Relationship Marketing in Lenovo - Essay Example

Relationship Marketing in Lenovo Li Zhao of the Marketing Management 08/02 Executive Summary Lenovo Group Limited is viewed to be one of such companies, which has embraced innovation while conducting business in different regions throughout the globe. Justifiably, the organisation has a business model built on innovation, operational excellence and customer satisfaction with the focus of making substantial level of investments in emerging markets. The objective of this assignment is to acquire a detailed knowledge about relationship marketing in Lenovo. In this regard, it can be ascertained that the organisation has extensively integrated relationship marketing in its business or operational process with focusing on executing the strategy of brand building. This facilitated the organisation to build greater portion of loyal customers in domestic along with international business markets. Table of Contents Executive Summary 2 1. Introduction 4 2. Analysis of Lenovo’s Relationship Marketing 5 2.1 Increase Brand Awareness 5 2.2 Importance of Word of Mouth 9 2.3 Create Business Opportunities 11 2.4 Understand Customers’ Needs 12 2.5 Add to the Organisational Development 13 2.6 Promotion Strategy 14 2.7 Cooperation Strategy 15 3. Conclusion 17 4. Recommendations 18 5. References 19 1. Introduction Relationship marketing is the association prevailing between the sellers and the buyers in the context of marketing any product and/or service. It is also regarded as the trust and belief persisting amid the customers and the employees of an organisation, which eventually grows a long-term relationship between them (Süphan, 2015). It has been argued that relationship marketing is not only limited between the customers and the employees of an organisation, but also amid every stakeholder of an organisation. Relationship marketing is of extreme value from the perspective of an organisation, as it is long lasting and difficult to be imitated as well as destroyed by the competitors (Angeles & Nath, 2003). Relationship marketing is reckoned to be a Customer Relationship Management (CRM) Strategy, which tends to encourage long lasting and strong connection between a brand and a customer. This results into generating repetitive sales by collecting relevant information from the potential customers and encouraging word-of-mouth promotion (Brink & Berndt, 2008). On a further note, the other purposes of relationship marketing are to create repeated sales and most importantly endorsing word-of-mouth promotion among others. In relationship marketing, buying patterns, customer profile and history of contacts are maintained in a sales database (Rai, 2012). Moreover, account executives are also recruited in order to fulfil the needs and demands of the High Net worth Individual (HNI) clients and maintain effective relationship with them in order to derive maximum profits. Such clients or the executives also have the opportunity to cross sell different products of the organisations (Bidgoli, 2010). Moreover, maintaining effective relationship marketing also results into enriching customer satisfaction level (Bidgoli, 2010). Furthermore, it also involves using the ways about how such relationship can be improved and maintained towards attaining predetermined targets (Brink & Berndt, 2008). Contextually, the objective of the assignment also involves comprehensive understanding of relationship marketing witnessed by Lenovo in its business process. In order to develop a comprehensive understanding about relationship marketing in Lenovo, it is important to possess brief background knowledge about the organisation. In this regard, Lenovo is a Chinese based computer technology business firm, whose operations are being conducted in various parts across the globe (Lenovo, 2002). The several range of products that the organisation sells to its customers include desktops, smartphones, notebooks, servers, netbooks, tablet computers, printers, peripherals, scanners, televisions and storage devices among others. In the current day context, the brand is identified to gain extensive popularity as compared to other firms (Lenovo, 2009). The organisation has wide range of customers and in order to meet the requirements of such customers, it formed an effective customer service team. Relationship marketing witnessed by Lenovo has enriched organisational value and correspondingly enhanced the position of the organisation in the global market of computer technology (Lenovo, 2009). The current assignment will reveal the manner through which Lenovo uses relationship marketing to add value for both the organisation and its stakeholders. 2. Analysis of Lenovo’s Relationship Marketing 2.1 Increase Brand Awareness Lenovo is duly considered to be the second most popular and revenue generated computer technology based company throughout the world (Lenovo, 2009). However, it can be argued that its brand awareness is not so much developed amongst the top global brands. Considering this lack of developing brand awareness, Lenovo started focusing on increasing its brand awareness in the year 2012. It perceived that the improvement of brand awareness will correspondingly lead towards the enrichment of organisational value (Lenovo, 2012). In order to achieve the above stated goal relating to the enrichment of organisational value, Lenovo considered the advertising strategy, which supported it to develop brand awareness by a certain level. This initiative also made the customers to be impulsive in buying the products and correspondingly supported the organisation to attain competitive advantage (Comm & Taylor, 2015). It can be apparently noted that the advertising of the organisation has been considerably based on the theme of relationship marketing. The purpose of