Innovation is undoubtedly believed to be the very engine to sustain the corporate growth.
However in a global economy with high level of social division of labor, innovation is not taking place singlehandedly, instead concerted efforts are required to promote constant iteration.
According to a research finding revealed by Yidian Caijing, a professional financial and economic news we-media, outstanding enterprises at home and abroad have one thing in common, that is the ability to draw upon the strengths of others, re-assemble different elements together as if building blocks, and eventually create their own core competitiveness.
This kind of ability is called modular innovation. In reality this ability can be further divided into the horizontal ability that connects different innovation elements together and the vertical ability that ensures the sound decision making at different stages.
Numerous business cases have demonstrated the power of modular innovation. After returning back to Apple, Steve Jobs started to apply modular innovation. He was so familiar with the cutting-edge technologies and knew how to integrate these advanced technologies into product design. As a result, Steve Jobs succeeded in introducing many epoch-making products such as the iPod and the iPhone.
Many Chinese enterprises are exceptionally good in applying modular innovation. DJI founder Wang Tao once said, “We work hard to piece together the jigsaw and establish our technological superiority, and eventually we create our systematic advantage”.
In the collectible toy sector, there is one Chinese enterprise that is good at applying modular innovation, and this enterprise is TOP TOY.
TOP TOY started to treat Chinese building block as a Top1 strategic product at the beginning of this year, and modular innovation methods have been applied in the sale channel development, IP operation and market expansion.
These modular innovation methods helped TOP TOY enhance its brand value and further consolidate its core competitiveness. When competing against Lego and other international giants, TOP TOY showed no sign of being a less brilliant competitor.
Lego recently announced a price hike of all its products, with the increase ranging between 5% and 25%; while TOP TOY decided to cut the price of its Chinese building block products, with the decrease ranging between 5% and 25%.
Price reduction is only the external appearance, and the truth is that TOP TOY has a much enhanced strength by encouraging continuous innovations internally.
The tug of war of building block
Building block has become an important growth engine of toy market in China.
According to a research finding released by JD.com following this year’s 618 online shopping festival, the total retail volume of toys in the year 2021 reached 85.46 billion yuan, up 9.6% year on year, while building block became the no.1 selling toy.
Most people will immediately think of Lego whenever building block is mentioned; however, the distance between Lego and its Chinese consumers is becoming wider.
As Lego products are becoming much expensive.
In these years Lego has become a synonym for high-priced toys. It is never an easy task for collectible toy lovers to achieve the Lego freedom, and even in the era of consumption upgrading, many consumers have to save money to buy their favorite Lego products.
The recent price hike definitely will make Lego products more unaffordable to Chinese consumers, and naturally they will buy products from Chinese building block brands.
In reality, with Lego gradually moving away from ordinary consumers, Chinese building block brands are growing popularity.
It is estimated that the topics relating to alternative Lego product and Chinese building block at the Red Book, a social media platform of China, has exceeded 4 million page views.
These consumers not only search for building block brands in China, but also place their orders for these products. According to the 2022 Toy Products Consumption Report released by JD.com in this May, Chinese building block, IP-based mystery box and STEAM were three most favored toy gifts by Chinese consumers. According to the pre-sale figure for this year’s 618 online shopping festival, Chinese building block saw a year-on-year increase of 100%.
It is evident that besides Lego Chinese young people are equally fond of building block products by Chinese brands.
In the past, domestic building block brands had not received so much attention. Most of them were OEMs of foreign brands, knew little about brand building, blindly sold their products at a low price with inferior product quality, and failed to create a valuable consumer experience.
Now consumers start taking a positive attitude towards Chinese building block brands. Such a change does not take place merely because of their relatively lower price compared to Lego, but their continuous brand building efforts and emphasis on product quality.
The change could be vividly felt at a themed event organized by TOP TOY this year, titled Please give Chinese building block a chance.
On July 31, a themed event titled Please give Chinese building block a chance was held at the TOP TOY store at Guangzhou Po Park, aiming to raise public awareness on the rapid growth of Chinese building block market.
Consumers were able to play Chinese building blocks and feel firsthand the R&D ability and innovative strength of TOP TOY and other Chinese building block brands. It is estimated that over 1,000 customers took part in the event, including 600 veteran players.
According to the on-site voting, 63% of players said that Chinese building block and Lego products were almost the same.
To some consumers, Chinese building block is still synonymous with “inferior quality” and “low quality IP”, but the themed event succeeded in rejecting their stereotype.
