Lego: 60 years of marketing plastic bricks

60 YEARS OF LEGO BRICKS

The Lego Group began marketing its iconic plastic brick sets in 1958. Fast-forward to 2018, and the 60-year-old product is one of the world's most popular toys, with marketing reinvented for the next generation. The brand is also estimated to be the world's most valuable toy brand.

The CMO notes that the brand's mission is 'to inspire and develop the builders of tomorrow, to reach more kids'. It continues to introduce new building sets, many linked to strong brand franchises like Star Wars, Harry Potter, and Ninjago.

Lego's sales in Europe and the US didn't meet company expectations last year. It experienced very good growth in China, however, and the company plans to open more branded stores there as demand surges.

The brand is also building on the strength of Legoland theme parks to keep its toys in the public eye. For the royal wedding of Prince Harry and Meghan Markle, for instance, Lego built a small-scale version of Windsor Castle on the grounds of Legoland Windsor.

And, with an eye toward social responsibility, Lego is beginning to make some of its bricks from plant-based materials. The idea is to become more environmentally-friendly and demonstrate good corporate citizenship.

This post updates the Lego Group example that opens Chapter 5 of my Essential Guide to Marketing Planning.

HSBC's marketing for growth

HSBC Facebook: https://www.facebook.com/HSBCUK/

UK-based HSBC bank has a new CEO and a new growth strategy, supported by new marketing.

John Flint, the new CEO, aims to expand HSBC within the UK market and market mortgages more aggressively.

Technology investment is key to the bank's future growth strategy. Meanwhile, recently appointed group head of marketing Leanne Cutts is looking at HSBC's traditional roots for connections to the bank's marketing future.

As shown in the illustration from the bank's UK Facebook page, HSBC's traditional red-and-white logo is being reimagined for the digital age. 'Most of our transactions with customers are digital, so having something easily recognisable is incredibly powerful. It helps the customer to cut through the clutter', Cutts explains.

The same logo is shown on HSBC's YouTube channel at this time, as well as on its Twitter account. The bank uploads not only adverts to YouTube but also videos about how to use its mobile banking app and other topics of interest to bank customers.  The bank has thousands of followers on Facebook, YouTube, Twitter and LinkedIn. HSBC is now reviewing agencies for its social media activities, which means changes as the bank positions its marketing to support future growth.

Burberry leverages the power of social media

https://www.instagram.com/burberry/

Social media platforms such as Facebook, Instagram and Twitter play a central marketing role for the UK fashion brand Burberry. Its marketing strategy actually relies on four distinct pillars: product, communication, distribution and digital. About communication, the company explains: 'We are evolving our communications to be led by product and made for social media'.

One study found that Burberry topped the list of 20 most valuable UK brands using social media in 2017. Fashion industry publication WWD says Burberry had the best-performing social media strategy during February's 2018 London Fashion Week. This is actually nothing new for the brand, which has long put special emphasis on social media and ecommerce: CampaignLive hailed Burberry's savvy social media strategy during London Fashion Week in 2014.

By cultivating tech-savvy consumers, Burberry has amassed an Instagram following of more than 11 million people. Its Twitter account is followed by 8.7 million people. More than 17 million people have clicked to like its Facebook page. In short, Burberry is leveraging the power of social media to reach and engage style-conscious brand fans who buy in stores or online or both.

This post updates the Burberry example in Chapter 8 of my Essential Guide to Marketing Planning.

McDonald's is marketing convenience and more

And you thought fast food just had to be fast. That's not the only (or even the most important) benefit that McDonald's is marketing for competitive positioning in the hyper-competitive world of casual dining. With 37,000+ restaurants worldwide, the company is a powerful marketer and continues to innovate as part of its growth strategy.

In the UK market, McDonald's is now offering McDelivery. Via Uber, it will deliver meal orders to home or office, a service that has helped the company increase sales despite competition and other elements in the marketing environment. In fact, the company says orders for home delivery on 1/1/18 made that the busiest delivery day to date. Convenience is adding to the appeal of burgers, fries and other McD's menu items.

What else is McDonald's doing? It recently became a sponsor of the NatWest Six Nations rugby tournament, after ending its long-time Olympic sponsorship. The rugby sponsorship is being used to highlight upmarket burgers in its Signature Collection. These three burgers, featuring British and Irish beef, have new, trendy flavors compared with traditional McD's burgers. One is a BBQ burger, one is 'spicy' and one is 'classic' with smoked bacon, Cheddar cheese and a Brioche bun. So not only is convenience important, a menu with more variety--in tune with today's taste buds--makes a difference.

