Lenovo Remains Committed to an Innovative Marketplace

After maintaining market leadership in China for several years the company expanded into international markets in 2003, and in 2004 they signed on for two ambitious transactions; joining the Olympic Partner Program, an $80 million agreement that made Leno the exclusive provider of computing equipment and services for the Olympic games in 2006 and 2008, and a deal in which they acquired Vim’s Personal Systems Division.

The former allowed Leno to have access to “exclusive worldwide marketing opportunities however It also presented them with the challenges and costs of using those opportunities effectively.

In the IBM deal, Leno gained use of the IBM brand name (for up to five years), the well-established IBM Think-family products, and some difficult questions on how to move forward. Leno, with the acquisition of the IBM PC business, first had to come up with a plan that would raise awareness for the Leno brand name while capitalizing on the established brand MOM.

Leno decided to go with a “master brand” strategy, focusing most of their efforts on building the Leno brand worldwide while also continuing to strengthen the Thinking product acquired through MOM.

After deciding on their strategy, Leno then had to decide what its brand “essence” would become and viewed the competition In two types of business models; those who sold products tit little or no innovation and focused on Inventory turns, or those who focused on product Innovation and less on market share.

To stay true to both Leno’s and Vim’s innovative roots, as well as attempting to stay current In the evolving PC business, Leno decided to position themselves against competitors that focused on innovation such as Sony and Apple.

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Leno redesigned the Thinking in several ways, despite the risk of offending earlier Thinking users, which yielded much admiration from the press. Although the design f the new Thinking models had been accepted well, Leno wasn’t getting the credit it wanted and raising awareness for the brand had become an issue.

While the Olympics sponsorship was seen to be a positive event for the brand’s reputation they were not seen as being a motivator for purchase. Leno had spent $250 million on worldwide marketing In 2005, which in many major markets was distant from the leader In market share of voice. In 2006, Leno planned to Introduce a new brand of PC’S worldwide known as the 3000 Family’; targeted at the small business market, these new computers would be parcel equal to competitor companies sun as pm HP, a pricing strategy inconsistent with the premium Thinking brand.

With low awareness among small business customers, Leno’s market research showed that they had to ensure that “the 3000 family had a unique, distinctive and attractive design”. Problem The big question Leno is faced with is how they should differentiate themselves from the competition in the midst of their shrinking market share, with consideration or the Thinking brand and the introduction of the 3000 Family PC series.

Recommendation Leno needs to be careful so as to not hurt the credibility of their master brand which they have spent time, money, and effort to create. With their earlier decision to use the Thinking brand to compete in the premium PC market against such brands as Apple and Sony, it is important for them to stay consistent with that message; however stretching their product category to include PC’s which compete with companies in the other business model that includes competitors such as Dell and

HP can help to gain market share. Leno has the option of staying consistent with its position as a premium provider of PC’s and promoting the 3000 Family as such, however this would completely be missing the new series mark as a unique alternative for small business owners. Because of this Leno should position the 3000 Family and the Thinking brand separately as unique sub-products of Leno, so they can appeal to their respective categories and not tarnish each other’s equity.

To do this, Leno’s first priority in their marketing efforts needs to continue the enforcement of the master brand (Leno itself) as being a producer of high quality PC’s that strives for innovation. Leno’s point of differentiation is in its ability to create PC’s for all types of users which will help segue into the differentiation between their sub-products. Leno should run individual advertising campaigns for the Thinking and 3000 Family products to distinguish their unique purposes; however, they both should maintain the unifying message of the master brand that connects them, highlighting Leno’s versatility.

They should continue to use the Thinking brand to compete on the higher-end level, positioning it with a message of premium quality and innovation; while positioning the 3000 Family series towards small business customers as reliable and durable machines. The goal of this strategy is to help Leno to be seen in the eyes of the consumer as a company that can create both innovative PC’s that are of premium quality and PC’s that are more affordable and reliable. In achieving this Leno would be able to compete in both categories, allowing them to turn their shrinking share of the market around.