Student Name – Yerrakalva Gayatri Alekhya
Student No. - 1479067
Lenovo wants to grow as an international brand worldwide. Being a Chinese company, generally remarked for low reliability, Lenovo has to create their image as a global company offering innovative, reliable product and services to a larger group in order to create value to their customers in the rest of the world.
PCs have become a part of everyone’s life for simple activities in households, for complex projects in business environments. Notebooks are looked at like easy to carry gadgets for business purposes. Customers are looking for new and original products offering more security in the digital world. Along with this they want reliable and efficient products with classic designs. There are 2 different segments of customers – 1)Price sensitive arising from the households and small businesses; average consumer 2)Innovation seeking customers from the premium range of the market.
PC industry is a mature, consolidated industry with few major players like Dell, HP, Acer, Gateway, Apple. Their rivals have well set distribution channels and market share in the international domain. The challenge for Lenovo lies in acquiring new customers who are already accustomed to other products. Lenovo has to differentiate their brand from others. Since they were well known in the Asia- Pacific region, they need not spend much on marketing in this region, but concentrate on other parts of the world.
Company - It is a product oriented company differentiating their products based on innovation. Since it originated in China, customers perceive this as a sub-standard company compromising on quality and service. It is a market-driven company as they are continuously looking to offer products according to customer satisfaction.
Lenovo acquired IBM’s personal systems divisions in December 2004. This will help them to use IBM’s strong footprint around the world to make their mark. They can be benefitted by the IBM’s pre-existing distribution channels. Since IBM was also playing in the premium zone, they could appeal to the IBM’s existing customers through their innovative products. They would have access to IBM’s suppliers and if necessary can vertically integrate to cut down on costs and increase their operational efficiencies as the components for IBM’s PC’s were sourced in China. Context -
Lenovo should consider the Political, and regulatory rules in different countries while expanding its base. They should be aware of the tariffs and restrictions on foreign companies in every country they are planning to launch their product as they are entering a larger market now.
Considering the problem statement of Lenovo, there are 2 approaches that can be considered -
Master brand strategy –
In this case, Lenovo would introduce all their upcoming products under one name. Let it be a new ThinkPad design or a newly designed PC.
1) Advantages – Lenovo can introduce their innovative products to the world using IBM’s hold on the market and creating a distinct image for them by building on to ThinkPad’s image. Lenovo can capitalize on the ThinkPad design to create an improved design to retain the existing ThinkPad customers and sales. Then slowly explore other product categories and have a single identity for them.
2) Disadvantages – They cannot introduce any standard or economical products to target the customers other than the premium range as there are high chances that this would lead to confusion among the customers as to what exactly Lenovo represents; is it innovative products or standard products. By this, they are losing a considerable market share. There is also a possibility that if a product is not received well by the customers, then the entire brand name is at stake…