9 Marketing PDF

Session 9
International Business Marketing
PGP-23 IB-E 2020-21 S9: International

September 22, 2020 1
Marketing
IB Strategies & Key Marketing Aspects
International strategy Product, Positioning, Place
Multi-domestic strategy Differentiation
Global strategy Product, Positioning, Price
Transnational strategy Product, Positioning, Price, Differentiation
©2019-2020 P Rameshan
Marketing
International Marketing Experiences
P&G marketing of diapers in Japan failed (late 1970s & early

1980s) because the product was bulky when the Japanese preferred
trim-fits. Later, the modified product was highly successful
P&G marketing of detergents in Japan failed (early 1980s) because

the product did not have the advertised action since the Japanese
washed clothes in cold water, adding fabric softeners. Later, the
modified advertisement, matched with a modified product, brought
good success
P&G marketing of dish wash soap was a huge success in Japan

(late 1990s) because the product was well-designed, based on
good research, to address the needs of Japanese customers, &
the product was backed up with excellent marketing campaigns
Kellogg’s early marketing of breakfast cereals in India (since 1990s)

failed to help it meet its strategic goals because of the inability to
address cultural factors & price sensitivities

Marketing
Miscommunications
KFC Finger licking good We will eat your fingers off

(Chinese)
Pepsi Pepsi brings you Pepsi brings your ancestors
back to life back from the dead (Chinese)
Pen It won’t leak in your It won’t leak in your pocket &
pocket & embarrass you make you pregnant (Spanish)
Coca ke-kou-ke-la Bite the wax tadpole/

Cola (Chinese) Female horse stuffed with wax
Airline Fly in leather (Mexico) Fly naked (Spanish)

Marketing
International Marketing Strategy
Oreo: Local Adaptation of Products
& Promotions

Marketing
International Marketing Strategy
Pepsi: Globalized Products* &

Localized Promotions
(* Augmented with some local product-discoveries)

Marketing
Determinants of Market Potential
Purchasing power
Leapfrogging trends
Prices & price elasticity
Income elasticity
Substitution effects
Income inequality
Tastes & preferences

Marketing
IB Marketing Factors
Product Feedback
Brand/Company Anti-campaigns
Context (Economic
Service
/Cultural)
Price

Marketing
IB Marketing Deficits
Product Company/
Mistakes Country Image
Pricing Contextual
Mistakes Mismatch

Marketing
International Marketing Tasks
Target market selection
Market concentration vs. diversification
Standardization vs. localization
Product policy
Pricing policy
Distribution policy
Promotion policy

Marketing
Case 6
Lenovo

Marketing
Provoking Question
Will Lenovo’s acquisition of IBM PC division work in the long

run?
If yes, how?
If no, why?

Marketing
Strategic Issues & Silver-lines
ThinkPad was associated with IBM: Will customer accept it with Lenovo?
IBM was continuously innovating on ThinkPad: Will it continue?
Loyal customers were anxious about future: Will Lenovo succeed?
Two businesses were complementary on customers, channels & regions
IBM focused on enterprise segment, Lenovo on small customers
IBM sold 70% through consulting, Lenovo 70% through partners
IBM was strong in non-China markets, Lenovo in China
Only major overlap in culture, customer focus, innovation & trust factor

Marketing
Strategic Actions
Company resolve to work together & take decisions on mutual trust
HQ in USA near IBM HQ
Research centres in USA, Japan & China
Restructuring & consolidation
English as communication medium
Coordination of 24 hours through teleconferencing
Free hand to CMO for new brand positioning
Leveraging on ThinkPad, IBM logo & IBM support for 5 years

Marketing
Provoking Question
Will Lenovo’s rebranding campaign work?
If yes, how?
If no, why?

