A NEW SERVICE PROPOSAL FOR LEGO:
MANAGEMENT REPORT FOR OPERATIONAL AND STRATEGIC PROCESSES OF BRINGING PRODUCT RECYCLING AND RENTAL SERVICE TO THE MARKETPLACE
By
Allwrite Solutions
Date of Submission: April 15, 2021
Executive summary
Lego, is a family-owned company that has been a major toy producer and manufacturer for the past few decades. Their brand name and quality has enabled them to maintain a major percentage of the toy market even in the world today, making them a major multinational corporation (MNC) globally.
The report proposal herein, undertakes to assess the present market situation so as to formulate a viable plan for the company to introduce and launch their new service; rental and recycling of Lego toys. The service is targeted at the middle and lower financial class citizens who may not be able to meet the costs of purchase of these toys.
Considering the mission and vision of the company, Lego aims to build and create better lives for children. Their recent developments in technology and innovation according to Lego.com. (2021), has shown that they are working towards making children more creative and tech oriented in a technological world.
We shall undertake to find out the various market dimensions while intricately dissecting them to create and discover avenues through which the company’s new service may thrive. The process shall involve market auditing, objective assessment, costing, financial, social and marketing objectives as well as a contingency plan in light of the recent Coronavirus pandemic. The proposal may serve as an in-depth research and planning analysis of the company and the best courses of action in their plan to launch a new service.
Table of Contents
Sales forecast and rationale. 21
Introduction
Formed in 10th August 1932 by Ole Kirk Christiansen, Lego Company is known globally for its Lego-brand toys, amusement parks and retailing stores. The company prides itself in innovation and provision of the best human experiences for the people they serve. With the humongous nature of the company and its operations, comes the complexity of managerial and organizational dynamics, as asserted by, Schultz and Hatch (2003). According to, Lauwaert (2008), Ole Kirk Christiansen, a masterful carpenter who built a wooden duck as the first Lego toy, was the result of the increasingly profitable business Lego has grown to become. The family-owned company aims to further its reach to those people who are of lower economic standing, through the new service of product rental and recycling.
The mission statement of the company, according to Schultz, Hatch and Ciccolella (2014), says, “To nurture the child in each of us.” He further claims that the vision statement reads, “The best is never good enough.” Such statements form the basis of the company’s driving force in the process of handing over form one generation to the next. Lego’s current mission is to enable children from disadvantaged backgrounds to receive the same form of satisfaction that advantaged children derive from playing with toys from their brand. The new service that the company aims to introduce to the general public, offers an enabling environment for such dreams to be achieved. One of the most relied on corporate beliefs by the company states that, children are the greatest role models since they are creative curious and imaginative, as asserted by, Schultz, Hatch and Ciccolella (2014).
One of the major ways in which Lego creates corporate goals, is by allowing trained moderators to communicate with Lego users whilst giving them feedback on their inquiries and suggestions, Hienerth, Lettl and Keinz (2014). Through similar interaction, the company is able to formulate corporate goals such as the need to develop partnerships with their suppliers and departmental store to enable the provision of their new service to customers. The new service proposal I am developing hereunder will enable the effective execution of the company’s plan and eventual success of the new service once it is launched to the public domain.
Market Audit
The below section provides for an in-depth analysis of the market sway and availability to accept the new service that Lego plans to offer. We shall elaborate on the various data collected and the deliberations thereof.
Macro-analysis
In order to adequately conduct a macro-analysis market, we require to first find out the various opportunities and threats facing Lego and the associated new services. According to Windekilde (2016), MNCs like Lego greatly benefit by creating synergies derived from operating in various industries. In this regard, the company is at a great position to assess their opportunities and threats through a market audit macro-analysis.
Some of the key opportunities enjoyed by the company include: organization of school competitions, segmentation of more content into other sections and further branding campaigns to reach newer segments of the market. School competitions offer a good niche to reach the major user of the company’s products – children, as ascertained by, Skool-Study.Learn.Share. By getting children involved in the pre-testing and pre-launch processes of the company by taking the toys to their schools for competitions will help influence a greater number of parents to appreciate Lego’s new service. Children will propose the new service to their parents and influence their choice to get involved thereby benefiting the company through profits and market involvement.
The segmentation of more content into other sections may involve the innovation and conglomeration of new concepts to old ones in order to come up with a unique and a market-alluring product. As ascertained by Mortensen, Jensen and Nielsen (2012), companies need to get involved in product segmentation to maintain focus on a few select products in spearheading marketing campaigns. Such actions will ensure that optimal sales for new product selections and in this case, the new Lego rental and recycling service, becomes a subject of major emphasis by the market.
