The Market for Childrens Toys: A Multi-Industry Connection

Introduction

In any supermarket, shop, holiday camps, schools and homes the children and teenagers are seen playing with toys. Many companies are linked with developing this toys and one unique one is the Lego Company. Billund, Denmark is the headquarter of Lego Company which was incorporated in 1944 but was started in 1932 by Ole Kirk Kristiansen who was a carpenter. This company produces toys and playing materials for both girls and boys of different age groups. Currently, the company has an approximate of 8,800 employees with a yearly sale of $2 billion of games, toys and children vehicles that forms a collection of 3944 varieties (Venkat, 2004, p.

54).

The Lego Group is a consortium of 45 companies that distributes toys to more than 133 countries around the world. The company is outsourcing their services depending on their ability in different regions. Therefore, to achieve this level of success, there are conditions or stipulations that the company has embraced. Hence, company strategies, company culture, innovation, ideas and production, and the challenges that are faced by Lego are analyzed and discussed.

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Company Strategies

The strategy of the company is being a brand driven, this means that they are regaining and strengthening the company name and the construction idea. Previously, this method had been lost when the company was pursuing individual product lines, volatile agreements and sub-brands (Richard, 2005, p. 14 - 15).

Therefore corporate branding has enabled the company to emphasis values that are both articulate of what the LEGO brand stands for and providing opportunities for developing new products and services.  This enabled the business to change from the tangible aspect of the artifact to the ideas that are behind the artifact, which the company beliefs has been their values and mission.

Additionally, the integrated marketing approach is embraced in advancing the sales of the product passing it to the mission of the company.

Corporate Culture

The culture of Lego Company is based on developing toys and games that forms bricks. The cornerstone of the company is developing a combine that can be played by assembling pieces of elements in forming a unique design. The company belief in value or quality of the products and this is seen from the motto of the company “Only the best is good”. Therefore, the company is based on the heritage of bricks resulting into creative plays.

The company beliefs that the company is dedicated into producing specific products: bricks toys. Moreover, this important motto ensures the sustainability of the quality of the product and ensures innovation and creativity in extending the compatibility and usability of the available and developing products.

Idea and production

The research on the market gives the idea of the product that should be developed. Market research is through identification of the market and new developments in the market are acknowledged. Additionally, the designers directly contacts the market through been stationed near shops and holidays camps will others interview the children directly (Charlene, 2006, p. 116).

Lego pieces are produced using a plastic material that is called acrylonitrile butadiene styrene, and employs the software NX CAD, CAM, CAE PLM to produce the right elements. The importance of the software that is been used is to optimize mold flow and analysis stress. In most cases, prototypes are built before mass production is advanced.

The plastic is heated to a temperature of 232 Celsius which will produce a dough-like consistency. The dough is then injected into molds at pressures that reach 150 tones which take about seven seconds to cool. To ensure that the bricks are connected, a tolerance of one thousandth of a millimeter is ensured. Quality is maintained by the use of human inspectors in ensuring the color and thickness is within the requirements. It is estimated that the eighteen out of a million bricks are defective (Richard, 2005, p. 14 - 15).

The production of Lego bricks takes place in different parts of the world. In Czech Republic and Denmark, molding takes place while decoration and packaging takes place in United States, Denmark, Czech Republic and Mexico. The company also practice outsourcing with other companies such as the Flextronics both in Mexico and in Singapore. Generally, the estimate productions of Lego bricks are 20 billion per year or 600 within a second.

Design Process

Despite the aspect of varieties that are produced by Lego in relation to purpose and design, the different pieces are compatible with existing pieces. This means that those pieces that were made in 1963 still are able to interlock with pieces that are been produced in 2008. The products that are designed puts into consideration beams, bricks, mini figures, axles and other elements that are combined to manufacture to an exact degree of tolerance. The pieces should remain a piece through snapping unless they are pulled apart.

This means that the pieces should not be too easy to pull apart due to the stability of the construction at the same time they should not be difficult to pull apart so that one creation may be used to create another which forms the backbone of Lego appeal.

The requirements of the designs that were to be embraced brought in the idea of toys that were unisex, were able to cover a wide range of age group, the developed toy should have a high number of components, availability of compatible pieces with already manufactured toys.

Innovation

The company has 120 designers that are situated in the Billund headquarters whereby they develop the primary concept of the different pieces. Additionally, there are smaller innovative groups in Spain, UK, Japan and Germany that are tasked to produce specific pieces for their regions or localities. In most cases, the development of a new product takes three stages which constitute twelve months (Paul, 2003, p. 413).

The first stage is in understanding the market, and what the market wants or the requirements of the market. The second stage is designing and developing the product that is based upon the first stage conditions. The designing may bring in 3D modeling software to generate the CAD drawings from the market sketches. The obtained designs are prototyped by the use of in-house stereo-lithography machine. The third stage is validation of the product through trials by parents and children. If there are any changes that are required, the piece is altered depending on those conditions and the virtual models which are completed are built at the same time the instructions are written.

The products that are produced usually have additional generic solutions that diverse the creation of bricks. Innovative processes have helped in developing the Lego Mindstorms that uses a lot of software methodology which are incorporated into Internet Lego communities. This lead to the creation of the new division – Direct, that is tasked to manage innovation.

Challenges

Lego Company has faced many challenges and difficulties of late. Competition is the major challenge that is faced by the Lego Company. Explosive growths in games that are associated with computers and computer based toys have continued reducing the revenues and sales that the company obtains. This makes the brick pieces that are produced currently by Lego are alternatives from the original aspect of been the market leader (Charlene, 2006, P. 115). Additionally, children toys that come from Asian countries are produced at a low cost; it stiffens the competition that is between the retailers and suppliers pushing margins hence reducing prices.

Currently through statistics that are obtained, it shows that children rate of play is declining. This means that the market for toys is drastically declining. This is due to technological challenges that are faced by the company that has taken away some of their customers. The technological dynamics has resulted in creation of technological competitors such as Playstation that has jeopardized the market for Lego (Richard, 2005, p. 16).

The company has faced some economic difficulties, in 2003, it faced a budget deficit of 220 million USD which made the president of the company to be fired resulting to around 1000 employees workers losing their positions. Such losses occurred in 2004, which recuperated in 2005 making profits.

Conclusion

Lego Company since its birth in 1932 by Ole Kirk Kristiansen and later on was managed by his son has produced diverse toys. The toys have been embraced into the society and a high percentage of the toys are found in United States and European countries. The toys have developed and the idea of compatibility is entrenched into the roots of the company.

Lego Company employs the idea of corporate branding whereby specific products are designed and built for the market and with the help of integrated marketing; it makes it possible for increasing the customer base. Designing and producing the bricks are based on the information that is obtained from customers and the ways that the customers use the toys. They are applying innovative means in introducing new toys into the market by the help of technology.

The success of the company has witnessed various challenges. Competition is increasing, advancement of relevant technology, economic difficulties have made the success of the company to be turbulent. The company has taken into focus the challenges that come their way in developing better products and developing strategies and policies that ensures the survivability and adaptability to the environment.

Reference

Charlene, L. (2006). Winning in the World of social Transformation and Technologies. New       York: McGraw Hill Publishers, pp. 113 – 117.

Paul, N. (2003). International Management: Cross-boundary Challenges. New York: Blackwell             Publishing, pp. 412 – 415

Richard, R. (2005). Development of Toy Industry. London: Oxford University Press, pp. 13 – 20

Venkat, R. (2004). The future of competition: co: creating unique value with customers. New     York: Prentice Hall Publishers, pp. 53 - 56