we do not have any information of what LEGO's sales and profit goals for the Japan market are, we can conclude that the 2 important goals that LEGO would want to achieved is firstly, to raise the brand awareness of the brand to the same levels as those perceived in the US or European market i.e., in excess of 97% and secondly, to be able to establish a good distribution strategy by having a partnership with a chain departmental store e.g., Takashimaya as a entry strategy to the Japanese market.
5. TEN KEYS, SEVEN STEPS TO A GLOBAL BRAND
There are many advantages for a well built global brand, for example, it communicates the company's character and mission, increases profit margins and return of investments to shareholders, allows for top of the mind recall of customers on the perceived quality of the products, etc... For LEGO to achieve a global brand leadership status, we will use James Gregory's model of "Ten Keys and Seven Steps to achieve a global brand" model and apply it to the LEGO brand. This will help us to understand if the brand has what is takes i.e., strengths, to become a well built global brand.
Coherence
The key promise of LEGO is the stimulation of creativity, imagination and learning with a fun and safe product. This is what LEGO is selling to the customer and also the brand promise when you purchase its products.
Consistency
LEGO take a long term view in their brand building, from opening brand stores in London and Cologne and LEGOLAND in Europe and USA, LEGO tries to recreates the "Imagination" metaphor and sensorial experience in these locations to the experience of building and creating models from LEGO bricks. To reinforce brand communication consistency, LEGO even created a new entity in the form of a Global Brand PR Team based in London.
Credibility
LEGO brand and its products have been around for 70 years and since day one, being manufacturing high quality toys. This rich heritage lends a lot of credibility of LEGO as a brand.
Integration
The organization within LEGO is aligned to support a consistent brand image by streamlining the brand into 5 recognizable values of Creativity, Imagination, Learning, Fun and Quality.
Differentiation
LEGO is not just a toy manufacturer and it tries to differentiate itself from the crowd by opening LEGOLAND theme parks, organizing LEGO League and the recent opening of brand stores, similar to Nike Town.
Risk
LEGO is an organization that dares to be different and keeping in touch with market trends. They are willing to take risks if that it what they perceived the market wants. Example of this risk-taking is the entry into the gaming industry via LEGO Interactive and the many marketing alliances with NIKE, NBA, Lucas films, etc.
Support
LEGO continuously re-invest in the brand through committed R&D programs via the LEGO Learning Institute. They work with universities and child psychologists to learn what is the best learning medium for children to bring out the power of creativity and imagination.
Focus
The CEO for LEGO, Kirk Kristiansen, provided a common vision for the brand and employees with a brand vision that states..."to become the world's strongest brand among families with children in year 2005". This has indeed provided a focus for all employees to strive and work towards this achievable and realistic goal.
Relevance
LEGO evolves with changing times, from a simple plastic block to interactive games. This is achieved by the organization providing relevance to the brand by listening constantly to the ever-changing needs of customer and plugging-in to current market trends.
Leadership
LEGO recognizes that in order for the brand to succeed, an integrated brand communication plan is crucial and to achieve this, there must be a person in charge of the brand, to provide consistent and constant brand messages and communications. This is apparent when LEGO appointed Francesco Ciccolllela as the SVP, Global Brand Communication in mid- 2002 to head the Global Brand PR Team in London. He is the focal point for all strategic brand planning and he co-ordinates consistent and constant brand communications with regional brand PR teams in the world.
6. RECOMMENDATIONS
From the analysis of James Gregory's Ten Keys, Seven Steps to a Global Brand, we have seen that the global brand strategies of LEGO is up to mark and they have made adjustments and realigned their organization to achieve a global brand leadership status. However, in the Japanese market, LEGO needs a fair bit of adjustment and adaptation if LEGO is to break into the Japan market and made an impact so as to achieve what it has set up to achieve, that is to raise brand awareness of the brand in Japan market on the same level as USA or Europe at 97% and realizing the brand vision of being the strongest brand among families with children by 2005. In order to achieve this twin fold strategy of market dominance and raised brand awareness for the Japanese market, the following are the recommendations for LEGO.