Branding campaigns are a major selling strategy that Lego has employed over the years to ensure market relevance and optimal sales all-year-round. Schultz and Hatch (2006) claim that, brand uniqueness, authenticity and attraction are the driving forces of Lego Company’s exemplary growth. In this regard, further branding campaigns should be held by the company in order to sell on quality and attractiveness of the brand, rather than on market strategy – as is the case with other competitors.
The greatest threats to Lego’s new service are: video games, cartoon channel, internet, outdoor games and other similar companies. Technological advancement has caused a major shortfall in the number of children who are interested in getting physical toys to play with. The television has captured their attention and research says that, 99 percent of boys and 94 percent of girls play video games today, Boduszek, Debowska, Jones, Ma, Smith, Willmott and Kirkman (2019). Consequently, the company’s new service may come as incentive to provide these children with a real-life experience with toys that emulate play tools, they use in the video games.
Cartoon channels are also very intriguing and one of the key threats to the Lego company business. The number of hours children spend in front of computer screens is overwhelmingly much. The new service that the company aims to give will provide for an alternative and cheap option that parents and children will appreciate.
Micro-analysis
The Lego Company enjoys a flurry of strengths that gives it a business edge over other present players in the toy business. Some of these strengths include: strong brand awareness in over 55 countries, strong product portfolio, brand diversification into video games, TV, movies and merchandise. Schultz and Hatch (2003) assert that, Lego Company brand created by its founder has acted as a long-standing umbrella propelling the business to great advancement and growth to its present state. The ongoing growth of Lego’s operations due to a strong brand awareness may be enhanced through the new service they aim to launch.
For any business to thrive, there needs to be a strong product portfolio that keeps them and their company appealing to the potential customers. Lego company, according to Robertson and Hjuler (2009), ensures that its innovation goals are in tandem with new-product portfolio so that a culmination of those efforts could create overall growth of the business. In this regard, Lego, keeps improving its product and service regularly, in order to keep their customers happy and well-engaged.
The move to diversify Lego’s products and service to include video games, TV, movies and merchandise, has led to its expanse into unchartered markets and prompted its growth. Johnson (2019) claims that, Lego is committed to diversity through its franchise and aims to employ the same principles in their independent products. Through such strategy and dedication to building a trustable brand, Lego aims to become even more profitable in the latter years through its new service for rental and recycling.
Despite the unequalled and unrivalled growth faced by Lego, there are a few weaknesses that the company harbours which may pose a problem to its continued growth and development. Schultz and Hatch (2003) concur with the fact that imitation of the company’s product and brand names and high brand conversion rate on to the loss of the online game market share are major weaknesses of the company which may affect its operations. Given the increased number of similar products in the market, Lego is faced with a great challenge of defining its products’ uniqueness as compared to other similar options bearing similar names to theirs. As such, the company, may potentially lose potential buying customers who may be inclined to buy on price rather than quality. Thereby, there is a great need for the company to offer the new service in order to reaffirm their market presence.
The recent high rate of brand conversion by Lego, is a major weakness that faces the company. Despite the high emphasis on customer and user experience by Lego through branding strategy, as asserted by Kalcher (2012), the company still faces an issue with brand conversion in order to maintain market uniqueness. By introducing the new rental and recycling service, Lego could take advantage of their user experience emphasis to capture and retain new customers who would have otherwise not been aware of the brand or initially able to afford their products. Subsequently, Lego will face an improvement in their sales margins and arise in company revenues.
Internal analysis
Based on the culmination of the above thoughts as appertaining to the macro and micro analysis market audit of Lego, it is realized that the company has an opportunity to reach customers who were otherwise unable to use its products. The strong brand image portrayed and upheld by the company are some of the contributing factors leveraging it against other major players in the market. Kalcher (2012) claims that Lego aims to transit from being a product brand, to becoming an experience brand. Such actions aim to make Lego represent an experience, such of which, the world today aches to receive. Some of the steps towards achievement of this goal is this proposal to introduce a new service to their customers for rental and recycling. By asserting their sway and power in the market through this service, Lego will become a major player in the user experience industry making them a stronger MNC and enable them to reach into other foreign markets.