Unilever shakes up its product portfolio

Unilever recently sold off its spreads and margarine brands to concentrate on other, higher-potential products in its portfolio. The company's CEO explained: 'The announcement today marks a further step in reshaping and sharpening our portfolio for long term growth'.

Brands sold to KKR, a private equity firm, include Flora, ProActiv, Becel, Country Crock, I Can't Believe It's Not Butter and and Blueband.

Although the spreads business was profitable for Unilever, with margins of about 20%, the firm wants to concentrate its marketing resources on products that closely fit its vision.

In particular, Unilever has been growing formerly niche brands like Pukka Herbs tea into mainstream brands to accelerate growth. It's also investing in personal care brands that are growing quickly and launching a number of new products for highly targeted customer segments within specific geographic markets.

This updates the Unilever examples in Essential Guide to Marketing Planning 4th edn.

Unilever and Nestle Pursue Niche Growth

Sweet Earth is being acquired by Nestle

Switzerland-based Nestle is buying a small California firm known for vegan and vegetarian foods; Dutch-British Unilever is buying a company that makes herbal organic teas.

Unilever is acquiring Pukka Herbs

Both of these multinationals are building part of their growth strategies around acquiring businesses and products in niches that are attractive because of increasing consumer appeal and the ability to be noticed through distinctive brands/products.

Unilever, for example, pursued Pukka Herbs because it is unusually fast-growing in its niche. Unilever's top tea executive explains: 'In the morning a lot of people still drink black tea as it picks you up, but in the afternoon or evening herbal tea is wonderful with different benefits'. In other words, Pukka Herbs complements Unilever's existing tea brands and products.

Nestle bought Sweet Earth, a vegan/vegetarian food marketer, to get firmly established in the plant-based protein market. Nestle USA's CEO comments: 'One of Nestlé’s strategic priorities is to build out our portfolio of vegetarian and flexitarian choices in line with modern health trends'.

Mainstream brands/products continue to sell--but certain niches are growing more rapidly and delivering customer acquisition (and profits) through specialization. That's why more multinationals will be exploiting growth opportunities by buying firms that have a following and a strong brand image in a well-defined niche.

Marketing with purpose: Think long term

Marketing with purpose is how some of the world's largest businesses are differentiating themselves in today's competitive global economy. At left, an image showing the new packaging of Procter & Gamble's Head & Shoulders shampoo, a bottle made partly from recycled plastics found on beaches.

P&G wants to demonstrate its leadership in sustainability marketing, and this packaging will soon be at in Carrefour stores across France. On the way are hundreds of millions of shampoo bottles made from recycled materials. P&G has also set aggressive multi-year targets for zero manufacturing waste. These and are other actions are building the firm's reputation for sustainability over the long term.

Competitor Unilever has been publicising its sustainability marketing as well. Last month, the company announced ambitious goals for plastic product packaging that is recyclable, reusable or compostable. It is reassessing its products and packaging to reduce the environmental impact wherever possible (as in image shown at right).

In a recent survey conducted in five countries, Unilever found that one in five consumers said they decide to buy based on whether a product was made without harming the environment. Unilever also reported that sales of its brands linked to sustainability are growing much more quickly than non-sustainability brands in the corporate portfolio.

A recent opinion column in The Guardian noted that social activism sells, and brands are busy promoting their good deeds for business reasons. In other words, marketing with purpose is the hottest way to differentiate a brand and make consumers aware of what it stands for, in order to make a sale. Well, yes, but if marketing with purpose is insincere or inconsistent, consumers will soon find that out. P&G and Unilever are committed to marketing with purpose for the long term, with considerable financial and human resources devoted to their environmental protection endeavors.

How did LEGO do?

From LEGO's corporate newsroom

LEGO recently reported turnover and profits . . . and different media outlets viewed the results in different ways.

• 'Lego wobbles after American downturn and higher wage bill' - The Evening Standard's headline
• 'Lego continues to build up sales' - BBC's headline
• 'Building on bricks with clicks' - CNBC's headline
• 'Lego profit falls 1.8% as company builds in China and Mexico' - Irish Times headline
• 'Toymaker LEGO builds more plant capacity to revive growth in US Sales' - Reuters

LEGO's profits are down a bit because it's expanding its workforce and its manufacturing capacity. Why? Because worldwide demand continues to grow and grow and grow.

In fact, demand was so extraordinarily high in 2015 that LEGO struggled to fill all orders for Christmas.

To avoid a repeat, LEGO is investing now as it continues implementing its global marketing plan, following a long-term growth strategy. Just in time: LEGO products are, of course, on this year's lists of top children's toys for Christmas.

