Pricing strategy of Lenovo

There are many companies in the market, which have a better reputation than Lenovo
in the computer world. Hard work of the company and a strong commitment to
providing the best for the people helped with the harvest of a global customer base.
This is the main reason why Lenovo has become the world’s fourth largest provider of
PCs worldwide in a very short time. If a person decides to buy a computer system,
Lenovo India is the name of a very respectable place in the priority list.The company
also tightened its grip on the PC market through the acquisition of IBM’s PC division in
2005. Lenovo is not a name that is restricted for a certain product, but that there is a
long list of products that are sold under the same brand needs. Some of them are as
follows:
• Lenovo Think Centre
• Think Station Lenovo
• Idea Centre desktop
• Lenovo Think Server 
• consumer-oriented IdeaPad notebooks 
• Lenovo 3000 J Series desktops 
• Lenovo 3000 C, N and V series notebooks and LCD monitors
• CRT projectors and Think Vision monitors
Lenovo signed an agreement allowing them to sell under the brand name of IBM
laptops and desktops by 2010. Lenovo notebooks and business machines are available
with Linux pre-installed.

Lenovo Pricing in India

Pricing strategy of this company is one that takes note of the key considerations of
the customer, which is nothing more than the price of the product. Probably for this
reason, almost every product that comes from the production of the parent company
is reasonably priced. Lenovo has been very aggressive in its pricing strategy with its
different series of laptops and respective models. Lenovo initially followed IBM’s
pricing policy. This can be considered skimming done by a company which wants to
earn as much as possible. Lenovo Laptops prices are in the range of Rs.24,500 to
Rs.54,000.There are several high end models also which cost more than Rs. One
Lakhs. Dell is the market leader which offers an AMD Athlon processor in its lowest
costing desktop worth 16000Rs.In the same category, Lenovo introduced the 3000H
series-a P4 processor for Rs 18000/-.Lenovo has always maintained a product mix such
as bread and butter products like 3000H series and high end products like Thinkpad
and Think centre which helps Lenovo develop a vast range in its prices. The product
mix of IBM is more powerful than before. They are doing what IBM did not do.

Maintain your
Don’t forget to market share
generate volumes
Be a big firm and
give world class
products

The pricing of some models are as follows:

Lenovo Y Series Laptops are priced from Rs. 32000-54000/-

Lenovo G Series Laptops are Priced from Rs. 25000-36000/-
Lenovo N Series Laptops are Priced from Rs. 35000-56000/-
Think pad XX&Z series are priced from Rs. 58000-1,10,000.
Lenovo constantly offers discounts on its products through its showrooms and online
purchases which are often in the range of 25-30%.Also there are many coupon codes
and promotional codes available on all product models which add to the total
discount.
In a recent promotional scheme, a 10 mega pixel canon camera was being offered
with the Ideapad Y& Z series notebook.

Capturing Market share:

The objective of the company is to capture a substantial market share and attract
more and more buyers to buy its products. Indian consumers are very price
sensitive .Dell dominated HP over the last few years because of their low pricing
model. Highly priced brands like Sony have also reduced the prices of their
laptops .The Indian market is slightly different .At around 8 million units a year, it is a
sixth of china’s market. For Lenovo ,to win in Asia, it believes it has to win India ,Its
market share is about 7% and is the number five player in the Indian market.

Competitor Pricing:

The pricing strategy of Dell has been to offer the lowest pricing based on the
configuration chosen. The customer has the flexibility of choosing the configuration
and gets the same at competitive prices. HP follows a perceived value pricing for its
pavilion range of laptops and an extremely low cost pricing strategy for its Compaq
Presario range of notebooks. Sony follows a skimming strategy in all its models. The
following table compiles the current market rates for various players.

Dell HP Lenovo

Core i5,500GB,3GB HP Pavillion DV Lenovo Edge series Sony Vaio core 2

RAM-44000/- 6-46500/- core i5-39000/- duo,i5 - 45000/-
Dell Inspiron 14R – HP Pavillion Lenovo Ideapad Sony Vaio core
Core i5-Rs 39000/- 1404TU-39500/- G430-30500/- i3-37000/-
Core 2 Duo,4GB HP Pavillion Lenovo Ideapad Sony Vaio,1G
RAM-36500/- DV2,4GB G450-26500/- RAM-32500/-
Dell Vostro Laptop RAM-34000/- Lenovo S10 ,1 GB Sony Vaio
RAM-19500/- VPCYA15FG-2900
A840, 1GB HP Pavillion
0/-
RAM-29000/- DV2,1GB
RAM-32900/-

Based on competitors price and market position, lenovo has two options for pricing.

• Value pricing-offering the customers high quality at lower price

 • Going rate pricing: following the pricing strategy of the competitor and pricing
the laptops at a rate just lower than that of the market leader.

Lenovo in India has selected the value based pricing. It is not directly involved in
price wars with competitors. It offers a large range of products in the Indian market
with substantially lower price and unique product features. The main goal of the
company is to capture the maximum market share and then go for alternate pricing.

Alternate pricing strategy.

Lenovo is now following the protect and attack strategy globally

– Protect: China / Mature Relationship; Attack: Emerging / Mature Transactional
– Profit Engine: Think & Relationship; Growth Engine: Idea & Transaction

In order to maintain its market share and remain competitive in the Chinese as well as
the global market it is important that the company adopts different pricing strategies
for different segments of the market. Some of the strategies can be useful:

1) For the developing markets of Asia, the company should adopt going rate
pricing strategy after achieving sufficient economies of scale. Lenovo is a
market follower in India after Dell &HP and this strategy can allow them to
ensure values as well as the optimal price of the product. With its Protect and
Attack global strategy, Lenovo India has already grown from an overall 7.2
percent market share in Q1 2010 to 10 percent in Q1 2011. Of late it has been
following the going rate pricing for some of its products like Lephone and
ideapad tablet. Lenovo has launched LePhone as an Apple iPhone  rival with a
low price strategy and customized for Chinese users. LePhone’s price is only
equal half of the iPhone’s, even when Apple just cut the prices of iPhone
handsets in the Chinese market. Also, it has launched IdeaPad A1, at a price of the
$199 Android tablet.

2) Lenovo should create a deeper impact in the Asian markets by encompassing

aggressive retail push, deeper channel penetration and channel engagement,
and introducing an exclusive product range. The company should increase its
touch points by adding exclusive retail outlets, resellers and authorized service
centers. Lenovo currently has 540 retail outlets in India. It should also expand
into Tier 3 & 4 cities.

3) Lenovo should adopt Multi-Model Strategy to Battle competitors. It should

increase its brand recognition and be a more active player in the Tablet and i-
phone markets to take over other competitors heads on. Like the personal
computers market, the company should realize that users tend to have
 different demands when it comes to their tablet computers. Their main focus
should be targeting specific users with specific products.

4) For European markets, Lenovo can adopt a perceived value based pricing. The
customers in the developed markets will be better able tpo understand the
product value. The recent acquisition of Medion: Mobile Internet device and
services business provider in Western Europe Complements Lenovo’s growing
Mobile Internet and Digital Home business .It will boost device and services
capability. Medion’s existing relationships and experience with retailers and
telcos will be a great asset for Lenovo.

5) For the Chinese market, company should continue its competition based
pricing. The Chinese market is huge and flooded with number of competitors.
Lenovo should strengthen China leadership and retain its market share by
widening the gap with the competition.
−References:

http://www.laptoppricelist.in/laptop-prices-india.html
http://www.lenovo.com/ww/lenovo/