Situational analysis
| Opportunities Organizing competitions in schoolsSegmentation of more content into other sectionsMore branding campaigns to reach newer segments of the market | Threats Video gamesCartoon channelInternetOutdoor gameOther similar companies |
| Strengths Strong brand awareness in over 55 countriesStrong product portfolio The brand has also diversified into video games, TV and movies, merchandise and more | Weaknesses Imitation of product and brand names is a problemHigh brand conversion rate, also lost online game market share |
The New Product/Service
Brief Product Description
In the deployment of this new service, certain product strategy needs to be used. The concept of product rental, according to De Angelis (2018) involves the use of a product over a period of time while paying certain fees, increasingly lower as compared to the purchase price of the specific item. The new rental and recycling service which shall be offered through suppliers and departmental stores will be highly labour intensive. With the recent Coronavirus pandemic, high levels of hygiene will need to be maintained to ensure that the service is not an avenue through which disease is passed on from user to the next. The proposal for the new service is aimed at easing the burden of purchasing toys for kids by offering rental solutions for a period of time and the subsequent returning of the same for use by a different customer.
The solution offers a green and sustainable solution for our rapidly degrading environment. Lego hopes to reduce the amount of disposable plastic toys through their recycling through extensive sterilization processes, then placing them back on the shelves for rent by another user. The service will be majorly preferred in towns where residents are of medium to low financial standing. Lego’s proposition hopes to give children from such backgrounds, exposure to some of the most expensive toys to piques they brains and seek solutions to the world’s greatest problems. My analysis of the said proposal is inclined towards finding reasons as to why this service may be advantageous to the society and providing probable solutions to the problems that may result in the success thereof.
Fig. 1. A visual representation of the product concept.
Source: Team, M. (2021).
Concept statement
Rental and recycling service by Lego, is an innovative and market friendly solution which the company could implement for a boost in sales. Considering Lego’s new store calendar indicative of its present sale items, as shown in Lego.com. (2021), the company offers its toys are really high prices which are seemingly affordable for the few select citizens of various nations. The new service aims at offering the same products at lower prices on rental basis. Such measures are intended to attract a new kind of market that realizes the incentive offered and appreciate the good brand name of Lego built over the years.
Target Market
In order to come up with a potential target market, we had to divide the market into various segments and assess them in stand-alone form in order to assert their viability to accept the new service that Lego hopes to offer. Subsequently, we came up with several groups of emphasis, in essence: the medium and low financial class. These are the prime target market audience that the company hopes to capture. Members of this class are aware of the good brand name that Lego provides but lack in the monetary muscle required for purchase of the products. The new rental and recycling service may service as an incentive for them to pay for it and enjoy a similar experience with their affluent counterparts. Besides this major target group, we have other secondary target groups who may get involved once the new service is launched for use.
| Market Segment Attractiveness / Potential level of interest in the service | Unattractive | Average | Attractive |
| Weak | Strong avoidance | Avoid The Video Gamer | Possibilities |
| Average | Avoid The student experiencer | Possibilities | Secondary target Adult Lego fans |
| Strong | Possibilities | Secondary target Young parents | Prime target The Medium and Low Financial class |
Table 2. An evaluation of the potential target segments.
Dobrynskaya and Kishilova (2018) assert that Lego is a company having a great collectable toy value but with a diminishing supply across time. Therefore, the products are set to have a high market demand. Considering the strong brand awareness campaigns carried out over time, the company is able to target customers who were initially unable to use and purchase their products due to monetary constraints. The company’s prime target audience, is a major part of the market which has been untapped for a long time now. According to Fonnesbaek and Andersen (2005), besides the major focus on the toys’ constructional elements, the company also uses stories to sell their products. These stories are a key selling point since they are able to teach children on some societal and moral values in an easy and directly hands-on way.
Besides the obvious intrigue harboured by children towards Legos, there is a secondary target group of adult Lego fans and young parents who enjoy the “building blocks activity”. As a pass-time activity, these target audiences are best suited to undertake involvement in the new service so as to save on the overall costs of purchase of the toys. In the world today, there is a large majority of persons who are categorized into groups indicative of their contribution and involvement with Lego toys. These groups, according to Heljakka (2018) are, theorists, hobbyists and “everyday players”. Such groups may find the new service more suited to their toy-based activities and cut on purchase costs to renting them only when required.
