In this chapter, foremost, there is a 5 force analysis on the Personal computer industry and SWOT analysis on Lenovo will be conducted ; secondly, the grounds to develop to planetary trade name will be addressed. And this chapter will concentrate on five facets to analyse Lenovo ‘s trade name scheme: trade name scheme planning, trade name individualism placement, trade name extension and popularisation, trade name direction and trade name protection.
4.2 Personal computer INDUSTRY ANALYSIS
By utilizing Porter ‘s 5 Forces theoretical account, the planetary Personal computer industry can analyse to acquire better apprehension for the attraction of industries, success determinates and the drive forces. As figure 4.1 shows, five forces are able to act upon the determination doing on whether to come in or put farther into Personal computer market. Meanwhile, the strength of influence is altering associated with the quickly growing of Personal computer market.
Figure 4. 1: The Five Forces Driving Competition
Competition among bing industry houses
Menace of Substitute merchandises
Dickering power of purchasers
Dickering power of providers
Menace of new entrants
Menace of New Entry
With the growing of the Personal computer corporate market, there are foreseeable possible entrywaies in this market. However, the entry barrier is comparatively high – endeavors by and large seem to be satisfied with their current notebook suppliers, with small inducement to look beyond their current providers.
Buyer ‘s Bargaining Power
The purchasers ‘ dickering power in this market is comparatively low in this market, since the clients are endeavors, which purchase bulk volume of Personal computers to their employees. The cost to exchanging to another Personal computer suppliers is high to our customersaˆ‚
Supplier ‘s Bargaining Power
This does non use to Lenovo, who manufactures its ain stuffs to a great degree – chiefly, natural stuffs like boards and french friess have moderately standard monetary values.
The most likely replacement merchandises are ultralight laptops and ultramobile Personal computers. Despite the heavy advertizement of these merchandises in the media, endeavors do n’t see them every bit utile to their organisation. These merchandises tend to be produced as a manner statement, which get more attending from younger clients. The consumer market is more promising for these merchandises.
Presently, there are three major participants in the Personal computer corporate market, Dell, HP and Lenovo, which take up about 90 % of the market portion. Harmonizing to the client satisfaction study, there are comparatively few distinctions among these top three participants in footings of merchandise characteristics and merchandise quality. While Lenovo has the best merchandise support and strongest concern relationship with clients among the three, for Lenovo to catch up with the other two rivals, maintaining the trade name name is the key, particularly when the IBM hallmark rights are lost.
Dell is presently the top endeavor desktop and laptop provider in the universe. Dell supplies both desktops and laptops to more than half of North American and European endeavors, duplicating its closest rival in both notebook and desktop Personal computer gross revenues. In North America, Dell is winning 60 % of the desktop and 58 % of the laptop market. Dell ‘s strengths lie in its low monetary values and merchandise support. However, low R & A ; D budget prevents Dell from bring forthing new advanced merchandises.
HP maintained its solid No. 2 desktop provider position and late overtook Lenovo for laptops, providing desktops to 27 % and laptops to 21 % of North American and European endeavors. HP has besides improved significantly year-over-year, particularly across laptops. It gained 6 % in the North American endeavor laptop market and 5 % in the European endeavor laptop market in the last twelvemonth. These additions will go on, since HP late refreshed its full batting order of Intel-based laptops in 2007 with Intel ‘s Santa Rosa release. However, HP is behind in merchandise quality and merchandise support, harmonizing to studies of client satisfaction.
In order to acquire a better sense for Lenovo ‘s mentality in footings of the corporate market and the at hand loss of the IBM stigmatization, it is helpful to analyse the company ‘s strengths, failings, chances and menaces in footings of the job. These cardinal parametric quantities are summarized here.
Lenovo ‘s major strengths lie in its current trade name image and market portion. On the international graduated table, Lenovo ranks 3rd in corporate gross revenues behind Hewlett-Packard and Dell. It shows enormous capableness for betterment, nevertheless, due to its clearly superior repute for high quality, high terminal merchandises inherited from IBM. In add-on, executives maintained from IBM ‘s notebook division provide the valuable experience that a comparatively new foreign participant usually would non hold in the corporate ( particularly US ) market. However, Lenovo already has a strong base in China, with a 29 % portion of China ‘s Personal computer market.