Marketing
Pre-merger Concerns of Customers on IBM PCs Going
to Lenovo & Later Changes
Slowdown in Innovation
Poorer Quality
Overseas Outsourcing of
Service & Support
Large Drop in Intent to

Purchase
Deal for IBM Service &

Support for 5 Years
Assurances to Customers
on Raising Quality &
Innovation
Later Rise in Intent to

Purchase
©2020 P Rameshan
Marketing
Strategic Actions
Changing perceptions of China as low quality & low trustworthiness
Leveraging on Lenovo’s experience & strengths
Surveying customers to know their anxieties & then addressing them
Master brand strategy was considered to position Lenovo as main brand
House of brands strategy was considered to position product brands
Brand synergy strategy was considered to position both Lenovo brand

& ‘Think’ house brands (e.g., Lenovo ThinkPad)
Lexus/Toyota brand strategy was considered to position Lenovo &

‘Think’ brands as two separate entities
It was also considered to slap ‘Think’ brand on all China origin products

Marketing
Strategic Actions
It was decided to position Lenovo as master brand
It was also decided to strengthen the ThinkPad brand
In PC market, one supplier group stood for cost efficiency & market share
Second supplier group stood for innovation & customer-centric products
Lenovo decided to choose cost efficient innovation leveraging its skills

& consistent with its mission
A significant new product launch & 3-phase advertising was planned
First phase of advertising focused on ThinkPad, second on further

developed ThinkPad & third on Lenovo master brand of innovation
Taking a flexible approach on brand transition

Marketing
Strategic Actions
Introducing a new advanced ThinkPad
Innovating the product with non-black Titanium lid
Offering other paid top ups as additional features
Favourable comments from media on new product
Earlier experience of credit going to IBM for a new Tablet introduced
So, emphasis on association between Lenovo & new ThinkPad
Quarterly brand tracking studies in 10 countries to identify gaps in

customer understanding of the new product & brand positioning
Indian gap in unaided awareness of brand & remedial positioning

Marketing
Strategic Actions
Efforts to ensure Olympic advertising leads to product purchases
Advertising budget mismatch with competitors Dell, HP, NEC etc
Efforts at unconventional clever ways of voice positioning the brand
Introduction of new Lenovo 3000 PCs for business customers
Distinct design & features based on feedback of business customers
Decision not to position as low cost PC to avoid loss of brand value
Complementary tools with PC for business customers’ comfort

Marketing
Worrying Questions
What’s Lenovo’s point of differentiation - Innovation? Efficiency?
Will Lenovo use ThinkPad to build its brand? Can it do it without

hurting ThinkPad franchise?
How much Lenovo will use IBM logo? How long? In what ways?
Why did Lenovo use a number on its first non-ThinkPad product

instead of a name? Does it still feel it’s the right approach?
How will Lenovo be positioned: As a new type of Chinese company? A

unique combination of East & West? An international firm?
Market share has been falling in 2005. How to arrest & reverse this?
PC prices are falling & margin is being squeezed. How to protect

margins?

Marketing
Provoking Question
Will Lenovo succeed in making IBM PCs survive?
If yes, how?
If no, why? In this case, what else

Lenovo should do to save the product?

Marketing
Will IBM Think PCs Survive With Lenovo?
Yes No
‘Think’ Brand Equity Dependent on Leveraging Skeptic Customers
‘IBM’ Identity Like a Guarantee 5-Year Restrictions
IBM Servicing Addressing Anxiety Service Anxieties
Product Innovations Sign of Competence Innovation Failures
Lenovo Branding Image Correction Branding Failure (e.g. X41)
Marketing Strategy Professional Approach Competitors’ Campaigns
Cost & Pricing Efficiency & Low Cost Lenovo’s Asian Focus
Brand Integration Issues

Marketing
Lenovo Succeeds Lenovo Fails
Empowering CMO Focused Branding Customer Apathy
HQ in USA Signaling Intend Innovation Failures
Securing IBM Support Reassuring Customers Branding Failure
Product Analysis & Redesign Innovations Low Cost Image
Customer Analysis Sensitivities ‘IBM’ Clouding ‘Lenovo’
Market Analysis Targeting Control Issues
Promotion Channels Optimum Returns Competitive Pressures
Market Pressures

Marketing
Will a Product Survive With Another Company?
Customer psychology: If they love a product, they would like it

to survive & succeed
Will it succeed: What is acquirer’s intent?
What is acquirer’s understanding?
What is acquirer’s effort?
Marketing
Post-Acquisition Product Survival
Strong Brand
Acquisition
Perception Gap
Product
Strengthening
Perception
Management
Rebranding
Marketing
Customer-Acquirer Role in Product Survival
Product
Customer Love New Owner
Competences
Customer Loyalty
Intent Understanding Effort
Desire for Survival Survival &

