Lenovo’s Brand Strategy by Lawrence Lu
Introduction
In the 21st century, brand frequently is appearing more and more in network, magazines and newspapers. Brand has become a part of people’s life. When people discuss merchandise, they step into brand merchandise, buy goods of the same brand. Therefore, the 21st century is a brand time. Now entrepreneurs are trying hard to establish their own brands.
In addition the basic definitions brand name, logo, design etc., Philippe, the “father of marketing”, also definite brand with six meanings: brand identity, brand interests, brand value, brand culture, brand personality, brand users.
Considering a company long-term perspective, the best strategy is to establish a brand. Once a brand gains a certain reputation, its products will win the right to be charged at a relatively high price in the market instead of being sold as inexpensive ones. An entrepreneur must have such determination to spend a great deal of energy and time to establish his brand; otherwise he will never be able to compete with others in the international market.
The internationalization trend of China’s brand is become more and more evident. Many Chinese enterprises are trying driving their brand into every part of the world. With China’s reform and opening and economic successive development, the entry of foreign brand enterprises into China’s market has speeded up the market competition of China, and promoted its local enterprises’ growth. More and more Chinese enterprises believe that the China’s market is no longer able to satisfy them, and they hope to step onto the world stage to compete with first-class brand companies. China’s Lenovo is trying hard to establish its own international brand.
The main target of this paper is to explore Lenovo’s brand establishment in the world. Now Lenovo is the world’s third largest computer manufacturer. However, its brand image hasn’t reached world-class levels. It is the most important task for Lenovo to correctly create its own brand. Philip Kotler believes that brand has lost its significance when it only stands for a name or a trademark, and that it is dangerous to promote brand attributes alone or benefit itself, because these attributes or benefit can easily cause the occurrence of homogeneous quality, and consumers is likely to lose their interest in these attributes or the existing benefit in the future. Only value, culture, and personality these things are the most durable. They are the essence of brand. So It is very not easy to establish a well-known brand. It takes great effort.
Review of literature
Lenovo’s History
In 1984, With an initial capital outlay of only RMB200,000 (US$25. 000) Lenovo ’s founding chairman Liu Chuanzhi, together with 10 like-minded colleagues, launches the New Technology Developer Inc. funded by the Chinese Academy of Sciences. After 20 years of development, Lenovo is showing itself in the competitive ability of China’s market, the market share of more than 30%, become well-deserved market leader.
In 2005, through the merger of IBM PC business, now the first Lenovo-branded products outside of China debut worldwide. Researchers, scientists and product design teams from around the world combine Lenovo’s heritage in enterprise and consumer PC technology to design the Lenovo 3000 product line, which features new desktop and notebook models specifically designed to provide worry-free computing to the small business market segment, is the world’s third largest computer manufacturer.
Lenovo’s Brand Strategy
In 1990, the first Lenovo brand computer was promoted. In 1992, “Lenovo 1+1″, with “household computer” concept’s being put forward, became the creation of China’s household computer. On February 14, 1994, Lenovo stock was first listed in Hong Kong, and in the same year it set up the division of Lenovo computers.
The year 1996 became a milestone in China’s computer history. After Lenovo’s four major consecutive descent of its price, “Wanyuan Pentium” won itself the largest market share in China. Before 1996, when foreign computer brands controlled the market, it is very difficult for China’s domestic computer brands to become popular in the nation. Lenovo brand promised to shoulder the national industry flag to make computer popularized with common people in China. Lenovo’s idea is to make the Chinese able to afford computers. It produced Lenovo 1+1 personal computers for family-oriented users. Through a series of activities, “Lenovo Computer Express” and “1+1″ Summer Training, etc., “Lenovo” brand gained its speed in becoming popular in China.
Brand Innovation
How to turn a brand into an international brand name? All depends on internationalization. Chinese enterprises are facing common problems. Lenovo has carried out innovation to stand at the forefront of domestic enterprises in its brand internationalizing journey, as is reported in China Daily on 5th of August, 2006. (Source: http://news.xinhuanet.com/ politics/2006-06/05/content_4646391.htm)
However, it is not so easy to become an international brand name! Therefore, Lenovo sets up a three-step strategy.
