Everyday is usually awesome, but today, August 10th is an extra-awesome one because it’s Lego’s birthday! My childhood memories will always be filled with fond memories of endless Lego-building, Legos, and trips to Legoland.
But what is the magic of these little plastic bricks that are worth even more than gold? Yes you read it right…they are that valuable!
Lego, as a company and a brand, has gone through so many milestones since Ole Kirk Kristiansen made his first creation in 1932, but its motto of “Play Well” has stayed the same over the decades.
Lego’s success comes from its business strategy of “Lego System in Play.” This means that each set pretty much has the same basic bricks, but over time (and several hundreds of dollars later) kids will be able to produce something bigger, better, grander. When a family decides to invest in a Lego set, it becomes a Lego household altogether.
This doesn’t mean, however, that Lego has not had its own challenges. When it lost its patent on its interlocking bricks, several competitors such as Mega Bloks, KRE-O and others started producing cheaper alternatives to Lego’s more expensive product. Lego started to bleed money and was forced to revisit its marketing strategy but held steadfast to its commitment to quality; a strategy that clearly paid off in the long-run.
In the short run, however, and faced with stiffer competition, Lego decided it would begin to create several spin-off product lines to see what stuck. Only one seemed to keep the company afloat that proved to be such a hit to boys…enter, Bionicle.
But its financial woes didn’t seem to improve in spite of Bionicle’s success. In 2004, however, CEO Knudstorp started to eliminate unprofitable sets. He also realized that those sets that have narratives or storylines to support them seemed to be more popular, like Bionicle and, eventually, Star Wars. Lego continued to ride this streak by obtaining licensing agreements with established brands, like Harry Potter, Marvel, Disney, etc; a move that clearly paid off for them. It is important to note, though, that these agreements work perfectly well because Lego continues to stand by its promise of safety and quality.
Lego’s future remains bright and remains to be the most valuable toy brand for the ninth year running. So, if you have a bunch of legos sitting in box somewhere, maybe it’s time to dust them off…they may be one of the best investments your parents have given you. The Lego universe, after all, is built on a foundation created by these interlocking plastic bricks that will be difficult to topple down.
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