conducting an effective advertising strategy through relationship marketing is to sell the products at a large scale and reap significant benefits from the same. Advertisement through relationship marketing strategy also supported the organisation to present the customers with varied features of the products. All forms of promotional advertising strategy have the objective of enriching brand awareness and corresponding increase of organisational sales (Comm & Taylor, 2015). Moreover, it is also eminent that repeated advertisement influences customer behaviour to purchase the products. In this regard, Lenovo has made number of advertisements on different media platforms. Specially mentioning, out of different forms of promotional activities, relationship marketing, as witnessed by Lenovo, is deemed to be more effective in raising brand awareness. The reason behind such is that relationship marketing ensures raising the connectivity level amid the organisations and their respective potential customers (Roll, 2005). It is evident that Lenovo majorly targets the customers within the age group of 18 to 35 years. It also targets the corporate clients who are younger in age. There are certain organisations who posses younger employees such as Google, YouTube and Southwest Airlines among others (Comm & Taylor, 2015). Lenovo has been extensively targeting such corporate customers by integrating relationship marketing in its business or operational procedure. The organisation has also marked its presence wherein the teenagers are mostly present in any specific domain. The organisation perceived that most of its young customers are present in online platform, thus, in order to attract such customers, an attempt has been made to integrate relationship marketing through online advertisements, activities and sales (Lenovo, 2012). Furthermore, Lenovo in order to enrich brand awareness from a global perspective has used relationship marketing as an effective promotional tool by conducting several activities. These activities include making sponsorship to the annual HopSotch independent music festival and becoming a technological partner with a high-profile movie named “Transformers 3”. The organisation has also marked its presence at the New York Fashion Week as a designer partner, which considerably supported towards the enrichment of brand awareness (Roll, 2005). It is worth mentioning that targeting different segments of customers is difficult through a single strategy of relationship marketing. However, it is also apparent that considering different strategies of relationship marketing also requires an extensive level of financial support and time. It is identified that Lenovo does not considered a single strategy relationship marketing to raise its brand awareness (Comm & Taylor, 2015). The organisation perceived that young people prefer to receive information about varied computer based products from internet. Therefore, it promoted trendy and colourful laptops through online media in order to target the young customers. On the other hand, businesspeople and mid-aged people were observed to prefer receiving information relating to such products from televisions and/or newspapers (Lenovo, 2012). Thus, Lenovo promoted convenient and functional computers on newspapers and television shows. This strategy of relationship marketing has not only reduced organisational expenditure, but also enriched organisational value by using appropriate promotional media (Roll, 2005). The aforementioned ways of conducting advertisements for enriching relationship marketing supported Lenovo to improve its brand awareness in a wider and global perspective. In the current day context, most people throughout the world are aware of Lenovo brand through different media platforms. With this concern, the organisation perceived that the buying behaviour of its consumers have the tendency to purchase products from known intermediaries. These intermediaries are individuals who are involved in working within the retail outlets or shops (Lenovo, 2012). In this age of extensive penetration of information technology, people have a variety of channels to receive information about their desired products prior to purchasing the same. Therefore, Lenovo has been extremely active in accessing diverse social media platforms including Facebook, Youtube, and Sina Blog among others (Lenovo, 2012). Apart from this, it can be noted that the organisation has its official website and online shops located in diverse regions across the globe. This effective relationship marketing strategy adopted by Lenovo eventually supported it to receive online feedbacks and conduct necessary modifications to the available products. Moreover, the strategy became much effective in attracting huge figure of stable consumers who remained loyal towards the organisation for a longer time (Roll, 2005). 2.2 Importance of Word of Mouth ‘Word of mouth’ is a form of relationship marketing, which has more important than any other type of promotional tool. It is witnessed that the people often prefer buying a product through the reference obtained from their friends, family members and others, who suggest them about the quality and the utility of the products. It is eminent to state that Lenovo possesses considerable number of buyers. Apart from this, it has over 6,500 Exclusive Stores that have witnessed of above 13,000 sales points and covering all the tier 1-6 cities (Lenovo, 2009). Lenovo provides high quality products and great service coverage to such consumers who get reflected from integrating relationship marketing. The organisation is also duly considered to be amongst the best and top consumer service provider in global technical market. The organisation has also realised that besides providing reliable products to the consumers, it