Discuss the concept of sustainable marketing and explain whether you believe TLG practices sustainable marketing. What are the five sustainable marketing principles, and which one best describes TLG’s approach?
Assess TLG’s competitive advantage and discuss the basic steps in analyzing TLG’s competitors. Should LEGOS think of themselves as a toymaker? Explain why or why not.
In addition to the case, review the LEGO website at https://www.lego.com/en-us/aboutus/lego-group/. Discuss the set of tactical marketing tools – product, price, place, and promotion – that TLG blends to produce the response it wants in their target market.
Principles of Marketing (subscription)
Philip Kotler; Gary Armstrong
Company Case LEGO: Making the World a Better Place—One Brick at a Time
Classic LEGO plastic bricks have been fixtures in homes around the world for more than 70 years. A little
more than 15 years ago, The LEGO Group (TLG) was near bankruptcy, spiraling downward and losing
money at a rate of $1 million a day. But after a massive restructuring and implementation of a new
strategic plan, TLG has been on the rise ever since. In fact, TLG is the world’s largest toy company,
besting powerhouses Mattel and Hasbro in a rather volatile global market. Last year, The LEGO Group
(TLG) produced 3,400 different types of LEGO bricks and 70 billion total bricks, enough to construct a
continuous line stretching around the world more than 22 times. All those bricks went into nearly 100
million LEGO sets that found their way into the eager hands of customers in 140 countries, putting more
than $5.5 billion into TLG’s coffers.
Perhaps more notable than becoming the global toy market leader is the fact that TLG has achieved this
feat while also establishing an unsurpassed commitment to social responsibility. In fact, in an annual
study published by Forbes, based on ratings of social responsibility from consumers in 15 countries,
LEGO came out on top last year, moving up from its fifth-place showing the year before. In the study
conducted by the Reputation Institute, LEGO topped all other companies in perceptions that it behaves
ethically, operates transparently, conducts business fairly, protects the environment, and supports
worthy causes. These consumer perceptions reflect TLG’s actions. According to the Reputation Institute,
TLG “has embraced corporate social responsibility from top to bottom.”
When TLG developed its plan to bounce back from the brink of bankruptcy, it also took the opportunity
to reevaluate its company values. As a result, a social responsibility strategy became a key component of
TLC’s turnaround plan, driven by a desire to have a more positive impact on the world. To demonstrate
its commitment, TLG became the first toy company to join the United Nations Global Compact—the
world’s largest social responsibility initiative—and committed to support the 17 United Nations
Sustainable Development Goals.
It’s for the Children
TLG organizes its social responsibility goals into three key areas: children, people, and the environment.
According to Thomas Kirk Kristiansen, great-grandson of company TLG founder Ole Kirk Kristiansen,
“Children are our role models.” TLG has always sought to inspire children through the power of play by
facilitating a child’s natural approach to learning. The idea is to enable children to build valuable life
skills while having fun. This supports TLG’s vision—“to inspire and develop the builders of tomorrow.” In
addition, one of the driving pillars of TLG’s responsibility strategy is “leaving the best possible world for
children to inherit.”
TLG’s very ownership structure demonstrates its commitment to children. The LEGO Foundation owns
25 percent of the company. Dedicated to carrying out TLG’s vision, the LEGO Foundation acts as an
internal watchdog, ensuring that the profits from every LEGO product sold help bring learning through
play to children. To this end, the LEGO Foundation conducts research and carries out Local Community
Engagement activities all over the world. Such activities include working with partners to execute early
childhood programs, launch Play Labs, and establish early childhood centers.
Recognizing “play” as a child’s right, TLG worked with the LEGO Foundation and partner UNICEF to give
children a voice during World Children’s Day, bringing kids in to take over key roles at TLG. Additionally,
TLG motivated employees to volunteer to work with children around the world in a program to engage
them in environmental and social issues as well as help them build ideas to make the world a better
place. Through these and other activities, the LEGO Foundation engaged 1.3 million children last year.
Caring for People—A Company Value
TLG’s social responsibility initiatives aren’t only about children—they also focus on TLG’s responsibility
toward people in general. And TLG engages employees as well as local community members to take
part. For example, TLG encourages employees to become “Play Agents,” training and educating them to
understand the role and significance of play and giving them the tools needed to inspire children
through Local Community Engagement activities. Last year, the LEGO Foundation trained almost 1,200
Play Agents, bringing the total to 3,000. TLG believes that engaging employees in the company mission
and vision is an important part of creating “the best place to work.”
But when it comes to caring for people, TLG goes much deeper than mixing work and play. TLG has high
standards for treating employees with respect, paying fair wages, maintaining a safe work environment,
and ensuring reasonable working hours. These standards do not stop at the walls of the company’s own
facilities. Under the LEGO Code of Conduct, all suppliers must comply with strict guidelines for child
labor, forced labor, discrimination, wages and benefits, health and safety, and other aspects of ethical
treatment of employees. During the past year, TLG audited 100 percent of suppliers with respect to the
LEGO Code of Conduct, including suppliers in high-risk countries. What’s more, TLG requires that each
supplier provide written assurance that their own suppliers comply with the same standards.
Leaving the Planet Better for Tomorrow’s Children
The final component of TLG’s social responsibility strategy is caring for the environment. Although
setting goals to reduce a company’s environmental footprint is pretty much mandatory these days, TLG
sees it as an extension of its mission. That is, TLG’s work to inspire children and help them achieve their
full potential through play applies to the children of tomorrow as much as to the children of today. And
TLG recognizes that for children of future generations to enjoy the fruits of its mission, they must inherit
a planet with a healthy environment. As with the other components of its social responsibility code, TLG
has high standards for both itself and its suppliers when it comes to minimizing CO2 emissions, waste,
and pollution. It has also established goals for developing renewable energy and sustainable materials.
Last year, TLG achieved a major environmental milestone by producing the first LEGO pieces made from
sustainable plant-based plastic. Specifically, polyethylene—a soft, durable, and flexible plastic made
with ethanol extracted from sugar cane material—will be the sole plastic used to make botanical
elements such as leaves, bushes, and trees included in LEGO building sets. As a bio-plastic, these pieces
will also be recyclable and biodegradable. These first bio-plastic LEGO pieces comprised only about 2
percent of all LEGO elements produced last year, with the rest made entirely from petroleum-based
plastic as before. However, according to TLG’s vice president of environmental responsibility, “This is a
great first step in our ambitious commitment of making all LEGO bricks using sustainable materials.” To
move toward this goal, TLG has joined forces with the World Wide Fund for Nature and the Bioplastic
Feedstock Alliance to support and build demand for sustainably sourced plastic and ensure fully
sustainable sourcing of raw materials for the bioplastics industry.
Just a few years ago, TLG set a goal to achieve 100 percent sustainable materials in its bricks and
packaging by 2030. However, it recently moved that goal for packaging forward to 2025. Already, 75
percent of the cardboard used in its packaging comes from recycled material. Additionally, the company
is focused on other environmental benefits that can be achieved through innovations in packaging. For
example, reducing the average size of a LEGO box by 14 percent over the past four years has saved
7,000 tons of cardboard, in turn eliminating the need for 3,000 truckloads of shipping.
When a major global corporation makes even a small social or environmental improvement, the scale of
the company magnifies the impact. But TLG is not satisfied with achieving big impacts through small
improvements. Can you imagine the impact of 700 million LEGO tires being made each year from bio-
plastic instead of oil-based plastic? TLG can. And TLG expects that the impact of such actions will not
only result in direct benefits, it will be felt throughout the toy industry and beyond.31