In this chapter, firstly, there is a 5 force research on the PC industry and SWOT analysis on Lenovo will be conducted; second of all, the reasons to develop to global brand will be dealt with. And this section will give attention to five aspects to investigate Lenovo's brand strategy: brand strategy planning, brand personality setting, brand propagation and popularization, brand management and brand coverage.
By using Porter's 5 Forces model, the global PC industry can examined to get better understanding for the attractiveness of companies, success determinates and the generating forces. As number 4. 1 shows, five pushes are able to influence your choice making on whether to get into or make investments further into PC market. On the other hand, the intensity of impact is changing from the rapidly growth of Personal computer market.
Threat of Swap products
Threat of new entrants
With the expansion of the Laptop or computer corporate and business market, there are foreseeable potential entrances in this market. However, the entrance barrier is relatively high - enterprises generally seem to be to be happy with their current notebook providers, with little motivation to look beyond their current suppliers.
The clients' bargaining electricity in the forex market is relatively lower in this market, since the customers are corporations, which purchase bulk level of PCs with their employees. The cost to switching to some other PC suppliers is high to our customers
This will not apply to Lenovo, who makes its own materials to a great degree - mainly, recycleables like boards and potato chips have reasonably standard prices.
The most possible alternative products are ultralight notebooks and ultramobile PCs. Despite the heavy advertisement of these products in the mass media, enterprises don't see them as beneficial to their organization. These products tend to be produced as a fashion assertion, which get more attention from more youthful customers. The buyer market is more encouraging for the products.
Currently, there are three major players in the Laptop or computer commercial market, Dell, HP and Lenovo, which take up around 90% of the market share. According to the customer satisfaction review, there are relatively few differentiations among these top three players in conditions of product features and product quality. While Lenovo has the best product support and best business relationship with customers among the list of three, for Lenovo to meet up with the other two competitors, keeping the brand name is the key, especially when the IBM hallmark protection under the law are lost.
Dell is currently the top business desktop and laptop company on the globe. Dell provides both desktops and notebooks to more than half of North American and European businesses, doubling its closest rival in both notebook and desktop PC sales. In THE UNITED STATES, Dell is being successful 60% of the desktop and 58% of the laptop market. Dell's advantages lay in its low prices and product support. However, low R&D budget helps prevent Dell from producing new innovative products.
HP managed its stable No. 2 desktop dealer status and recently overtook Lenovo for laptop computers, delivering desktops to 27% and notebook computers to 21% of UNITED STATES and European corporations. HP in addition has improved significantly year-over-year, especially across notebook computers. It gained 6% in the UNITED STATES business laptop market and 5% in the European organization laptop market within the last year. These increases will continue, since HP recently rejuvenated its entire lineup of Intel-based notebooks in 2007 with Intel's Santa Rosa release. However, Horsepower is behind in product quality and product support, corresponding to research of client satisfaction.
In order to get a much better sense for Lenovo's view in conditions of the organization market and the impending lack of the IBM branding, it is effective to analyze the company's strengths, weaknesses, opportunities and threats in conditions of the trouble. These key variables are summarized here.
Lenovo's major talents rest in its current brand image and market talk about. In the international scale, Lenovo rates third in commercial sales behind Hewlett-Packard and Dell. It shows huge functionality for improvement, however, due to its evidently superior reputation for high quality, high end products inherited from IBM. Furthermore, executives maintained from IBM's notebook department supply the valuable experience a relatively new international player normally wouldn't normally have in the organization (especially US) market. However, Lenovo already has a strong bottom part in China, with a 29% share of China's PC market.
There is bound competition for existing IBM/Lenovo corporate and business customers, because of existing reputation and relationships formed by moved IBM staff. The historical brand image and continuing advancement in the high-end market makes products like the ThinkPad X300 a "must-have" for a CEO to show off and use. The strength here is based on the ability for creativeness in producing a high-end product with all the great features essential for a corporate executive.
Lenovo provides a highly adaptable notebook product line, in addition to its high-end ThinkPad. As the "one-stop shop" company, Lenovo shows guarantee - its products covers mid to top quality products, now assisting Linux products. Furthermore, in-house manufacturing specialty area permits lower marginal costs - this contributes to a more competitive position for a price war.
Since Lenovo is a new player in the international stage it has lots of of weaknesses in its perspective. In general, its team has less market knowledge than local experienced players in the US market like HP and Dell. Lenovo has just begun to build up its service team in the US - it still handles to provide top of the line customer service, but the system is not optimized.