should also meet their needs and satisfy them accordingly. In order to achieve this goal of satisfying its customers, Lenovo website has provided its customers the opportunity to communicate with the organisation (Kotler, 2008). In addition, Lenovo has excellent customer service department to resolve varied customer related issues through online and telephonic media. This depicts the intensive commitment of Lenovo in order to serve its customers in a responsive manner, which reflects the organisational integration to relationship marketing. From the perspective of an organisation, commitment to serve its customers in an effective manner is necessary, as this provides the direction to run long-lasting relationship persisting between organisations and customers (Morgan and Hunt, 1994). This eventually makes the consumers to possess a satisfied buying experience. This satisfaction among the customers supports to make a long lasting relationship. Eventually, the customers become more loyal to the brand (Kotler, 2008). Moreover, Lenovo has diversified its products, which attracted customers who possess different preferences. The satisfied customers, by relationship marketing, influence their family members, friends and acquaintances to purchase the products of Lenovo. Thus, relationship marketing considerably acts as a perfect tool for enriching ‘word of mouth’ in favour of the organisation (Lee, 2014). It is strongly believed that every aspect has two sides, which may have favourable impacts or not. This is similar to that of ‘word of mouth’ concept as witnessed by Lenovo by integrating relationship marketing. It is worth mentioning that social media is considered as the most influential tool, wherein the application of ‘word of mouth’ gets evident (Kotler, 2008). In addition, family and friends gathering are the places, wherein ‘word of mouth’ has its application. Therefore, any negative ‘word of mouth’ against any organisation may destroy its brand image. Thus, considering the impact of ‘word of mouth’, Lenovo attempted to provide high quality laptops with advanced technology to the end users (Lee, 2014). At the same time, Lenovo also tends to make better use of its professional team for solving the queries of their customers. The reason behind the introduction of such a professional customer service provider team is to ensure that the customers do not become influenced by the negative ‘word of mouth’. From a general perspective, a he customer service provider team supports the customers to clarify their confusions related to the brand (Lee, 2014). It is evident that the organisation i.e. Lenovo has designed a quality as well as effective customer service provider team, which remains active for almost 24 hours on a daily basis. This team introduced by the organisation not only acts to reduce the confusions persisting amid the customers generated through the ‘word of mouth’ activity, but also tends to generate a long-term relationship with the customers. It is also expected that this relationship between the customers would influence them to communicate with their friends and family members on a positive note regarding the brand (Kotler, 2008). 2.3 Create Business Opportunities Establishment of relationship with the customers is considerably important than selling products at the initial phases from the perspective of an organisation. Justifiably, once the relationship with the customers has been build, there lays huge opportunity for the organisations to sell their respective products with relatively less efforts. It is worth mentioning that by forming, developing and maintaining relationship with the customers, Lenovo is able to learn about the customers’ preferences and lifestyles. Based on this learning context, the organisation is able to modify its products as per the customers’ needs. Therefore, it created more business opportunities for Lenovo to increase the sales value of the products by a considerable extent. In the current day context, students are considered as the core customers in electronic products (Süphan, 2015). This is evident from the fact that the maximum purchaser of laptops is the young students who are mainly college goers. The organisation, in this situation, perceives that effective relationship with such younger customers may potentially influence others to purchase Lenovo products (Bidgoli, 2010). As a result of successful relationship marketing witnessed by Lenovo, the new products introduced by the organisation such as Thinkpad and IdeaCentre among others have enabled in gaining huge market share within a short time. Thus, it is eminent that relationship marketing has a major contribution in raising business opportunities that witnessed by Lenovo, resulting into greater level of organisational growth and development (Rai, 2012). 2.4 Understand Customers’ Needs The most basic requirement from the perspective of Lenovo is to possess a comprehensive knowledge regarding the needs of the customers (Lenovo, 2009). The organisation is solely concerned about the outcomes and the benefits that the customers would derive from the products. Lenovo perceived that better understanding of this specific need of the customers will be feasible by maintaining long-term relationship (Johnston & Marshall, 2013). Understanding the needs of consumers is not only limited by setting a website, rather the organisations such as Lenovo need to ensure that a connectivity is being maintained with the customers on a periodic basis. With this concern, the organisation i.e. Lenovo has established physical stores in order to sell its products. In such stores, the organisation made deliberate attempts to ascertain and fulfil the needs of the customers. Likewise, Lenovo sends them text or e-mail to introduce its products. If the customers face any sort of technical