Marketing strategy report on: Lenovo

1. Executive SummaryThis report majorly takes into consideration critical evaluation of the marketing strategy of Lenovo. A situational analysis of the same is conducted in the report. The report begins with the current market situation of Lenovo covering up the various aspects such as the industry it deals in, customers, the marketing mix, competitors, etc.

Lately, the traditional desktops of the computer manufacturing organization Lenovo has been utilizing exceptional aggressive strategies in order to accomplish a speedy amplified share in the computer market.

Further the report takes into consideration a situational analysis i.e. Strengths, Weakness, Opportunities & Threats of Lenovo. The SWOT analysis gives a fair understanding of the company as a whole. Growth opportunities & recommendations mentioned below in the report would help in order to succeed in the near future.

This report takes into consideration, the following important strategic suggestions:Þ    How Lenovo upgrade their strategies in order to outperform the competitors such as Dell, Apple, HP, etc.

Þ    Various growth opportunities available with Lenovo as compared to its competitors.

Þ    How the products being manufactured y the organization should be manufactured so as to have a global presence.

Þ    Lenovo should adopt the spinning off marketing strategy in order to launch the ThinkPad under its own brand name rather than using IBM’s logo.

Þ    How Lenovo should widen its product line by adding high & low end products taking into consideration the needs of its target audience.

1. Introduction

Lenovo Group refers to a Chinese multinational company which majorly deals in computer technology which manufactures, develops & desktops, laptops, notebooks, servers, workstations, IT software’s & some of the related services. Headquartered in Hong Kong, Lenovo is currently operating in Beijing, China, Morrisville, US & Singapore with many centers spread almost all across the globe. Some of the centers where Lenovo is currently are Shanghai, Xiamen, Chengdu in China, Shenzhen, and Yamato in Japan (Kotler, Pfoertsch & Michi, 2005).Lenovo merged with the PC division of IBM for $1.75 billion, which used to sell the ThinkPad notebooks, in the year 2005. The company refers to one of the largest PC makers all over the world once it acquired the PC segment of IBM. It is the market leader in China & also enjoys its presence all across the globe (Kotler, Pfoertsch & Michi, 2005).

1. Situational Analysis:

3.1 Segment:

The products being offered by Lenovo refers to

Þ    Workstation

Þ    Personal Computer (Desktop)

Þ    Storage Devices

Þ    Servers

Þ    Laptops & notebooks

Þ    IT software’s

Þ    Accessories & upgrades

The various IT software’s being manufactured by Lenovo are marketed under the name Think Vantage & has been generating about half of the revenues (Kotler, Pfoertsch & Michi, 2005) in China & greater Asia/Pacific regions. Lenovo’s major chunk of business comes from selling desktops, laptops & notebooks & the workstations. The highest revenue generating countries refers to Japan, China & US. Most of the desktops & laptops are being sold in the countries mentioned above (Zhen, 2007).

3.2 Customers:

The major customers of Lenovo could be summarized under the two main heads i.e. corporate & big business houses. The big & medium sized corporate houses are more prone to buy PC for their business purposes (Kotler, Pfoertsch & Michi, 2005). Desktops refer to one of the major products that generates high amount of revenue. The major reason is that the desktops are cheaper as compared to laptops & notebooks available with the company.There has been a consistent rise in the revenues generated by sale of laptops. Increased portability & high speed of laptops have replaced the old desktop in the corporate market. The ratio of desktop versus laptops has decreased in the year 2006 (Kotler, Pfoertsch & Michi, 2005). The approximate figure in the year 2004 was, for every 75 desktops 25 laptops were sold. Whereas, in the year 2006 for 70 desktops 30 laptops were sold. This shows that the sale of laptops have been increased & would continue to increase due to the advantages mentioned above in the report (Zhen, 2007). It has been forecasted that the current customers of Lenovo would prefer laptop as compared to the personal computers. The forecasted demand for the Lenovo laptops would be 1.5 times higher as compared to the traditional laptops (Kotler, Pfoertsch & Michi, 2005).

