Lego’s Longevity Nick Wake looks at the enduring appeal of Lego and examines how the brand has evolved over the years to remain relevant within the children’s toy industry.
H
aving recently celebrated a significant birthday (which is the acceptable expression for turning 50) I am ever more conscious of the enduring appeal of NICK WAKE those brands that were a big part of my early life and which still thrive today - possibly because many are not as visible as they once were. As a child between, let’s say the ages of 8 to 14, the brands that mattered to me, as far as I can recall, in no particular order were: My Mitre football boots, my Commando comics, my Subbuteo, my Bostik glue for fixing my broken Subbuteo players, my Rucanor tennis racket, my Chopper bike, Ribena (on special occasions only) and Milky Ways – the sweet you could eat between meals without ruining your appetite. And of course there was Lego. Some forty years on, there is now a Lego movie – the latest step in the renaissance of a brand that nearly went bust ten years ago. At that time sales were dropping off a cliff amid dire predictions that the digital generation was more interested in manipulating a mouse than snapping together brightly coloured plastic bricks. The curve of the product life-cycle was well and truly in decline. But in February 2014 Lego is resurgent once more. According to a recent article in the Observer (16.02.14), there are now 86 Lego bricks for every person on earth, with around seven sets sold every second (more than 50 since you started reading this article), and all the tyres that clip nicely on to the various Lego modes of transportation, mean that Lego is also the world’s biggest tyre manufacturers. Like all things Scandinavian at the moment, Lego, which originates from Denmark, is on a roll. The characteristics of this colourful comeback - or the 8 Cs of Lego’s longevity – might be classified as follows:
Children The product has broad appeal for a target audience with enormous breadth. And it taps into one huge advantage this audience has over the older generation: imagination. With Lego you can build whatever your imagination desires. It is stimulating, safe, multidimensional and always fresh. And it seems that adults, like me, who grew up with Lego, are returning to it with their own children. The emergence of the “Afols” segment – adult fans of Lego – market it is reported, is a significant feature of the brand’s resurgence.
52
CAMBRIDGE MARKETING REVIEW - ISSUE 8 Q2 2014
VIEWS - WAKE
“Sales were dropping off a cliff amid dire predictions that the digital generation was more interested in manipulating a mouse than snapping together brightly coloured plastic bricks.” Colour Lego bricks are instantly recognisable, not just because of their unique shape, but also because of their colour. Lego is now manufactured in a range of 51 colours, 33 of which are known as solids including the ones that are instantly familiar: bright red, blue, green and yellow. In Lego digital designer, there used to be a bigger range of 121 colours but these have recently been reduced to 52. In colour terms it looks like once you get beyond 50, even in the digital age, you are into the law of diminishing returns. Consistency Like all good brands Lego is remarkably consistent. Not just with colour, size, shape, but also with less tangible dimensions of the brand proposition. For example, Lego would not allow any characters in the new film to kiss. Unlike Ken and Barbie who were allowed to turn up the steam in Toy Story 3, holding plastic hands is as hot as it gets in The Lego Movie. Credibility The credibility enjoyed by Lego is both inherent in its quality, durability and proven appeal. Its simplicity, means that, unlike technology dependent entertainment, there is little that can go wrong. Credibility is also earned. When fans include Ed Sheeran and Britney Spears, it is cool to be into Lego. Earlier this year, David Beckham was in the news for buying a £210 Tower Bridge set because, it was reported, building it helped him calm down. Last year, he enjoyed perhaps his greatest ever accolade in a long and illustrious career, when he was immortalised in his own Lego character. Mind you, I am not sure the researchers were totally on their game on this job. Amid his myriad of hairstyles, I do not ever recall him being a bouffant blonde!
Characterisation Character development - or more accurately licensing – is now playing another huge part in the brand’s revival, though it was arguably also at the heart of its near downfall when the company expanded and diversified too quickly in the late nineties. According to Brikipedia (oh yes) there are two types of licensing: inbound and outbound: • Inbound licensing refers to properties that LEGO gains and creates licensed themes out of, for example Star Wars • Outbound licensing is where a company is given permission to use The LEGO Group’s intellectual property, such as DK Publishing and books or Merlin Entertainments and LEGOLAND theme parks. In his book Brick by Brick, which chronicles Lego’s resurgence, David C. Robertson pinpoints that the company was able to salvage itself and emerge stronger than before by returning to its ‘core values.’ This involved “making retail customers (rather than kids) their primary concern” and further expanding safe-bet licensing deals that featured Harry Potter, Lord of the Rings, and Spongebob Squarepants. Collaboration When the boundaries between company and customer become so small that your customers are co-creating products for you, that is a smart and profitable place to be. Lego do this tremendously well. In the late 1990s the company introduced Lego Mindstorms, which contained software allowing users to create their own robotic Lego creations. Lego users began hacking the software however and shared their new creations online. How Lego reacted was perhaps a turning point in the company’s fortunes. After initial nervousness, they decided to embrace the pirates. To begin with user generated ideas were vetted by Lego staff and if they passed the test, then they were placed into production. As time has moved on Lego has simply accepted the new customer collaboration ecosystem, the mere existence of which is a tribute to the strength of the brand.
“Lego is remarkably consistent. Not just with colour, size, shape, but also with less tangible dimensions of the brand proposition.” CAMBRIDGE MARKETING REVIEW - ISSUE 8 Q2 2014
53
Cost Lego has positioned itself full square in the premium category and thanks to all the Cs mentioned here is batting away the cheaper rivals with impunity. It is not only David Beckham who is perfectly prepared to pay £210 for a Tower Bridge set, the raw materials for which cost less than a $1 a kilo. In his book Robertson points out that the customer is paying around $75 a kilo. That is some serious value add and a healthy profit margin. Creativity Rather like licensing, creativity could be categorised as internal and external. After video games, books, TV shows, T-shirts, robots and theme parks, The Lego Movie might be described as the victory lap of a revival due in no small part to creativity. Externally, the emergence of You Tube has provided amateur movie makers with a wonderful platform for showcasing their amateur movie making talents. One of the most popular genres for doing this in, is Lego Star Wars. Creativity, it seems to me, is inherent in the DNA of the brand which, at its core, invites its customers, young and old, to be as creative as they possibly can be, during the noble pursuit of building something. Meanwhile marketing works behind the scenes to find ever more creative ways of keeping the curve moving upwards.
54
“the company was able to salvage itself and emerge stronger than before by returning to its ‘core values.”
Nick studied at the University of East Anglia in Norwich where he gained a 2:1 BA Joint Honours in Economics and Social Studies, with German. He is a Chartered Marketer with over 20 years experience of B2B and B2C in a variety of contexts including client side (7 years with Whitbread), public sector (3 years with Sport England) and agency side (3 years with CPM Sales Promotion and 8 years with Grass Roots). Nick’s strength and passion is marketing communications – across all channels in all formats. He is now Director of Awaken Communications and tutors for Cambridge Marketing Colleges.
CAMBRIDGE MARKETING REVIEW - ISSUE 8 Q2 2014