problem, Lenovo’s customer service department make a phone call or communicate by e-mail with them (Lenovo, 2009). This makes such customers to feel connected with Lenovo. Correspondingly, this strategy effectively strengthens the relationship persisting between Lenovo and its customers. Therefore, in order to understand the customers’ needs, effective relationship marketing witnessed by Lenovo has played a significant role (Johnston & Marshall, 2013). Understanding customers’ needs is always vital for any organisation in this modern day context for ensuring long-term sustainability. Apparently noted, Lenovo possesses in excess of 1500 service points that provide 100% coverage in tier 1-5 cities, which plays a decisive part in integrating relationship marketing with greater understanding of customers’ needs (Leneovo, 2012). In addition, Lenovo has 24x7 E-care services, which has 350 million visits per month. On the other hand, Lenovo has 8,000 certified service professionals including more than 3,000 Lenovo engineers who can solve customers’ problems immediately. If people do not have time to visit the service centres, Lenovo still have 800 phone lines handling average of 20,000 calls per day that constantly attempt to understand the customers’ needs and issues regarding any specific service. This attempt of successful relationship marketing makes Lenovo to keep the “Best Customer Service” award by CCID for 12 years (Lenovo, 2012). It must be mentioned in this regard that when Lenovo is going to develop new products, the customers can be invited to imagine the designs together. This is the reason behind the popularity of the products of the organisation and increasing customers’ satisfaction level. Thus, it can be inferred that Lenovo is effective in understanding customers’ needs by integrating the approach of relationship marketing, which supported it to gain competitive advantage. Therefore, it is eminent that relationship with the customers is closely related to understanding of customers’ needs, which eventually leads towards organisational growth along with development (Johnston & Marshall, 2013). 2.5 Add to the Organisational Development In this competitive market, organisations require to make changes continually for fulfilling the needs of the customers. In order to adapt to the changing scenario of electronic industry, Lenovo produced new products frequently that are highly attractive to the customers. This development of the attractive products depends on the relationship existing amid the consumers and the organisation, which has been studied in earlier sections (Lenovo, 2012). The customers receive new information about the products through online media and they show higher degree of willingness to know about such products. With this concern, Lenovo has provided high-quality products to its customers with trendy designs and advanced technologies. In addition, Lenovo treats their consumers like friends and likewise provides best customer services for 12 years after the purchase of the products (Lenovo, 2012). All the above factors lead to the development of relationship between Lenovo and its customers to a considerably high level. Therefore, Lenovo has more space to work on new technology and create new products. It has been shown that relationship marketing makes long-term profit. Thus, relationship marketing considerably supports to ensure organisational development through improved profitability as witnessed by Lenovo (Paladino, 2011). 2.6 Promotion Strategy Promotion is regarded as the approach of communicating with the people regarding the products and/or services of a brand. Generally, the purpose of promotion is to influence customers to buy the respective products and/or services. Promotional strategy is an interaction between organisations with its consumers for increasing sales by attracting new customers (Carl Hose, 2014). Relationship marketing is considered as an effective promotional strategy, which has been extensively used by Lenovo. The organisation has sponsored the International Electronic Sports Tournament (IEST), which can be duly considered as one of the remarkable attempts for promoting its products by relationship marketing. More importantly, the organisation has a selling plan for Chinese rural consumers, which is named as “Heavenly Pleasure Strategy for a New Countryside”. Lenovo offers computers and laptops to poor people in countryside and support in ensuring educational development for the children. It not only builds a good brand image for Lenovo, but also creates a sustainable relationship with them (Lenovo, 2012). In the global market, Lenovo became the top sponsor of the 2008 Beijing Olympic Games. It also became the global official PC partner of NBA in the year 2006. Besides, in the year 2007, Lenovo cooperated with AT&T William’s team. These promotional activities have strengthened the relationship between the organisation and its customers, which eventually led towards the enrichment of loyalty among such customers (Pride & Ferrell, 2008). Lenovo, in addition to the above attributes of relationship marketing, has also incorporated Corporate Social Responsibility (CSR) as an integral part of promotional strategy. The organisation has conducted several charitable activities, which are regarded as the most effective tool for promotion of the brand (Lenovo, 2012). Those charitable activities within the nation have enriched loyalty among the customers. By the conduct of charitable activities, the organisation has been able to communicate with its stakeholders in an effective way. Therefore, it is eminent to state that relationship marketing is a significant aspect of promotional strategy that witnessed by Lenovo (Pride & Ferrell, 2008). 