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The University of Chicag
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Lego (a): The Crisis

January 10, 2021
Lego Quiz Case Notes
The toy industry
Industry booked wholesale revenues $61B in 2004 and grew 4% per year
Couple important trends
Fad toys seemed to be sising and product life cycles declining
Children had more after-school activities and less unscheduled play time
For kids over 3, demand shifted toward technology
*as children gave up traditional toys earlier for videogames and online activities, childhood became
shorter and adolescence longer
There were thousands of toymakers, but only a handful led the industry.
- Mattel ($5.1B)
o Fischer price, Barbie, Hot wheels etc
- Hasbro ($3B)
o Transformers, Monopoly, GI joe, playdoh
To win customer attention and retail shelf space, toymakers introduced new products, cut wholesale
prices, sponsored coop ads and promitions, provided in store support, and advertised to consumers
*new product introductions was muted by rapid imitation and limited protection of intellectual property
To boost brand presence, toymakers often licensed characters from media companies
Toymakers increasingly manufactured in Asia
Toymakres went to market through diverse retailers
Retail competition had heated up in recent years
Building the Lego Group (1916-1992)
They catered to make sure it was systematic organization of toys
The plastic brick was very resilient, and could be added in ways that created new toys everyday, thus
fostering creativity
Realized the value you have expands exponentially the more elements you have.
LEGO itself had a strong culture of creativity that favored the steady introduction of new prodcuts and
themes based on the brick system

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