There is limited competition for bing IBM/Lenovo corporate clients, because of bing repute and connexions formed by transferred IBM staff. The historic trade name image and go oning invention in the high-end market makes merchandises like the ThinkPad X300 a “ must-have ” for a Chief executive officer to demo off and usage. The strength here lies in the capableness for creativeness in bring forthing a high-end merchandise with all the bells and whistlings necessary for a corporate executive.
Lenovo provides a extremely various notebook merchandise line, in add-on to its high-end ThinkPad. As a “ one-stop store ” company, Lenovo shows assure – its merchandise lines screens mid to high terminal merchandises, now back uping Linux merchandises. In add-on, in-house fabrication specialisation allows for lower marginal costs – this leads to a more competitory place for a monetary value war.
Since Lenovo is a new participant in the international phase it has plentifulness of failings in its mentality. In general, its squad has less market cognition than local experient participants in the US market like HP and Dell. Lenovo has merely begun to develop its service squad in the US – it still manages to supply top of the line client service, but the system is non optimized.
Lenovo ‘s major failing, nevertheless, is in the stigma associated with Chinese merchandises and companies with a repute for scanting on quality to accomplish low costs. A client in the provinces is likely to distrust the Lenovo trade name in favour of the more well-known and trusty, American IBM logo. It is this failing that Lenovo must get the better of in the following twelvemonth as the IBM stigmatization disappears from its merchandises.
With low fringy costs and a broad merchandise spectrum, Lenovo has the chance to go a one-stop human dynamo in the corporate market, supplying high-end executive computing machines with the IBM ThinkPad line, and high-quality, middle-spectrum computing machines for lower degree employees on the corporate ladder. In add-on, a developed electronics section allows Lenovo the chance for making synergisms between corporate addons like cell phones and Pocket PCs.
In general, the failing of the US economic system and the dropping value of the dollar might present a menace to Lenovo ‘s growing. Rivalry between Lenovo and other companies in the corporate market like HP and Dell already pose a important challenge, but Apple is demoing a turning strength in the corporate market that must be addressed as Lenovo seeks to go the dominant international corporate participant.
4.4 REASONS TO CHANGE BRAND
From 2003 to 2004, Lenovo owned 20 per centum to 27 per centum portions in domestic market. When a company occupies about one tierce in the market, the bottle-neck will happen in its development and so the uninterrupted growing will necessitate huge investing. Therefore Lenovo Group fixed its way clearly, that is, to step towards the universe and do Lenovo an international trade name.
Lenovo ‘s development calls for internationalisation. To be internationalized, foremost of all, Lenovo needs an English trade name that is unblocked in the international market and loved by consumers. But the English logo ‘Legend ‘ had been registered in many states and could non be used. This is the first ground. Second, Lenovo needs to be after its trade name scheme once more. In the yesteryear, Lenovo ‘s abroad operation was chiefly production and processing, without a existent trade name operation. Third, Lenovo needs to redefine ‘ what sort of company is ‘ . Lenovo launched its new logo, and defined its trade name significance as the four features of ‘ fidelity and honestness, invention and verve, first-class particular service and relaxation ( see APPENDIX A ) . ‘
In add-on, the competition in the domestic market would be really high after China jointed WTO, and the growing of the Personal computer market had shifted from US ( 11.7 % ) to Europe, Middle East and Africa ( 20 % ) , a planetary trade name will be needed if Lenovo wanted to vie with other trade names like HP, Dell. To keep the premium monetary value of Personal computer, trade name acknowledgment would be needed, since many local trade names can supply demands of the cheap computing machine of no differential characteristics. Without a planetary trade name that can be perceived as an advanced with differential characteristics, Lenovo would be perceived as a Chinese computing machine trade name that is cheap in nature. This will besides decrease the sub-brand power of what Thinkpad had established.
4.5 BRAND STRATEGY PLANNING
Zeng ( 2005 ) points out that trade name scheme planning is the beginning of the trade name scheme. The get downing point of a trade name scheme is full, sufficient, nonsubjective, right and timely market research and survey. The stage demands of a trade name scheme are outside information smoothness and inside endowments solidarity.