& Success Success
Marketing
IBM Think
Balanced
Investment
Lenovo
Required
Slower Outsourced Selected

Innovation Service Option
Poorer ThinkPad &

Quality Lenovo
IBM
Action
Strategy
Innovation Efficiency Brand
Branding
Campaign
New Pricing
Products
Master House of Parallel Master & Hero
Brand Brands Brands Sub-brands
3000 Titanium
Lost Sub- Costliest Confusing Family ThinkPad
brand & Risky
Small Business
©2018-2020 P Rameshan Needs
Lenovo 2015
Revenue $46.3 billion
Net Income $837 million
Assets $27.1 billion
Acquisitions Motorola Mobility (2014)
‘Think’ Products ThinkPad, ThinkCentre,

ThinkServer, ThinkStation,
ThinkVision
Market Position Largest in China
Second largest in the world
Chairman & CEO Yang Yuanqing

Marketing

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Session 9

International Business Marketing

PGP-23 IB-E 2020-21 S9: International

International strategy Product, Positioning, Place

Multi-domestic strategy Differentiation

Global strategy Product, Positioning, Price

Transnational strategy Product, Positioning, Price, Differentiation

P&G marketing of diapers in Japan failed (late 1970s & early

P&G marketing of detergents in Japan failed (early 1980s) because

P&G marketing of dish wash soap was a huge success in Japan

Kellogg’s early marketing of breakfast cereals in India (since 1990s)

PGP-23 IB-E 2020-21 S9: International

KFC Finger licking good We will eat your fingers off

Coca ke-kou-ke-la Bite the wax tadpole/

Airline Fly in leather (Mexico) Fly naked (Spanish)

PGP-23 IB-E 2020-21 S9: International

PGP-23 IB-E 2020-21 S9: International

Pepsi: Globalized Products* &

PGP-23 IB-E 2020-21 S9: International

Prices & price elasticity

Tastes & preferences

PGP-23 IB-E 2020-21 S9: International

PGP-23 IB-E 2020-21 S9: International

PGP-23 IB-E 2020-21 S9: International

Market concentration vs. diversification

Standardization vs. localization

PGP-23 IB-E 2020-21 S9: International

PGP-23 IB-E 2020-21 S9: International

Will Lenovo’s acquisition of IBM PC division work in the long

PGP-23 IB-E 2020-21 S9: International

IBM was continuously innovating on ThinkPad: Will it continue?

Loyal customers were anxious about future: Will Lenovo succeed?

Two businesses were complementary on customers, channels & regions

IBM focused on enterprise segment, Lenovo on small customers

IBM sold 70% through consulting, Lenovo 70% through partners

IBM was strong in non-China markets, Lenovo in China

PGP-23 IB-E 2020-21 S9: International

Company resolve to work together & take decisions on mutual trust

HQ in USA near IBM HQ

Research centres in USA, Japan & China

Restructuring & consolidation

English as communication medium

Coordination of 24 hours through teleconferencing

Free hand to CMO for new brand positioning

Leveraging on ThinkPad, IBM logo & IBM support for 5 years

PGP-23 IB-E 2020-21 S9: International

Will Lenovo’s rebranding campaign work?

PGP-23 IB-E 2020-21 S9: International

Large Drop in Intent to

Deal for IBM Service &

Later Rise in Intent to

Changing perceptions of China as low quality & low trustworthiness

Leveraging on Lenovo’s experience & strengths

Surveying customers to know their anxieties & then addressing them

Master brand strategy was considered to position Lenovo as main brand

House of brands strategy was considered to position product brands

Brand synergy strategy was considered to position both Lenovo brand

Lexus/Toyota brand strategy was considered to position Lenovo &

PGP-23 IB-E 2020-21 S9: International

It was decided to position Lenovo as master brand

It was also decided to strengthen the ThinkPad brand

Second supplier group stood for innovation & customer-centric products

Lenovo decided to choose cost efficient innovation leveraging its skills