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Growth of Laptop market in India.

• Indian Laptop market is now in sync with global market.

• In 2005 that sales of laptops surpassed the sales of desktop computers for 1st time.

• Laptop market has registered 79% Year-on-Year (YoY) growth during 2006.

• Market share of laptops would be 35-40% in the next two years. •

Present Market scenario
The major players in the laptop category are: • Hewlett Packard (HP) • HCL • Toshiba • Compaq • Dell Computers • Sony • Lenovo.

• HP has the largest market share of 21 per cent in the Indian laptop market, followed by HCL and Lenovo.

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Legend to Lenovo
• 1984: Chinese Academy of Science founded the New Technology Developer, Inc (NTD). • 1987: Legend character card which translated English language operating systems into Chinese. • 1989:NTD renamed Legend Computer Company. • 1990: Legend launched its own computer. • 1996: Legend introduced itd first laptop model. • 2004: Legend renamed Lenovo (Le + novo) the same year a deal with IBM PC. •

4 Ps of Marketing
Pro d u ct
• Desktops • Laptops (scratch resistant, protective & titanium cover). • Servers • Client base is small business and customers.

P l ce a Le n o vo h a s th e h i h e st m a rke t g sh a re i C h i a , n n o f o ve r 3 5 % C u rre n tl i h a s y t th e th i p l ce i rd a n G l b a lP C o m a rke t I m a rke t sh a re ts i co n sta n tl s y

Product Map

Everyone
Putting more innovation in the hands of more people so they can do more amazing things.

Few

Commodity

Innovation

Price

Promotion
Promotion in India – ‘’Who wants to be a millionaire. Turin Olympics sponsorship Product oriented messages in advertising. Public relation campaigns. Advertisements focused on quality and innovation

• Reasonable rates of laptops • Follows competitive pricing strategy • Prices for all range of customer base • Follows a different price range for products in India and China • Accessories and Aftersales services is very cheap compared to its competitors.

Branding decisions
•Customers concern:
i . i i . i. i i Innovation Quality Service and support


•Branding alternatives:
i Master brand . i House of brands i . i. i i Synergy approach i . Lenux/toyota strategy v

v.

Building the Masterbrand
• “one-two punch” ; build up Lenovo as a strong Master brand

and continue to strengthen the ThinkPad product brand Three phase advertising plan Worldwide advertising campaign ceremony Lenovo as a Masterbrand for innovation

• •

• “ThinkPad Unleashed” during Turin Olympics opening • •

i. ii.

Innovations
•Think Pad 60 –needed something appealing . •Titanium cover •Protection •Scratch resistant •Built-in EVDO wireless broadband card and • antenna.

BCG Matrix
The BCG matrix method is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit.

Categories of BCG Matrix

Lenovo in BCG Matrix

GE Matrix T h e G E M a tri w o rks i 3 x3 x n M a tri x

Market Attractiveness
Market size Market growth rate Market profitability  Pricing trends  Competitive intensity / rivalry  Overall risk of returns in the industry Entry barriers  Opportunity to differentiate products and services Demand variability Segmentation  Distribution structure Technology development 

Competitive Strength
Strength of assets and competencies Relative brand strength (marketing) Market share Market share growth Customer loyalty Relative cost position (cost structure compared with competitors) Relative profit margins (compared to competitors) Distribution strength and production capacity Record of technological or other innovation Quality Access to financial and other investment resources Management strength 

Lenovo in GE Matrix

Michael Porter’s FIVE COMPETITIVE FORCES

The purpose of Five-Forces Analysis
• The five forces are environmental forces that impact on a company’s ability to compete in a given market. • The purpose of five-forces analysis is to diagnose the principal competitive pressures in a market and assess how strong and important each one is.

Porter ’ s Five Forces Model of Competition
Threat of Threat of New New Entrants Entrants

Bargaining Power of Suppliers

Rivalry Among Competing Firms in Industry

Bargaining Power of Buyers

T h re a t o f S u b sti te tu Pro d u cts

Threat of New Entrants
Economies of Scale Product Differentiation Capital Requirements Switching Costs Access to Distribution Channels
Government Policy

Bargaining Power of Suppliers Suppliers are likely to be powerful if :
Supplier industry is dominated by a few firms Suppliers’ products have few substitutes Buyer is not an important customer to supplier Suppliers’ product is an important input to buyers’ product Suppliers’ products are differentiated Suppliers’ products have high switching costs

Bargaining Power of Buyers
Buyer groups are likely to be powerful if :

Purchase accounts for a significant fraction of supplier’s sales Products are undifferentiated Buyers face few switching costs Buyer presents a credible threat of backward integration Product unimportant to quality Buyer has full information

Threat of Substitute Products
Keys to evaluate substitute products : Products with similar function limit the prices firms can charge

Products with improving price / performance tradeoffs relative to present industry products

Example :
Electronic security systems in place of security guards Fax machines in place of overnight mail delivery

Cutthroat competition is more likely to occur when : Numerous or equally balanced competitors Slow growth industry High fixed costs High storage costs
Lack of differentiation or switching costs Capacity added in large increments Diverse competitors High strategic stakes High exit barriers

Rivalry Among Existing Competitors

Porter’s Five forces

New World, New Thinking.
eats of new entrant
N,

Threats of substitute

Easy entrant Profitabl e sector New technolog y

Rivalry among existing firms

Ultra light laptop’s mobile pc’s Think pads PDS Desktop, ppda Smartphone

Cont..

