Lego – The Yellow Brick Road
When Ole Kirk Christiansen said “let’s play” is his native Danish tongue in 1937, he was completely unaware that he had said words that will forever change how generations viewed playing toys – “Le Go”.
The story of Lego spins through close to a century of innovative toy making that grew from small wooden playthings in the early 20th century into the center of a vast market of plastic building bricks that dominated the world markets for decades. With revenue of over 2 billion Euros annually, spanning from merchandising and brand licensing – including licenses obtained from global brands like Batman, Walt Disney etc, the once small Danish company has made itself a case study for companies wishing to expand their brand.
So how did it come to this? How did a small Danish carpenter maintain the existence of his brand in a world were toy making giants Hasbro and Mattel continue to churn out world changing franchises. The answer is quite simple really – brand identity. Christiansen had made a decision not to cascade into the action figure and dolls market, but to monetize every child’s desire to stack building bricks…making Lego globally synonymous with building toys.
Protecting the Brand Identity
The first thing Lego did was establishing a brand identity which was a merger between its brand sign (logo) and its brand culture (colourful building bricks). Once these were identified, CEO Jørgen Vig Knudstorp, immediately set out to protect the brands by registering its trademarks and patents. This move proved to be one of Lego’s wisest brand decisions when in the 200s when they successfully defended their brand against Chinese company, Coko bricks, after their colorful plastic bricks were found to be infringing on Lego’s well known toys. The … court ordered Coko to cease manufacture of the infringing bricks, publish a formal apology in the Beijing Daily, and pay a small fee in damages to Lego. On appeal, the Beijing High People’s Court upheld the trial court’s ruling. Also, in 2003, The Lego Group won a lawsuit in Norway against the marketing group Biltema for its sale of Coko products, on the grounds that the company used product confusion for marketing purposes. These decisions stem from the umbrella protection enjoyed through Lego’s perseverance to protect their brand Identity.
The Business and the Brand Story
The front line of any brand in the marketplace is not the advertising, packaging, or product design. It is the interaction that the brand experiences by brand expansion that determines the brand’s reputation to a large degree. The Business of the brand is etched in its ability to grow. When Lego and Universal Pictures signed a 3 movie deal in 2005 … that saw Logo make whole adaptations of selected movies in (brick) animation form, analysts started to lose faith. It was a decision that netted the global toy makers their largest quarterly earnings and caused competitors to rethink their merchandising methods. Business expansion, while normally aided by investment and market reception, is guided by innovation and the knowledge that the brand identity is safe.
So while we oooh and ah at the Lego story, the simple lessons exist:
Identify and protect your brand identity;
- Create a niche that makes your brand effortlessly recognizable;
- Embrace brand growth, ensuring interests are protected through well drafted license agreements.