KnowThis Blog Postings
- Published on July 26, 2010
- Posted by Paul Christ
How LEGO Revived Its Brand (BusinessWeek)
One of the trickiest decisions facing marketers is deciding when to move beyond what has made them successful and tackle something new. This is because at some point, nearly all companies find growing their business requires they branch out into new areas that are often unfamiliar. For instance, companies will begin marketing new products that are significantly different compared to the products that made them successful. Or maybe they continue to produce the same products but target markets they previously did not target.
Whatever the change, there is always risk involved when making marketing decisions in unfamiliar ground. What makes things worse is when the decisions require the company possess skills that are beyond their general core competencies. For example, just because a furniture company's product design team is skilled at creating office furniture does not mean the company can use the same team to successfully branch out to other furniture markets such as marketing outdoor furniture. The skills of the designers may be very different. Unfortunately, most companies that fail when expanding to new markets often do not realize what their real core competencies are until it is too late.
This story looks at one such case involving the Lego toy brand and how this company lost its way when they ventured into new areas. The story shows how Lego tried to expand into several areas only to find sales suffer for the entire company. Yet this story is not only about the problems Lego faced it also provides guidance on what it took for this company to recover.
The company's problems began in the late 1990s, when it stopped focusing on design. Back then, company executives wanted to extend the brand, venturing off on wild forays into new product development. The prototypical example: Galidor, a legendary bomb inside the walls of LEGO.
What are the key marketing concepts that Lego seemed to ignore?
Image by EJP Photo