3.3 Marketing Mix:

4P’s of the Marketing Mix for Lenovo have been discussed as under:

Product: As mentioned above that Lenovo refers to an organization which manufactures laptops, PC’s, workstations, software’s, accessories, storage devices etc (Kotler, Pfoertsch & Michi, 2005). The number of IT software’s offered by Lenovo are marketed under the name Think Vantage & has been generating about half of the revenues in China & greater Asia/Pacific regions. Lenovo’s major chunk of business comes from selling desktops, laptops & notebooks & the workstations. The highest revenue generating countries refers to Japan, China & US. Most of the desktops & laptops are being sold in the countries mentioned above (Benjamin, 2007).

Price: The prices offered by Lenovo are higher as compared its competitors i.e. Dell, Apple, HP, etc. Though the prices are high but, the quality offered Lenovo is better as evaluated with its competitors (Kotler,  Pfoertsch & Michi, 2005).Place: Headquartered in Hong Kong, Lenovo is currently operating in Beijing, China, Morrisville, US & Singapore with many centers spread almost all across the globe. Some of the centers where Lenovo is currently are Shanghai, Xiamen, Chengdu in China, Shenzhen, and Yamato in Japan (Benjamin, 2007).

Promotion: Promotion of the products manufactured by Lenovo is done by the through virtual marketing on the official sites, promoting its products on various search engines.

3.4 Competitors:

Lenovo refers to a multinational company & has been ranked as one of the top most brands in the technology sector. The major competitors of Lenovo refers to:

Þ    Dell

Þ    HP

Dell refers to one the top most business enterprise in the laptop & the desktop segment. Dell has been referred to as one of the largest suppliers in the desktop & laptop segment covering approximately more than half of North America & Europe (Zhen, 2007). It refers to one of the leading suppliers of notebooks as compared to Lenovo. It has been estimated that 60% & 58% of the North America’s desktop, laptop market is being ruled by Dell. Low prices & fair product support refers to some of the strengths of Dell. Low research & design prevents dell to manufacture less innovated products (Benjamin, 2007).The other major competitor of Lenovo refers to HP. HP refers to the next best supplier of desktop & laptop after Dell. HP supplies 27% desktops & 21% laptops on North America & European business houses. HP has improved its performance in the laptop segment. HP has recently gained 5% – 6% (Zhen, 2007) in the desktop & the laptop segment in the North American market. Even after gaining a substantial share in the market, HP is far behind in terms of providing high quality products & customer satisfaction (Kotler, Pfoertsch & Michi, 2005).

Based on the current market analysis i.e. the Marketing Mix, Customers, Competitors & the Segment with which it belongs to the following conclusions could be made. This has been made with the help of the most common tool of marketing i.e. SWOT Analysis. It is as follows:

1. SWOT Analysis of Lenovo

In order to perform a situational analysis of Lenovo in terms of its current market situation, SWOT Analysis i.e. Strength, Weakness, Opportunities & Threat should be analyzed. The SWOT Analysis of Lenovo could be summarized as under:

Strengths

Þ    Lenovo’s strength majorly lies in its current brand proposition & the market share. On the basis of the global survey Lenovo has been ranked as the third largest technological enterprise in terms of Sales after Dell & Hewlett-Packard (Chen, Grace & Lu, 2008).

Þ    Lenovo’s strength lies in terms of the quality being provided to its customers after acquiring IBM (Benjamin, 2007).

Þ    Lenovo enjoys a high market share of about 29% in the Chinese computers Market.

Þ    The competition amongst Lenovo IBM in terms of the corporate customers is quite low. The main reason behind this is due to the existing reputation which Lenovo enjoys in the PC market (Zhen, 2007).

Þ    The major innovations in the PC market was first done Lenovo by launching ThinkPad X300, an essential for a CEO of the company to show off (Chen, Grace & Lu, 2008).

Þ    Lenovo’s product line is quite versatile. It means that, Lenovo has high range of products for all the sections in the business world (Benjamin, 2007).

Þ    Lenovo provides a promise that they manufacture the products with the optimum quality. It gives its customers a promise that they would cover high end products which would be supported by Linux.

