Lenovos Brand Strategies and Marketing Communications in China - Case Study Example

of the of the Concerned 22 August 2009 Lenovo's Brand Strategies and Marketing Communications in China Lenovo Group Ltd. is well aware of the fact that the demand for personal computers in China is continually on the rise and at present China represents the biggest PC market in the world. In fact, in the last couple of years, the Lenovo Group consolidated its market in China so as to cash on the emerging propitious circumstances, by taking over the business of IBM Corp. in the year 2005 (Chao 2009). Right now Lenovo knows that there exists no more scope for profitable mergers and acquisitions. Hence, the firm is bent upon pursuing a potent branding and marketing strategy to cash on the rapidly growing demand. Pursuing a China centric strategy is pivotal for Lenovo in the sense that more then 40 percent of Lenovo's revenues are collected from China (Chao 2009). Mr. Yang Yuanqing, The acting CEO of Lenovo Group reported to Xinhua news agency in April 2009 that the recent cost cutting operations tagged to an aggressive branding and marketing strategy, unleashed by the company are expected to lead to an additional income of $ 300 million (Chao 2009). This will not only bring the company back on the profitability track, but will also strengthen its position as a brand in China and the other emerging markets. There is no denying the fact that Lenovo is definitely not immune to the ongoing meltdown that has hit China as well. Thus, the branding strategy and marketing communications of this firm certainly deserve the attention of interested individuals and concerns. The astounding fact is that in the Chinese PC market, Lenovo commands the most commendable brand awareness. In fact, it is amazing to acknowledge that the brand awareness of HP in China stands second to Lenovo (China Business News 2007). As per a survey conducted by the search engine Baidu, based on a sample of 43,400 cookies, associated with the data pertaining to PC related searches, nearly 16.38 percent of searches were attributed to Lenovo, with HP standing second, commanding a pathetic share of 9.19 percent (China Business News 2007). The same survey also declared Lenovo to be the top ranker in the Chinese notebook market, accruing an impressive share of 16.9 percent of all the searches (China Business News 2007). The given survey concluded beyond doubt that Lenovo commands exceptional brand awareness in the Chinese PC and notebook market, courtesy its innovative branding and marketing strategy. The effective branding strategy of Lenovo dose not happen to be a very recent phenomenon, but a plan that was conceptualized and unleashed by Lenovo at least half a decade ago. In 2005, Lenovo unravelled its new global brand strategy, which was to be first tested and fine-tuned in China. This new strategy was rolled on and implemented in the Chinese market by the end of 2005. The spike end of this strategy was to exploit the Think trademark that Lenovo inherited from IBM to target the elite corporate customers having a detectable predilection for Lenovo's high-end products. In contrast, Lenovo chose to retain its original corporate name to attract the marginal corporate customers and individual buyers interested in the company's regular and mainstream products. Hence, this double brand strategy chalked out by Lenovo turned out to be utterly successful in covering a whole range of customers located in China. Lenovo's brand integration with IBM materialized into a huge success that certainly bolstered the company' brand appeal in China and the related markets. Yet, Lenovo was well aware of the possibility of diluting its brand identification to the much popular IBM brand. Hence, the top management decided to use IBM brand name for its PC products for a period of five years only. The main objective of this strategy was to eventually give way to a more identifiable and strong Lenovo brand appeal in the Chinese and world markets. Simply speaking, Lenovo intended to use the brand appeal of IBM as a launch pad to enhance its individual brand awareness in China and the emerging markets. This astuteness of Lenovo in exploiting the brand awareness of IBM in the Chinese market to diversify its customer base is particularly commendable. The main premise on which Lenovo based it brand strategy and marketing strategy was a firm realization of the fact that the Chinese market was the key to Lenovo's PC sales. Chinese market was deemed a propeller required to eject Lenovo into the world markets. China was not only required as a source of income to support Lenovo's global designs, but also was crucial as a vital manufacturing and R&D base (Yongzhe 2005). Hence, the branding strategy of Lenovo was trifurcated in the year 2005 to give way to a three tier tactics targeting three important customers segments in the Chinese market that is the large organizational customers, the urban individual customers and the customers located in the rural areas (Yongzhe 2005). All the marketing and advertising campaigns in the future were to