image

Lego Comes Back from the Brink of Bankruptcy to Win Over Fans Young and Old

Do you have a favorite toy from childhood that still brings a smile to your face? Was it Barbie or Hot Wheels, maybe? Or maybe Crayola and Play-dough stole your imagination. Whichever brand it was, chances are you wouldn’t mind going back in time and playing with them again.

One of my favorite toys that always made an appearance on Christmas and birthday lists was Lego. Sometimes it was a specific set (I was obsessed with the Harry Potter sets) or just another tub filled with assorted sizes and colors of these fantastic bricks was all I wanted. Well, several years have passed since I covered my living room floor in them to begin an afternoon of building, but I’m still in love with this brand.

One very happy boy got exactly what he wanted for Christmas this year

I dare you to look at this picture and not smile

Their past hasn’t been a perfectly shaped tower; they’ve had a few quakes that have shaken their brand to the core. They’ve always come back from whatever was thrown at them to come back stronger and more powerful than ever before! I won’t bore you with a giant history lesson, you can check out their “About Us” or if you’ve got some time to spare, they have a really cool computer animated video telling about their history (writer’s note: the dialogue is pretty cheesy, but the story and animation are beyond neat to watch!)

As I mentioned earlier, Lego has faced its hardships. In the early decades of the company they encountered factories being burned down, having products that were becoming outdated with society, and in the last decade in the early 2000s they faced the possibility of going under completely!

These guys were almost extinct!

These guys were almost extinct!

Why the Possibility of Bankruptcy?

They were going up against stiff competition from Mattel and Hasbro and in 2004 had debts nearing $1 billion and saw sales slump 40% in just two years. How did they overcome becoming just a memory in the lives of their faithful fans? They didn’t just stop doing one or two things; they sold off every part of their company that wasn’t an integral brick to their core product. They sold their four theme parks to a Merlin Entertainments Group (a company that specializes in running theme parks), they sold their video game development division to be handled by outside partners under a Lego license, and shortened product development from 2 years down to 1 year.

Starting in 2005 they started to climb out of debt and in 2011 they brought in nearly $710 million in income and have become the most profitable and fastest growing company in the toy industry! They also started to target another previously untapped market and began connecting with them. Adult Fans Of Legos (AFOLs) account for nearly 10% of their yearly sales. Granted, it’s not a huge piece of the pie, but a large enough share that deserves attention.

An AFOL in their natural habitat

An AFOL in their natural habitat

Popular conventions like “BrickCon” in Seattle, Washington are where Lego fans young and old can go and check out thousands of models created by Lego hobbyists from around the globe. Lego knows how important these customers are to their brand and instead of just saying ‘thanks’, they recruit the most passionate AFOLs to serve as ambassadors and consult on new and upcoming product lines.

Still Not Enough Reasons for You to Love Lego?

How about this great video that a mother posted of her son receiving a set he’d been saving up for. There’s a wonderful back story about 11-year-old James Groccia from Massachusetts, who scrimped and saved all his money for two years to buy the Lego Emerald Night Train set (here’s a link to an Amazon.com product page) to then find out it had been discontinued.

He did what any bound and determined kid would do and wrote to Lego explaining what had happened in hopes of being able to buy one of the ones directly from them. Not only did they acknowledge his letter, but they sent him the train set he’d been lusting after for years! The video is about four minutes long, but trust me, it will warm your heart and make you want to run out and buy a bin of Legos to play with.

Lego hasn’t just sat back and waited for the world to give them everything they wanted on a silver platter. The Kristiansen family and the Lego brand have adjusted to consumer’s changing tastes while still maintaining their brand values: imagination, creativity, fun, learning, caring and quality. Your target market may not be children, but that doesn’t mean you can’t learn a few lessons from a company that caters to them!

Did you ever play with Legos as a kid? As an adult? What do you like most about the brand? What lessons could other companies apply from Lego? Sound off below!

Expand Your Brand!

Photo Credits: woodleywonderworks and origamiguy1971


Amy Swanson

Amy is one of Quality Logo Products’ content developers and social media coordinators. She is a self-professed newspaper nerd and thoroughly enjoys reading business and financial news and having impromptu discussions about it. Oh yeah, she’s “one of those” people! A true Midwestern girl by nature, she loves riding her bike, photography, and the Chicago Cubs. You can also connect with Amy on

Comments

  1. Jana Quinn

    At first glance, it looked like they were cutting off those other branches just to stop the sinking ship, but it actually is a pretty genius refocused branding plan. Legos are colorful, plastic blocks – not theme parks or video games, although those are fun add-ons. When they got focused on their ideal customer and rewarded those passionate followers, they BUILT (see what I did there?) a revamped brand for themselves.

    Good on you, Lego. Nice collection of research, Amy.

    Now if only they had some kind of Lego that you could step on without causing waves of blinding pain to radiate up to your throat…

  2. Rachel

    I never knew Lego almost went bankrupt! I’m really happy it didn’t — while I didn’t play with Legos a whole lot as a kid, I’m a big fan of their video games these days (the ones you say are now handled by outside partners, I assume). Really interesting article, Amy — thanks for sharing! :)

  3. Cybernetic SAM

    This is a really great post! I spent HOURS and HOURS with them and I very much blame Lego for a lot of my back problems! So much So that my dad even built me a table in the basement that was all lego platforms! Lego ALWAYS won over EVERYTHING when I was home, video games (I did have computer Lego game that I played a lot), TV, friends, barbies etc.. you name anything and give me a choice of that or Lego, well clearly you can see what the ultimate choice would be! Ha! It is so weird to love something so much and yet not actually know that much about it! So thanks!

  4. Roddie02

    True @Cybernetic SAM

Leave a Comment

Copyright 2003 - 2014 Quality Logo Products, Inc., Registration No. TX7-524-201. All Rights Reserved.