a. To modify and adapt the brand identity, especially the extended identity by focusing the brand communications to include teenagers as a target segment and positioning the brand towards more of a lifestyle product and not merely a toy.
b. Focusing more on brand building programs than media advertising by extending owned sponsorship programs like LEGO League, Save The Children sponsorship program from other countries to Japan.
c. Initiating community and family bonding programs to leverage on local cultural philosophy, where family activities is more important than individual activities. Examples of such programs include Father & Son LEGO creation / building contest.
d. Increase brand awareness and exposure by developing the first LEGO Land theme park (fostering family activities) in Asia within Japan and positioning LEGO as a lifestyle brand with the opening of LEGO Brand Stores where customers will have the same experience in the stores as when they playing with the LEGO bricks.
e. Achieving quick acceptance of LEGO products and therefore the brand by having partnership with other Japanese toy manufacturer. This can be achieved through the co-branding with popular Japanese cartoon icons like Hello Kitty, Pokemon, Digimon, Doraemon, etc...into LEGO brick sets.
f. Committed R&D programs in Japan by working with Japanese universities, child psychologists and PC game developers to introduce new LEGO products that are in tune with the Japanese customers and market trends.
APPENDICES
Exhibit 2.6. Global Strategy Levers
Exhibit 2.7. Actual and Target Globalization by Activity
Exhibit 2.8. Actual and Target Use of Global Marketing
Exhibit 2.9. Competitors' Use of Global Strategies
Exhibit 2.10. Specification of Core Business Strategy
Exhibit 3. Brand Leadership - The Evolving Paradigm
Exhibit 2.6. Global Strategy Levers
Exhibit 2.7. Actual and Target Globalization by Activity
Exhibit 2.8. Actual and Target Use of Global Marketing
Exhibit 2.9. Competitor's Use of Global Strategy
Exhibit 2.10. Specification of Core Business Strategy
Business: LEGO
Region/ Country: Japan
. Business Definition
Customer Needs Addressed: Play, stimulate creativity and imagination and other needs are the same but a shift towards socio-culture (lifestyle) needs as well.
Technologies used: Same technologies used globally
Customer Segments Served: Same children and family with children segments but also teens, young adults and trendsetters.
Products Offered: The same products globally.
Geographic Scope: Japan
2. Strategic Thrust
Direction: Business Growth
Rate: 20% per annum (our team's estimate)
Performance Priorities: Gain Market Share, Improve Revenues and Improve Profitability (in order of priority).
3. Financial Targets
There is no access to such information from open literature.
4. Sources of Competitive Advantage
Sources and order of competitive advantage:
) Strength of brand name and reputation of company: The LEGO brand
2) Product quality: Meeting the international safety standards.
3) Marketing skills: Global Brand PR Team to handle marketing issues and brand communications.
4) Patents: New coupling system for the LEGO brick that results in far greater structure stability. Patented in 1958.
5) Breath of product line: No longer limited to product alone, LEGOLAND is what LEGO represents as an experience.
5. Strategy Elements
Technology: Utilize technology for interactive software to meet the new digital age.
Manufacturing: Allocate more resources for more manufacturing of lifestyle products.
Product Line: Increase focus on lifestyle product line to meet the needs of young Japanese.
Pricing: No change.
Selling Approach: No change.
Marketing Communications: Localized the communications.
Distribution: Maintain present distribution channels which actually accounts for 99% of the sales.
Customer Service: Localized the customer service.
6. Value-Adding Activities
) Research: HQ
2) Development: HQ
3) Procurement: HQ
4) Raw material processing: HQ
5) Intermediate production/subassembly: HQ
6) Final production/final assembly: HQ
7) Marketing: Japan
8) Selling: Japan
9) Distribution: Japan
0) Customer Service: Japan
7. Competitive Strategy
Competitors: Hasbro, Mattel and Bandai
Strategy: To leverage on LEGO brand as a branded house and use the interactive version for the new digital age.
Exhibit 3. Brand Leadership
Corporate Profile, LEGO corporate website, 2003
2 Young & Rubicam, Brandscape: Brand Asset Valuator, 2001
3 Landour Associates, Image Power, 1991
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