Market research took LEGO from losing a million dollars a day to the pinnacle of their industry – imagine what it will do for you.
It’s 2020 and, for the LEGO brand, “everything is awesome.” But that now-iconic song lyric wouldn’t exist and be running through your head right now if market research hadn’t saved LEGO from brink of extinction in the early 2000s.
In the 1930’s, founder Ole Kirk Christianson began by making simple wooden toys, and after World War II, LEGO began producing the plastic building blocks and after modest but steady growth for several decades, they took off in popularity in the late 1970’s. The brand flourished for the next 15 years, with profits doubling every five years.
However, LEGO sales began to plummet in 1993. Chinese competition, big-box retailers, and the rising popularity of video games all negatively affected sales, so the company attempted to adapt with a push towards innovation.
On the surface, LEGO was doing everything right. They brought in experts who advised finding competition-free markets, focusing on staff-diversity, and developing new products to disrupt existing markets.
The result: by 2004, LEGO was nearly bankrupt and losing almost a million dollars a day.
Why? After following expert advice and a “proven” innovation strategy playbook, how could the results be so disastrous for LEGO?
To get the answer, LEGO turned to market research. And when they did, they found many of the assumptions they made were dead wrong.
LEGO presumed that the increase in popularity of video games meant their target market of young boys wanted instant gratification. But observational research proved that the appeal of video games was in the level of mastery – scores, rankings, level-ups, etc.
Armed with this valuable information supplied by market research, LEGO was able to overhaul their product offerings. They focused on designing concepts using the perspective of the consumer, not the brand. And by 2014 LEGO surpassed Mattel to become the biggest toy manufacturer in the world.
Now, let’s examine some specific benefits of market research and how they give you a virtual road map to success.
When you have an expert team conduct your research, you will…
- Perfectly understand your market landscape to assess opportunities and threats
- Offer exactly what your market wants/needs to maximize sales and revenue
- Speak your customers’ language to create masterful copywriting that persuades and sells
Contact Ready to Launch Research today to find out how we can acheive these goals for your business.
Analyze Your Market Landscape
To maximize success, you need to have a near-perfect understanding of your market landscape. You need to know: • Who is your target market? • What is the size of the market? • Who are your competitors? • What is your unique value proposition?
When you have detailed answers to these questions, it is exponentially easier to create (and market) products and services people want, clearly see opportunities and threats, and differentiate yourself in the marketplace. These questions are answered with secondary research.
And, by always keeping tabs on your market landscape, you will also be aware of shifts that have an impact on both your industry generally and your business specifically.
For instance, Ulta Beauty, a leading cosmetics brand in the United States, has seen sales fall in the past few years. But, by keeping their finger on the pulse of their consumers, they know that a big part of the decline is due to a rising trend back toward natural beauty.
A brand like Ulta understands that while their main product has been cosmetics, they are truly in the beauty industry, not strictly the cosmetic industry. And so, after recognizing the natural beauty trend, the company has shifted towards more skincare products to meet the rising demand.
There are countless examples of huge corporations who had a massive market-share that have been destroyed by their failure to adapt to consumer shifts – think Nokia and Blockbuster Video.
Offer the Perfect Product or Service
Once you understand the market landscape, it’s time to drill down and really get to know exactly what your customers want.
A perfect example is a cautionary tale of Coke’s C2 product offering from 2004.
Don’t remember C2? Well, us neither and probably for good reason – it was a massive flop. But it could have been avoided if Coke had properly done its research.
Coke was correct in assessing that the market was ripe for a new product catering to men who wanted fewer calories but didn’t like Diet Coke. Their offering was C2, basically half Coke and half Diet Coke, marketed as a low-carb, low-calorie substitute for Coke amid the low carb craze of the early 2000’s.
The only problem: no one was really interested in a low-calorie substitute. What the market wanted was a no-calorie substitute, which Coke launched shortly thereafter with Coke Zero. But not before squandering a 50 million-dollar advertising budget and precious time better spent responding to actual market desires.
Better primary research could have saved Coke from this debacle.
So, do you know what your customers want from a new product or service before you launch? It’s imperative that you do. A C2-type failure would bankrupt most businesses.
Speak Your Customers’ Language
The words you use when describing your product or service are of paramount importance.
People spend money emotionally. If you’re not making a connection on that level, it’s extremely difficult to get people to crack open their wallets for you. And one of the best ways to make that connection is with the words you use in describing and/or advertising your offering.
Market research is a perfect way to “find your words,” so to speak.
Actively listening to the words your customers use is a goldmine of ideas to create fantastic copy for your products and services.
For example, you could ask two very simple questions in a focus group:
- What do you like best about our product?
- What is your biggest complaint about our competitor(s)?
Of course, the answers will be informative. But pay special attention to the exact words people use. Are there certain words or themes that come up again and again? Those are the things to ferret out and use when crafting your language for surveys, product descriptions and advertising.
Also, there are times you simply need to make sure you’re using the right words to be understood. People speaking the same language in different geographies will use various words to describe the same thing.
Imagine you’re marketing automobiles to people in the United States and the United Kingdom. If one of your selling points is a spacious rear storage compartment, you’ll need to know they call that a boot in the UK and a trunk in the USA. This may seem like a small thing, but it can have a big impact if you’re not careful.
Get Started with Market Research Today
So, are you ready to take advantage of market research that will boost your business to new heights? It’s just a click or call away.
Contact us today for a free consultation and find out exactly how Ready to Launch Research will help you now.
Ready to Launch Research is a boutique market research company based in Los Angeles, California specializing in hybrid methodologies that blend qualitative insights and quantitative findings.