Lenovo Case Analysis

Competing at a global scale requires profound brand equity. Lenovo is a well-known brand in China
(as Legend) but it cannot become a global technology giant like Dell or Hewlett-Packard, by merely
acquiring the Personal Systems Division of IBM, whose products are popular across the world.
Normally, the key challenge in establishing global brands lies in devising the manner in which a
company can position its brands in customers’ mindsets, while taking into account global competition
that comes from national and international suppliers (Wright, Millman & Martin, 2007, p. 139). Lenovo
has to engage in intelligent marketing to attract consumers and make itself a force to reckon with in
the global personal computer industry. According to the case study, the global PC industry is highly
competitive with the leading performers being Dell, HP, Lenovo and its IBM acquisition, and Acer and
Fujistu-Siemens among other corporations and vendors locked in tight competition (Quelch & Knoop,
2006, p. 2-3). Therefore, Lenovo has a daunting task to create brand equity to thrive at a global scale.

The Key Issues

The issue that Lenovo is principally dealing with is how it can effectively enter into the global market,
where it is not only struggling against the competition, but is also dogged by an incredulous market.
On the surface, the deal between Lenovo and IBM seems to give the former a platform for success
due to the complementary nature of the operations of the two firms and because the deal facilitates
the expansion of Lenovo’s operations from China and Asia to over 138 countries in the world, where
IBM is established (Quelch & Knoop, 2006, p. 6). However, in a marketing research that the company
conducts among 4,000 IBM customers, the concerns raised are that the innovation, quality, and
service and support are going to be negatively impacted by the takeover of IBM brands by Lenovo
(Quelch & Knoop, 2006, p. 9). The grievances held by the consumers are a major undoing to
Lenovo’s attempts to create strong brand equity.

The criticism shows that the customers harbor negative brand knowledge about Lenovo. Brand
knowledge consists of brand awareness and brand image (Wright et al., 2007, p. 140). Normally,
brand knowledge determines the directions that the brand takes and, in turn, this influences the
decision that marketers take in creating a brand promise, which entails informing the public about the
positive essence of the brand and its purpose (Kotler, 2012, p. 115). The competition must be
addressed seriously through a brand promise, with strong product dimensions. A brand’s dimensions
differentiate an offering from other offerings that are aimed at satisfying the same need by either
emphasizing on product performance by introducing functional, rational, or tangible differences or by
emphasizing the symbolic, emotional, or intangible factors (Kotler, 2012, p. 114).

Lenovo has the chance to utilize the brand equity creation process that emphasizes on the product
performance in the phase of introducing itself into the global market, while intending to rely on the
latter dimension in the long run. Brand equity is created by thoroughly satisfying the presence,
relevance, performance, advantage, and bonding dimensions, in an increasing order of importance
(Kotler, 2012, p. 116). Profound consumer loyalty is achieved after the firm attains a market share.
Companies acquire a share of the heart and a share of the mind of customers by being authentic and
genuine, aspects, which lead to higher, market share and profitability (Kotler, 2012, p. 135). As much
as the chief marketing officer of Lenovo states that branding is a business issue rather than a
marketing issue, the brand is a matter of the perception created by product’s substance and
marketers’ efforts.

Alternative Courses of Action

The courses of action that can be taken by Lenovo include establishing a master brand, a house of
brands, synergy approach, or the strategy referred commonly as Lexus/Toyota. First, the master
brand strategy can be useful for creating a brand equity for Lenovo on a worldwide scale, but there
are fears that the ThinkPad influence may be lost if this strategy is adopted. Second, the house of
brands approach can enable the firm to establish many brands at once, but it is expensive to market
the different brands. Third, the synergy approach will let the company have Lenovo as a master
brand, while the ThinkPad shall be regarded as a superior sub-brand. Fourth, under the Toyota/Lexus
strategy, a premium line of ThinkPad brands are established alongside basic Lenovo brands (Quelch
& Knoop, 2006, p. 9).

Evaluation of the Alternative Courses of Action

The course of action that the company should choose has to address the global market conditions,
while also upholding Lenovo’s desire to compete internationally. To gauge the conditions in this
market environment, the company engages in extensive marketing research. The research comes in
handy in helping the company to make well-informed decisions, to understand the marketplace, and
most importantly, to learn about customer satisfaction and the value of goods on offer. In addition, the
advantages of the primary data collected are that the respondents pinpoint their challenges
concerning the use of personal computers in business, give voice to current concerns, and enable the
firm to gauge the needs in different nations.

The master brand option is challenging to Lenovo since the market regards it as untrustworthy. The
high level of dishonesty with which Chinese firms are regarded in the rest of the world is a major
detractor to the success of this strategy (Quelch & Knoop, 2006, p. 8). If this approach is chosen,
building favorable brand knowledge would not be an easy thing for Lenovo, in spite of having the
reputable ThinkPad brand at its disposal. The ThinkPad acquisition doubtlessly makes Lenovo have a
comparative advantage in the global scope. The ThinkPad has already won a lot of accolades for
design and engineering innovations since it was introduced in 1992, with some of its superior qualities
being power, portability, and wireless networking (Quelch & Knoop, 2006, p. 6).

