LEGO’s business turnaround story is so amazing that, most people don’t even know that it went through a turn around in the past decade.
Many businesses all around the world have chosen to focus on a number of different markets that they feel are going to be more profitable and attractive over time.
Introducing products to newer emerging geographic locations like Brazil, China and India or reaching out to newer segments or demographics within the existing markets with a belief that targeting these areas will eventually increase revenues.
However, LEGO has focused on its core market and instead. This is one of the most fascinating successful business strategies around in that it shows that there is a need to grow a business and sell more products over time so the business will have a brighter image ahead of it.
Sticking to Proven Markets
While many different companies tend to focus on expanding into more countries, Lego has concentrated on working to enhance its foothold on markets that it is already in. An example of this can be seen in how new factories are created in markets where business is blooming.
For instance, Lego has planned a new factory in Hungary. This factory will be the second one in the country and will go alongside the existing site in Nyiregyhaza. This new factory will allow Hungary and other surrounding countries in Europe to have more access to all sorts of Lego products.
Some other strategies include expanding existing warehouses and factories in some spaces. One warehouse in Connecticut was expanded upon while plans were announced in 2013 to expand a similar factory in the Czech Republic.
This is a sign that by sticking with existing markets, the company will be more likely to target future generations of customers. It is a unique strategy because it means that the business wants to target young people in these new places.
These markets will also be targeted to retain a brand’s identity. This is to encourage the next new generation of potential Lego users to stick with the company. This could create a nice look that is very interesting and worth exploring for all the purposes that Lego has for creating a long-lasting plan for making a marketing plan work as it is supposed to at a given time.
Working In New Markets With Care
There are many cases where new markets are often added to Lego’s arsenal. However, Lego has found over the years that it is easier to slowly move into new markets instead of trying to go all out.
One instance comes from how Lego is going to expand into Asia over the next twenty years. Asia was a fast-growing market for Lego as it had sales rates that rose by 35% in the past year versus the 4% in North America. However, Asian sales only total about 10% of Lego’s sales as of 2013, thus placing an emphasis to focus on Asia but without going too far in the process.
A head office was introduced in Singapore and in 2017 a manufacturing plant is expanded to open in China. This will go with a regional distribution center in Shanghai.
This does not look like too much work to get into Asia but it is a sensible strategy that allows Lego to keep itself in Asia without risking more money and ignoring other markets where a majority of sales are found in. Asia is a fast-growing market for Asia but there is still a good way to go before sales can really start to add up after a while.
In addition, the growth has to be done carefully so Lego can compete with some of the many different parts of competition that Lego would bear with. Asia has become known for having many Lego knock-offs like the Best-Lock Construction Toys company in Hong Kong and the Banbao and Ligao companies in mainland China. Lego uses a slow process as a means of making it easier for the company to expand so people can tell the difference between Lego and other potentially inferior alternatives.
Controlling Expansion On the Holidays
One great aspect of expanding Lego’s operations is that the company is focusing not so much on year-round sales as it is with trying to get sales up and running during some of the seasonal times of the year when sales are more likely to occur. These include sales from the end of the year when people are looking to buy holiday gifts.
Part of the expansion process includes making sure that businesses are introduced well before the Christmas season. This includes a plan to create an introductory stage where a business will provide people with information on different kinds of products that are open.
The development of the Lego brand has been a strong part of the business world as it shows that there is a great deal of effort for people to use when finding a way to expand