Fig, 2. Lego’s growth strategy and innovation to expand
Source: Booker (2019)
Fig. 3. Lego market history in Minifigures
Source: Qian (2020)
Product positioning
In order to perfectly position the Lego company in the market and asserting its dominance through the new service to be offered, much effort needs to be put in brand marketing. Selling on user experience as illustrated by Kalcher (2012), should be the major selling strategy to ensure that new users appreciate first class service and refer their friends and neighbours. The increased involvement of these new players and referrals will lead to the eventual success of the new product and help the company increase operations. As a marketing strategy, product positioning is essential to the introduction of new products or services to the market and reaffirming customer trust in the brand.
The major objectives of the new service can be divided in short, medium and long-term objectives that the Lego company aims to achieve in the course of the next five years. The proposal for the new service encompasses all the social, marketing and financial objectives that the company must undertake to succeed in their new service quest. Some of the most highlighted financial objectives of this proposal are to increase the receipt per unit per rental and recycling by 5% by October 2023, from $10 to $12.99. Since marketing strategy can be compared to a perfectly executed military strategy, as is the norm with the Lego company, Windekilde (2016), there is need to undertake this plan with utmost due diligence to meet the set-out goals and objectives.
| Short term: 1 year | Mid-term: 3 years | Long term: 5 years | |
| Marketing objectives | Achieve at least a 75% awareness rate amongst current Lego customers by October 2021. | Attract new customers and users: increase the proportion of renters from the “Medium and Low Financial class” target groups by 4% compared with year 1 by October 2023 | Increase brand loyalty to become the brand of choice for toy rental and recycling service: Have at least 75% of repeat customers by October 2025. |
| Encourage trial of the new service and achieve at least 35% trial rate amongst current Lego customers by October 2021. | Retain existing customers and service users: Have at least 30% of repeat service users within the total annual number of service users by October 2023. | Maximize customer satisfaction: Achieve a customer satisfaction rate of 95% by October 2025. | |
| Financial objectives | Contribute to a 17% increase of the total weekend rental revenue by October 2021 | Increase receipt per unit per rental by 5% by October 2023, from $10 to $12.99. | Achieve a 45% gross contribution rate annually for the new service offer by October 2025. |
| Rent and recycle at least 15,000 units through the new service offer by October 2021. | Generate positive gross contribution with the new service offer by October 2023. | Rent and recycle at least 35,000 units yearly from the new offer by October 2025. | |
| Societal objectives | Have 70% of the toys’ distribution line locally sourced. | Reduce plastic use and production within the new product line by 30% by October 2023. | Have 100% of the toy rental and recycling line locally sourced. |
| Employ individuals who are trying to reintegrate into professional life: they should represent 15% of the total number of employees needed for the new service by October 2023. | Employ individuals who are trying to reintegrate into professional life: they should represent 20% of the total number of employees needed for the new service by October 2025. |
Table 3: Marketing, Financial and Societal SMART Objectives set for the project over the next five years.
In order to demystify the marketing mix of this new service, the 5P’s method has been used to develop a proper marketing mix.
Product
The major Lego selling products in their production lines, are toys; in essence, building blocks. The major sellers in Lego’s line of products as indicated below show the prices for the service which are customer-friendly. Some of these blocks are based off characters from TV, movies, cartoons and series which are major hits in the recent past. As such, their demand may be high hence the relatively higher prices as compared to other Lego products.
| Product Lines | |||
| Building blocks | Lego Dots | Lego Friends | |
| Items in the line | Easter bunny’s carrot house: $15 | Lego dots memory: $8 | Lego Star Wars: $15 |
| Easter egg chick: $10 | Lego dots dragon: $7 | Lego technic: $8 | |
| Lego duplo: $7 | Lego dots bracelets: $7 | Year 1: Lego Creator 3 in 1 | |
| Winnie the Pooh: $10 | Lego dots animal ideas: $6 | Year 1: Lego City |
Table 4: An overview of the new product mix, based on current price offers.
Price
The below table gives an overview of the potential rental prices that the company – Lego – could offer their service users from the first year and into the fifth year of operation. The prices increase exponentially to allow for stabilization of the market presence and an overall profitability of this business venture. While the prices gradually increase, Lego hopes that the market demand for their new service shall also increase in like manner.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Price (excl. VAT) | $5 | $6 | $8 | $10 | $14 |
| Price (incl. VAT) | $6 | $7 | $9 | $11 | $15 |
Table 5: Price table from Year 1 to Year 5 for the new rental and recycling range.