As a affair of fact, altering the logo was non a individual scheme of Lenovo confronting internationalisation. It took two old ages to fix the plan. In the planning phase of the new trade name scheme, Lenovo visited 1000s of employees from the frailty president to ordinary staff in order to confer with Lenovo people of their feelings about the spirit of Lenovo trade name. Through a deep communicating and a rigorous command procedure, it sought its cooperation spouse of trade name direction points from many professional service companies. This plan covered sing 2,800 consumers, 70 endeavor clients and golding six planetary meeting in five foreign states ( see Appendix C )
And Lenovo asked a universe celebrated expansive designing and consultancy company to transport out the new trade name scheme plan, including researching and analyzing market, trade name scheme planning, trade name symbol designing, and the popularisation of the new logo, and commanded all information including all kinds of information on economic sciences, policy, societal environment, challengers, consumers ‘ inclination, on the populace ‘s rating of endeavors ‘ images and so on ( see Appendix A ) .
Meanwhile, by analyzing repeatedly the instance of trade name logo replacement of rival endeavors like Sony and BenQ to acquire utile information as mention. Furthermore, by sing staff and inquiring for their feeling of Lenovo trade name spirit and its internationalisation development scheme, Lenovo stipulated and encouraged its staff ‘s will, animate their ardour and creativeness, strengthened their feelings of belong, and therefore created a harmonious inner environment for the execution of Lenovo ‘s new logo replacing scheme ( see Appendix B ) .
4.6 BRAND Placement
Zeng ( 2005 ) suggest that a trade name scheme of drawn-out nature, continuity, system, overall state of affairs, oneness, stableness, and integrity must be based on clear and unvarying trade name placement of difference and individualism. Brand placement is the merchandise and the manner of service that endeavor wishes consumers to savor, to believe, and to experience. Brand individualism positioning includes selling placement and trade name image placement.
In the trade name positioning phase of Lenovo ‘s new trade name scheme, it collect and cover with the information, and confirm whole image manner of endeavors ‘ trade name. By roll uping information necessary through new merchandises exhibition to larn about consumers ‘ demands, consigning particular probe companies to descry cheque, follow and see consumers to garner more information about the new trade name logo scheme, Lenovo eventually decided its new logo and defined its trade name significance as the four features of ‘faithfulness and honestness, invention and verve, first-class particular service and relaxation ‘ .
Lenovo attached importance non merely to enterprise ‘s industry graduated table, merchandises ‘ covering country and market business rate, but besides to trade name ‘s well-knownness and influence ; meanwhile, Lenovo held as a rule making alone manner and image individualism of trade name in consumers ‘ Black Marias.
Lenovo had chosen to place itself as a premium Personal computer company that would supply differential characteristics for its mark clients like Sony and Apple. In general, two different theoretical accounts could be used to set up a Personal computer company 1 ) Cost-oriented, like Dell that emphasized the demands of supply concatenation efficiency and keeping the competitory advantage with non differential characteristics in PC 2 ) Innovation-oriented, like Sony and Apple that emphasized the demands of the mark clients, provided them with needed functionalities for high premium, the market portion is non a major concern. To accomplish its end to be an advanced company with higher efficiency, Lenovo went through a three-steps-process to leverage the acquired Thinkpad trade name by perpetrating to its success by turn overing out a better and improved Thinkpad. This bold move was praised by major imperativeness like Wall Street Journal, and Fortune Magazine. By procuring and implementing the Thinkpad trade name place and advertising this sub-brand as a Lenovo ‘s trade name, the Thinkpad sub-brand was used to bring forth a positive maestro trade name for Lenovo. To distinguish itself with Sony and Apple as the other advanced computing machine company, Lenovo besides positioning itself to be the 1 that can unite the efficiency ( with the knowhow on the value and supply concatenation operation in China ) and the invention ( with the embedded invention Deoxyribonucleic acid from East ( China ) and West ( IBM ) ) . With this scheme of Branding, Lenovo created two production lines, one for the Thinkpad/ThinkCentre that charged a little more premium than the rivals and one for Lenovo 3000 trade name for the Laptop/Desktop that charged comparably with its rivals.
In China market, it is of import that they would see the oriental tradition of the market environment. In this respect, Lenovo must be known in China as a new company which is attached with another well known trade name in the company addition more clients ( Holl ensen, 1998 ) . The company may besides see a alone combination of East and West tradition to guarantee that they would adhere to the demands of the Chinese market easy and to guarantee that their Western values will non be diminished but turn more as portion of the Chinese market.
