Many have condemned television advertising as dead. Mads Nipper, Executive Vice President, Marketing, LEGO, disagrees. Close to half of LEGO's marketing budget of approx. two billion kroner still goes to television. It is certainly far less than a few years ago, and the curve is too downward, but the expectation at LEGO is that the classic channels such as TV and catalogs will play an important role for many years to come.

At the same time, a range of digital and dialog-based channels is growing, and LEGO's marketing department keeps a close eye on the consumption patterns of both children and parents.

- We will not be first movers on the technologies, but we cannot sit back either. The focus is clearly to be present on all platforms with games and marketing, as long as it can match LEGO's core values, explains Mads Nipper.

Social media, for example, does not play a significant role in relation to LEGO's primary target group, the children, due to the age limit of 13 years. By contrast, lego.com, with 20 million unique users, is an important channel. So is the Lego Club, with over five million members and a special VIP program that creates loyalty. Finally, joint campaigns with store chains worldwide play an important role.

Value-led growth

LEGO is the world's third largest operator in the toy market after Mattel and Hasbro. The Danish group has its own companies in over 30 countries and is in all established markets with a share of between 3 and 25 %. As an example, the market share is approx. 20 % in Denmark, 15 % in Germany, 8 % in England and 7 % in the USA.

- We do not go after a specific market share, but in the past 7-8 years we have experienced revenue growth of approx. 20 percent every year, and we've gotten used to gaining market share. We just don't do it at any cost, says Mads Nipper.

- We prioritize growing properly so that customers can buy products of the quality they expect, and by quality I mean play experience, durability, safety, ethics and the common set of values, he says.

For example, LEGO does not want to produce and market toys that glorify war, even if competitors are successful in that market.

- Products from LEGO must be creative, developing, exciting and engaging, and even though many parents think that their children are different from everyone else, 98 percent of our product line covers the whole world, he says.

Only Japan has some completely unique product lines, whereas the three best-selling lines are sold all over the globe. At the same time, this means that the creative content in the marketing is thought of globally, whereas the media plans are devised locally.

Drop “Cover-my-ass” tests

LEGO knows a lot about its customers due to a large number of analyses. Compared to many other companies, LEGO spends a lot of resources on consumer research and testing, even though it only accounts for less than 5 percent of LEGO's total marketing budget.

- When we have a turnover of around DKK 50 million per product, and when over 50 percent of the entire group's turnover is sold during the last 6 weeks leading up to Christmas, it is extremely important to know that we have the right products in the right quantities on the right shelves at the right time - and therefore we must know the customers, explains Mads Nipper.

- You cannot overinvest in customer knowledge, because it gives you a secure foundation for taking chances in a rapidly changing market. It is important that you have an honest interest in dialogue with the end users and your other stakeholders. "Cover-my-ass" customer tests, which you can still see around, are precisely for nothing other than saving a manager who has gambled and failed, he says.

In the coming years, LEGO expects to have to bet more and accept a lower hit rate. That is why it is important to know the customers - and to say goodbye to the "zero-error" culture. It will be replaced by portfolio management, so that management can identify areas where it is ok to take chances.

Close dialogue and full responsibility

LEGO works to communicate actively with all stakeholders, be visible at all contact points in the established markets and take responsibility for ensuring that everyone benefits throughout the value chain. This is one of the main reasons for the success of recent years.

Responsibility for the value chain already begins with the development of new series. No products are sent to the market until they have been thoroughly tested by children in the target group. In some cases, the products are even developed in collaboration with the children.

The members of the Lego Club are also asked to vote on which themes they would like to buy next, making it more likely to hit the mark.

The dialogue is also close in relation to the retailers.

- Years ago, we might not have cared if Carrefour added a little extra to each box of LEGO, they lingered over the counter, if only LEGO made a profit from the sale. It no longer works, states Mads Nipper.

- We know that everyone in the entire value chain must have value if we are to develop success, and that is why we are in close dialogue, he explains.

Together with the store chains, the merchandise flow plan is developed and implemented, and the marketing materials are adapted to the store types in the country in question, and everything is translated into the local language.

- We adapt the material to whether we mostly sell through specialist shops or via large hypermarkets, just as we have to adapt e.g. marketing via TV series to local conditions, explains Mads Nipper.

- In England, it is forbidden to broadcast TV series with product reviews, so there we use many spots, whereas the USA is more lenient in relation to commercial TV programs, so there we run TV series of 22 minutes per hour. broadcasting for selected lines, he says.

LEGO has also developed educational materials that are used in many countries, and this access to the children can naturally arouse an interest in buying, but Mads Nipper categorically rejects that there are "scary" marketing ideas behind it.

- We have a deep interest in developing children and believe, in all modesty, that we have some tools that are better than the classic blackboard teaching. Therefore, we want to influence the entire learning environment and contribute to more creativity in the future, says Mads Nipper.

Open and authentic

Global marketing is built, as it may already be clear, from several layers of objectives and flow plans for what is to be produced, distributed and marketed at certain times throughout the year.

At the same time, open and flexible management is needed to navigate the many opportunities and challenges.

- Precisely because the markets, technology and consumption patterns develop so rapidly, we cannot think of all actions. We often have to act in a new way without knowing the result, and only afterwards learn to think in a new way, he explains.

Last updated 22 September 2022