Place
The USA is divided into 5 major regions. Some of these regions could greatly benefit from the new service being offered by Lego; thereby also benefiting the company in revenue stream reception. These regions include: Northeast, Southeast, Midwest, Southwest and West. The table below shows the number of potential service users who the new service will greatly benefit.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Regions covered | Northeast | Northeast and Southeast | Northeast, Southeast and Midwest | Northeast, Southeast, Midwest and Southwest | All regions |
| Number of service users covered | 2000 | 3900 | 4800 | 8900 | 9900 |
Table 6: Distribution strategy and market coverage from Year 1 to 5.
Promotion
Businesses have recently transitioned to the online space for marketing and campaign objectives. Such is because all the customers and users are now online. With the innovation and development of technology and the internet, companies like Lego are now in a position to reach potential customers from all parts of the globe. The campaign objectives as outlined below are indicative of some of the methods by which the new service promotion could be done to ensure success.
| Campaign objectives | Middle financial class | Low financial class | ||
| Awareness | Behavioral | Awareness | Behavioral | |
| Advertising | Targeted Facebook ads Point of purchase advertising: Posters and announcements in the suppliers and departmental stores | Billboards and press ads Point of purchase advertising: Posters and announcements in the suppliers and departmental stores | ||
| PR | Publicity: press release and interviews to be published in local newspapers and in local toy magazines | Publicity: press release and interviews to be published in local newspapers and in local toy magazines | ||
| Sales promotions | Consumer promotion: Limited promotional offers: e.g., Buy one get one free (BOGOF) if you rent among the first ten people | Consumer promotion: Limited promotional offers: e.g., BOGOF if you rent among the first 10 persons Prizes: e.g., one random client winning a free Lego toy | ||
| Direct Marketing | Owned social platforms: Facebook & Instagram Information displayed on the website E-mailing | Information displayed on the website E-mailing | ||
| Personal selling | Rental promotions on holidays | Rental promotions on holidays |
Table 7: A summary of communications tools and channels for pre-launch and year 1
Physical evidence
To assert their market dominance, Lego could run adverts on TV and other media outlets showing physical evidence of their new service. Such actions, while promoting the brand, may depict a good user experience thereby influencing the decision of new users to use the rental and recycling service. Physical evidence is one among the major means by which MNCs like Lego assert dominance and carry out brand campaigns.
Fig. 4. Lego cube
Source: Booker (2019)
Fig. 5. Lego building blocks with faces
Source: Booker (2019)
To evaluate the viability of the new service from a financial perspective, Lego requires taking into consideration the great monetary strain they are bound to experience with the introduction and launch of the new service. As such, a sales forecast needs to be conducted alongside reasonable appropriations for profitability and sales margins assertion.
Sales forecast and rationale
Considering the below sales forecast, we ascertain that there shall be an exponential increase in sales from the first to the fifth year respectively. As such, over the five-year period, Lego’s new rental and recycling service, will gradually have taken root in the market, becoming a preferred method of obtaining toys rather than purchase. Over the same period, the good brand name of the company shall also have enabled them to thrive in this new service as compared to their major competitors who may imitate their product and service.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Unit Sales | 4000 | 9000 | 14000 | 35000 | 45000 |
Table 8: Sales forecast table for the new offer over the next five years.
Financial evaluation
On the basis of previous forecasts and calculation, the financial profitability of the project as reviewed from year 1 to 5, with the consideration of:
Value sales = unit sales x price
Net Sales Value (NSV) = Value Sales – VAT = Value Sales x 0.8
Gross Contribution = NSV – (Fixed + Variable Costs)
Incremental profit = Gross Contribution – Total Marketing Costs
The new product will start generating positive gross contribution in year 3, and positive profit in year 4. It will engender a substantial net profit over the five-year period. The profit growth through the years seems to indicate that the product will generate even more revenue after the fifth year.
Effective planning processes are necessary for the proper execution of any marketing plan according to Qian (2020). A concise and actable plan needs to be created for the launch of the new service to be effective. In essence, the success of a new product or service in the market, is a culmination of proper planning and subsequent top-notch execution. The time plan is illustrated using a simplified Gantt chart as shown below.
| LEGO NEW SERVICE TIME PLAN: RENTAL AND RECYCLING TOY SERVICE | |||||
| YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 | |
| Set-up of new service operation | |||||
| School competitions | |||||
| Product segmentation | |||||
| Branding campaigns | |||||
| Increase portfolio | |||||
| New market campaigns |
Fig, 6. Time plan Gantt Chart
Pre-launch
Based on the above planning processes in the course of this proposal for a new rental and recycling service by Lego, we estimate that the project should be officially launched on 20th of July. As such, the company has enough time to undertake market research and conduct flagship pre-launch testing on the service to assess its viability and effectiveness. Such measure will as a result contribute to the anticipation of customers and new users to use the new service being offered once it is officially launched.