4.7 BRAND PROPAGATION AND POPULARIZATION
Fang ( 1998 ) thinks that after the work of trade name placement is done, endeavors have to propagate and distribute the trade name as planned, Stiring consequence can merely be made after omni-aspected and fruitful extension and popularisation. Successful extension and popularisation can do endeavors put up as a end the good image of the whole organisation and invariably and seek the populace ‘s support and cooperation, and therefore obtain success of the whole concern. This requires enterprises to transport out deep extension and popularisation. And because public dealingss have the features of fullness in contents, durability in clip, potentialness and indirectness in consequence, it becomes the most effectual agencies of trade name extension and popularisation.
Lenovo carried out a series of extremely effectual activities of extension and popularisation, such as keeping Lenovo engineering show to do the public understand the endeavor better. With the successful launch of ‘Divine Boat Airship No.5 ‘ , Lenovo started a national series of distributing activities with the subject of ‘ merely you can conceive of ‘ . Meanwhile it donated a big figure of financess to Beijing municipal authorities for contending against and forestalling SARS. In the international degree, it carried out trade name extension and popularisation by patronizing the Olympic games. Through these activities, Lenovo non merely succeeded in propagating and popularising its new logo, but besides successfully set up a good endeavor image, formed the permanent influence of replacing logo, and created its alone trade name manner and image individualism in consumers ‘ Black Marias ( see Appendix B ) .
‘ Lenovo ‘ is rather unusual to abroad consumers. It needs a bearer or a platform through which it can widen their trade name to accomplish the end of bettering the acknowledgment grade at abroad and the fancy at place. Lenovo makes an attempt to do certain that the Lenovo trade name is good known and trusted as it continues to turn and bring forth computing machines in the international market on their ain name. Co-branding that two companies work together to make selling synergism can be used to accomplish great consequence. During twelvemonth 2005 to 2008, Lenovo provided calculating engineering equipment including desktop computing machines, notebooks, waiters, and desktop pressmans, and supply support every bit good as technological support to Olympic Games and over 200 national and regional Olympic commissions around the universe, so as to better our acknowledgment grade overseas.
Lenovo ‘s sponsorship of many instances, such as Olympics Game and F1, are the good chances to go on to set up the Lenovo name as one that is trusted in general, merely as the IBM name was. However, advanced and most influential is the Lenovo Olympic selling. For Chinese endeavors, this is the first Chinese company to better the image and repute to assist Chinese endeavors enter the universe market a rare chance. Lenovo Olympic internationalisation scheme is the most of import measure and the best opportunity, which make its trade name acknowledgment reach 26 % ( see Appendix A ) .
Lenovo understood that stigmatization is really of import in every market because it helps attract clients to get down purchasing their merchandises and retain them for a long clip. Brand consciousness can be promoted through advertisement. Since their merchandises are related to high engineerings and discovery constructs, a immature famous person, who conveys an energetic, originative and aggressive image, would be their best pick for advancing their trade name image and merchandises.
Sport is a planetary linguistic communication. In order to allow Lenovo go better known in the planetary market, they took the chance to acquire more exposure in many international athleticss games, such as going official spouse with NBA and Olympic Games, subscribing the World Footballer Ronaldinho, patronizing Williams F1 etc. Lenovo ‘s streamers all over the athleticss bowls and their Sons on unrecorded Television transmittals will greatly increase their planetary exposure ( see Appendix A ) .
In add-on, Chinese jocks became stars in many different athleticss such as hoops ( Yao Ming ) and path and field ( Liu Xiang ) . In order to run into the tendency and the opportunity,
Lenovo needed to procure the place of the first trade name related to feature. Therefore, Lenovo spent RMB 6 million to use the celebrated path and field athlete Liu Xiang as one of their official spokesmen ( see Appendix C ) .
4.8 BRAND MANAGEMENT
Li ( 2002 ) argues that trade name direction is the whole procedure of set uping, maintaining, and consolidating a trade name. Its chief intent is to make a harmonious environment that is good to accomplishing trade name scheme ends and to increasing trade name assets.
