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Lego: Breaking Away By Staying True

Abandoned-LEGO-Victorian-Houses-by-Mike-Doyle-1By Mich Bergesen, Global Director of Financial Services of Landor Associates, and Albert Kugel, Client Manager, Landor Associates

Take a look at the photo of the abandoned Victorian home pictured.

Now, take a closer look. What may appear to be a Photoshop masterpiece or a realist painting was created entirely in Lego. Even the tree and vegetation surrounding the building was made from standard Lego pieces, selected and composed by New York-based artist Mike Doyle.

The modest studded brick, patented over 50 years ago, has come a long way from its roots in the sleepy Danish town of Billund. Lego has staved off product obsolescence by staying true to a few basic principles, while turning itself into the medium of choice to build just about anything under the sun. If you can think of it, it’s probably been expressed as Lego. In so doing, it has founded a creative revolution that goes way beyond the toy aisle, with appeal across every age group.

That remains the key to the firm’s sustained success: its ability to tap the universal human desire for creative expression. According to Y&R’s Brand Asset Valuator, Lego’s brand strength rose 29 percent between 2009 and 2012, making it one of the top 10 risers among almost 3,000 brands tracked across all categories in the U.S. over this time period, and placing it at the 98th percentile of all brands per Landor Associates Breakaway Brands study. Meanwhile, its closest competitor in the construction toy category, Mega Bloks, sits at the 62nd percentile of all brands in brand strength.

The brand’s rise hasn’t been a story of linear growth, however, and can be told in roughly three parts:

The first built on early success as a construction toy, with the launch of a wide range of imaginative worlds from knights and castles to scenes of the wild west, pirates, and futuristic scenes of space exploration.

The second chapter positioned the brand as a broader platform for popular content. Starting in the late 90s, Lego signed deals with high-profile entertainment franchises such as Star Wars and Indiana Jones, which continue to be a central plank of the brand’s strategy today. However, the company lost some focus during this period with a flurry of internally managed extensions into theme parks, apparel, video games, and a range of digital offerings.

The most recent chapter followed poor earnings in the early to mid-2000s which led the company to refocus on its core strengths. External restructuring included spinning off the theme parks and turning over the video game businesses to licensees. Internal reorganization accelerated product development from two years to 12 months, and the company reduced the total number of pieces it was manufacturing from a high of around 12,000—which included a lot of bulky pieces that were getting away from the standard building brick—to below 8,000 in 2008. This simplified business operations but allowed the business to efficiently continue the brand’s central mission of providing a tangible, universal creative medium to all its audiences. Also, the brand that was traditionally seen as a boy’s construction toy has deepened its appeal to girls through the Lego Friends line, which includes five female characters, play scenes, and accessories.

Attesting to the overall success of this strategy, our research data shows the resumed strengthening of the brand in recent years, following a period of stagnation.

The company’s dalliance with its own digital offerings continued until 2010, when it finally abandoned efforts to launch a massively multi-player game in the face of competition from popular online building platforms such as Minecraft. Instead, Lego is co-opting digital entities with strong followings into its own orbit. For example, it now offers physical Lego Minecraft sets, which launched this summer to instant acclaim. Lego also curates a Facebook page that invites fans to post photos of their Minecraft-inspired creations.

This integration of on- and offline activity has pervaded every other part of the business. Lego licensees still release video games inspired by action heroes such as Batman, but kids are playing just as much offline as online, with Batman Lego sets and mini-figures. The company fuels user-generated content by giving online builders the tools they need to bring Lego creations to life. Creators animate and share their models via a storytelling app, and consumer-generated films from loyal and enthusiastic fans can be shared on Lego’s website and social media platforms.

The brand supports a lively online ecosystem from Facebook chatter on the most recent Lego mini-figures, to photo-centric social platforms such as Tumblr and Instagram, where users from around the world share photos of their masterfully-built creations. Lego is a regular fixture on wired.com, and Gawker Media’s Gizmodo blog has a category dedicated to adult users called “LegGodt,” the Danish phrase for “Let’s Play,” from which the word Lego originated.

The brand’s overarching philosophy is also seen in its approach to retail environments. Having sold its amusement parks, the company focuses its brick-and-mortar strategy on small retail stores in high-traffic areas, such as Rockefeller Center in New York City. Kids not only can buy the models, they can also pick and choose individual pieces from colorful containers and play with them right in the store at a workspace. Additionally, the stores regularly hold workshops that are enjoyed by kids and parents alike.

Ultimately, Lego may become marketing’s greatest example of user-generated content. A powerful showcase for this is Lego’s foray into the art world. In 2007, a lawyer named Nathan Sawaya quit his day job to become a Lego artist. His exhibition, “Art of the Brick” has traveled around the world, and his art has sold for serious amounts of money. Today, a vibrant community of Lego artists showcases the brick’s power as a tangible creative medium.

Continuing to provide an unconstrained medium to all audiences and channels will present many challenges – not least, managing user-created content with care and clarity of purpose to protect the brand’s reputation. But based on Lego’s success thus far, we believe the brand will continue to break out by simply staying true to its roots.

Mich Bergesen joined Landor in 2005 and leads the firm’s financial services branding practice, working to bring a category specialist perspective. He manages global client programs covering the spectrum of brand strategy development and implementation, with experience in both consumer and institutional financial services. Previously, Bergesen spent 11 years at Stern Stewart, originators of the Economic Value Added approach to financial management. He founded Stern Stewart’s business in South Africa, then served as managing director of Stern Stewart Europe. He later launched BrandEconomics in New York, advising clients on building and managing brand value. He developed the valuations used in Landor’s Breakaway Brands list published in Fortune and Forbes.

Albert Kugel is a client manager in the New York office of Landor Associates, working in the corporate identity department. While at Landor, he’s worked to launch major brands in the medical device and financial categories. Before joining Landor, Albert gained branding and marketing experience from both the agency and client sides, from working on brand partnerships at Clear Channel Communications to working as a creative strategist at a boutique ad agency.

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