Year 1
The first year of the business should mainly constitute of laying a foundational basis for the new product or service to take root in the market so that the subsequent years may be profitable. In this year, there will be a 6-month loss period during which, the company may decide to offer greater incentive to the customers than returns in order to get them attracted and used to the service. After the said period, the company may withdraw extra incentives and slightly increase prices to get to a break-even point. Afterwards, the service will go on to be profitable and market-friendly.
Monitoring and control
The process oof monitoring and control, primarily occurs in the production process as asserted by Robertson and Hjuler (2009). The process is comprising of the key marketing proposal objectives for the new service launch. Much consideration should be taken to effect smooth objective and overall success of the expected goals.
| Type of objective | Objective | Metrics | How to measure it? |
| Marketing | Achieve at least a 60% awareness rate amongst current rental customers by October 2021. | Awareness | Surveys amongst rental and recycling users |
| Encourage trial of the new service and achieve at least a 15% trial rate amongst current service users by October 2021. | Unit rental and recycling | Full year unit rental and recycling to benchmark against the annual number of service users | |
| Financial | Contribute to a 5% increase of the total holiday rental and recycling service revenue by October 2021 | Value rental and recycling | Value rental and recycling 2021 vs. Full year rental and recycling 2020 (moving annual total) |
| Rent and recycle at least 3,500 units from the new offer by October 2021. | Unit sales | Total unit rental and recycling for year 1 | |
| Societal | Have 60% of the rental and recycling line locally sourced. | Percentage of local suppliers | Keep track of suppliers’ and departmental stores’ locations |
Table 9: Objective’s metrics and measurement for year 1.
Given the newness and volatile nature of this new service venture, Lego should undertake to conduct financial, social and marketing objectives monitoring to ensure that their appropriations for the new service. If their expected results are not met at that point, then they shall be in a position to effect necessary changes and tweaks.
Contingency plan
Lego should be prepared to undertake and mitigate any of the following risks arising from internal and external factors, which may affect the effective launch of the new service. As such, the below contingency plan measures may herewith be invaluable as a precursor to the anticipation of such eventualities.
| Risk | Probability | How to prevent it? | Corrective action |
| Products for service provision not delivered in time for the launch | Medium | Order and dispatch in advance to secure orders with suppliers and departmental stores. | Only rent and recycle products available. Identify the reason why it happened and take action to prevent it from happening again |
| Difficulty to find qualified staff | Low | Carefully plan the recruitment process, select appropriate recruitment platforms and tools and allocate sufficient time for recruiting. | Employ volunteers, or reduce the number of service points for the launch |
| Posters & other creative elements not ready in time | High | Start looking for an agency and working on the creative brief as soon as possible Make the agency aware of the expected completion time. Allocate sufficient time for potential improvements. | Postpone the start of the communication campaign. If it is seriously delayed: postpone product launch. |
| Lack of awareness around the offer | High | Carefully monitor awareness metrics on a weekly and monthly basis. | Review communications plan: drop ineffective tools if needed |
| Service objectives not met | High | Carefully monitor rental and recycling service on a monthly basis & implement promotional tools to encourage product trial | Review service objectives and forecasts if it seems too ambitious Review marketing mix and plan to try to encourage service and product trial even more |
| Customers who try the new offer are dissatisfied | Medium | Carefully design the service process: identify potential fail-points and associated contingency actions. Source quality products. Run regular satisfaction surveys. | Use feedbacks available from satisfaction surveys to identify reasons of dissatisfaction and improve the offer consequently |
| Profit smaller (higher) than expected | Medium | Monitor service & costs on a weekly basis | Review estimates for upcoming years Try to find ways to reduce costs and/or increase service rate (review marketing mix and campaign tools to identify the most successful). |
| Inaccurate service forecasts | Medium | Monitor service frequently | Review forecasts for following years if service objectives for the first year are not met |
| Coronavirus: lockdown lasting for longer than predicted & economic recession | High | External factor: no way to prevent it | Reschedule product launch, adapt marketing mix depending on the consequences (suppliers may have gone bankrupt, etc.) |
Table 10: A risk and contingency analysis for the new product launch.
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