Lenovo has ever regarded fidelity as the most of import thing of Lenovo trade name. For Lenovo, fidelity is non merely a promise to the clients but besides more of go throughing down of endeavor ‘s trade name, civilization and scheme. On this foundation, the Lenovo has ever attached importance to supply high quality merchandises and first-class professional service to consumers and this is really point that consumers recognize and accept Lenovo. Lenovo therefore did good consumer relationship direction and because of this it maintained a long and good relationship with consumers and achieved their trade name trueness. In order to beef up the relationship between and clients and the endeavor, Lenovo has used client relation direction for its trade name scheme direction. This good omni-directional direction absorbed all media ‘s attending and gained their positive studies, and therefore farther created a harmonious environment for Lenovo and increased Lenovo ‘s trade name value.
While taking the new trade name logo, Lenovo concept trade name direction system. It keeps on utilizing the trade name logo of ‘Lenovo ‘ , attaching importance to Lenovo at place and to Lenovo abroad. In direction Lenovo stress its four features, particularly stress the direction of fidelity, all new employee of Lenovo will be trained on this on the first twenty-four hours.
Before the Acquisition of IBM PC division, Lenovo was a extremely successful local Personal computer trade name of China. It was perceived as an advanced Personal computer company through its customization and apprehension of its chief base of Chinese market by presenting Chinese specific demands for Personal computer like fable cards for Chinese characters treating, gross revenues channels for Personal computer alternatively of direct gross revenues, etc. To spread out this innovation-oriented scheme, non merely a computing machine company from China that would be perceived by many as a company to merely supply cheap and less advanced, less dependable Personal computer, Lenovo needs to unite its advanced Deoxyribonucleic acid to its Personal computer trade name.
To specify the trade name, several factors needed to be considered:
( 1 ) Brand Attributes
( 2 ) Consumer Expectations
( 3 ) Rival properties
( 4 ) Monetary value
( 5 ) Consumer perceptual experiences
In China, the clients accepted Legend computing machines ( Lenovo ‘s Chinese trade name name ) as a premium computing machine, Lenovo had to reenforce this perceptual experience to its planetary trade name. The corporate stigmatization and positioning scheme was defined by its planetary selling squad to utilize “ synergy attack ” to make its planetary trade name. The Thinkpad, a good known dependable advanced premium notebook Personal computer, would be used as a sub-brand to give Lenovo the maestro trade name, its personality. Three stairss were taken to transport this scheme, 1 ) from March 2005 to September 2005 to supply the advertizement of Thinkpad to inform clients, Lenovo ‘s committedness to Thinkpad trade name 2 ) Showcase the new and improved Thinkpad to guarantee the perceptual experience of Lenovo ‘s apprehension of Thinkpad and ability to heighten its advanced values 3 ) Stress the Lenovo maestro trade name ‘s Deoxyribonucleic acid of invention. The scheme is to set up Lenovo as a advanced trade name that owns Thinkpad as a planetary premium Personal computer trade name like IBM and HP.
Since the acquisition the IBM PC division, Lenovo had tried really hard to make a maestro trade name for its concern. The 3 stairss procedure and the synergism attack for its stigmatization attempts would clearly make the feeling that the Lenovo PC would be the best for little concern proprietors ( its mark clients ) . The usage of the figure for a merchandise is to reenforce its trade name power and its association of the maestro trade name. The usage of the figure can besides simplify the advertizement and easier for the launching of new merchandises. Since Lenovo already had a line of Personal computer that focuses on medium/big concern, the usage of Lenovo as the trade name to aim smaller concern did supply complementary consequence for the company.
This attack is simpler but ran a hazard to potentially damage the maestro trade name. By utilizing the figure, Lenovo trade name is used to aim a specific client sector. This merchandise as Lenovo defined was the merchandise that would for little concern proprietors. With the computing machine engineerings altering so fast, and losing measure would make catastrophe for a Personal computer merchandise. This catastrophe would potentially damage the repute of the maestro trade name created. The usage of different names, Lenovo would hold the options to make differentiated merchandise lines with their ain features. This attack would continue the trade name power of Lenovo and can run into diversified clients with a wide outlook if needed. In its first launching of new merchandise besides ThinkPad, Lenovo should hold usage “ names ” alternatively of Numberss ( see Appendix B ) .
