Subject:
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Re: A rant on many poor business practices leading to unemployment
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Newsgroups:
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lugnet.lego
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Date:
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Fri, 2 Jan 2004 16:07:19 GMT
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Viewed:
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1429 times
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In lugnet.lego, Andrew Kochan wrote:
> Ok... here's an interesting article from Australian Financial Review that I
> think appeared in a number of other places as well. Article follows at
> bottom of post. Highly saddening. Looking at the 2004 catalog pictures
> makes me think things are going to get worse rather than better. TLC seems
> to be continuing down it's overly licensed, dumbed-down set approach.
> The only good news in the article for me was the possible F1 line for the
> future. (Although what was wrong with the original Town race sets??? They
> were pretty much a non-licensed F1 set where Lego didn't have to give anyone
> else a share of the profits.) I'd guess that if Lego makes even the
> slightest profit on this new license that 99% of the money goes to Bernie
> Eccelstone anyhow. :P
>
> Anyhow... I feel bad that Lego has made such poor marketting decisions
> leading to yet more overly licensed sets which will lead to more layoffs.
> Yet I see more licensed than non-licensed products in their new catalog. How
> much money from the classic Castle theme did Lego have to give any other
> company after P&L were calculated? None. What about classic Space? None.
> Don't get me wrong... if they want to make a small percentage of their line
> licensed that's great. I love the Star Wars models. But what if they sold
> *GASP* both Star Wars and classic Space? It's not like legos go bad per se.
> If the classic Space set sits on a shelf a bit longer than the Star Wars set
> but still eventually sells they still get the money,. In fact over the long
> run they get a greater percentage because Lucas Arts doesn't get their Space
> money.
Well, it sounds like a good idea, but from what I understand and what I've
heard here on Lugnet, Lego cannot make Space and Star Wars at the same time.
Something about it in the contract with Lucas (all hearsay, but if I was
Lucasfilm, I'd be putting that in too...think about it..Lucasfilm would see
Lego space as competing with Star Wars product. Granted, I think we'd all
like to see some non-Star Wars space sets come out. However, if that
Lucasfilm contract says "no Lego space product", TLC's hands are tied. (I for
one, would love to see the Galaxy Explorer as a Legend series). At least the
NASA discovery sets have made it to the shelves--very cool sets, but
apparently, not selling well (as per my observation). Not to mention, there's
also the whole issue of part capacity per year that has to be factored in--and
you can't simply "buy more machines"..molding machines are expensive, but the
molds, dies, floorspace, heaters needed to dry equipment, storage space for
the ABS pellets, dyes, etc, additional quality control space, shipping,
storage, etc can pile up real fast. I've got molding experience, so I know
enough of what I'm talking about when it comes to making injection-molded
plastic parts.
> Every year it seems there's a different set of themes. IT makes NO sense.
> Make new themes. That's great. I love em. But stop discontinuing/putting
> on hold or whatever you want to call it the old themes. Just make more not
> less and not the same amount. If say in 1990 (this is an example not an
> exaction) there was Town, Space, Castles, Technic, and Trains. Then in 1991
> Town, Pirates, Castles, Technic, and Trains. Where it should be Town,
> Space, Castles, Technic, Trains, Pirates. See you add more without taking
> away old. It's called growth. By now
> there should be 500 active product lines, not 8. If you sell 1 model from a
> theme a year you should not discontinue said line. If I go to a toy store I
> should be able to purchase any Lego set from any theme from 1930whatever
> onwards and each and every set ever made should be available on hand
> immeadiately on demand right there on every store shelf.
Um, hate to say that, but lets get to reality here. That's a pipe dream at
best. Seriously, how would you account for the extra molding capacity needed,
additional molds needed, product and material costs, manufacturing overhead
costs, material costs, shipping costs, product storage space and storage cost,
both on the factory and retail level. retail shelving space, I'm sure the
retailer would LOVE to make use of an already cramped space by having MORE
product on their shelves. "ok, we've got X space to put all our product, and
it's not enough. Now we have to put 5 times X in the same space?, how the hell
are we gonna do that?" Store shelf space costs money--money that ultimately,
the consumer pays for. Did you know the most expensive cosmetics are at the
front of an aisle? Why? Because not many people go past the first 30% of an
aisle being careful researchers.
Remember, the primary customer tends to focus on price, not quality. "It's 20%
more? I can't buy that!" Even if that product lasts 3x longer for the 20%, it's
a better overall deal, but few consumers do a long-term look at things.
Unfortunately, you can't portray quality and longevity of a product on a box
cover too well. I won't go into details on some of Wal-Marts product demands,
nor some of the solutions--but I will say the resulting product sometimes is
really poor quality--but you get what you pay for, as the saying goes.
Remember, Lego is a worldwide company, and European tastes differ from American
and Asian tastes--that's a big factor when working internationally, and a much
harder task to manage when trying to find the balance of them all.
> But ultimately what Lego is doing is the same thing that every other company
> does. Appealing to the lowest common denominator. I suppose I shouldn't be
> upset because they're doing the same thing every toy company, TV station,
> radio station (baring college and public radio), and game company is doing.
> But can't they see what it's doing? Each year people become more sheeplike
> than the last. And more fickle. And that's why they keep desperately
> changing their themes... trying to keep up with the newest fad. Well...
> apparently it isn't working. Good luck finding a new job you poor laid off
> souls.
