Marketing Strategy of Lenovo
In 1964, American Marketing expert, Boughton (1964) produced the marketing mix concept, it
is an integrated activity that marketing personnel comprehensively use and
optimize the various controllable factors in order to achieve its goals of the
marketing. A successful and complete marketing activity means with the appropriate
products, the appropriate price, the appropriate channels and the appropriate
means of promotion, enterprise products and services are devoted to a specific
market. According to the marketing theory, we will pick up the following
marketing strategies of the Lenovo based on the above case study.
Target Marketing
Choice of Lenovo
At present, Lenovo considers the following factors when
choosing target market:
1) Strong brand
awareness, city customers who have advanced concepts. In the personal computer
market, the impact of Lenovo brand is comparative advantage, so choosing
such target customers can cater to the needs of such customers.
2) Cities customers
who have the high level of education, higher on admission, and are aged below
45. Lenovo called this crowd high-end crowd, the crowd is conducive to high-end
products sales.
3) Developed rural
market, those customers have strong brand awareness. This crowd has formed part
of purchasing power, Moreover, Lenovo early did the act of the "free
movies for countryside" to develop the rural market, the activities have
brought the brand impact, so choosing this part of the crowd as the target customer group, apparently can quickly enter
the rural market.
Market Position of
Lenovo
Lenovo‟s marketing position mainly
considers the following
three factors: Take mainly to the
high-end, middle and high-end combination of market positioning methods. Middle
and high-end positioning can not only guarantee the consistency of Lenovo
position in the market, also continue the image and status in consumer's
mind, while the computer industry‟ present status such as the profits decline also decides the only
choice for high-end positioning, will it be possible to maintain the
long-term favorable market competitive position
(Gan, 2002). Generally speaking, the high-end products‟ unit profits are 2 -3 times
more than low-end products, in the pressure of the rising cost situation, low-end
products have no guarantee of profits, the profits of enterprises is the key to
taking the high-end route.
Low energy is not only the main consumer demand of IT
industries, but also an image of the representatives of high-tech enterprise,
therefore, choosing low energy consumption and market leading-edge technology positioning
will enhance brand image. At present, the service content of Lenovo brand is
mainly limited to the after-sales service in a timely manner, etc. such
narrow positioning can no longer meet
the needs of the competitive market situation. Management master Michael Porter
(2003) said, in the 21st century the multinational companies are unlikely to be
manufacturing companies, but the service industry. The new economy is the
services economy; the service is the competitive edge. Therefore, the service
content of Lenovo should learn from the experience of DELL, it
should provide more information on purchasing home computers, and after-sale
service.
Customers‟ focus has changed from product quality
and price gradually to control energy consumption, frequency and quiet
technology (Jack, Telaote, Lise, 2006).
So Lenovo's market position should be made promptly converted to meet consumer
demand. It is the origin of Lenovo to create the famous Chinese brand, and this
existing connotation can continue exist and support Lenovo‟s strategy choice.
The Product Strategy
of Lenovo
Lenovo‟s product strategy is the same as target
market and positioning, mainly embodied as follows:
Middle and High End Market Positioning
Take Lenovo‟s
personal computer as
example, the market survey shows that its refrigerators mainly focus on middle
and high end, Lenovo owns 70% market share in high end products, while the
middle end count for 40-50% market share, the market share of low end product
is lower than 10%.
Different Competition of Product Development
Through segmenting the market, tapping users‟ unmet demand, thereby pre-empt competitors to develop completely
different products from the market, exclusive share the cake of segment market.
Seen from the introduction of Lenovo‟s products
in the past three years, we can see this development idea. In light of this
situation, in 2001 Lenovo introduced the "ThinkPad" machines,
which reaches not only to meet the needs of the users but also share the piece
of cake alone.
According to the Channels and the Difference of Segment Markets,
Develop and Design Targeted Products
As for the supermarket channel, Lenovo has designed
relatively low prices of mid-level products, while high-end products on the
electrical chain and retail sales channels. For the rural market, Lenovo
designs and develops products that have
relatively simple functions, relatively low prices to meet the needs of the
students market.
Price strategy of
Lenovo
In recent years, the production capacity of IT enterprises
seriously exceeds, and this causes to expand market share and the price war has
become worse. As a large computer manufacturer, of course, Lenovo
is subject to the impact of the
price war. However, Lenovo was
demonstrated most vividly in this price war,
Lenovo did not reduce price, while the corporate image enhanced, sales
grew and market share expanded, the effective price strategy has enabled Lenovo
to exceed in the economy of excessive capacity.
Based on different levels of consumers, Lenovo developed
different prices, by creating differentiated products to meet different
consumer groups, formulating differential price discrimination. Lenovo domestic
market sales operator, Yang (2006) said, Lenovo's production line is continuity,
so prices of their products are also of continuity, from more than 10,000 Yuan
to more than 2000 Yuan. Almost every 500 Yuan there are two products to serve
the different needs and purchasing power of consumers. Lenovo now has 19
species, 200 various models of products; Lenovo's exports and diversified
product enable it to avoid involvement in domestic plague of the price war
impact of its competitors.
We can see that Lenovo's price strategy can according to
products in accordance with the best performance of the physical value, brand
value, the value of service and other form of value make Lenovo
establish an independent cognitive
value in the eyes of consumers, which can be the base of the price of
Lenovo products and achieve the relatively
independent cognitive value system. This awareness of the value system is not
set up like the prices can be as simple imitation. Such an independent value
and the price of Lenovo model are built on years of accumulated brand and the
concept of service. This created a core competitiveness of Lenovo brand and
Lenovo is still invincible in the fierce competition.
Differentiation
Strategy
A differentiation strategy is based upon persuading
customers that a product is superior to that offered by competitors. The major
benefits to Lenovo of a successful differentiation strategy are:
(1) Its products will command a premium price.
(2) Demand or its product will be less price elastic than
that for competitors‟ products.
(3) Above average profits can be earned.
(4) It creates an additional barrier to entry new business
wishing to enter the industry.
Lenovo is seeking to differentiate itself which will
organize its value chain activities to help create differentiated products and
to create a perception among customers that these offering are worth a higher
price.
Focus Strategy
A focus strategy is aimed at a segment of the market for a
product rather than at the whole market or many markets. The major benefits of
Lenovo‟ focus strategies are: (1). It requires a lower investment in
resources compared to a strategy aimed at an entire market or many
markets. (2). It allows specialization
and greater knowledge of the segment being served. (3). It makes enter to a new
market less costly and much simpler.
Since Lenovo‟s
is regarded to
adopt cost leadership
as its development
strategy which share some
features of differentiation in
the current by the author, the Lenovo‟s competent
advantage is developed from differentiation and cost saving through
value chain. Its core competence is illustrated:
· Improved supply chain;
· A cheaper price through lower
transaction costs;
· Convenience and
twenty-four-hour access;
· Good reputation among
customers;
· Quick and efficient search
capability;
· The personality of the service;
· Wide selection and one-stop
shopping;
· First mover in the market
stronger than average and well-known.
Lenovo famous brand names makes Lenovo
stay well in the fierce market competition, Lenovo‟s lot of
advertising budgets provided a strong guarantee for the material in
order to maintain the competitiveness of
Lenovo brand. Over the years, Lenovo brand and Lenovo advertising leave
a deep impression in people’s minds, enhancement of brand
recognition, is actually the acceptance of Lenovo cultural diffusion.
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