Chinese building block brands are not lack of good products, what they need is a good opportunity and a market leader.
The price rise of Lego products provided Chinese building block brands a rare development opportunity, and TOP TOY was ready to resume its position as a market leader and revive the image of made-in-China building blocks.
Behind these brave moves were TOP TOY’s application of modular innovation methods.
To perform the value creation trilogy
Brand value enhancement is a powerful weapon for Chinese building block brands to make new breakthrough.
When consumers see the value of a particular brand, they will regard their purchase decision value for money, grow favorability and stickiness to the brand, thus allowing the brand to have a greater market share and make new breakthrough.
In the past many Chinese building block brands assumed that brand value was brand image. However, if they choose not to dispel such a misconception, they will never have a chance to compete with Lego at a level playing field and be accepted by a growing number of Chinese consumers.
In fact, brand value can be divided from low to high---functional value, emotional value and symbolic value. In the process of brand value transition, modular innovation plays a pivotal role in integrating all available resources.
Among all Chinese building block brands, TOP TOY is a role model in applying modular innovation to perform the value creation trilogy.
The functional value is the cornerstone of any particular brand. It is mainly reflected in the physical properties, usage quality of the product and the ability in addressing a particular need of the users.
When participating in the themed event titled Please give Chinese building block a chance, a veteran player excitedly told us that he was amazed by the meticulous details as displayed in the TOP TOY spacecraft building block products.
For example, this product very much resembled the actual spacecraft in terms of height and appearance, and the entire piecing process was smooth, labor-saving and produced the solid structure.
The improvement of product quality will definitely help raise the brand value to a higher level, and behind this revolutionary change is TOP TOY’s modular innovation efforts in its supply chain.
It is a least known fact that China has the world’s most powerful supply chain for the toy industry, and 70% of the toys in the world are produced in China. When developing its end to E2E supply chain, TOP TOY has established partnerships with a number of quality building block manufacturers in Chenghai, a place known as the toy capital of the world.
With the deepening of cooperation, modular innovation began to take effect. Many key steps, covering raw material selection, mould design, assembly of building blocks and subpackage, are on par with international standards.
TOP TOY founder and CEO Sun Yuanwen once said that Chinese building block should be defined by Chinese creativity and Chinese supply chain, and TOP TOY succeeded in setting up a full-link closed loop that includes design, manufacturing and sales.
The emotional value of the brand mainly expresses the emotional connotation of the brand and gives the product vitality and appeal with emotion. Touching and retaining customers with affection can build brand stickiness and loyalty.
Compared to foreign brands, Chinese building block brands know much better on how to touch Chinese customers. However, due to their inexperience in IP deployment, they are unable to combine IPs with likely scenarios and attract customers’ full attention at the first sight.
By giving full play to modular innovation, TOP TOY succeeds in integrating its IPs with many likely scenarios and creating a dynamic product mix covering vintage home appliances, city streets, car sets, green plants and flowers.
By stimulating the interests of different people, these products can effectively generate emotional connections and enhance users’ brand stickiness and loyalty.
For example, in collaboration with Parrot BEBE, a popular collectible toy in China, TOP TOY launched two independent building block products, and its IP owner Dao’er was even invited to attend a limited toy signing event to mark the 5th anniversary of Parrot BEBE at a TOP TOY store.
The partnership with Parrot BEBE helped increase customers’ fondness for TOP TOY products. According to relevant data, on the signing day the customer flow saw an increase of 151% compared to other weekends, with the queuing time as long as two hours, and the GMV also saw an increase of 169% compared to two weeks ago.
In the near future, TOP TOY plans to carry out in-depth cooperation with Honor of Kings, Little Blue and His Friends and other domestically famous IPs, and these moves will definitely help TOP TOY attract more potential customers.
The symbolic value of the brand refers to the values and cultural connotations carried behind the brand, which brings spiritual sustenance to consumers.
It fosters customer trust, dependency and loyalty to the brand.
For domestic building block brands, their biggest advantage over foreign brands is their understanding of Chinese culture. Moreover, these brands are Chinese brands, and Chinese people have strong spiritual sustenance for their rise to the world.
TOP TOY is an expert in fostering symbolic value. By highlighting the uniqueness of made-in-China collectible toy and giving full play to China aerospace and other Chinese elements, TOP TOY succeeds in heightening consumers' national pride and cultural identity, and eventually enhances users' trust, dependence and loyalty to the TOP TOY brand.
