Lenovo: Building a Global Brand - Research Paper Example

? Marketing Marketing A company by Lenovo who is in the field of a personal computer–desktops and books, has been chosen by me for a study in the area of Marketing. There are several manufacturers world over in the field of manufacturing and marketing personal computers also known as PCs. Some of the well known brands are Apple Inc, Hewlett Packard, Acer, Dell, Toshiba, and many more catering to the various segments of the industry. Lenovo is a state-owned company of China. It was founded in 1984 to distribute the equipment made by IBM and other companies. Lenovo has manufacturing facilities in Shenzhen, Shanghai, Beijing, and Huiyang in China and at Pondicherry, India and a center at Whitsitt, North Carolina. It will not be out of place to note that Compaq and Hewlett Packard got merged in 2002. It was in 2004 that IBM sold off their PC business to a state Chinese company called Lenovo. The Compaq and IBM were two dominating brands in the market in the mid-1990s. Dell and HP emerged as two strong players in the PC market during late ‘90s while share of IBM went on reducing year after year. With that state of affairs and highly competitive market coupled with aggressive pricing strategies by many other manufacturers, IBM became a minority share holder in Lenovo. IBM held 18.4% share holding in Lenovo and Lenovo was granted rights to use IBM brand for 5 years as per the agreement; however, Lenovo got the product brand ‘ThinkPad’ from the IBM on a permanent basis. (IBM sells PC…2004) Lenovo is a state-owned company having most of its operations in China barring a few installations in India and Mexico. India and Mexico operations are mostly for the local needs of that country. Before we embark upon the marketing plan for Lenovo, it would be worthwhile to do SWOT analysis. SWOT Analysis of Lenovo It will be appropriate to identify the Strengths, and Weaknesses of the company along with the opportunities that company can readily harness and issues that may pose threat to the company. Strengths: a. The company is well guided and supported by qualified and talented managerial pool of IBM. b. Lenovo PCs are endorsed by IBM brand ‘ThinkPad’ providing a confidence to the consumers in the market place. c. Manufacturing facilities being in China, the company enjoys not only the low cost of manufacturing but additional skilled manpower for its expansion project. d. Being a state-owned company, the company is well taken care of at the time of any change in local rules and regulations during normal and adverse market conditions. Weaknesses: a. The company may have trouble during natural disasters or calamities within the country to maintain normal production programs as most of its manufacturing facilities are in China. b. Being a state-owned company, decision making process may not be quick enough to thwart competition when it is need of an hour. Opportunities: a. The Personal computer market is at fast pace of growth; there is large untapped market locally and globally. Lenovo is well placed to take advantage of this burgeoning market. b. The new technologies are making deep inroads in the personal computer field, making it more user-friendly and thus expanding the market with new applications. Lenovo, being backed by IBM is positioned appropriately to exploit new developments in the field of hardware. c. IBM’s long known history of R&D in the field of mainframes, servers, and personal computers is likely to benefit Lenovo immensely in the coming days. The low-cost manufacturing facilities coupled with technological back up from technology giant forms a good synergy in the quality conscious and price sensitive markets. Threats: a. Lenovo is pitted against some of the well known brands of the companies such as Hewlett Packard, Dell, and Acer. Any mergers among them may certainly pose a big threat to Lenovo. b. Dell and HP are expanding their manufacturing operations in China. In the event of this, the cost advantage to Lenovo will get nullified in the future. Marketing Plan Product Strategy The Americas has proved second largest market giving approximately 30 percent of total revenue. Lenovo focused in three segments of the market namely notebook computer, township markets and large enterprises that continue to grow faster than the market. Lenovo has successfully harnessed the brand image of ‘ThinkPad’, which the company received from IBM in its chosen market segment. All its products come through 3 year warranty adding confidence to the buyer and helping them in their buying decision. Lenovo needs to continue with that strategy to further increase the market share in the above mentioned market segment. The ThinkPad product group accounts for 65 percent of Group’s sales to the targeted commercial customers. Lenovo’s ThinkPad notebooks outperformed the market with 15 percent and that needs to be strengthened further as future growth will come from notebooks rather than desktops. Lenovo 3000, desktops version, positioned for a price sensitive segment, and targeted to small customers is again a good business proposition. It will be better to concentrate more on note book segment for better profit margins and higher volume growth. Promotion Strategy Lenovo needs to continue with its fundamental “Protect and Attack” strategy that has contributed immensely to the Group’s performance. Lenovo had successfully leveraged its position during sponsorship of Olympic Games and strengthened its brand image within china and outside. The company needs to continue with strong promotional strategy in the identified segments of high growth in the domestic and US markets for these two are the most promising markets for the company. With the launch of New ThinkPad Edge laptops, the company has launched a new ad campaign which conveys about the extra thinking that Lenovo designers have put to develop Think-branded products–starting from desktops to workstations and from servers to laptops. Social networking sites can provide a good boost to Lenovo sales; the company needs to harness these platforms devising an aggressive promotional strategy on its entire product lines. Physical Distribution In the present competitive market scenario, product needs to reach client not only quickly but also should be serviced without lapse of much time. Customers are ready to pay more if they are assured of quick services. Customers always keep in mind while taking their buying decision that how the company treats its clients in delivering the goods and servicing the products including the parts replacement as and when needed during warranty and outside warranty period. Lenovo has established a wide network of retailers across all major towns of US and in other countries where Lenovo products are sold so that customers do not have to travel much. The products are within reach of the most clients across wide territories. Besides, the company has established a wide net work of service centers globally to provide quick services and replacement of parts as and when needed. Pricing Strategy Lenovo has many segments of the market to cater to–some of them are price sensitive and some are not. The company needs to have aggressive pricing policies for their Desktops segment as the same being a price sensitive segment. ThinkPad notebooks segment is a premium segment of the company giving phenomenal growth and needs to be nurtured through appropriate pricing strategy. Similarly high end product launches in mainframes and servers, catering to the needs of institutional clients will have pricing as per the specific needs of the customers. References: 1. IBM sells PC…2004. Online at http://news.cnet.com/IBM-sells-PC-group-to-Lenovo/2100-1042_3-5482284.html [Accessed on 4/7/2011] 2. About Lenovo Online at http://www.lenovo.com/ww/lenovo/pdf/report/E_099220100628a.pdf [Accessed on 4/7/2011] 3. “Lenovo: Building a Global Brand” Online at http://www.jrleeconsulting.com/files/Product%20and%20Brand%20Management-Lenovo.pdf [Accessed on 4/7/2011] Read More