Lego Group, Marketing and Operation Management Report

FOUNDATIONS OF MANAGEMENT (PART A)

LEGO Group

Marketing and Operations Management Report

Prepared:

For: LEGO Group

By: Éva Gaál

On: 17 November 2008

Introduction

At the request of the LEGO Company, this report advises the company on the expansion of its operation based on market segmentation, appropriate marketing mix, new product design and development, including total quality management for outsourcing new partners.

LEGO Group is the fifth-largest toy manufacturer of the world and has operated successfully for 75 years; however, it has had some problems in the last couple of years. To solve these problems, LEGO introduced a seven-year strategy plan, which consists of some fundamental changes regarding to the processes, procedures and structure of the company. This strategy so far has been executed successfully as shown in the financial results; however, LEGO is going to face some more challenges in the future. (LEGO Annual Report 2007, 2007).

1./ Market segmentation

‘Market segmentation is defined as the subdividing of a market into distinct and increasingly homogeneous subgroups of customers’ (FM-A, 2004, p.93) and ‘it centres on the assumption that customers demonstrate heterogeneity in their product preferences and buying behaviour’. (Green, 1977, Wind, 1978, cited in Dibb, 1998, p. 394).

‘The business did actively segment its market’ (Dibb, 1998, p. 399), as LEGO identified itself from the very beginnings as a toy manufacturer it therefore automatically determined its marketing segmentation approach. In the children's toy market the primary segmentation base is the age (the older the more complex product); however, the real buyers are the parents (e.g. LEGO Duplo). ‘Such an approach is popular because it is convenient, clear-out, easy to implement and stable over time.’ (Curran and Goodfellow, 1989, p. 23, cited in Dibb, 1998, p. 399).

During the company operation LEGO identified more and more secondary segmentation

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