Þ    Lower marginal cost refers to another major strength of Lenovo & helps in making a more competitive position (Zhen, 2007).

Þ    One of the major strengths of Lenovo refers to the appropriate use of branding. The brand IBM has build a strong name for the organization i.e. Lenovo. IBM has also helped Lenovo in order to retain the customers in the corporate market (Benjamin, 2007).

Þ    Lenovo has manufactured certain high range accessories such as ThinkPad & IdeaPad without using the brand IBM. Branding their products without using the brand IBM would help to market their products in the long run (Barrett, 2008).

Weaknesses

As mentioned above in the report that, Lenovo refers to one of the major players in the PC market, it has variety of weaknesses. Some of the weakness could be listed as under:

Þ    The team of Lenovo is less specialized as compared to the team of its competitors i.e. Dell & HP (Benjamin, 2007).

Þ    The market knowledge with the team of Lenovo is less as compared to the local players in the US market (Zhen, 2007).

Þ    Lenovo has recently formulated a service team in US – still it is able to provide a best of the services to its customers (Chen, Grace & Lu, 2008).

Þ    Lenovo’s major weakness lies with the Chinese products. The Chinese product is low in cost & provides a skimping quality of product.

Þ    In case of the US market, customers are able to mistrust the brand Lenovo as it poses an IBM logo. This adds to one of the major disadvantage for the organization & should get rid of it as soon as possible.

Opportunities

Low marginal cost & a wide range of products being offered by Lenovo, gives the organization an opportunity to develop into a one-stop enterprise, which would provide high end products such as IBM ThinkPad & mid – lower computers or desktops to the employees of the organization. The company i.e. Lenovo has an opportunity to grow in the most developing sector such as electronics department i.e. mobile phones & PC’s (Chen, Grace & Lu, 2008).

Threats

The major threat to Lenovo would be due to a drop in the value of the American dollar. This might act as a threat in the growth process of the organization i.e. Lenovo (Zhen, 2007). There has been a major challenge amongst the two main rivals of Lenovo i.e. Dell & HP. Apple has also come up with certain innovated products in the technological market. Hence, Lenovo should formulate & adopt various strategies which would help them to dominant the global technological market (Chen, Grace & Lu, 2008).

1. Evaluation of the market theories:The various market theories should be evaluated, which would help the organization in order to dominant the international electronics market. They are as under:

Þ    Marketing:

The first marketing theory which has been used by Lenovo is the fair marketing strategies. Lenovo has built a fair reputation amongst the client base. There are two main focus of Lenovo in order to market its product. The marketing strategy being adopted by Lenovo refers to maintain customer relationship, (Benjamin, 2007) retain the existing customers, provide innovative products, satisfy the customers, etc. The major marketing strategy adopted by Lenovo refers to provide the customers with the best of the quality & support system. The major motive of Lenovo is to build relation which would help to earn more number of customers. IBM did the same in the past & hence, Lenovo should practice the same in order to maintain the similar kind of quality, product, service, etc (Chen, Grace & Lu, 2008).

The transaction model helps in evaluating the marketing strategy adopted by Lenovo. This model states that how new business would be able to spread all across the world. Lenovo thus, chose China as its target market. Low manufacturing cost & high levels of R&D would help Lenovo to establish itself in the chosen market. Though, its competitors i.e. Dell & Hewlett Packard also tries to target the same market, Lenovo has taken steps in advance which would help to overpower others (Benjamin, 2007).

Þ    Management:

Lenovo’s major market theory also refers to management i.e. the culture being adopted in an organization. Lenovo’s major concern is to hire the ex-executives of IBM so as to transfer the same organizational culture & structure. The Chairman Liu Chuanzhi knows how to take the relevant decisions. There is high level of commitment amongst the employees & the organization uses various techniques which have led to a success in the enterprise (Chen, Grace & Lu, 2008).

Þ    Branding:

The other successful strategy used by Lenovo refers to full use of branding. The organization has used the IBM name in the most efficient manner. The brand IBM has build a strong name for the organization i.e. Lenovo. IBM has also helped Lenovo in order to retain the customers in the corporate market. Lately, Lenovo has manufactured certain high range accessories such as ThinkPad & IdeaPad without using the brand IBM. Branding their products without using the brand IBM would help to market their products in the long run (Barrett, 2008).