Lenovo's major weakness, however, is in the stigma associated with Chinese products and companies with a reputation for skimping on quality to accomplish low costs. A person in the us is likely to mistrust the Lenovo brand in favor of the more well-known and trusted, American IBM company logo. It is this weakness that Lenovo must get over within the next time as the IBM branding disappears from its products.
With low marginal costs and a wide product spectrum, Lenovo gets the opportunity to become a one-stop powerhouse in the corporate market, providing high-end professional pcs with the IBM ThinkPad brand, and high-quality, middle-spectrum personal computers for lower level employees on the corporate ladder. In addition, a developed electronics section allows Lenovo the opportunity for creating synergies between corporate addons like mobile phones and Pocket PCs.
In standard, the weakness of the US overall economy and the shedding value of the money might present a hazard to Lenovo's expansion. Rivalry between Lenovo and others in the corporate market like Horsepower and Dell already pose a significant concern, but Apple is demonstrating a growing strength in the corporate market that must definitely be addressed as Lenovo seeks to become the dominant international commercial player.
From 2003 to 2004, Lenovo managed 20 percent to 27 percent stocks in home market. When a company occupies about 1 / 3 in the market, the bottle-neck will arise in its development and then your continuous growth will require huge investment. Therefore Lenovo Group set its direction plainly, that is, to step on the world and make Lenovo an international brand.
Lenovo's development calls for internationalization. For being internationalized, first of all, Lenovo needs an English brand that is unblocked in the international market and liked by consumers. However the English logo design 'Star' had been registered in many countries and could not be utilized. This is the first reason. Subsequently, Lenovo needs to plan its brand strategy again. In the past, Lenovo's overseas operation was mainly creation and processing, without a real brand operation. Thirdly, Lenovo must redefine ' what kind of company is'. Lenovo launched its new logo design, and identified its brand interpretation as the four characteristics of ' faithfulness and integrity, creativity and vitality, excellent special service and easiness (see APPENDIX A). '
In addition, the competition in the local market would be high after China jointed WTO, and the development of the Computer market experienced shifted from US (11. 7%) to Europe, Middle East and Africa (20%), a worldwide brand will be needed if Lenovo wanted to contend with other brands like Horsepower, Dell. To keep up the premium price of Personal computer, brand recognition would be needed, since many local brands provides needs of the inexpensive computer of no differential features. With out a global brand that may be perceived as an innovative with differential features, Lenovo would be regarded as a Chinese computer brand that is inexpensive in aspect. This can also diminish the sub-brand vitality of what Thinkpad got established.
Zeng (2005) highlights that brand strategy planning is the beginning of the brand strategy. The starting point of an brand strategy is full, sufficient, objective, correct and timely general market trends and research. The phase requirements of a brand strategy are outside the house information smoothness and inside abilities solidarity.
As a matter of fact, changing the logo was not an individual strategy of Lenovo facing internationalization. It needed two years to organize the program. In the planning stage of the new brand strategy, Lenovo frequented thousands of employees from the vice chief executive to ordinary staff in order to talk to Lenovo people of their feelings about the soul of Lenovo brand. Through the deep communication and a demanding bidding process, it wanted its cooperation partner of brand management items from many professional service companies. The program covered browsing 2, 800 consumers, 70 venture clients and golding six global conference in five foreign countries (see Appendix C)
And Lenovo asked a world famous grand designing and consultancy company to handle the new brand strategy program, including researching and studying market, brand strategy planning, brand image developing, and the popularization of the new custom logo, and commanded all information including a variety of home elevators economics, policy, public environment, rivals, consumers' tendency, on the public's analysis of corporations' images and so forth (see Appendix A).
Meanwhile, by learning repeatedly the case of brand emblem replacing of rival companies like Sony and BenQ to get useful information as reference. Moreover, at staff and requesting their sense of Lenovo brand nature and its internationalization development strategy, Lenovo stipulated and urged its staff's will, motivated their ardor and ingenuity, strengthened their emotions of belong, and therefore created a harmonious internal environment for the execution of Lenovo's new brand updating strategy ( see Appendix B).
Zeng (2005) suggest that a brandname strategy of protracted characteristics, continuity, system, overall situation, oneness, stability, and wholeness must be predicated on clear and standard brand setting of difference and individuality. Brand positioning is the product and just how of service that organization needs consumers to flavour, to think, and also to feel. Brand individuality setting includes marketing setting and brand image placement.
