Investment and Reselling Markets- Case Study Lego 10179
As Lego is a dynamic and innovative company, it creates new sets for most themes every six months. When a set is retailed it has an average shelf life of two years during which the price elasticity of demand remains fairly inelastic. During these two years there are many sets to choose from, choice becomes limited for an individual consumer because products are expensive. It is because of this that the demand is inelastic on the whole for an average consumer because he or she cannot afford to buy multiple sets. Moreover, even though there are many sales, Lego’s direct pricing is somewhat on the whole unbeneficial to consumers looking for a ‘good deal’. The change in price is minimal and …show more content…
The value of the collecting and business prospects is subject to the significance a set might have if it has featured in a film and its popularity to the collecting society. Sets such as the Universal Collectors’ Series Millennium Falcon (Set no. 10179) have been of significant interest in the reselling market on eBay for collectors around the world. In 2007 this was the largest ever Lego set topping the values at 5195 pieces. Moreover, it was the most expensive set Lego has ever produced. Lego produces these sets to target the Adult Fan of Lego market (AFOL). It is said that 10% of all Lego bought by adults is for adults. Thus it falls that Lego also has to target the adult market by producing these large intricate sets under the base name ‘Universal Collectors Series’. Placing this into context using the Star Wars phenomenon is a strategic decision for Lego to increase revenue. The Star Wars age boomed in the late 1970s and the early 1980s. Consequently this is the period where parents of today’s children and teen generation would be in their early or late teens and may have been a fan of Star Wars related toys. The love of Star Wars for older generations continues and Lego can use this benefit to produce upmarket sets to attract those wishing to collect Lego models from childhood memories. Moreover, the licensing of Lego Star Wars didn’t start until 1999; …show more content…
This artificial exclusivity added to the set is extremely important in the reselling of the set albeit new or used. Only 10,000 were produced in the world and this changes the behaviour of buyers wanting this exclusivity. Currently the reselling of both the normal and ‘First Edition’ of the set is considered irrational as it doesn’t represent the intrinsic objective value of the set. When investing buyers buy based on the subjective theory of value. This is defined as an object which is worth more than the inherent value based on the notional demand and desire of the product. Applying this behavioural economics in some sense it must be argued that the purchasing of such product is irrational regardless of the fact that money is unlimited. A passive view is that one is buying six kilograms of grey plastic and that all a Lego set does after building collects dust. However, what people don’t understand is that it is this which makes it so valuable. People do not buy based on the inherent value of the pieces, they always buy based on an innate subjective view that this set is valuable to them emotionally. Even for resellers and investors though the appreciation may take several years (BrickPicker’s Ed Maciorowski) , the human appreciation of this set is always going to be high. In December 2015, it is expected that the set will increase marginally in value because of the release of the new
As Lego is a dynamic and innovative company, it creates new sets for most themes every six months. When a set is retailed it has an average shelf life of two years during which the price elasticity of demand remains fairly inelastic. During these two years there are many sets to choose from, choice becomes limited for an individual consumer because products are expensive. It is because of this that the demand is inelastic on the whole for an average consumer because he or she cannot afford to buy multiple sets. Moreover, even though there are many sales, Lego’s direct pricing is somewhat on the whole unbeneficial to consumers looking for a ‘good deal’. The change in price is minimal and …show more content…
The value of the collecting and business prospects is subject to the significance a set might have if it has featured in a film and its popularity to the collecting society. Sets such as the Universal Collectors’ Series Millennium Falcon (Set no. 10179) have been of significant interest in the reselling market on eBay for collectors around the world. In 2007 this was the largest ever Lego set topping the values at 5195 pieces. Moreover, it was the most expensive set Lego has ever produced. Lego produces these sets to target the Adult Fan of Lego market (AFOL). It is said that 10% of all Lego bought by adults is for adults. Thus it falls that Lego also has to target the adult market by producing these large intricate sets under the base name ‘Universal Collectors Series’. Placing this into context using the Star Wars phenomenon is a strategic decision for Lego to increase revenue. The Star Wars age boomed in the late 1970s and the early 1980s. Consequently this is the period where parents of today’s children and teen generation would be in their early or late teens and may have been a fan of Star Wars related toys. The love of Star Wars for older generations continues and Lego can use this benefit to produce upmarket sets to attract those wishing to collect Lego models from childhood memories. Moreover, the licensing of Lego Star Wars didn’t start until 1999; …show more content…
This artificial exclusivity added to the set is extremely important in the reselling of the set albeit new or used. Only 10,000 were produced in the world and this changes the behaviour of buyers wanting this exclusivity. Currently the reselling of both the normal and ‘First Edition’ of the set is considered irrational as it doesn’t represent the intrinsic objective value of the set. When investing buyers buy based on the subjective theory of value. This is defined as an object which is worth more than the inherent value based on the notional demand and desire of the product. Applying this behavioural economics in some sense it must be argued that the purchasing of such product is irrational regardless of the fact that money is unlimited. A passive view is that one is buying six kilograms of grey plastic and that all a Lego set does after building collects dust. However, what people don’t understand is that it is this which makes it so valuable. People do not buy based on the inherent value of the pieces, they always buy based on an innate subjective view that this set is valuable to them emotionally. Even for resellers and investors though the appreciation may take several years (BrickPicker’s Ed Maciorowski) , the human appreciation of this set is always going to be high. In December 2015, it is expected that the set will increase marginally in value because of the release of the new