First, Legend changed its making. As the English marking “legend” had been preemptively registered in many countries, in April 2003, Legend successfully changed it into “Lenovo”, making it the new logo of Legend’s global brand, then Legend’s brand gained its internationalization passport. (IBID.)
Second, on March 24, 2004, Legend formally signed with the International Olympic Organizing Committee to become the first and currently the only Olympic global partner. (IBID.)
Third, Lenovo purchased IBM. Although having occupied 30% of market share in China’s market, this was still not enough for Lenovo to become a real international brand. Yang Yuanqing said, “a company can not gain benefit in the area of purchase and research without a business operation, and can’t obtain a better ability to withstand risks than its globalization competitors.” As was based on such thought, “When IBM stretched out its olive branch to us, we seized it without hesitation.” IBID.)
During a past year, Lenovo speedy completion of the phased integration of a global organization and in the market has made a remarkable achievement.
Brand Promotion
In the past one year, Lenovo has gained a relatively good repayment today through the Olympic top plan, patronage in Turin Winter Olympics, and signing a contract with Ronaldinho these three major marketing behaviors, and has risen the degree of its China’s brand reputation by 20%. However, it still needs to make a greater effort. Although the starting point is low, the pressure of competition is still great, as is said by Chen Shaopeng on the 13th of July 2006.
(Source: http://news.chinabyte.com/369/2486369.shtml)
Lenovo has taken the chance of the Turin Winter Olympics to fully step into the global market of mid- and small-scale enterprises and has gained some achievement. But its signing a contract with Ronaldinho hasn’t turned out very successful. Ronaldinho has already spoken for several products before, which is Nike, Pepsi, and Unilever, such large international business, and his’ value to speak for a brand as a star has been seriously diluted. So Lenovo is slapdash to make Ronaldinho its spokesman in this situation. And Ronaldinho’s poor performance in the World Cup match has passively influenced the promotion of Lenovo brand as well. (IBID.)
Getting Rid of the IBM Brand
How to handle the relationship between its IBM brand and Lenovo brand has been puzzling the policy-makers of Lenovo for a long time.
Lenovo hopes to create its worldly recognized brand “Lenovo” by starting an advertising campaign in the United States and around the world. Lenovo will put its main energy on its promotion of products to enhance its corporation image, rather than directly build its enterprise brand. In future, Lenovo will enter the new high-tech market with its IBM’s “Think” brand, and use its own “Lenovo” brand in small businesses and the mainstream computer market for consumers. This global brand strategy will have been proposed and put into use by the end of the year. Legend’s biggest challenge will be whether it can get rid of its IBM brand in five years and create its “Lenovo” brand, as is said by Yang Yuanqing on 16th August, 2005.
(Source:http://news.chinabyte.com/227/2072227.shtml)
Brand Extension
Lenovo is a computer-based IT enterprise with mobile phones as part of its IT industry. Its mobile phone brand content has a potential extension, especially with the development of smart mobile phone, a mobile phone with the function to be used as a MP3 player, to take photographs linked with a computer, and to do data-processing. With this as a background, IT manufacturers will create new product trend points.
Lenovo has a disadvantage in its brand extension as a mobile phone. Phone is a relatively new field for Lenovo brand in its extension. For Lenovo’s own research and development of mobile phones, the brand awareness of its mobile phone consumers, new management methods and new business professionals, etc. are unknown domains. If process is not good, Lenovo will have a bearing on the success or failure in its mobile phone brand strategy, as is written by Liang Lvyan on 2nd April, 2005.
(Source:http://www.maad.com.cn/v2/article_content.asp?unid=158&number=108)
Brand Culture
As we enter the 21st century, Lenovo established the “high-tech Lenovo, the Lenovo services, internationalization Lenovo” development goals. Internationalization is Lenovo established direction, the Lenovo want to be internationalized, the first in the world need a clear, and the people fond of English brand and new brand logo for the internationalization of the strategic plan prepared, as is written by Dr. Li Qun on 30th June 2006.
