Marketing Insight – Lego had lost its brand identity

In the early 2000s, amidst losses of approximately $1 million per day, Lego was on the brink of bankruptcy. It was a company, and brand, that had lost its identity. Faced with the threat of intensified competition in the traditional toy market and the rise of digital entertainment, the brand reacted by over-diversifying. It moved away from what had made it successful and launched products which had little connection to the core business. It was a costly error which confused and alienated its traditional audience.  

To re-build, Lego needed to re-establish its brand position and reconnect with its customers. It undertook extensive audience research, embedding researchers into families in US and German cities. This uncovered the insights that “children still had plenty of free time, that they enjoyed difficult problems and that they often behaved differently when unsupervised.” To survive, Lego needed to go back to its roots and remind people of what made it special: imagination, creativity and play. Advertising and storytelling would play a crucial role in this.  

Expanded audience targeting changed brand perceptions  

Lego realised that a major part of its audience were the adults who used to use its products when they were children themselves. Global advertising campaigns like ‘Rebuild the world’ allowed the brand to adopt a consistent message that Lego is for everyone and is a tool for creativity rather than just a toy. Classic sets were relaunched to tap into nostalgia and campaigns ran targeting adults specifically where previously kids had been the sole target audience. Through this sustained and consistent strategy, Lego expanded its audience and shifted perceptions. Today, Lego is seen as a multi-generational brand, rather than just a toy. 

Accelerating Growth: adapting to a changing environment 

From near bankruptcy in 2003, Lego has built revenue from $1bn per year to $9.8bn in 2023. The group now employs over 25,000 full-time staff members, with the workforce growing by 10,000 since 2018. It has gone from making daily losses of $1m to an annual profit of approximately $1.8bn. 

This was not an overnight success. Lego had a vision of where it wanted to go and it put the building blocks in place to get there. It measured effectiveness and made the adjustments necessary to be successful, instead of repeatedly knocking the whole thing over and starting again… The impact of activity like the Lego Movie and Rebuild the World campaign on product sales was carefully analysed (there was a 37% increase in Lego sales the year following the movie release). Customer perception of the brand was closely tracked, as well as engagement with content and advertising campaigns (Rebuild the World drove a 5% increase in sales and over 100million views across social platforms). 

Ultimately, a willingness to understand its audience, its position as a brand and the flexibility to adapt to a changing environment allowed Lego to build on its existing brand strengths to become one of the leading toy manufacturers in the world today.