This is the winning competition deck for the 2012 West Coast Case Competition at UBC. It was created by Ben Cappellacci, Helge Ratvik, and Paul McLaughlin.

1. Building Strategy

2. Just six bricks can be combined
915 million ways

3. Agenda
Introduction
Analysis
Strategy
Implementation
Risks and Mitigations
Conclusions

4. “A competitive strategy to continue the organization’s
financial success and dominance in the toy market”
Licensing New competitors
Commoditization
challenges taking market
of Lego product
influencing product share
Expanding dominance in a toy market
with opportunity and uncertainty

5. Uncertainty in Disney Licensing
presents a challenge to future contracts
Lego has Lego Star
considerable Wars, Spider
investment in Man, Indiana
licensed building sets Jones
Disney’s recent Marvel had
acquisition of Marvel Disney favoured agreements with
gives it rights to over partner is Mattel Hasbro to produce
5000 characters toys
Future of Disney Hasbro has a New Kre-O product Hasbro’s multiple
licencing strong past launch could product lines
opportunities is relationship to increase royalty might act as
unclear Marvel payment tolerance stronger incentive

6. Hasbro’s introduction of Kre-O is a
significant threat to market share
Hasbro’s brand power
Enlarged marketing budget
Guaranteed Shelf Space
Popular Transformers brand
Compatible with LEGO blocks
LEGO has considerable product brand value
Hasbro cannot mention LEGO in its promotion

7. Failure to protect LEGO brand from
competitors has lead to commoditization
MEGA blocks has All competing
Lego must focus
challenged the products will be
on its brand
control over the compatible with
values
brick ecosystem LEGO

8. Brick Ecosystem to Lego Ecosystem
Brand Engagement
• Connect to consumers on multiple platforms
Innovation Focus
• LEGOs leadership in the market drives responses
Develop Experiences
• Focus on delivering value beyond blocks

9. “A competitive strategy to continue the organization’s
financial success and dominance in the toy market”
Licensing New competitors
Commoditization
challenges taking market
of Lego product
influencing product share
Expanding dominance in a toy market
with opportunity and uncertainty

10. High profile brand licensing is an easy
revenue generator
Low Risk
• Pipeline of
opportunities
Proven Integrated
• Spiderman: $100 Competition
million toy sales • Disney, Hasbro, MEGA
Blocks
Focus on
Western
Brands

11. License Brands in localized areas to
increase product awareness
• Unproven brands
Lock in untapped • Higher risk potential
licenses • Lower competition means discount purchases
Purchase smaller • Anime
brands in specific • Cartoons and Movies
area • Popular Media

12. Strategies to focus on New Growth
Build Avoid
Brand Products
Popular
New Licensing Licensing
Customization Standardization

13. Expand beyond North America
Create an on the
LEGO stores a Bring to emerging ground brand
proven concept in markets with experience to
North America localized content engage new
customers

14. Build Foundation with Lego Stores
Core Products Special
• LEGO Themes Products
• LEGO Games • Localised
Content
• Collectables
Media Interactive
• PC Games • Play Booths
• Ipad Apps • Building set
• Comics Projections
• Personalisation's

15. Engaging the Consumer: Virtual Media
Mirroring virtual
Average 6-year old
World is going content is essential
has access to a
virtual to continued
mobile device
success

16. Engaging the Consumer: Virtual Media
Mobile Application
• Augmented Reality
• Stories/comics from licensed/non-licensed products
• Games
Partnerships with Zynga for Facebook games

17. Engaging the Consumer: Point System
Localisation and customization tied to LEGO brand with Point System
Add value to all LEGO branded products
Network Effect – Each new product adds value to the system

18. Engaging the Consumer: Point System
• Buying products
• Completing video game
achievements
Gaining
points • Use of mobile app/Zynga
Facebook games
• Any LEGO Theme Park
purchases

19. Engaging the Consumer: Point System
Buy products
Exclusive DLC online or at a
LEGO store
Customization
Theme Parks
of products Why
collect
points?

20. Engaging the Consumer: Lego Account
Engage with online community
• Upload pictures/videos of LEGO creations
• Discussion boards
• Share creative ideas
Track and manage points
Connect with LEGO

21. How is fits together
Get Points Add Points Spend Points
Lego Packs Personalised
-Lego Characters
Game Achievements Enter via: Collectable Content
-Special Editions
Comic Purchases QR Codes Downloaded Content

22. Engaging the Consumer: Point System
Creates unique LEGO experience
Allows LEGO to tap into the creativity of its users
Gives LEGO consumer data that is hard to get through vendors

23. Risks and Mitigations
Inability to procure • This would be a big problem
new licensing • Mitigation would require extensive investments into
agreements LEGO’s innovative capacity
Competitors copy • Hasbro’s Kre-Os do not have sufficient brand power
our strategies • First mover advantage
• LEGO grew revenue by 37% when the market
Competitors steal increased by 13%
our market share • Ecosystem will further mitigate brand switching

24. Implementation Timeline
Item F M A M J J A S O N D J
Develop Objectives
Contract Developers
Product Development
Product Testing
Test Release
Feedback Implementation
Product Modifications
Store Modifications
North American Launch

25. Assumed Costs
Online content development
• Agency at $500k
Online content management
• $500k per year
Store build-out costs
• ($200-400k per store) * (50 stores) = $10 million
Marketing costs for emerging markets
• ($250k year) * (40 markets)
New licensing agreements
• ($1 million each) * (1 per market) = $40 million

26. Metrics of Success
Vs. Generic • Change in sales after
Blocks rollout
• Click through rate on point
Network Effect system
Local • Total sales of localised
Engagement content

27. Revenue Growth Expectation
20% 25% 30%
• No further • Estimated • Best Case
licensing impact given Scenario
our strategy
2011 Revenue: 20,818mm DKK

28. Non-Licensed
Building Sets
Mobile Licenced
Content Building Sets
The
Online
Website LEGO Video Games
Group
Stores and
Board Games
Merchandise
Theme Parks

29. “Our ultimate goal is to inspire and develop children
to think creatively, reason systematically and release the
potential to shape their own future –
experiencing the endless human possibility”