(Source: http://www.ce-c.com/hyxx/shownews.asp?newsid=845)
Lenovo (Reading is len ‘nouvou) this is a new English name, was already in succession on the basis of brand assets to the development and understanding. “Le” represents Legend past English name “Lenovo”; “Novo” is a very origins Latin root, the representative of “new ideas and innovation.” The brand name meaning is “innovative Lenovo”. (IBID)
Lenovo marking through extraction and development of the original brand for the enterprise, the new Lenovo brand will be given to four major characteristics: integrity, innovation and dynamic, quality professional services and easy. This representative is solemn commitment for the majority of clients, partners. (IBID)
Lenovo has successfully changed its own brand from Legend to Lenovo, realized this new brand global registration, and cleared obstacles for itself in its way of brand global expansion in future. (IBID)
RECOMMENDATION
Brand Innovation
The first generation of Chinese Han cards, other first independent brand servers, the first made trillion times computers in oneself country, the first amongst the top 500 super computers list. In the course of 21 years, Lenovo used constant innovation; overcame many strong emulate, became China’s largest computer manufacturer, also a people-oriented, Lenovo culture of constant innovation.
After purchased IBM personal computer business, Lenovo Group rapid integration of the research and development system, Lenovo has been established in Beijing, Tokyo and the United States Raleigh three research bases. Now, Lenovo reached 2.5 billion yuan annually technology research and development inputs, and has a number of patents owned by 2000.
Lenovo already had the very high well-known in China, but how to develop the local brand to become international brands as the biggest problems of Lenovo, according to the experience in the development of China, continuing innovation, develop high-quality products, is Lenovo create the basis for international brands, as well as the Lenovo brand to the key to success.
Brand Promotion
Lenovo wanted to use Ronaldinho’s enormous global influence, develop a global brand marketing stratagem, to further improve the “Lenovo” global brand visibility, but the show of Brazilian team in the World Cup and Ronaldinho’s bad state, give Lenovo a fist. Before Lenovo at the signing Ronaldinho helped, only think he in the performance of Barcelona, but no analysis of whether he would have the same performance in the World Cup. When Brazilian team is easy to go home, Lenovo has no corresponding drumbeating strategy; no good promote Lenovo brand visibility.
In the United States, because the United States government interference, Lenovo encountered many difficulties, many officials of U.S. government believe that the Lenovo is the state-owned enterprises, development of Lenovo will affect the security of the United States, so must let them know that the Lenovo is a private enterprise, to enhance the transparency of Lenovo. Only the United States government does not obstruct the sale of Lenovo, Lenovo can be a very good development in the United States.
NBA is one of most influential professional league in the United States, and Lenovo cooperate with NBA, will increase the force. In those years Nike cooperated with Michael Jordan, quickly became internationally renowned brands. Of course, Nike and Lenovo development area is different, and influential players such as Michael Jordan decades could not touch, but if find to fit players of Lenovo brand, have influential NBA players, will promote the visibility of “Lenovo” brand.
Getting Rid of the IBM Brand
Getting Rid of the IBM Brand
After Lenovo purchased IBM PC operation, have “IBM” make five years of tenure and “ThinkPad” ownership, and the hope of relying on IBM technology and brands into international companies. Internationally, the popularity of “Lenovo” is lower than “ThinkPad”, and promote Lenovo “ThinkPad”, will be borrowed “ThinkPad” to build a Lenovo brand of internationalization. IBM “ThinkPad” will turn into Legend “ThinkPad”. Let Lenovo “ThinkPad” can become a part of Lenovo.
Some people think that consumer purchases ThinkPad is because the consumer can relate it with behind IBM, is purchases ThinkPad because of IBM, is in no way purchases ThinkPad.
But consumers buy things enough to brand loyalty is not easy to change, most people will try to buy Lenovo “ThinkPad”, with the same good service and high quality products, slowly change the consumers to Lenovo “ThinkPad” cultural understanding, Lenovo “ThinkPad” will be very good development.
Brand Extension
Lenovo from the beginning only produces computer production until now produces phones, MP3, digital cameras, and other products. The extension of Lenovo impart Lenovo brand more meaning, but also brings more crises and challenges.