In the brand placement level of Lenovo's new brand strategy, it gather and package with the information, and confirm entire image style of businesses' brand. By collecting information necessary through new products exhibition to learn about consumers' needs, consigning special research companies to identify check, follow and visit consumers to gather more information about the new brand company logo strategy, Lenovo finally decided its new logo and defined its brand meaning as the four characteristics of 'faithfulness and integrity, advancement and vitality, excellent special service and easiness'.
Lenovo fastened importance not only to enterprise's manufacture range, products' covering area and market occupation rate, but also to brand's well-knownness and influence; meanwhile, Lenovo presented as a rule creating unique style and image personality of brand in consumers' hearts.
Lenovo acquired chosen to put itself as a premium PC company that could provide differential features for its goal customers like Sony and Apple. Generally, two the latest models of could be used to determine a Personal computer company 1) Cost-oriented, like Dell that emphasized the needs of resource chain efficiency and preserving the competitive advantage with not differential features in Computer 2) Innovation-oriented, like Sony and Apple that emphasized the needs of the prospective customers, provided them with needed functionalities for high premium, the market share is not really a major concern. To accomplish its goal to be an impressive company with higher efficiency, Lenovo experienced a three-steps-process to leverage the received Thinkpad brand by committing to its success by rolling out a much better and much better Thinkpad. This daring move was praised by major press like Wall structure Avenue Journal, and Fortune Journal. By securing and enforcing the Thinkpad brand position and advertizing this sub-brand as a Lenovo's brand, the Thinkpad sub-brand was used to create a positive master brand for Lenovo. To differentiate itself with Sony and Apple as the other innovative computer company, Lenovo also positioning itself to be the the one which can incorporate the efficiency (with the knowhow on the worthiness and supply string operation in China) and the innovation (with the embedded creativity DNA from East (China) and Western (IBM)). With this strategy of Branding, Lenovo created two creation lines, one for the Thinkpad/ThinkCentre that billed a little more superior than the competition and one for Lenovo 3000 brand for the Laptop/Desktop that costed comparably using its competitors.
In China market, it's important that they would consider the oriental custom of the marketplace environment. In this respect, Lenovo must be known in China as a fresh company which is attached with another well known brand in the business gain more clients (Holl ensen, 1998). The company may also consider a unique mixture of East and Western tradition to ensure that they would adhere to the needs of the Chinese market easily also to ensure that their Traditional western values will never be diminished but develop more as part of the Chinese language market.
Fang (1998) feels that following the work of brand setting is done, corporations have to propagate and pass on the brand as designed, Stirring effect can only be produced after omni-aspected and successful propagation and popularization. Successful propagation and popularization can make companies set up as an objective the nice image of the complete corporation and constantly and seek the public's support and cooperation, and thus obtain success of the complete business. This involves enterprises to handle deep propagation and popularization. And because public relations hold the characteristics of comprehensiveness in articles, lastingness in time, potentialness and indirectness in place, it becomes the most effective method of brand propagation and popularization.
Lenovo carried out some highly effective activities of propagation and popularization, such as possessing Lenovo technology show to help make the open public understand the venture better. With all the successful kick off of 'Divine Motorboat Airship No. 5', Lenovo began a national group of distributing activities with this issue of ' only you can think about'. In the mean time it donated a huge number of cash to Beijing municipal authorities for preventing against and preventing SARS. Within the international level, it carried out brand propagation and popularization by sponsoring the Olympic game titles. Through these activities, Lenovo not only succeeded in propagating and popularizing its new company logo, but also successfully set up a good business image, created the lasting affect of replacing emblem, and created its unique brand style and image personality in consumers' hearts ( see Appendix B).
' Lenovo' is quite weird to international consumers. It requires a carrier or a system through which it can increase their brand to achieve the goal of enhancing the recognition level at in another country and the fondness at home. Lenovo makes an effort to be sure that the Lenovo brand established fact and respected as it is growing and produce computers in the international market independently name. Co-branding that two companies work together to create marketing synergy may be used to achieve great result. During calendar year 2005 to 2008, Lenovo provided processing technology equipment including desktop pcs, notebooks, servers, and desktop printers, and provide funding as well as scientific support to Olympic Games and over 200 countrywide and local Olympic committees round the world, so as to improve our popularity degree abroad.
Lenovo's sponsorship of several cases, such as Olympics Game and F1, are the good opportunities to keep to establish the Lenovo name as the one which is trusted generally, equally the IBM name was. However, forward-looking and most influential is the Lenovo Olympic marketing. For Chinese enterprises, this is the first Chinese company to improve the image and reputation to help Chinese enterprises type in the world market a uncommon opportunity. Lenovo Olympic internationalization strategy is the main step and the best chance, which make its brand acknowledgement reach 26% (see Appendix A).