Three Phases of Brand Building
IBM allowed Lenovo to utilize its logo for its Personal computer merchandises ( Laptop and Desktop ) for 5 old ages, but Lenovo merely used IBM logo on its Thinkpad series. Lenovo did n’t utilize IBM ‘s logo on its other computing machine merchandises of all time since the acquisition went through. The lone association between Lenovo and IBM was the IBM logo on its Thinkpad trade name names. It is really clear that Lenovo was seeking to construct its ain maestro trade name utilizing synergy attack. Its scheme was to procure the trueness from Thinkpad current proprietors and possible purchasers by undertaking IBM for service and attached an IBM logo to guarantee clients that Thinkpad would be in good attention event with changing of the ownership. Besides this attempt, Lenovo distanced itself from IBM for the intent of set uping its ain maestro trade name with the aid from Thinkpad sub-brand. This is a good determination for Lenovo to move and travel rapidly portion with IBM.
There were several grounds for this separation, 1 ) Lenovo needed to develop itself as an advanced company without shadowing by IBM. One illustration cited by the paper was the proclamation Thinkpad Z60, that was viewed as the invention by IBM non Lenovo in April 2005. 2 ) US PC market/Global Personal computer market were dominated by Dell, HP, IBM was non the key participant in this Personal computer market. 3 ) IBM was traveling into service sectors, the Personal computer sector was non every bit favourable as a profitable concern. 4 ) The ground for Lenovo ‘s acquisition of IBM PC division was non merely for the IBM trade name but for the planetary Personal computer channels every bit good as its flagship Thinkpad notebook computing machine. These grounds explained why the usage of IBM logo was on the Thinkpad. This is the right move since IBM ‘s trade name in Personal computer was non the dominated factors besides Thinkpad.
Without utilizing IBM ‘s logo or trade name name more, Lenovo lost the chances to maintain IBM ‘s current clients and possible purchasers, but these short term tendencies could be reversed with a sensed better trade name that is more efficiency and advanced in Lenovo if established. Lenovo was taking the hazard of short term lose but positioning for the long term addition. Lenovo believed it could utilize the combination of marketing/branding attempts to make a place feeling of a better new maestro trade name of both efficiency and invention with the aid of Thinkpad sub-brand.
This synergism attack for the stigmatization of Thinkpad and Lenovo is the best among other options. To utilize “ maestro trade name ” attack for Lenovo would be easier to advance and construct the Lenovo trade name. This would besides affect altering the civilization, tactics and substructures of the freshly acquired IBM PC division for this new Lenovo Personal computer company to work. And largely, by merely advancing the Lenovo maestro trade name, this attack would surely decrease the trade name power of the Thinkpad, this move would be counter-intuitive. The house of trade names attack could besides be used to advance Lenovo PC company, but with the advertisement budget much less than Dell, HP and other name trade names, Lenovo merely did n’t hold the deep-pocked to vie and use this scheme. With the same item, Lenovo could non afford to make two distinguished organisations as Toyota did on Lexus/Toyota. With the appraisal of these other attacks, Lenovo did n’t hold other good picks at given company ‘s fiscal state of affairs. The synergy attack is the 1 and merely scheme should be picked ( see Appendix D ) .
4.9 BRAND PROTECTION
Li and Qiu ( 2002 ) suggest that the anfractuous interior and outside public people and the invariably altering environment faced by endeavors in their operating activities are filled with uncertainness. This uncertainness now and so tests the endeavor. Under this status, the most important thing is that endeavors should do the best usage of public dealingss, following the end of enlarging endeavor ‘s grade of recognition standing and set uping good endeavor ‘s image. The endeavor should exercise wholly public relation ‘s extension map, candidly face the media and the public, state the truth, heartily accept the remarks, so as to derive the good feeling and trust of the truth, heartily accept the remarks, so as to derive the good feeling and trust of the populace, desalinate the struggle and transform the crisis, and alter uncertainness into certainty.
Lenovo told the truth to one of the clients about its sloppiness in supplying the incorrect adjustments, which are non vey serious, although the client had non figure out the job. Furthermore, Lenovo replaced the high quality adjustments with the incorrect 1s actively. This made the client really satisfied with Lenovo ‘s service and the client gave much more concern to Lenovo to make for old ages. This action brought Lenovo a god repute in the industry. Here Lenovo turned a harmful accident into a favourite opportunity of concern through utilizing public dealingss.