Þ    Awareness about the target audience:

The last strategy being used by Lenovo refers to know the customers. Lenovo makes ample use of its brand & instill in the customers the feeling of trust. Lenovo makes it a point that they are aware about their target audience. Co-branding would help to create synergy, which would have a huge effect. Co-branding would help in satisfying the customers in the most efficient & effective manner (Chen, Grace & Lu, 2008).

1. Growth opportunities

The various growth opportunities identified & justified  as compared to its competitors i.e. Dell, HP, Apple & Hewlett Packard are listed as under. They are as follows:

Þ    Product Differentiation:

The first opportunity available with Lenovo refers to the differentiation of product i.e. to provide various types of services into the corporate market. With high quality of computers, wide range of computers in terms of prices, Lenovo would focus more on the niche market as compared to the established markets (Chen, Grace & Lu, 2008).

Lenovo should manufacture more number of notebooks & computers exclusively designed for executives rather than manufacturing machines which would be of no use to the customers (Aykin, 2007).

Lenovo should majorly focus upon all major features in the high end computers which would help to maintain the reputation of the organization. Apple, one of the biggest competitors of Lenovo focuses in order to provide low cost products so as to earn more revenues as compared to Lenovo. Lenovo should majorly focus upon quality rather than the price. By providing a quality product, Lenovo would be able to hurt its competitors in the indirect manner (Barrett, 2008).

Þ    Complements to Compete with Apple and HP:

Another growth opportunity available with Lenovo would refer to demonstration of the success & competing with Apple & HP. This part takes into consideration the software being used by the companies mentioned above.

It is seen that HP uses certain technology & software which would help to upgrade its effectiveness & efficiency of the product in the corporate market. The same model is taken into consideration in regards to Lenovo (Aykin, 2007). This means that Lenovo should use a server which would help to maintain its reputation & brand image. Lenovo should use attractive & competing products which would help to challenge Dell, Apple & HP (Zhen, 2007). Improper use & formulation of the product might create a problem in the years to come. Lenovo notebook, resulting in an inability to generate widespread demand for the product taking it an ineffective draw for Lenovo products, or not dependent enough on such a purchase, resulting in an ineffective pairing. Hence, it must be noted that all the things should be at place (Barrett, 2008).Recommendations:

Some of the recommendations for Lenovo could be listed as under:

Þ    In order to uphold an optimistic brand image, it would be recommended that Lenovo apart from offering wide range of quality products to its customers, the company should adopt the policy of split & diversify (Zhen, 2007).

Þ    The major focus of Lenovo should be to diversify & attack the corporate market in order to solve their problems by upgrading the software’s (Chen, Grace & Lu, 2008).

Þ    In order to challenge Dell, Lenovo should market their products in the most effective manner. For Example, ThinkPad should be marketed by Lenovo by using a spin off strategy which would help in order to make up all the losses made at the time of IBM (Amazon, 2011).

Þ    It would be recommended that Lenovo should use their own logo rather than using IBM’s logo. The new ThinkPads & IdeaPads manufactured by Lenovo does not possess any logos, which creates a threat for the organization (Zhen, 2007).

Þ    Lenovo should be recommended that it should attack Dell’s main source of sales i.e. to provide the products at a subsidized & affordable rates.

Þ    Lenovo should maintain its branding, quality of the product being offered to their customers (Amazon, 2011).Þ    Lenovo should focus upon expanding their presence in the Asian market.

Þ    Lenovo has a significant customer base in the Chinese Market. Hence, it should focus upon the Asian Market. Before concentrating on the same, it should be noticed that HP, Dell & Apple are some of the significant players in the same segment (Chen, Grace & Lu, 2008).

Þ    Though, Dell has cheated the innovation strategy of Lenovo & has come up with Dell IdeaPad, still Lenovo would be recommended to use certain strategies which would help them to be at the top (Zhen, 2007).

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