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4 Managing Marketing Information to Gain Customer Insights

Chapter Preview

In this chapter, we continue our exploration of how marketers gain insights into consumers and the marketplace. We look at how companies develop and manage information about important marketplace elements: customers, competitors, products, and marketing programs. To succeed in today’s marketplace, companies must know how to turn mountains of marketing information into fresh customer insights that will help them engage customers and deliver greater value to them.

Let’s start with a story about marketing research and customer insights in action. Over the past decade, The LEGO Group has used innovative marketing research to gain deep insights into how children really play and then used those insights to create compelling play experiences for children all over the world. In the process, it has rescued itself from near bankruptcy to become the world’s biggest toy maker. As one analyst puts it, The LEGO Group has now become “the Apple of Toys.”

THE LEGO GROUP: Digging Out Fresh Customer Insights

Classic LEGO plastic bricks have been fixtures in homes around the world for more than 65 years. Last year, The LEGO Group (TLG) produced a record 55 billion LEGO bricks, enough to construct a continuous line stretching around the world more than 20 times. It put its popular constructions sets and toys into the eager hands of an estimated 100 million customers annually in 130 countries. TLG is now the world’s largest toy company, ahead of competitors Mattel and Hasbro. And whereas Mattel and Hasbro are facing flat or declining sales, TLG’s sales are exploding. In the past 10 years, its revenues have quadrupled to more than $5.7 billion, growing nearly 25 percent last year alone.

But just over a decade ago, TLG was near bankruptcy, spiraling downward and losing money at a rate of $1 million a day. The problem: The classic toy company had fallen out of touch with its customers. In the age of the internet, video games, mobile devices, and high-tech playthings, traditional toys such as LEGO bricks had been pushed to the back of the closet. So, in 2004, the company set out to rebuild its aging products and approaches, brick by brick.

The LEGO makeover, however, didn’t start with engineers working in design labs. First, TLG had to reconnect with customers. So it started with marketing research—lots and lots of it—listening to customers and learning in depth how children around the world really play. It created a Global Insights Team, a group of marketing researchers charged with finding innovative new ways to dig out fresh customer insights.

Beyond traditional research methods and data analytics, TLG used innovative immersive research approaches to understand the deeper motivations underlying LEGO purchases and play. For example, TLG research teams conducted up-close-and-personal ethnographic studies. They embedded researchers with families, observed children at play, interviewed their parents, shopped with families, and studied the inside workings of toy stores. This immersive research produced a lot of “Aha! Moments,” customer insights that shattered many of the brand’s decades-old traditions.

For example, TLG had long held fast to a “keep it simple” mantra. From the beginning, it had offered only basic play sets—bricks, building bases, beams, doors, windows, wheels, and slanting roof tiles—with few or no instructions. The philosophy was that giving children unstructured building sets would stimulate their imaginations and foster creativity. But the research showed that this concept just wasn’t cutting it in today’s modern, tech-rich world. Today’s children get bored easily, and in the current fast-moving environment, they are exposed to many more characters, themes, and technologies. However, counter to previous assumptions that kids seek only instant gratification, TLG found that today’s children welcome challenging tasks, such as putting together complex LEGO sets.

Responding to such insights, TLG shifted toward more-specialized, more-structured play experiences. It now churns out a seemingly endless assortment of themed product lines and specific building projects, complete with detailed instructions. So instead of just buying a set of basic square LEGO bricks and building their own houses or cars, children can now buy specialized kits to construct anything from fire trucks and helicopters to crave-worthy ninja castles. To add variety and familiarity, TLG also offers an ever-changing assortment of licensed lines based on everything from Star Wars and DC Comics to Marvel Super Heroes and Disney Princesses. And to satisfy children’s needs for skill-mastery challenges, TLG has developed involving play experiences such as LEGO MINDSTORMS, a series of building sets complete with hardware and software for making customizable robots that are programmable from a smartphone app. The latest incarnation of LEGO MINDSTORMS, EV3, is a 601-piece kit that includes software, motors, and sensors that control robot movements and speech.

Another customer insight that emerged from the ethnographic research is that kids no longer draw meaningful distinctions between digital and physical play. To children today, the two worlds blend together into one. This insight led to TLG’s “One Reality” products, which combine digital and real-world play experiences that involve building with LEGO bricks alongside software running on a phone or tablet app. For example, the LEGO Fusion line lets children build physical models with actual LEGO bricks, scan their creations using a phone or tablet app, and bring them to life in a virtual world. In LEGO Fusion Town Master, for instance, kids create a miniature virtual LEGO city, then run the city as its mayor in an app. Town Master was one of last year’s hottest-selling Christmas toys.

The LEGO Group’s innovative marketing research produced lots of “Aha! Moments,” helping the brand to recast its classic, colorful bricks into modern, tech-rich play experiences for children around the world.

(left) Bloomberg via GettyImages; (right) © incamerastock / Alamy Stock Photo

TLG’s marketing researchers have also discovered important differences between how boys and girls play, leading to the launch of girl-focused lines such as LEGO Friends. Both boys and girls like the construction aspects of LEGO bricks. However, boys tend to be more drawn to narrative—as reflected in popular boy-focused, story-based product lines such as Ninjago and Legends of Chima. In contrast, girls tend to use their sets for role-play, as reflected in the pink- and purple-accented LEGO Friends, which focuses on community and friendship themes. The development of LEGO Friends took four years, based on research involving 3,500 girls and their mothers around the world seeking to understand what girls who had not previously played with LEGO products might want in a construction toy. LEGO Friends has been a major hit with girls in markets ranging from the United States and Germany to China.

Of course, kids aren’t the only ones playing with LEGO bricks. The classic brick sets have a huge fan base of adults who never got over the toys of their youth. Hundreds of thousands of AFOLs (Adult Fans of LEGO) around the globe spend large sums on LEGO products. These adults maintain thousands of LEGO fan sites and blogs and organize get-togethers such as the annual BrickFest fan festival. TLG actively taps into the AFOL community for new customer insights and ideas. It has created a roster of customer ambassadors who provide regular input, and it even invites customers to participate directly in the product development process. For example, it once invited 250 LEGO train-set enthusiasts to visit its New York office to assess new designs. The result was the LEGO Santa Fe Super Chief set, which sold out the first 10,000 units in less than two weeks with virtually no marketing. Similarly, TLG used customer co-creation to develop its most popular product ever, LEGO MINDSTORMS.

Thus, over the past decade, thanks to customer insight–driven marketing research, The LEGO Group has reconnected with both its customers and the times. TLG probably knows as much about how children play as any organization on earth, and it has parlayed that knowledge into compelling, profitable play experiences for the world’s children. As one analyst concludes, “In the last 10 years, LEGO has grown into nothing less than the Apple of Toys: a profit-generating, design-driven miracle built around premium, intuitive, highly covetable [play experiences that its young] fans can’t get enough of.”1

Objectives Outline

AS THE LEGO STORY highlights, good products and marketing programs begin with good customer information. Companies also need an abundance of information on competitors, resellers, and other actors and marketplace forces. But more than just gathering information, marketers must use the information to gain powerful customer and market insights.

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Table of Contents for
4 Managing Marketing Information to Gain Customer Insights