2.7 Cooperation Strategy It has been earlier mentioned that relationship marketing not only tales place between the buyers and the sellers, but also amid all the stakeholders within an organisation. Apart from the existence of relationship marketing amid the buyers and the sellers, it may also occur amid two or more organisations. This relationship may be between the suppliers of Lenovo and the organisation itself. This corporate relationship is also evident from the collaboration of Lenovo, which it made with other organisations (Lenovo, 2012). For instance, Lenovo has made collaboration with Stoneware Company, which largely benefitted the organisation in terms of ensuring technological developments. Along with the progress of science and technology, the relationship between these two organisations witnessed to develop and invent new functional products and/or services (Kotler & Pfoertsch, 2006). It is evident from the fact that in the year 2005, Lenovo cooperated with a motherboard maker company named Elite group Computer System (ECS) to embrace technological innovations while designing its own motherboards. This relationship between the two organisations has supported Lenovo to improvise its R&D and design capabilities. At the same time, this relationship has also supported ECS to manufacture the products and sell the motherboards through an appropriate distribution channel (Lenovo, 2012). Therefore, relationship marketing witnessed by Lenovo and ECS supported both the organisations to share advantages and correspondingly deriving win-win outcomes. This relationship marketing between Lenovo and its co-operators supported to increase organisational value, which was not created earlier. This organisational development is evident from the annual report of Lenovo (2012), which suggests that the organisation has witnessed significant financial development after the implementation of effective relationship with its co-operators including ECS and Stoneware among others. It is evident that the organisation has witnessed a record of US$204 million pre-tax income (Lenovo, 2012). Moreover, it also witnessed a record of US$8.7 billion quarterly sales and 15.6 % of market share. On the other hand, the net cash reserves of US$3.6 billion and the basic EPS of 1.58 US cents or 12.25 HK cents in the second quarter of 2012/2013 also highlighted the financial development of the organisation. Thus, it can be inferred that the co-operation and collaboration between corporate organisations implies effective relationship marketing, which correspondingly leads to financial development and long-term success (Lenovo, 2012). 3. Conclusion Based on the above analysis and discussion, it can be ascertained that the approach of relationship marketing has played an imperative part in developing the overall performances of Lenovo. Justifiably, the stated approach supported Lenovo to obtain customers’ belief and trust, which eventually enriched their satisfaction level at large. In addition, the approach increased business opportunities for the organisation by a considerable extent. Apart from the development witnessed in relation to the factor concerning brand awareness, relationship marketing in Lenovo is evident through the incorporation of CSR activities as an integral part of operational or business process. Therefore, the integration of relationship marketing by Lenovo has highlighted a good example for other organisations and the customers as well. This has also attracted more people to become Lenovo’s customers. Apart from promoting organisational products, relationship marketing also implies modest acceptances of the suggestions made by other organisations as Lenovo witnessed. This cooperation and collaboration is a significant aspect of relationship marketing, wherein Lenovo has been able to create win-win situations. In summary, it must be stated that relationship marketing supported Lenovo to possess a clearer knowledge about its consumers’ needs and interests. Furthermore, such approach or strategy has brought more chances and possibilities for future growth along with development of Lenovo. Thus, to conclude, it can be affirmed that there is no doubt about using relationship marketing successfully by Lenovo to bring value to itself and its stakeholders as per the desired level. 4. Recommendations In the current day context, Lenovo is not the only one, which has been operating in the respective industry. Therefore, in order to attain superior competitive position as compared to others, Lenovo should enhance the relationship with its existing customers. In addition, Lenovo should spread its brand awareness to a global context. This will help Lenovo to gain more customers from different parts of the world. Notably, there lay considerable number of teenagers who possess excellent imagination and creative skills. Thus, it is recommended to Lenovo that it should extensively consider the feedbacks and the viewpoints of such individuals by gaining support from several online media platforms. It is projected that the consideration of the aforementioned suggestions will certainly support the organisation to improve its product and business process, resulting into satisfying the customers at large. Subsequently, it will also lead towards greater level of organisational growth and development characterised by business sustainability and financial stability. 5. References Angeles, R. & Nath, R., 2004. Electronic Supply Chain Partnerships: Reconsidering Relationship Attributes In Customer-Supplier Dyads. Information Resources Management Journal (IRMJ), Vol. 16, No. 3, 59-84. Bidgoli, H., 2010. The Handbook of Technology Management, Supply Chain Management, Marketing and Advertising, and Global Management. John Wiley & Sons. 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Customer Relationship Management Strategies in the Digital Era. IGI Global. Read More