Discuss about the International Marketing China, Europe and Denmark.
According to the case study, LEGO is the second largest toymaker in the world with 7.0 billion net profits. It belongs to the construction toy category producing both licensed and non-licensed products. The main focus of the company is laid on quality and innovation rather than price. LEGO has main market in China, Europe, Denmark and other Far East countries. This paper aims at determining the reasons why emerging economies such as China, India and Indonesia have a small share although they have long-term opportunities for organic growth (Hollensen 2014). Secondly, the reasons because of which it was a good idea or not to launch LEGO friends is discussed. The type of retailing that suits the brand is also recognized. Thirdly, recommendations are provided to the LEGO management to measure market success for LEGO Friends. Lastly, the considerations regarding cultural customization strategy in the expansion to Middle East or Japan are examined (Merkin, Taras and Steel 2014).
Small Market Share of LEGO in Developing Economies
The developing countries such as China, India and Indonesia are already a home to significant population. Although progress is made in these countries, but poverty and inequity is a major challenge for sustainable development. As these countries face poverty, majority of the people are not ready to pay a higher price for the product. According to the case study, majority of the toy products are outsourced to China. LEGO focuses on product quality and innovation rather than price. The customers have to pay a premium price for obtaining quality products. Rather than having in-house production in China, LEGO outsources majority of the toy products to China. While the globalization in developing countries provide a lot of economic advantages, but there is also an issue if the companies are taking advantage of the less wealthy people (Hollensen 2016). Therefore, number of people buying the toys in these countries prefers low priced products keeping the market share of LEGO Friends low despite long-term opportunities for organic growth (Graham, Gilly and Cateora 2015).
Launch of LEGO Friends and Type of Retailing
Yes, it was a good idea to launch LEGO Friends. Their diverse range of product portfolio and relationship with license owners such as LucasArts and Disney make it a success. The sales were lifted substantially as it kept high brand appeal. LEGO is always looking for innovation in its products and launched products targeting the girls segment. The brand keeps multiple themes such as camp of Heartlake city, farmer’s market theme, nursing sets, Pop Star sets and camping theme. These categories and themes give its customers a variety of options to choose from (Hollensen 2016).
The type of retailing that suits LEGO Friends is E-Tailing. E-tailing or electronic retailing is the sale of goods and services through the internet. With the advancement in globalization and shift in customer trends, the stores are moving from brick-and-mortar concept to e-tailing. E-tailing allows the customers to choose from different age options such as less than a year, 1-3 years, 3-5 years and so on. It shall also allow the customers to choose from the type of games such as puzzles, dolls, shooting games and any other category as designed by the company. The customers can filter the age group of the children and their gender to girls or boys as desired by them (Fletcher and Crawford 2013).
Measurement of Degree of Market Success
As stated in the case study, LEGO Friends has been introduced to the market as a supplement to the current product range. Therefore, the management can implement a few measures to assess the market success for LEGO Friends. Firstly, the management can measure profitability. The company may assess if they have money left after paying for the operating expenses such as rent and wages and any debt (Hollensen 2016). However, if very little or no finance is left; the chances of success may begin to dwindle. Further, the customer base shall be measured. If the customer base is effectively reaching the target market, then the company has a vibrant customer base. Lastly, measuring customer satisfaction shall help in determining the level of contentment of the customers. If the customers are highly satisfied, it shall indicate that the organization is moving in the right direction (Kotabe 2014).
Consideration of Cultural Customisation Strategy
Cultural Customisation can be defined as a strategy or step to reach the global audience. In the given case scenario, LEGO is considering to expand in the Middle East or Japan. It is important for them to consider cultural customisation strategy as the business practices of the Middle East are different from that of the West. The Middle East people consider follow up activities done in person. They do not prefer doing business over phone or e-mail. The business partners must be greeted with the Islamic greeting. Also, the time differences have to be considered. The female staff members are advised to refrain from any physical contact including handshake. In case of expansion in Japan, negotiations are considered as a matter of deep seriousness. They prefer having verbal agreements than a written one. For both cases, the management of LEGO Friends must provide cross-cultural training to the employees. They must also be taught the basics of Arabic and Japanese language so that the communication is smooth. Therefore, LEGO Friends must consider the cultural differences when expanding across borders (Merkin, Taras and Steel 2014).
Conclusively, countries such as China and India face poverty, majority of the people are not ready to pay a higher price for the product. The customers have to pay a premium price for obtaining quality products. The brand keeps multiple themes such as camp of Heartlake city, farmer’s market theme, nursing sets, Pop Star sets and camping theme. The type of retailing that suits LEGO Friends is E-Tailing. The customers can filter the age group of the children and their gender to girls or boys as desired by them. In case of expansion in Japan, negotiations are considered as a matter of deep seriousness.
Fletcher, R. and Crawford, H., 2013. International marketing. 6th ed. Australia: Pearson Education.
Graham, J., Gilly, . and Cateora, ., 2015. International Marketing. 17th ed. Singapore: McGraw Hill Education.
Hollensen, S., 2016. Global marketing. 7th ed. UK: Pearson Education.
Hollensen, S., 2014. Global marketing: a decision-oriented approach. Harlow. New York. Financial Times Prentice Hall.
Kotabe, M., 2014. Global marketing management. 1st ed. USA: John Wiley.
Merkin, R., Taras, V. and Steel, P., 2014. State of the art themes in cross-cultural communication research: A systematic and meta-analytic review. International Journal of Intercultural Relations, 38, pp.1-23.