Lenovo known that branding is very important atlanta divorce attorneys market since it helps catch the attention of customers to begin buying their products and preserve them for a long period. Brand recognition can be advertised through advertising. Since their products are related to high technologies and breakthrough ideas, a young superstar, who conveys a lively, creative and extreme image, would be their best choice for promoting their brand image and products.
Sport is a worldwide language. In order to let Lenovo become better known in the global market, they needed the chance to get more visibility in many international sports video games, such as becoming formal spouse with NBA and Olympic Games, signing the World Footballer Ronaldinho, sponsoring Williams F1 etc. Lenovo's banners all around the athletics stadiums and their logos on live Tv set transmissions will greatly increase their global exposure (see Appendix A).
In addition, Chinese language athletes became stars in numerous sports activities such as field hockey (Yao Ming) and monitor and field (Liu Xiang). To be able to meet the craze and the opportunity,
Lenovo needed to secure the positioning of the first brand related to sport. Therefore, Lenovo put in RMB 6 million to hire the famous record and field athlete Liu Xiang as you of their standard spokesmen (see Appendix C).
Li (2002) argues that brand management is the complete process of creating, keeping, and consolidating a brandname. Its main goal is to create a harmonious environment that is effective to reaching brand strategy goals also to increasing brand assets.
Lenovo has always regarded as faithfulness as the most important thing of Lenovo brand. For Lenovo, faithfulness isn't only a assurance to the clients but also more of transferring down of enterprise's brand, culture and strategy. On this basis, the Lenovo has always attached importance to provide high quality products and excellent professional service to consumers which is very point that consumers realize and admit Lenovo. Lenovo thus does well consumer romantic relationship management and for this reason it maintained a long and good marriage with consumers and achieved their brand commitment. To be able to strengthen the romantic relationship between and customers and the enterprise, Lenovo has used customer relationship management for its brand strategy management. This good omni-directional management utilized all media's attention and gained their positive information, and so further created a harmonious environment for Lenovo and increased Lenovo's brand value.
While choosing the new brand brand, Lenovo construct brand management system. It helps to keep on using the brand company logo of 'Lenovo', attaching importance to Lenovo at home also to Lenovo abroad. In management Lenovo point out its four characteristics, especially point out the management of faithfulness, new worker of Lenovo will learn on this on the first day.
Before the Acquisition of IBM Personal computer division, Lenovo was a highly successful local Laptop or computer brand of China. It was perceived as an innovative Personal computer company through its customization and knowledge of its main platform of Chinese market by adding Chinese language specific needs for Personal computer like legend credit cards for Chinese personas processing, sales stations for PC instead of direct selling, etc. To broaden this innovation-oriented strategy, not simply a computer company from China that would be perceived by many as a corporation to simply provide inexpensive and less impressive, less reliable Personal computer, Lenovo needs to combine its ground breaking DNA to its Laptop or computer brand.
To define the brand, several factors needed to be considered:
(1) Brand Attributes
(2) Consumer Expectations
(3) Competitor attributes
(5) Consumer perceptions
In China, the customers accepted Legend pcs (Lenovo's Chinese brand) as a premium computer, Lenovo got to reinforce this perception to its global brand. The organization branding and placement strategy was defined by its global marketing team to work with "synergy methodology" to generate its global brand. The Thinkpad, a favorite reliable innovative premium notebook Personal computer, would be used as a sub-brand to give Lenovo the expert brand, its personality. Three steps were taken to carry this strategy, 1) from March 2005 to September 2005 to provide the advertisement of Thinkpad to inform customers, Lenovo's dedication to Thinkpad brand 2) Showcase the new and superior Thinkpad to ensure the perception of Lenovo's understanding of Thinkpad and capacity to improve its innovative ideals 3) Stress the Lenovo professional brand's DNA of development. The strategy is to establish Lenovo as a progressive brand that is the owner of Thinkpad as a global premium Laptop or computer brand like IBM and Horsepower.
Since the acquisition the IBM Computer division, Lenovo acquired tried very difficult to make a master brand for its business. The 3 steps process and the synergy approach because of its branding attempts would evidently create the impression that the Lenovo PC would be the best for small enterprises (its aim for customers). The usage of the number for something is to reinforce its brand vitality and its association of the get good at brand. The use of the number can also simplify the advertisements and easier for the starting of services. Since Lenovo already had a line of PC that targets medium/big business, the use of Lenovo as the brand to target smaller business does provide complementary result for the business.