Supplier’s power

it has excellent supply chai Intel corp. Seagate's technology etc

B u y e r’ s p o w e r

Customers who are enterprises have less power as compared to individual buyers.

The Five Forces of Competition Model
HIGH

INTENSE LOW

High

MODERATE

SWOT
Strength
Lean cost structure Effective business model Innovation leadership Event sponsoring Good marketing and distribution strategies Quick responsiveness Strong R&D National image.
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Weakness
Unable to maintain sustained growth rate in all market segment Ignoring potential market Retaining of largest shares by competitors Poor global perception Globally not well known.

Opportunity
Increasing globaldemand for PC Specialty shops proving one stop platform for distribution Government organizations increasing their spending on IT Internet boom Increase product lines Converting manual orders to automotive orders.
 

Threat
Competition threat from both local and international market Industry reaching maturity Software piracy and clone market Price war Emerging small firms International competitors forming alliance with local competitors.

Product Map

Everyone
Putting more innovation in the hands of more people so they can do more amazing things.

Few

Commodity

Innovation

Lenovo’s growth Strategy
• Changed its name Lenovo from Legend in 2003. • In 2004 LENOVO acquired IBM’s PC division. • Adopted direct distribution technique leaving traditional technique. • Lenovo established new Innovation center in 2005. • Lenovo introduced the first Dual-core ThinkPad notebook PCs in 2006. • Sponsored 2006 Olympic Winter Games in Torino, Italy, supplying 5000 desktops. • Increasing the range of product categories (diversification) in order to maximize the number of customers and to face fierce competition • Efficient international management. •

PROFIT IMPACT OF MARKETING STRATEGY (PIMS MODEL)

The PIMS (Profit Impact of Market Strategy) of the Strategic Planning Institute is a large scale study designed to measure the relationship between business actions and business results. The project was initiated and developed at the General Electric Co. from the mid-1960s and expanded upon at the Management Science Institute at Harvard in the early 1970s. Since 1975 The Strategic Planning Institute has continued the development and application of the PIMS research

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continued
The comprehensive profiles of over 3,000 strategic experiences constitute this unique data pool.. The data covers the important characteristics of the MARKET ENVIRONMENT, THE STATE OF COMPETITION, THE STRATEGY PURSUED BY EACH BUSINESS AND THE RESULTS OBTAINED.  PIMS is: • a database of business strategies, used to generate benchmarks and identify winning strategies. • a set of data-derived business strategy principles to guide strategic thinking and strategic measurement. • a methodology for diagnosing business problems and opportunities, and for measuring the profit potential of a business.  

PIMS
• The data constitute a key resource for such critical management tasks as evaluating business performance, analyzing new business opportunities, evaluating and reality testing new strategies, and screening business portfolios.
  • The primary role of the PIMS Program of the Strategic Planning Institute is to help managers understand and react to their business environment. PIMS does this by assisting managers as they develop and test strategies that will achieve an acceptable level of winning as defined by various strategies and financial measures.  

KEY STRATEGIC FACTORS INFLUENCING BUSINESS PERFORMANCE
• • • • • • • • • • • • Competitive Position Market Environment Stage of Lifecycle  Market Share Marketing/Sales New Products/Sales Relative Market Share Customer Concentration R & D/Sales Relative Quality Customer Purchase Amount Real Market Growth • Relative Price • Industry Concentration • Capital and Operating Structure •  Investment / Sales • Receivables / Investment • Investment / Value Added •  Capacity Utilization • Gross Book Value of P&E/Total Investment •  Value Added / Sales • Operating Effectiveness

THE STATISTICS
• Lenovo market share 0.01% (November 2009)   Devices  Market Share   • Lenovo i966   0.01%  •  Lenovo V800  <0.01%    • Lenovo P780  <0.01%    • Total market share   0.01%  (0.01%)    • Other than Lenovo devices,  unknown  devices and PC browsers   99.99%  •  Total market share   100%  (99.99%) 

Consumer satisfaction index

CRITERIA OF PIMS-QUESTIONS TO BE ASKED
• Return on Investment Report - What level of profitability is "expected" for comparable businesses? (106.42%)   • Market Share Change Report - What level of share gain/loss is "expected" for comparable businesses? (.01%)   • Marketing Budget Report - What level of marketing expenses is "expected" for comparable businesses?   • Market Attractiveness/Competitive Strength Report - How attractive is the market/competitive position of comparable

CONTINUED
• Important Strategic Principles Derived From PIMS   • In the long run, product quality is the single most important factor affecting performance   • Market share and profitability closely correlated   • High-investment intensity reduces profitability   • Cash implications of growth rate and relative market share are affected by many factors   • Vertical integration is profitable for some businesses only

LIMITATION OF PIMS

• Key market-share variable is sensitive to productmarket definition   • Other variables depend on subjective judgments   • Inherent limitations of cross-section analysis   • Sample biased toward larger firms that are industry leaders   •

• THANK YOU


PRESENTED BY: HARSHA ABHISHEK MUKESH MANALI PANKAJ PRIYANKA