Insights Done Right: How Market Research Gave Lego a Facelift
Countless companies have been transformed by market research. As the consumer market grows in competition and diversity, market research has been a vital tool in pursuing new niches and improving products and services.
One of the most standout examples of a company being transformed by market research is the beloved toy brand Lego. They were able to completely transform their revenue potential by altering their product line to break into a vital, and growing, new market.
The Lego Company
The Lego company was founded in 1932 by the Kirk Kristiansen family and to this day still remains a privately held company by the same family. Lego is based out of Billund, Denmark and features a whole franchise dedicated to the classic childhood building blocks and figurines that helped build the foundation of their success.
The Lego philosophy is built on “systematic creativity — Lego bricks are all part of the Lego system, which essentially means that they can easily be combined in innumerable ways — and just as easily be dismantled. The more Lego bricks you have, the more fertile your creativity can become. The combination of a structured system, logic and unlimited creativity encourages the child to learn through play in a wholly unique Lego fashion.”
While this sounds relatively inclusive and Lego could be loved by all children in its respective age range, for a long time, Lego mainly catered to only one market: young boys.
What Lego Discovered
In a study done by the company, Lego discovered that only nine percent_of the users of the toy were female. Seeing this as an opportunity to not only increase revenue by expanding their reach with their brand but to empower young girls, Lego made the high-profile decision to go back to research and development and create products that would appeal to the young female audience.
Lego Market Research
Prior to releasing a line of products that targeted the young female audience, Lego conducted a lengthy trial of market research that of four years of studying the play habits of 3,500 girls and their mothers. Researchers were tasked to collect data regarding that would answer critical questions about what would make Legos more interesting and appealing for young girls.
Upon the conclusion of the market research, Lego’s product line called “Friends” was born. The colours of the brick included in this line were more vibrant and diverse. Lego ensured that the packaging was more appealing to young girls, and the figures were also altered to cater to the new audience. They increased the size of the figures so they could now hold accessories such as hairbrushes and purses.
All the tweaks made by Lego to break into this new market were in line with what researchers uncovered in the market research trial.
The End Result
Since unveiling Lego Friends in 2012, the Danish toymaker became a hit with girls and continues to increase its market share in construction toys. Lego told the Wall Street Journal the share of girls among Lego players (which we know was about nine percent) has increased sharply since.
That’s not all. Lego Friends is also believed to be the reason girls’ construction toys in the U.S. and the larger European countries tripled to $900 million in 2014 (up from $300 million in 2011) according to research firm NPD Group.
Answer ALL the questions in this section.
Question 1 (25 Marks)
Discuss the importance of marketing research and highlight, using examples from the case study, how Lego was able to address the needs and wants of existing and potential customers by conducting regular market research.
Question 2 (25 Marks)
According to the case study: “In a study done by the company, Lego discovered that only nine percent of the users of the toy were female. Seeing this as an opportunity to not only increase revenue by expanding their reach with their brand but to empower young girls, Lego made the high-profile decision to go back to research and development and create products that would appeal to the young female audience.”
With this in mind, discuss the role of Marketing Intelligence in improving management decision making.
Question 3 (25 Marks)
When conducting marketing research, engaging in ethical business practices is not a matter of choice; it is a necessity.
The laws and regulations differ by country, but they all aim to protect the privacy of an individual with particular reference to personal data. These laws require that the principles of transparency and consent are put into practice. This is called the “principle of consent” and this basically means that when an individual is asked to provide personal data it is made clear why such data is needed and what the organisation collecting the data is using it for. In the UK, these notions are encompassed in the Data Protection Act 1998.
You have been appointed as a marketing consultant. Advise Lego’s research department about the EIGHT (8) principles that this Act focuses on to protect the rights of an individual during research.
Question 4 (25 Marks)
As a marketing consultant advise the marketing research department of Lego Group about the characteristics and challenges of using the survey method when conducting marketing research.
Answers to Above Questions on Marketing Management
Answer 1: Market research is defined as a process that involves determination of the viability of a new service or a product by way of conducting research directly with the potential customers. It is considered as an important business strategy adopted by businesses with the objective of achieving competitiveness. The importance of marketing research can be identified from the given case study of Lego Company whereby the company has achieved enhancement over its products and services which ultimately helped in enhanced revenue performance of the company. The ways in which Lego Company was able to address the needs and wants of existing and potential customers through market research includes…….
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