The Lego Group managed to emerge from the crisis to become the most valuable brand of toys. The Danish company has set the pace for its growth in sales with a renaissance that it achieved with more than just plastic blocks: movies, video games and a commitment to the adult market were also part of the strategy.
Color blocks have managed to pass through the hands of three generations, and although they are now at the top of the industry, achieving success also meant learning from mistakes and taking a few steps back to nearly triple their sales growth in the industry. last decade.
For Mario Alberto Nava, an academic at the Escuela Bancaria Comercial (EBC), Lego is a company that exemplifies the phrase “renew or die”, which without neglecting its main characteristic as a sensory toy, has managed to grow along with the generations to which it that it has played throughout its history.
“The brand has diversified its market and has opted for licenses that are not specifically for children, and that combination has been the right one because they make it identifiable to join these great icons of movies, series or characters,” he says. “Lego identifies the part of nostalgia and the icons of the generations and then makes a perfect engagement ,” he adds.
Lego was the answer that Ole Kirk Kristiansen, the founder of the company, found to save his carpentry, which was dodging the effects of The Great Depression, which the world experienced in 1932. In his workshop, where he produced doors, windows and cabinets from kitchen, he began making wooden toys.
Three years later, this toy workshop adopts the name Lego, which is the conjunction of the Danish words leg godt , which means ‘play well’, and which in Latin means “I put together”. Among the company’s earliest toys were wooden ducks, buggies and yo-yos, the four- and eight-pin plastic blocks arriving in 1949.
The first of the important turns of the company occurred in the 1950s, after the arrival of the blocks. It was in 1958 that a set was marketed to assemble a city with buildings, a gas station, a Volkswagen dealership and houses of different sizes. In 1960, after a fire, Lego stopped making toys to concentrate on plastic blocks and construction sets.
In the following decades, the company opted for innovation, although with an unclear path, as they began to launch larger blocks, with different colors and strange shapes, on the market. Added to this was the commitment to books, clothing and theme parks. There seemed to be several lines of business, which ended up eroding the company’s profits due to high production costs.
Then the problems began and from 1992, the company was on the edge of a precipice and in 2004 it was about to declare bankruptcy. Then, it was necessary to give another turn of the rudder and the company returned to put in the center of the business the plastic blocks. He created sets with a higher level of difficulty, which were more challenging for buyers.
Since 2015, Lego has remained the most valuable toy brand in the ranking compiled by Brand Finance. In 2022, the plastic block company had a brand value of $6.026 million. when the previous year the value was 5,397 million dollars. The value of the Bandai Namco brand, the second on the list, is 1,743 million.
beyond the blocks
But after the turn of the century, the company faced a bigger challenge than just adjusting its business: the shift in generations from traditional toys to video games and the internet.
The company took plastic blocks to the digital field, with the development of video games for consoles, online games and even applications that complement the construction of the blocks. The great step of this new construction was in 2014, when the company launched Legacy the movie, a success that had a sequel five years later, which was joined by Lego Batman: the movie, Lego Ninjago and other productions that came out direct. for the big screen.
Lego Group has almost doubled the size of its revenue since 2014. During the pandemic, there was an opportunity to reach new players, who had to keep busy at home. In 2021, the Lego Group’s revenues amounted to approximately 7,440 million euros, which represented a growth of 26.7% in its annual comparison.
Markel Lehman, a marketer and specialist at La Salle University’s Business School, comments that the company found the perfect equation to maintain focus on its main market and develop its own market opportunities.
“In a world full of distractions, Lego sets allow adults to practice an activity that helps maintain concentration, to which is added the value of having different business areas. This has allowed the company to maintain a 50% strategy in classic bricks and the other 50% in other businesses”, he declares.
bet on nostalgia
Licensing has been another of the paths that Lego has taken to go back to success. For Brand Finance, the most successful has been Star Wars, with which the king of toys has managed to create a successful franchise, ranging from collectibles to a video game since 2005.
Lego has known how to capitalize on this attraction, which has allowed it to approach the adult generations by appealing to nostalgia and has added Harry Potter, Bob the Builder, Batman and Super Mario licenses to its portfolio, in addition to others associated with other companies. such as Vespa, Dodge and Land Rover.
For the specialists consulted, licensing will always generate brand positioning and power, although Lego has stamped its seal on it, without losing its essence, and above all, understanding how to generate niches from these alliances, which at the same time time work to maintain the validity of the brand.
It is here where the company has managed to generate its brand value, which for the experts, will give it the opportunity to remain at the center of consumers, large and small, as an inclusive and classic company over time.
“The company is betting on this part of nostalgia so that people, adults, have a toy from the brands that have always been with us and now they are even a milestone, that is what, after all, gives them that value as something more aspirational, collectible, which also allows them to have a higher price and an estimated value”, he declares. Nava, from the EBC.