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Lego’s Expansion to Catering

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Characterized by offering services both to businesses and customers, the catering

industry, backed by the food service industry reached a value of USD 516 billion in 2020. The

market outlook for the industry expects a 4.5% CAGR growth rate through 2026 where the

estimated market value would be more than USD 600 billion (Global Catering Services Market

Report and forecast 2022-2027). Despite the constriction in growth caused by COVID-19,

markets like Asia, Australia and Africa are expected to join European and American markets in

growth through the forecasted period. LEGO’s venture into the catering business would require

careful consideration in market trends and segmentation, service specialization, and competitive

edge if they are to succeed in the segment. The paper seeks to explicate on the target market,

competitor analysis and identifying points of parity and difference for LEGO when expanding to

the catering industry.

Target Market

LEGO group already has a market base characterized of children and adults. The Lego

brand enjoys massive recognition in the market which can act as competitive advantage to the

company while expanding to the food industry (Çınar, Yetimoğlu, & Uğurlu, 2020). Considering

the nature of customers in catering business; businesses and consumers, Lego can target event

planners, brides and grooms, companies engaging in corporate events like team building among

others . Since the company’s toys already targets children from age 1 to 15 and recently

expanded to adults, Lego would target consumers hosting birthday events, high school get

together events, prom, and any activities that bring together individuals from ages 1 to 30.

Lego’s segmentation analysis (Çınar, Yetimoğlu, & Uğurlu, 2020) can resemble the

company’s where they split the market into distinct groups based on their tastes and preferences,

and age. Take for instance catering for children under ten years. The target market would
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constitute children in events like birthday parties where products and services offered would be

structured based on psychological developmental stages. Children would love ice-cream, candy,

cakes, among other playful activities like waterways. The strategy would differ when targeting a

much mature audience of individuals in their teens who would love products like burgers, pizzas,

and a range of drinks. As for a mature segment, ages 21 and above, their services and products

would be organic foods and alcoholic drinks as per the legal drinking rules.

Moreover (Zhong, 2021), using social media channels in accessing the target market can

be useful for the company since online experiences give insight to consumer behavior, allowing

segmentation using personas. Buying behavior of consumers can determine what kind of food

and beverages preferred. The company can take advantage of their large data sets on consumers

purchasing their Lego products to entice them with additional services such as bringing Lego

toys to events hosted. In birthday situations for example, children can be enthralled to eat, drink,

and play with Lego toys for free. The same can be applied to older audiences with the Lego adult

toys which can be a substitute for the drinking games in events like high school get together

parties.

Competitor Analysis

The catering industry is set to grow by at least USD 104 billion by 2025 (Global

Catering Services Market Report and forecast 2022-2027). However, consumer catering segment

is expected to stagger in growth following health threats of the COVID-19 with new markets

such as Asia and Africa slowly entering the global space. However, the pandemic has

popularized online catering services which are gaining popularity, and a strong driver for the

entire catering market (Global Catering Services Market Report and forecast 2022-2027). Also,
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with the trends to healthy eating, Lego can include health diet options in their menus to attract

more customers.

Considering Porters Five Forces (Maharani, 2020), Lego’s expansion to catering business

should take not of competitors in the market. Players like the Aramark, The Genuine Dining Co,

Elior Group, Compass Group etc. have a stronger market presence with companies like Compass

Group being global leaders in the market. Lego should use their brand power and recognition to

establish their presence in the market if they are to succeed in the expansion. Moreover, to

establish credibility, focusing on the American Cuisine at the beginning can be advantageous

since the company is American based, with more information on American food and beverages.

Merging with smaller catering business can be an option too.

The catering business is highly consumer oriented which means customer satisfaction is

greatly valued. Using performance management systems to conduct business can be a

competitive advantage for Lego where it should use outstanding services, and reward systems to

gain market recognition and prevalence (Maharani, 2020). Also, using the Lego brand image can

boost recognition in the industry like for instance, organizing event promotions with clients like

Disney can serve as a handy marketing strategy to gaining market presence. Moreover, pricing

strategy should be a factor to consider since businesses and consumer clients have different

disposable incomes to facilitate their spending habits. For convenience, using media (website,

social media, apps etc) can prove superior because customers would have direct access to the

company, enabling them make informed decisions on prices, services needed, and answering

where, when and with who kind of questions consumers have when in need of catering services.

Points of Parity and Difference

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Lego needs to ensure that the food and beverages served observe the FDA rules and

guidelines issued to catering businesses. Moreover, Lego should ensure that their services

compare with those of their competitors like Compass Group which ensure five-star experiences,

and timeliness in their business operations (Strategy & Business Model). Taking note of such

practices would sync with the points of parity catering businesses.

To stand out, Lego can include Lego games in their events as indicated above to make

their consumer experience while catering unique. However, the element of using games should

be optional to the customers since not everyone associates with Lego games. Moreover, Lego

can incorporate menus options that offer diversified foods to account for diversity and inclusion.
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References

Çınar, K., Yetimoğlu, S., & Uğurlu, K. (2020). The Role of Market Segmentation and Target

Marketing Strategies to Increase Occupancy Rates and Sales Opportunities of Hotel

Enterprises. In Strategic Innovative Marketing and Tourism (pp. 521-528). Springer,

Cham.

Global Catering Services Market Report and forecast 2022-2027. Catering Services Market

Analysis, Size, Share, Research 2022-2027. (n.d.). Retrieved May 12, 2022, from

https://www.expertmarketresearch.com/reports/catering-services-market

Maharani, N. (2020). Strategy in Entering the Healthy Catering Industry: Case Study on Alfa

Catering. Asian Journal of Business and Entrepreneurship, 1(02), 90-98.

Strategy and Business Model. Compass Group Corporate Website. (n.d.). Retrieved May 12,

2022, from https://www.compass-group.com/en/who-we-are/strategy-and-business-

model.html

Zhong, J. (2021, June). Analysis on the Application of Market segmentation. In 2021

International Conference on Enterprise Management and Economic Development

(ICEMED 2021) (pp. 125-129). Atlantis Press.