Lenovo mobile phone brand extension, there is a certain disadvantage. It is a new area for Lenovo mobile phone, although Lenovo mobile phones have other products of Lenovo technical support, but the development still has many difficulties to Lenovo mobile phones. Moreover consumers don’t know Lenovo mobile phones brand, management style and mobile phone business is needful talent, they are all the new question of Lenovo. If deal with not well, will use Lenovo mobile phone brand strategy to encounter the defeat, the more serious will affect the reputation of Lenovo brand.
In China, most people only know that the Lenovo is a production of computer companies, for the understanding of other products rarely, it has made the customer does not catch up with the easily purchase other products of Lenovo. Therefore, visibility of Legend products, Lenovo also has very many works to have to do.
Extension of Lenovo will cause talented person’s decentralization. Main computer business will encounter the gap to the technology and marketing talent.
Lenovo access to the Internet looks like a bold gambling. How won’t know the future to be able, because Lenovo lack network technical expertise, and no idea wholeheartedly.
Brand Culture
A company establishes the brand culture. In-house staff of the company has considerable function, the staffs endow with the brand by personality characteristics, such as personality and the brand will be different. Brand personality is diverse, reflecting the core values of the enterprise.
Companies need to establish their own brand culture, such as when people talk about Nike, will know “Just do it”. But when people talk about Lenovo, just know it produces the computers. Regarding his brand culture, Lenovo wants to express the meaning, many people do not know. So Lenovo must be good promotion for brand culture, let customers understand and experience this kind of culture. In this way, a lot of customers will purchase more products, moreover is unnecessary product itself.
Along with time variance, the content of brand is may changed, but brand establish loyalty is difficult to change for the customers, the customers like this brand, they also can know new connotation of the brand quickly.
The localization of Lenovo brand is “science and technology create freedom”, through provides the information technology, the tool and the service which build a more free life space for the people. New Lenovo brand has the four characteristics: integrity, innovation and energy, quality professional services and easy. These characteristic must be when the customers use the computer, can experience it by oneself. It isn’t a large of propagandas, just can cause the customer to realize the culture of the company.
CONCLUSION
Lenovo want brand internationalization, we must start from the market psychology to identify market needs, enhance product value, the development of a clear business strategy, through the brand strategy operation, and construct Lenovo brand of the profound connotation, can obtain consumer’s approval, truly wins the customer loyalty, obtain the internationalization brand of the true significance.
After will enter the international market, Lenovo new brand culture, brand extension, brand innovation and brand promotion, will face more difficulties.
Lenovo develop brand strategies, including brand identity, location and structure. After high-level discussions Lenovo decision to determine the future of the Lenovo brand identity. The top four attributes are: integrity, innovation and energy high-quality professional services and easy, and they have equal importance, also is the Lenovo carries on the brand promotion the goal. On top character Lenovo hope to be able to give consumers to Lenovo brand overall impression is that “science and technology to create freedom.” As is reported in China influence brand (http://www.cec-ceda.org.cn/brand/lenovo/zhanlue/zhanlue1.htm)
New strategies of Lenovo brand, is integrity, service and innovation, more emphasis is brand connotations. When consumers buy computers of Lenovo, can understand services and innovation of Lenovo, the brand building is a very complicated process, consumers use experience, product satisfies the demand and the quality level close correlation. It is not a day’s work, he will require a long time. Only continuous and hard work can let the consumer build up the association brand the idea.
Lenovo has succeeded for the Turin Winter Olympics Games to provide technical supports, with the cooperation of Coca-Cola, already enable repute of the Lenovo brand to have a good development. 2008 Beijing Olympic Games will be associate the propaganda brand the best opportunity, such as “Samsung” enterprises, the very good use Olympic Games’ image obtains the very good development, and even global development. If the Lenovo can seize this excellent opportunity, believe the Lenovo brand will become internationalized brand.
BIBLIOGRAPHY
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One Response to “Lenovo’s Brand Strategy by Lawrence Lu”
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August 31st, 2006 at 10:36 pm
This paper is of much interest to many onlookers in the PC industry. Moreso, it signifies the strart of GLOBAL BRANDING in China.
The paper does provide fair bit of the history of Lenovo and its acquisition of IBM. A few interesting points were rasied regarding whether consumers would rather buy an IBM-branded notedbook compared to Lenovo.
Overall, the paper has given a rather balanced view and effort has been put in the facts-finding.
A fairly good job done!