The veteran player mentioned earlier told us that building block featuring Chinese aerospace was particularly appealing to Chinese customers, and he had a great time in admiring the great achievements made by the Chinese aerospace and playing the building blocks at the same time.
In the process of creating the brand's functional, emotional and symbolic values, TOP TOY has gradually demonstrated its horizontal ability that connects different innovation elements together.
Of course, having performed the value creation trilogy does not make these Chinese brands serious competitors of Lego.
These Chinese brands also need to acquire their vertical ability of modular innovation.
To seek new opportunities on top of outstanding product quality
After acquiring the horizontal modular innovation ability, Chinese building block brands are able to stand up and walk, but they cannot run at the time being.
In other words, they have not acquired the ability for sustainable development yet.
Lego is a leading brand with a history of over 90 years. It has been through different stages of development and has a wealth of strategic endurance and combat experience.
The Chinese building block brands now enter their golden era, with opportunities to demonstrate their brand values; however if they cannot achieve sustainable development, they are nothing but passer-by to Lego’s long list of competitors.
Modular innovation can give birth to the considerable force of sustainable development.
As the horizontal modular innovation ability can help enhance the brand value, while the vertical ability will ensure the sound decision making at different stages and enable an enterprise to deliver outstanding product quality and keep seeking new opportunities for sustainable development.
Only after having acquired such an innovation power can Chinese building block brands compete with Lego, otherwise they are only short-lived and unfortunate competitors of Lego.
TOP TOY has set a good example in applying such a vertical ability that ensures the sound decision making at different stages to develop incremental market.
Against the backdrop of new retail economy, any brand will reach a dead end if it focuses exclusively on online or offline businesses. The brand must use the vertical innovation ability to ensure the sound decision making for both online and offline market, discover more potential customers and increase the coverage rate of the brand significantly.
As for the online market TOP TOY carries out in-depth cooperation with major e-commerce platforms to increase the exposure of its brand. It also grabs any possible chance to recommend TOP TOY products at various public domain platforms, so as to increase the size of building block fans. After directing consumers from the public domain to the private domain, TOP TOY will activate the private domain traffic through the membership incentive scheme.
Building blocks are experience-based products, and online promotion can never replace user experience. In its offline stores, TOP TOY set up special areas for users to play with the Chinese building blocks, and enhance customers’ consumption experience with the assistance of organizing themed exhibitions.
Apart from being an experience-based product, building block is a product of creativity.
Continuous iteration is very important to any creativity business. Simple online-offline integration is far from enough. When creativity is absent, consumers are not able to experience the feeling of freshness, their consumer demand is not satisfied, and the brand will be trapped in the unprofitable traffic.
In an effort to stimulate creativity, TOP TOY launches a Partnership Plan, which is designed to sign contracts with more prestigious artists, deepen cooperation with existing contract artists and cultivate more new artists through internal incubation. The Plan works effectively in improving TOP TOY’s design capacity and enhancing its brand value.
By ensuring the sound decision making concerning online and offline market and incubation, TOP TOY is able to develop more potential customers and keep discovering new business opportunities.
By doing so TOP TOY turns itself a brand that values product quality and learns the know-how in seizing opportunities.
A quality-oriented enterprise is exceptionally good in a certain segment of market and will take active measures to improve product quality; while an opportunity-oriented enterprise will keep looking for new business opportunities and make quick investment decisions to make financial gains.
A collectible toy Chinese brand must attach great importance to product quality and business opportunities at the same time, so as to achieve sustainable growth and have a diversified competition with Lego, provide quality products and services to customers and facilitate the healthy growth of the entire sector.
The building block sector is now seeing rapid development. According to a market research company Research and Markets, the market size of building block sector in the world was estimated to reach 7.3 billion USD, and the figure is expected to reach 10.4 billion USD in 2027, with a compound annual rate of growth of 5.1%. The building block is indeed a vast market.
Chinese market is definitely the largest share of the global building block market. According to Chinese Toy Association, the market size of building block sector was expected to reach 13 billion yuan in 2020.
It is a golden era for the Chinese building block brands. Their ability in fostering continuous innovation, seizing new business opportunities and enhancing brand value is essential for them to make new breakthroughs.
By applying modular innovation, TOP TOY has created a new path of diversified competition for Chinese building block brands. On top of efforts to enhance brand value, TOP TOY manages to seize new opportunities and becomes a forerunner in the industry. The message of TOP TOY is so simple:
A forerunner of any industry must possess the ability to innovate uninterruptedly.