The marketers in Lenovo must therefore create positive brand knowledge if they choose this option.
Failure to achieve this means that even the premium ThinkPad brand shall be thought of as an
inferior product by consumers. The house of brands option would make the company incur a lot of
expenses in the marketing function, without necessarily achieving the desirable sales of any of the
brands. The company’s CMO concedes that this strategy cannot succeed since the company had
limited resources at the time (Quelch & Knoop, 2006, p. 9). House-of-brands has brands that are
independent, which are somewhat endorsed by the organizational brand (Rajagopal & Sanchez,
2004, p. 238). However, the reputation of the Lenovo as an organization in the international market is
not favorable at this juncture hence it cannot promote brands effectively.

The synergy approach, which entails a master brand getting recognition partially due to a superior
sub-brand, would require investments to jointly build the Lenovo and the ThinkPad brands (Quelch &
Knoop, 2006, p. 9). The ThinkPad sub-brand would be expected to be a co-driver in the success of
Lenovo. The shortcoming of this approach is that the association might taint the image of the
prestigious brand if the brands do not have comparable qualities (Aaker & Joachimsthaler, 2000, p.
15). Clearly, ruining of the ThinkPad brand will certainly end up undoing the entry of Lenovo into the
global market. The Toyota/Lexus strategy will force Lenovo to establish luxury and mass market
brands separately. This strategy will entail implementation of dissociated brands, with each expected
to perform well within its segment. However, under the global environment into which the firm is
entering, creation of a mass product is not feasible.

The use of PCs has become ubiquitous and consumers are looking for enhanced innovation, better
quality and reliability, tighter security, and better design (Quelch & Knoop, 2006, p. 10). To offer
customers the desired product, the firm was supposed to invest in enhancing computer products,
rather than producing low quality cheap products. As a result, this strategy can make the company
lose its core business. After considering all the branding strategy options, Lenovo managers should
appropriately consider the category membership under competitive frame of reference. Category
membership refers to the products with which a brand competes and which are close substitutes to it
(Kotler, 2012, p. 130).

The managers should to establish points of differences that would make the company have a
competitive edge. At the present, Lenovo pursues a legacy of customer focus, innovation, and
dependability (Quelch & Knoop, 2006, p. 7). These aspects have a potential of making make the
products it offers distinctive and superior in comparison to competitors in the global market. The focus
of the company should be on long-term holistic performance of its products. A well established brand
value drives brand loyalty among customers, making the company to enjoy security of demand,
making it hard for new competitors to enter the market, and making the customers willing to pay a
higher prices for the offering (Kotler, 2012, p. 114).

The Best Course of Action

According to the facts presented in the case, the adoption of Lenovo as a master brand is the best
course of action. Though this alternative is risky, it is worthy because of the ultimate good image it
would create for all the brands on offer at a global scale. Making Lenovo a master brand helps to
make the core products of the company to the entire world. Master or family branding is where a
family brand is associated with several brand extensions. The use of the company’s brand name
across the entire products’ range lowers development costs and boosts sales if the corporate image
is associated with innovativeness, expertise, and reliability, which are factors that influence consumer
evaluations directly (Kotler, 2012, p. 123).

The company actually chooses to use this strategy with great level of ingenuity. The first global
advertising campaign is signed off with “ThinkPad,” the second campaign emphasizes that Lenovo is
doing better than IBM by improving the ThinkPad, while the third campaign stresses that the Lenovo
master brand represents innovation (Quelch & Knoop, 2006, p. 10). Introduction of brand extension is
facilitated under the master brand. New products that are introduced as brand extensions often
succeed because the customers’ expectations of the new product are based on their knowledge
about the parent brand and how relevant they find the information (Kotler, 2012, p. 123).

Any product sold under an umbrella of a brand name develops an identity out of the customers’
perceptions of the product, the marketing activity, word-of-mouth marketing, and the individual
psychological set of customers (Wright, et al., 2007, p. 140). In effect, corporate brand endorsement
in the international markets reassures consumers and is an integrating force, which unifies different
brand identities on a global scale (Rajagopal & Sanchez, 2004, 246). Assurance that consumers
benefit from the product is vital for successful marketing. Moreover, brand equity is leveraged in a
new context if the master brand makes the product more appealing to customers and its positive
associations are relevant and appropriate (Aaker & Joachimsthaler, 2000, p. 18). With the master
brand strategy in place, continuous success of the Lenovo brand and its extensions is guaranteed.

References
1. Aaker, D. A. & Joachimsthaler, E. (2000). The brand relationship spectrum: The key to the
brand architecture challenge. California Management Review, 42(4), 8-23.
2. Kotler, Philip. (2012). A Framework for Marketing Management, P. Kotler and K. L. Keller (Ed).
Upper Saddle River, NJ: Pearson education Inc.
3. Quelch, J. & Knoop, C. (2006). Lenovo: Building a global brand. Harvard Business School.
4. Rajagopal & Sanchez, R. (2004). Conceptual analysis of brand architecture and relationships
within product categories. Brand Management, 11(3), 233–247.
5. Wright, L. T. Millman, C. & Martin, L. M. (2007). Research issues in building brand equity and
global brands in the pc market. Journal of Marketing Management, 23(1-2), 137-155.

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