Aldi's growth strategy on both sides of the Atlantic

Aldi--the German-owned discount grocery chain known for super-low prices and no frills--is expanding across the UK and in the US.

With a UK market share of more than 5% the chain's growth strategy means investing £600m to open 130 additional stores and increase its workforce to 35,000 by 2022. Costs are low, so prices are low.

Bring-your-own-bags to tote groceries home--and if you buy an Aldi's UK bag, the pennies go to the RSPB, aiding a good cause and reinforcing the company's reputation for social responsibility. Aldi UK has attracted more than 1m Facebook likes, 188k followers on Twitter, 7,500 followers on Pinterest and a few thousand followers in Youtube.

Across the pond, Aldi is getting ready to compete even more aggressively with Trader Joe's and other low-price grocery chains. Within a year, its growth strategy calls for 45 new stores in California, where local consumers value both quality and low prices. Unlike the bare-bones assortments of the past, Aldi's is testing organic specialties such as cage-free eggs and chia seeds to differentiate itself and attract new shoppers.

Aldi US is as social as Aldi UK, with 1.5m Facebook likes, a few thousand Youtube followers, 23k Twitter followers and 24k Pinterest followers.

Ocado's long road to profitability

It's been a long road to profitability for Ocado, the online grocer that has struggled with finances, competition and other issues since its founding in 2000. Now the grocer has reported an annual profit for the first time and is building on changes in consumer behaviour that make online and mobile shopping more appealing and popular every day. And it's branching out with ventures like a deal with Marie Claire magazine to enter the upmarket beauty business.

Ocado's strategic objectives are to:

1. Increase the number of customers it serves
2. Increase the amount spent by each customer
3. "Make shopping easy" for customers
4. Continue improving efficiency
5. Commercialise intellectual property such as proprietary processes/technologies

Ocado courts digital-savvy customers with a strong social media presence on Facebook (274,000 likes), Twitter (38,000 followers), Pinterest (1,800 followers), Instagram (1,800 followers), YouTube and a corporate blog. It has both an iPhone app and an Adroid app for mobile-based customers. It has an app that allows customers to scan a UPC code on a grocery item at home and have it instantly added to the Ocado shopping list. Convenience for time-pressured customers is a major benefit that Ocado is banking on to keep it profitable in the intensely competitive world of grocery retailing.

To grow, Unilever trims its product portfolio

Updating the chapter 12 preview example in my Essential Guide to Marketing Planning, Unilever has been adjusting its marketing plan to drive growth by focusing on core brands. The idea is to cut costs and provide marketing efficiency for a streamlined portfolio.

Here, from Unilever's 2013 annual report, is a graphic of its business model, showing a virtuous cycle of growth.

In recent months, Unilever's brand divestments have included:

• Selling its Ragu and Bertolli pasta sauce brands to Mizkan, based in Japan.
• Selling its Peperami meat snack brand to Jack Link's, based in the US.

Still to be sold are hair-care brand Brylcreem and diet shake brand Slim-Fast.

Even with these portfolio changes, Unilever markets brands in three broad product categories: (1) food and drink, (2) home care and (3) personal care. Earlier this year, it became majority owner of a water purification company in China, to profit from that firm's knowledge of the local market, distribution ties and technological skill.

With marketing investment concentrated on fewer but stronger brands, Unilever expects to stimulate growth in turnover and further enhance its bottom-line results.

Grow, grow, grow

Nearly every marketer wants to stimulate growth in sales and profits. But what are your options? Glad you asked--here's a quick guide to the four main growth strategies for your marketing plan:

1. Sell more of your existing products in existing markets or market segments. This can mean getting current customers to buy more in each transaction, or getting current customers to buy more often. Thornton's, for example, is looking to encourage chocolate buying not just at Easter and Christmas but on other occasions, as well.
2. Sell existing products in new markets or segments. Audi, the German automaker, is doing this by seeking to expand in India beyond the biggest cities to smaller areas.
3. Sell modified or new products in existing markets or segments. McDonald's does this all over the world, constantly adding new menu items, such as Chicken McBites, which started in McDonald's in Australia and are being tested in the US.
4. Sell new products in new markets or segments. Also known as diversification, this strategy can be implemented by distributing through existing channel arrangements in the new market, starting new marketing activities in new markets, or acquiring a company or product in a new market. Not easy, and often risky, but potentially rewarding for the business that has sufficient financial strength to diversify and hold on until a brand has been established--or has the intelligence to leave a market if competitive pressures are too high (or consumer acceptance is too low).