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Roundtable: How Lego became the world's biggest toymaker

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Lego has become the world's #1 toymaker
 Time Warner
Lego went from crisis to becoming the world’s largest toy company in the span of a decade. It’s secret isn’t just selling US$1 of raw plastic for $75 – the company excels at engaging with its customers, understands its product, and has made the right strategic partnerships to expand its lineup beyond its namesake building blocks.

We spoke with a number of marketing experts to take a deeper dive into the lessons that other businesses and entrepreneurs can learn about its remarkable turnaround. It’s easiest to place each topic into its own (Lego) bucket, so we've separated each opinion into one of three sections. Here's the first:

A brand that is engaging with its customers:

“They are masters at using content to drive sales for their products… On their social channels they have also shown a strong ability to "Newsjack." Just last night they released an Oscar design that got 1,700 shares and 1,100 likes.” – Rick Ramos, founder of Rick Ramos Consulting 

 “They have created brand stories around was is essentially a commodity product. Lego club magazine is a perfect example of their use of content to sell product.” – Rick Ramos

“Lego is taking the time to deeply connect with their consumers.” - Christian Madsbjerg, founding and managing partner of ReD Associates

“Many companies these days rely on thin data from big data databases or statistics to make products and strategies. Lego is different in the sense that they want to connect with their consumers as people in their full contexts. They want to understand the lived experience of play.” - Christian Madsbjerg

"Lego understands that their consumers are more than consumers, they are people with full lives and the lived experience of play is more than what can be captured in a statistics. It is this deep understanding of its customer groups that makes the success possible." - Christian Madsbjerg

“They have successfully grown their appeal to include both boys and girls.” - Dave Wakeman, principal, Wakeman Consulting Group

“They have maintained a consistent message over generations” - Dave Wakeman

“Lego has found new media and activated both younger and older consumers by touching them in different areas...like The Lego Movie and the Moleskine Lego notebook.” - Dave Wakeman

“Lego has built a clear and consistent Creator 'Brand World', with the right type of language to trigger creator motivations and containing the products, ideas and systems that enable those customers to maintain and improve their creativity.” – Sandra Pickering, founder of opento

Understanding its product

“In addition to the sticking to the core product LEGO has a good understanding of how to ENGAGE its core group of customer; while it is possible to play Lego virtually, the company understands that it is the PHYSICAL nature of LEGO play which really resonates with users.” – Mary Conran, Temple University, Fox School of Business

“Both Children and Adults find satisfaction and challenge in working with LEGO - the company's efforts to stay relevant with connections to pop culture is only icing on the cake.” – Mary Conran

“The new Lego Movie brings all of the product lines together and attempts to inspire kids (and parents) to just build things and not worry about whether it fits the original description. Total freedom to explore!” -- Professor Richard Hanna, assistant academic specialist of Marketing at Northeastern University's D'Amore-McKim School of Business

“Archetypally, Lego is a 'creator' brand that understands and leverages the psychology of their 'creator' customers. Creator brands are characterized by inventiveness, imagination and attention to detail. Creator customers look for brands to reflect and enhance their own creativity. Other examples of Creator brands are Crayola, Apple and M.A.C. cosmetics.” – Sandra Pickering

“They have an incredible product to work with. Building Legos is both educational and fun—and it’s not just for kids. People of all ages can enjoy these products (I am not ashamed to admit I have bought some sets for myself to build!).” - Richard Hanna

“Most parents probably have less apprehension about buying Lego sets because the toys encourage creativity, structure, hand-eye coordination and dexterity, and many other helpful skills. Perhaps the only downside is having hundreds of little Lego pieces to find allover your home.” - Richard Hanna

Strategic partnerships

“Possibly the most important first step was partnering with Lucasfilms in 2000.” -- Richard Hanna

“…The global recognition of the Star Wars brand coupled with Lucasfilm’s keeping Star Wars fresh has helped keep the Star Wars sets a top seller for Lego…It also opened the door for similar relationships with other companies such as Warner Brothers and Disney, among others. - Richard Hanna

“The StarWars Lego games (and subsequently other characters) help keep the Lego brand top of mind as well as reach additional audiences. Moreover, creation of shows such as Ninjago and Legends of Chima that are directly tied to Lego play sets helps further strengthen interest in Lego products.” - Richard Hanna

“Lego has also been very liberal in expanding their lines of niche models and toys, not just the core building blocks that have been the primary product for so long.” – Dave Wakeman

Execution

Lastly, the company has improved its execution. Kirsten Osolind, president of RE:INVENTION, explained that it “stopped spinning its wheels” and focused on key steps to shed its declining margins of the 80s and 90s. Here are her thoughts:

  • Lego shortened go-to-market development time
  • Built “change readiness”
  • Stopped "desperately pursuing" uncontrolled innovation and ultimately improved their innovation success rates.
  • Reorganized to improve accountability and decision-making
  • Shed its unrelated businesses


— By on March 3, 2014, 4:45 PM PST

David Worthington

Contributing Editor

David Worthington has written for BetaNews, eWeek, PC World, Technologizer and ZDNet. Formerly, he was a senior editor at SD Times. He holds a business degree from Temple University. He is based in New York. Follow him on Twitter. Disclosure