This approach is simpler but ran a risk to potentially damage the get good at brand. By using the amount, Lenovo brand is used to target a specific customer sector. The product as Lenovo defined was the merchandise that could for small business owners. Together with the computer technology changing so fast, and missing step would create catastrophe for a Laptop or computer product. This disaster would potentially affect the reputation of the expert brand created. The use of different labels, Lenovo could have the options to create differentiated product lines with their own characteristics. This approach would protect the brand ability of Lenovo and can meet varied customers with a wide expectation if needed. In its first launching of new product besides ThinkPad, Lenovo must have use "names" instead of quantities ( see Appendix B).
IBM allowed Lenovo to make use of its logo for its PC products (Laptop and Desktop) for 5 years, but Lenovo only used IBM logo design on its Thinkpad series. Lenovo didn't use IBM's logo design on its other computer products since the acquisition went through. The only relationship between Lenovo and IBM was the IBM custom logo on its Thinkpad brands. It's very clear that Lenovo was wanting to build its own professional brand using synergy procedure. Its strategy was to secure the commitment from Thinkpad current owners and audience by contracting IBM for service and attached an IBM company logo to ensure customers that Thinkpad would be in proper care event with changing of the ownership. Besides this work, Lenovo distanced itself from IBM for the purpose of establishing its expert brand with the help from Thinkpad sub-brand. That is a good decision for Lenovo to act and move quickly part with IBM.
There were several known reasons for this parting, 1) Lenovo had a need to develop itself as an progressive company without shadowing by IBM. One of these cited by the paper was the announcement Thinkpad Z60, that was viewed as the development by IBM not Lenovo in Apr 2005. 2) US Personal computer market/Global Computer market were dominated by Dell, HP, IBM was not the key player in this Computer market. 3) IBM was moving into service industries, the Computer sector was not as beneficial as a profitable business. 4) The reason for Lenovo's acquisition of IBM Personal computer division was not limited to the IBM brand but also for the global Personal computer stations as well as its flagship Thinkpad portable computers. These reasons discussed why the use of IBM logo was on the Thinkpad. This is actually the right move since IBM's brand in Laptop or computer had not been the dominated factors besides Thinkpad.
Without using IBM's logo or brand more, Lenovo lost the opportunities to keep IBM's current customers and audience, but these short term styles could be reversed with a perceived better brand that is more efficiency and innovative in Lenovo if founded. Lenovo was taking the chance of short-term lose but placing for the permanent gain. Lenovo assumed it might use the mixture of marketing/branding work to create a position impression of a better new master brand of both efficiency and advancement by making use of Thinkpad sub-brand.
This synergy approach for the branding of Thinkpad and Lenovo is the foremost among other choices. To work with "master brand" methodology for Lenovo would be much easier to promote and build the Lenovo brand. This would also involve changing the culture, practices and infrastructures of the newly acquired IBM Laptop or computer division because of this new Lenovo PC company to work. And largely, by simply promoting the Lenovo get better at brand, this approach would certainly diminish the brand power of the Thinkpad, this move would be counter-intuitive. The house of brands methodology could also be used to promote Lenovo Computer company, but with the advertising budget much less than Dell, Horsepower and other name brands, Lenovo just didn't have deep-pocked to compete and utilize this strategy. Along with the same token, Lenovo could not afford to generate two distinguished organizations as Toyota do on Lexus/Toyota. With all the assessment of the other solutions, Lenovo didn't have other good alternatives at given company's finances. The synergy approach is the one and only strategy should be selected (see Appendix D).
Li and Qiu (2002) suggest that the anfractuous outside and inside open public people and the constantly changing environment experienced by businesses in their operating activities are filled with uncertainty. This uncertainty occasionally tests the enterprise. Under this condition, the most crucial thing is the fact that corporations should make the best use of public relations, following goal of enlarging enterprise's degree of credit ranking and building good enterprise's image. The organization should exert completely public relation's propagation function, frankly face the media and the general public, tell the reality, cordially accept the remarks, in order to gain the nice sense and trust of the truth, cordially accept the responses, to be able to gain the nice feeling and trust of the public, desalt the turmoil and transform the problems, and change uncertainty into certainty.
Lenovo told the truth to 1 of the clients about its carelessness in providing the incorrect fittings, that are not vey serious, although your client had not figure out the condition. Furthermore, Lenovo substituted the high quality fittings with the incorrect ones positively. This made the client very content with Lenovo's service and the client gave much more business to Lenovo to do for years. This action brought Lenovo a god reputation on the market. Here Lenovo transformed a harmful car accident into a well liked potential for business through using pr.