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Strategic Marketing
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Management:

Report on Brand Image


of LENOVO‘

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Aditya Jain 09PG303
Chawla Manisha 09PG313
Karthik V 09PG 323

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Pooja Prasad 09PG333
‘ Sandeep Babaji 09PG342
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Swati Ray 09PG352
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S. No. Particulars Page
1 Company Profile 4
2 Market Research Process
2.1 Need for Marketing Research 6
2.2 Defining the Problem 6
2.3 Research Objectives 6
2.4 Research Design 9
2.5 Information Types and Sources 9

2.6 Methods of Accessing Data 9

2.7 Data Collection Form 9

2.8 Sample Plan and Size 11

2.9 Data Collection 11


2.10 Data Analysis 12

3 Conclusion 15

4 Recommendations 15

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‘‘ ‘is a multinational technology corporation that
develops, manufactures and markets desktops and notebook personal computers,
workstations, servers, storage drives, IT management software, and related
services. Incorporated as Legend in Hong Kong in 1988, Lenovo's principal
operations are currently located in Morrisville, North Carolina in the United
States, Beijing, China, and Singapore, with research centers in those locations, as
well as Shanghai, Shenzhen, Xiamen, and Chengdu in China, and Yamato in
Kanagawa Prefecture, Japan. Lenovo acquired the former IBM PC Company
Division, which marketed the ThinkPad line of notebook PCs, in 2005 for
approximately $1.75 billion.
Lenovo is the fourth largest seller of personal computers in the world. The
company is the largest seller of PCs in China, with a 28.6% share of the China
market, according to research firm IDC in July, 2009. It reported annual sales of
$14.9 billion for the fiscal year ending 2008/2009 (ending March 31, 2009).
Lenovo markets its products directly to consumers, small to medium size
businesses, and large enterprises, as well as through online sales, company-owned
stores (in China only), chain retailers, and major technology distributors and
vendors. As of October 31, 2008, 50.4% of Lenovo is owned by public
shareholders, 42.3% by Legend Holdings Limited, and 6.6% by Texas Pacific
Group (TPG Capital), General Atlantic LLC and Newbridge CapitaLand 0.7% by
the directors. Because the Chinese Academy of Sciences, a Chinese
government agency, owns 65% of Legend Holdings, effectively the Chinese
government owns about 27% of Lenovo and is the largest shareholder.
IBM became the owner of 18.9% of Lenovo in 2005 as part of Lenovo's
acquisition of the IBM personal computing division. Since then IBM has steadily
lowered its shareholding in Lenovo. In July 2008 the IBM shareholding went
below the 5% reporting disclosure threshold

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 ‘ Public company (Red chip)

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‘ Beijing, China; Morrisville, North Carolina, United States; Singapore.

‘‘ Worldwide

‘ ‘ Liu Chuanzhi, Chairman, Yang Yuanqing, CEO

‘ Computer Systems


Computer Peripherals
Computer Software

!‘ Desktops, Servers, Notebooks, Peripherals,


Printers, Televisions, Scanners, Storage


‘ ź $ 14.901 billion (S )

‘!‘ ź $ 226.3 million (S )

 ‘‘ ź $ 6.308 billion (S )

 ‘‘ ź $ 1.310 billion (S )

 ‘ Approx. 23,000 (S )

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2.1 "  ‘‘#‘ 
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Why is Lenovo less popular among the youth?

2.2 #  ‘‘
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As IBM is taking out the contract with Lenovo, it might affect the Brand Image of
Lenovo.

Most of the market shares have been covered by HP and DELL due to their
service, quality and promotions, which the Lenovo could not do. Can have the
enough opportunity to improve in its deficiencies

2.3 "  ‘



‘"$  %:

Three most important reasons are:

1.‘ A highly lucrative yet competitive home market.


2.‘ Lack of brand equity in the consumer computer market.
3.‘ Negative effect of "China Brand Effect" in the Western markets.

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Explanation of the above factors:

A highly lucrative yet competitive home market¡‘ ‘‘‘‘ ‘



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Such a division of resources and strategic focus has allowed competitors to inch
closer to Lenovo in China. Compared to 2007, all competitors have increased their
China market share in 2008. Dell increased its share from 7.2% to 9.1%, HP
increased its share from 13.8% to 15.1%, and Acer has gone from 5.6% to 7.2% of
the market. This in turn poses increasing challenges to Lenovo and its brand. Till
date, it has not been able to effectively do two things at the same time - thwart
competition at home and take market share from competitors in their home market
- the United States.
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¡ When Lenovo acquired
IBM's PC division, its main aim was to leapfrog to become one of the largest
computer companies in the world. Lenovo became the third largest computer
company in the world, but not necessarily the biggest in the consumer market.
IBM's traditional strength was in the business segment. IBM's Thinkpad laptops
were the gold standard in business computers. But Lenovo did not restrict itself
just to the business market.
Over the last three years it has made a very aggressive entry into the consumer
computer market with two new Thinkpad models and the new line of Ideapads. But
given the recessionary economic conditions in the US, this move has not yielded
any credible results so far. Furthermore, for a company that is still learning the
rules of the global brand game in the computer industry, Lenovo has bitten more
than it can possibly chew. Entry into the very highly competitive US consumer
computer market where DELL and HP have a near strangle hold, leveraging IBM's