>
> -Andy
Well, some of the new LEGO products have been successful. From my observations,
Make and Create, Clickits, and Bionicle have been making a lot of sales. Lego
trains have been popular as well--especially with the proliferation of Lego
Train clubs. Lego is (slowly) bringing back Technic. Advent calendars are
always very popular. Apparently the racers line was popular in Europe, but not
as popular in the US. World City looks nice, but apparently hasn't been selling
well, although that new fireboat on the back of the cover looks pretty cool, and
I like the rescue helicopter as well. It appears the larger Knights kingdom
items are riding on the Bionicle figures for popularity. A lot of castle people
have not been too happy with the Harry Potter sets for their needs. The
Hogwarts Express is nice, but I don't think the average consumer understands the
difference in push-train versus powered train (nor that it's pretty easy to
convert if you have the Lego train sets). No Star Wars film or Harry Potter
film last year, that could have been a factor regarding low Harry Potter and
Star Wars set sales. Don't forget that Lego has been pretty successful in
pulling girls into the market with the Clickits products (not to mention some of
the backings fit onto Lego studs--I'm going to get some and see how they look as
gardens on some house displays)
Did anybody notice the 4404 tub looks a lot like it's got leftover star wars
parts in it? the 4404 is a nice collection of parts for a good price--maybe
Lego did that to recoup some costs, as as you can see, 4404 tubs don't stay in
inventory for long.
I'm not saying Lego is perfect by any means. All companies make mistakes.
The goal is to make less mistakes than successes. Do I agree with you on some
issues? Yes. Do we all want Lego to succeed? I think that's a resounding
yes. Do I have my opinions on what should be done? Sure, however before I
go off and start saying what needs to be done, I'd need to understand the
problem and the situation first. (Unfortunately, I'm bound by legal matters
to outright speak my ideas, but trust me, I've got 'em) From there, then you
try to find options that work. Ok, some don't work, but some do. The trick
is finding out what works, and often times, only trial and error work. (I will
say, I have always loved the Lego commercials that feature the stop-motion
usage, watching a set go from groud up to finished product in a few seconds).
Sometimes you have to make decisions based on other factors (i.e. cost and
manufacturing), not to mention, there is always an additional factor when
dealing with people. For example--watch how people drive. If everybody drove
the same, it would be easy to design a road system with little to no traffic
jams. Do people drive the same? Of course not--that's why we have traffic
issues and accidents. The same is true of consumer buying in general. That
consumer factor is always difficult to judge and anticipate--usually something
happens by pure luck more than anything else.
So, while ideally, I may not agree on some ideas (based simply on cost
requirements--which ultimately go back to the product price), It is good to
have opinions, as opinions can only open up someone's eyes to a larger problem.
So, please keep the opinions up, and opinions work even better when supported
with logic and good examples. Please don't think the above holds only for the
Lego company--it holds for all companies in general.
Scott Lyttle
>
> Lego limps as Christmas disappoints
> Dec 30 08:07
> AFP
>
> Lego, which has built a toy and game empire from building bricks, warned on
> Monday that profits would slump because sales of Star Wars and Harry Potter
> products had flopped over Christmas.
>
> Vice director Poul Plougmann told the financial newspaper Boersen that "the
> trend throughout the year was unexpectedly bad, nearly catastrophic".
>
> He said that "all the signs of Christmas sales, for toy manufacturers throughout
> the world, show an attitude of growing reticence by customers".
>
> He added: "Apart from Denmark, I have not heard anything positive about trends
> in the retail trade."
>
> Lego, a family company, signalled that it was heading for its third loss since
> it was founded in 1932.
>
> The board had seen the threat back in August after disappointing sales in the
> first half, particularly in the United States which accounts for nearly 40
> percent of its total turnover.
>
> A key factor was weak sales this year of games based on the Star Wars and Harry
> Potter films in 2002, much in contrast to last year's boom.
>
> Christmas sales, which represent 40 per cent of Lego's annual turnover, would be
> known in January and would either enable the company to recover or push it into
> loss, it said.
>
> In 2000 Lego reported a pre-tax loss of nearly 1.07 billion kroner, the second
> loss in its history, resulting in restructuring and job cuts which have reduced
> the workforce by 20 percent to about 7,500 people throughout the world.
>
> These changes, and a change of strategy, resulted in a profit of 530 million
> kroner in 2001 and 625 million kroner last year.
>
> To face up to tough competition from computer games, Lego began producing in
> 2002 video films and animated productions based on its successful Bionicle
> series, signing contracts with US companies Creative Capers Entertainment and
> Miramax Films.
>
> Its film "Bionicle Mask and Light", produced in DVD and VHS formats, got off to
> a strong start when it was launched in the United States and Canada on September
> 16. Lego is counting on similar success in Europe and in the rest of the world.
>
> As part of its diversification, Lego has also signed a partnership agreement
> with the Williams Formula 1 Team to connect children to the world of Formula 1
> car racing.
>
> But these new products might not be enough to keep Lego in profit.
>
> The board has already sent a signal by announcing the loss of 257 jobs at the
> headquarters at Billund in the west of the country and has not ruled out further
> such measures in 2004.
>
> On October 27 the company announced that it was preparing a "positive and solid
> budget" for 2004.
>
> "Particularly in the United States, the toy market is more dynamic than ever
> which means that Lego must demonstrate a vital capacity to react rapidly and
> reply efficiently to the needs of our clients and customers," Mr Plougmann said
> at the time.
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