Competition

As we’ve learned in the class material this week, companies must go through a number of steps to create an effective marketing plan and strategy.  There are 2 steps that companies must follow in order to create an effective plan.  First, the company must conduct a S.W.O.T. analysis.  Next, companies must decide on which strategic alternative they will use to market their product or service. 

LEGO must reference their S.W.O.T. analysis in order to decide on which competitive advantage they will use within the toy market. 

           Strength:

·         LEGO is a global brand that incorporates educational features to develop skills within young children.

·         LEGO encourages goal oriented and problem solving play.

·         The LEGO brand has moved into video games, TV, and movie merchandise.

·         Extensive advertising and TV commercials continuously engage consumers.

Weakness:

·         Imitations of products and building pattern is a concern.

·         Intense competition.

Opportunity:

·         Strengthen their brand through school programs.

·         Target the girls category to the level that LEGO has done within the boys category.

Threat:

·         Outdoor/Seasonal toys.

·         Video games.

·         Companies whom imitate LEGO’s building pattern and theme based play patterns.

·         Outdoor games.

The next step is to determine what strategic alternative suits LEGO’s needs the best to market their product.  Looking at the definitions for market penetration, market development, product development, and diversification; I would say that LEGO does imply all four.  Market penetration is the most used by LEGO because they know the products they offer can continue to provide positive return on investments within the large retail chains.  Also, LEGO knows that if they continue to record positive comps from the previous year they are likely to increase their market share because the toy industry has not grown over the last few years.  Market development occurs when LEGO recently introduced their LEGO Friends line.  LEGO wanted to attract new customers to their existing brand lines.  The thought was to introduce a girl friendly product that would get them interested in the LEGO brand and in the future lead to cross purchasing back into the boys category with lines like City and Creator.  Product development occurs when LEGO creates new products.  Back when LEGO launched their Ninjago line two years ago, they also released an item called a Spinner.  This new item complemented the Ninjago line, but it was not the typical LEGO building set.  The Spinner involved LEGO bricks, but in a new concept that involved a spinning-top in which consumers could battle one another.  Lastly, diversification takes place when a company pushes their products into new markets.  LEGO is currently purposing the Asian market and putting a heavy push into China.  We have learned that consumer vary from country to country across the globe, but China is extremely challenging because we have experienced many knock-off brands that are offered at a much lower costs.  I believe that LEGO does cover all four of the strategic alternatives, however it depends on what the strategy is for that specific year and that is how LEGO determines to use market penetration, market development, product development, or diversification.