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brand name in the business market, building equity for the Lenovo brand and
guarding the home turf in China have all together put Lenovo under immense
stress.‘
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¡ As one of the recent articles in a leading US daily
reported, for US consumers Lenovo (even after acquiring IBM⼌s PC division)
is still a Chinese brand. Given the general perception of China, Chinese products,
controversies about China's counterfeit markets (and products), the questionable
quality of "Made in China" products and the overall macro socio political
sentiment towards China have heavily impacted the perception of Lenovo among
the US and other Western consumers.
This reflects the lack of Lenovo's efforts in building a strong brand. Even though
Lenovo had a golden opportunity to capitalize on IBM's co-brand name for three
years, it has turned out that Lenovo has not managed to create a strong brand
image among the Western consumers. While sales in China grew by 18% during
the first quarter of 2008 compared to 2007's first quarter, sales in the US increased
only by a paltry 3%. Furthermore, Acer's acquisition of Gateway has catapulted
Acer's position within the US market and Acer is inching closer to Lenovo.

Given these apparently insurmountable challenges Lenovo faces both at home and
in the Western markets, it is not surprising that Lenovo is taking a beating of its
stock. In spite of reporting sales of US$3.74 billion and revenues of US$140
million in the first quarter of 2008, Lenovo's stock is down by 14% for the year
2008 as against a 15% drop for Dell and an 11% drop for HP. The same saga has
continued in 2009 as well. Lenovo reported sales of US$3.5 billion for the June 30
quarter. This sales number is down 17.9% for the same period in the previous year.
Furthermore, Lenovo posted a loss of US$16 million for the quarter as against a
net profit of US$119 million for the same period in the previous year. With
competitors chipping away at its market share in China, Lenovo will have to
aggressively build its brand in the US and European markets in order to survive
long term. The strategy has to be carried out by management.


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2.4 DETERMINING RESEARCH DESIGN:
Our research design is done on scientific as well as systematic data.

2.5IDENTIFYING INFORMATION TYPES AND SOURCES:


Information is based on the Internet from various websites and through personal
findings i.e. questionaire.

2.6 METHODS OF ACCESSING DATA


a) Visiting websites.

b) Questionnaire.

2.7 DESIGNING THE DATA COLLECTION FORMS:


Forms were designed, keeping in mind the percentage awareness of the Lenovo
Brand as a preference of the people.

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We request you to give you valuable feedback and spare 2minutes for it.
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Please answer the options in the bracket provided.
1)‘ What Brand comes to your mind, when you hear Laptop«««««.. ( )
a)‘ HP
b)‘ DELL
c)‘ Lenovo
d)‘ Others specify«.

2)‘ Which Laptop gives value for money««««« ( )


a)‘ HP
b)‘ DELL
c)‘ Lenovo
d)‘ Others specify


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3)‘ What do you look for, when buying a Laptop««««« ( )
a)‘ Configuration
b)‘ Price
c)‘ Quality/Durability
d)‘ Looks and design
e)‘ Others Specify

4)‘ How do you rate the Lenovo Laptop as per you««««« ( )


a)‘ Excellent
b)‘ Good
c)‘ Average
d)‘ Below Average

5)‘ Have you purchased Lenovo Laptop««««« ( )


a)‘ Yes b)No

6)‘ If Yes are you satisfied with Lenovo««««« ( )

a) Yes b) No

7) Will you prefer to buy Lenovo Laptop in the future ««««« ( )

a) Yes b) No

8) How did you come to know about Lenovo Laptop ««««« ( )

a) Print media/News paper

b) TV Ads

c) Friends

d) Others Specify«««

9) Did you know that IBM and Lenovo are having joint Contract««« ( )

a) Yes b) No

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10) What is Lenovo as a brand for you in one word«««

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2.8‘ DETERMINING THE SAMPLE PLAN AND SIZE:
Sample Plan was designed by following steps given below

a.‘ Defining the objective


b.‘ Finding the target to get review
c.‘ Preparation of questionnaire to know the Brand Image of Lenovo
d.‘ Analysis of the data
e.‘ Finding corrective measures and Implementations

2.9‘ COLLECTING DATA:


The questionnaire was mailed to about 500 people for quick survey results. Among
these people were those who are already laptop users and also those who will in
future be laptop users. The questionnaire was prepared on a free online survey site
(www.freeonlinesurvey.com).

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2.10‘ ANALYSING DATA:

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3.‘CONCLUSION
The above analysis shows that LENOVO does not have a good brand image in the
Indian market as compared to other players. As is evident from Question 1, that the
brand penetration of Dell and HP is more as compared to Lenovo which is 7.14%
only .Also since Lenovo is a Chinese company, there is ambiguity about its
durability in the minds of the customers.

4.‘RECOMMENDATIONS
The following steps should be taken so as to make LENOVO a popular brand in
the market:-

a)‘ Product design: - Weight should be reduced, should be available in


some more colours.
b)‘ Target customers: - Focus on students and small business firms.
c)‘ Promotions :-

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‘ Advertisements: -Ads on television, magazines should be
more frequent.
‘ Brand Ambassador:- Brand ambassador should be
someone who has a greater impact on public or someone
who is techno savvy like Pranabh Mistry.

d)‘Post Purchase Services :- More customer service centre¶s should be


opened.

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