Literature Review

2.0 The Marketing mix of 4Ps

2.1   Promotion

            Lego Company puts a lot of focus on marketing its products in China. Over the past years, China is among the best economic success stories. In the Chinese market, active product promotion is achieved through improvement of the brand awareness by running various advertising campaigns. According to Wagstaff (2016), over the past few years, the sales of Lego Company have increased by over 50 percent in the mainland China. This increase in sales was achieved through carefully planned product promotions. The brand image of a company can be uplifted through having high-quality, high definition advertisements that aim at increasing the value proposition. The development of toys to second-tier and third-tier cities in China remains a top agenda for Lego Company and among the most significant strategies for improving sales revenue. Evers, Andersson, and Hannibal (2012, p.52) assert that in China multinationals use promotion strategies that are comprehensive and use all the verticals of marketing.

            According to Ki and Li (2015, p.368), over the past few decades, the Chinese economy has posted a constant growth rate of 9 percent. Being the most populated national globally, China provides Lego Company with billion-plus potential customers for its products. For that reason, this stresses the need for the Danish toy manufacturer to run an effective advertising campaign that can boost sales revenue. He and Zhou (2008) found out that multinationals gain a competitive advantage in China through building and maintaining product awareness with potential buyers. Through various advertisement initiatives, Lego Company educates its potential customers on why they need to buy its LEGO bricks. Besides, advertisement provides the company with a platform where the company communicates the usefulness and the benefits derived from the use of its products. The popularity of Lego Company products has increased in China because the advertising campaigns tell the potential consumers why the company products are better than those provided by its competitors.

Yu (2009, p.116) acknowledges that the Chinese media has also played significant roles in the development of online marketing hence resulting in effective product promotion campaigns. However, the use of internet adverts is still an area that has not been fully exploited in China. Gu (2011, p.55) found out that the Chinese market is accustomed to less supportive social networks. Some of the online platforms that Lego Company uses to promote its products in China include micro blogging sites, gaming, online video, and so on. The organic search results and instant messaging are regarded as the most significant online searching and advertisement platforms in China. The most popular platforms used by Lego Company in its online marketing include the popular Chinese platform Baidu. In 2012, Baidu achieved advertisement revenues of over $200 million, hence, highlighting how important this form of product marketing is prevalent in the Chinese market.

            Gui and Li (2002, p.79) conducted a research study that revealed that to have an effective advertisement plan in China, it is imperative that multinationals perform market research so that to acquire essential information. The Chinese market has been criticized for being hostile to foreign companies. As a consequence, to promote its products Lego Company must obtain significant product information of the type of media, factors that influence purchasing decisions, and the unsatisfied need in the Chinese toy industry. The data collected reflects on the potential customers thus making it easy for the company to come up with a proper advertisement message and determine how well to disseminate the message to potential customers. To be successful in China, Lego Company will have to maximize the use of the Internet as a channel to promote its products. The official website of the company will also act as an essential cog in the advertising campaign.

            Mao and Wang (2009, p.117) affirm that the rigidity in the Chinese market complicates matters for most of the multinationals operating in China. To be successful multinationals have incorporated the use of the internet in their different advertising programs. For example, a tool of advertisement most companies uses their web pages to provide crucial information concerning product descriptions, company history, and so on. There is a range of internet advertising options, for example, the use of paid advertisement as well as organic search results. The awareness of a product is built in the mind of a potential customer through the provision of paid adverts that are pop-ups that are designed to attract the attention of a person with access to the internet (M Business Administration and Business Economics. 2014, p.933). Lego Company uses paid adverts that are usually characterized by short messages. Besides, in China, it is common to find companies using organic search results as a form of advertisement.

2.2 Place

            Gui and Li (2002, p.78) opine that the place strategy adopted by a company outlines how customers can access specific products. The success of Lego Company will depend on the place and the channel through which the company products will be provided to the customer. The place strategy is crucial to the progress of a company as it makes it easier for a company to assess what channel is most suited to a product. Lego Company produces its products so that they can be sold to its loyal and potential customers. For a company to maximize on the sales revenue, it is essential that its products are made available to the targeted market at a place where purchases can be made conveniently. The main factory of Lego Company in China is located in Jiaxing, Zhejiang province with the manufactured products being found all across the major cities.

            According to Gu (2011, p.61), the success of a company in the Chinese market relies on the ability of a company to make its...