The children’s toy market has changed and as a result the marketing strategies previously employed by LEGO have led to a decrease in market share and consumer sales.

First, we analyzed the threat of substitutes in the industry. A substitute is classified as any product that grabs and holds the child’s attention. The overall threat of substitutes in the industry is considered to be high, as a result of the many varying products that children have to choose from in today’s growing toy market.

The threat of initial entry into the toy industry is high, because any entrepreneur can produce a trendy product classified in the toy market. These entrants rarely sustain product sales and, over time, lose out to the larger companies who have customer loyalty, brand equity, and financial resources. This idea is further explained in the analysis of rivalry in the industry.

Rivalry is classified as the ability of a company to produce a comparable produ

Recently, the life cycle for LEGO products has shrunk from 3 years to 2 years. This has partly resulted from LEGO’s inability to develop and market new products in a timely fashion.

Due to the long-standing history of LEGO in the construction toy industry their brand continues to attract customers and influence purchasing power based on LEGO’s dedication to quality. Also in a French opinion poll that focused on assessing major brands of the 20th century, LEGO was awarded “Brand of the Century” in 1996. The poll requested that French households judge the brands based on reputation, quality, innovation and confidence.

Expiration of the patent has led to other companies marketing products similar to LEGO with only slight changes in an attempt to mislead consumers. The imitation products do not reflect LEGO’s quality standards and thus when mixed with LEGO’s superior product the user’s frustration might be quickly associated with LEGO.

Major threats of LEGO include: the recent expiration of their patent, as well as, their inability to be immediately responsive to consumer buying trends.

LEGO is the single strongest construction toy producer in the world today. However, their patent has run out recently and many imitators have emerged and LEGO has felt the effects. The construction toy market has become saturated with similar looking products lacking quality. These products take away market share from LEGO and lower LEGO’s brand equity through lower prices and mistaken identity. To combat this, one of LEGO’s alternatives is to buy out one of their competitors in the construction toy segment of the market. Overtaking a competitor could increase market share, which is declining to companies such as K’NEX and Rivtik. Additionally, if LEGO bought a different type of block company they would lose their LEGO equals block association and branch out into new forms of construction toys and raise their struggling consumer sales.

Even though LEGO has many strengths, it is not without its faults. Some of LEGO’s weaknesses include: the shrinking lifecycle of its products, lack of product differentiation, and the low pay of employees.

One alternative we considered for LEGO is to expand out of the construction toy market and focus on changing consumer tastes. This could be accomplished by producing computer games, which will grab the attention of today’s children. Technology and computers are influencing all industries and the toy industry has not been immune. Through this endeavor LEGO can utilize its strong brand equity and customer loyalty as a weapon to tap into the market share of Nintendo and Sega, which a

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