be evolved around this three-tier approach. Lenovo's 8,000 distributors scattered all across China were enlisted as the major stakeholders in all the ensuing branding and marketing strategies (Yongzhe 2005). The credibility and influence of these distributors in the local and niche markets were to be exploited to generate maximum brand awareness and sales (Upshaw 1995). As per Li Lan, the vice president of Lenovo in the year 2005, the company was projected to invest $ 60 million in enhancing its brand awareness in China (Yongzhe 2005) As far as its strategy of brand enhancement was concerned, Beijing Olympics came as a blessing to Lenovo. Lenovo used Beijing Olympics not only to enhance its brand awareness in China, but also in the rest of the world. Lenovo shared the privilege of being the official sponsor of Beijing Olympics and provided the requisite hardware and support for this venture. The hardware extended by Lenovo to 2008 Beijing Olympics comprised of 12,000 desktops and 700 servers (China Business News 2007). Ten thousand of the desktops provided by Lenovo were equipped with 17'' TFT displays while the remaining 2000 came with 13'' touch screen displays (China Business News 2007). In addition, the company also donated 800 notebooks and 2,000 desktop printers (China Business News 2007). It is understood that Lenovo was also the official sponsor of Torino Winter Games. At present Lenovo happens to be the sponsor of Formula 1 and the US National Basketball Association. The honour of being the sponsor of international sporting events added manifold to Lenovo's brand appeal and brand awareness in China. Once the local customers saw that Lenovo was associated with the international sporting events of much repute and credibility, they started perceiving Lenovo as an international and reliable brand. In addition, the expertise extended by Lenovo in these mega sporting events grabbed the attention of corporate and organizational buyers, who by this time were left with no doubt as to Lenovo's credibility and expertise. Lenovo's sponsorship of international sporting events and especially Beijing Olympics was a step replete with propitious ramifications. This endeavour added to Lenovo's brand awareness the worldwide and solicited the faith and interest of a whole range of customers in the Lenovo brand. In addition, Lenovo also resorted to the time tested strategy of soliciting brand endorsements by celebrities and international sports stars (Bond 1997). In 2006, Lenovo signed Ronaldinho, FC Barcelona's top-notch star as its brand ambassador (China Business News 2006). The top management and brand strategists at Lenovo believed that the endorsement of Lenovo by international sports celebrities would immensely diversify and strengthen its brand appeal, especially more so during the 2006 World Cup. China being home to a large population of soccer fans and enthusiasts, this tie up was expected to yield tons of brand awareness, which it did. In 2007, Lenovo choose Liu Xiang, the gold medallist in 100-meter hurdles in Athens Olympics as its brand ambassador (Asiainfo Services 2007). In a way, it was a more localized and China specific extension of Lenovo's sports associated marketing. This tie up with Liu Xiang was to bolster the brand awareness garnered by Lenovo by sponsoring Beijing Olympics, as Liu happened to be one of the most celebrated and popular athletes and a youth icon in China. Through such ambassador strategies, Lenovo succeeded in making an impact on the Chinese youth, which comprises a large chunk of the potential PC and notebook buyers. In addition, Lenovo proceeded to carve a niche into the market for widescreen laptops by coming out with its own range embellished with the images of Mickey Mouse and other Disney characters. It also used the images of Disney characters at its 3,000 retail outlets across China to extend a more welcoming and attractive ambience. There is no denying the fact that China will always continue to be the pivot of Lenovo's business operations. Lenovo well understands this reality and makes it a point to have a China specific element into all its international and local branding strategies. Total Words: 1,507 References Bond, Jonathan (1997). Under the Radar. New York: Wiley. Chao, Loretta (2009), 'PC Demand in China is Rising, Lenovo Says', The Wall Street Journal, 6 April, viewed 24 August 2009 'Lenovo brand awareness in China higher then HP- survey (2007)', China Business News, Interfax-America, HighBeam Research, viewed 24 August 2009 'Lenovo invites Ronaldinho as its worldwide brand ambassador (2006)', China Business News, Interfax-America, HighBeam Research 'Lenovo to increase global brand recognition through Beijing Olympics (2007)', China Business News, Interfax-America, HighBeam Research, viewed 25 August 2009 'Liu Xiang said to promote Lenovo brands (2007)', Asiainfo Services, HighBeam Research, viewed 25 August 2009 Upshaw, Lynn B (1995). Building Brand Identity. New York: Wiley. Yongzhe, Huo (2005), 'China still key for Lenovo PC sale', China Daily, HighBeam Research, viewed 24 August 2009 Read More