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Lenovo: Building a Global Brand Managing Brands over Geographic Boundaries and Market Segments Presented by: Prasanth Bohara Dinesh Sharma Mudith Himwan Shalini Mishra Het Mavani

2. REGIONAL MARKET SEGMENTS Regionalization is an important recent trend that, perhaps on the surface, seems to run counter to globalization. Reasons for regional marketing Need for more focused targeting The shift from national advertising to sales promotions Drawbacks Production headaches Marketing efficiency may suffer and costs may rise

3. OTHER DEMOGRAPHIC AND CULTURAL SEGMENTS For example, the importance for marketers to consider age segments and how younger consumers can be brought into the consumer franchise As another example, the 2000 census revealed that Asians and Hispanics accounted for 79 million of 281 million people in the United States and an estimated $1 trillion in annual purchasing power.

4. RATIONALE FOR GOING INTERNATIONAL Perception of slow growth and increased competition in domestic markets Belief in enhanced overseas growth and profit opportunities Desire to reduce costs from economies of scale Need to diversify risk Recognition of global mobility of customers

5. Advantages of Global Marketing Programs Economies of scale in production and distribution Lower marketing costs Power and scope Consistency in brand image Ability to leverage good ideas quickly and efficiently Uniformity of marketing practices

6. DISADVANTAGES OF GLOBAL MARKETING PROGRAMS Differences in consumer needs, wants, and usage patterns for products Differences in brand and product development and the competitive environment Differences in the legal environment Differences in marketing institutions Differences in administrative procedures

7. STANDARDIZATION Vs. CUSTOMIZATION Indian consumer American consumer 8. As brand consultant Robert khan said. global branding does not mean having the same brand everywhere Standardization: same product-same communication across the border or globally - Followed by electronic instrument customization: to change or adopt productcommunication according to the market - As cokes marketing mantra think global act local

9. Standardization-customization process- product communication No change change No change change Straight extension Product adaptation Communication adaptation Dual adaptation

10. Why customization: Meaning is different reading habits country 1 right left right left country 2 Detergent Ad

11. taste, need , demand is different from one country to other Culture difference: individual Vs. collectivism , masculine Vs. famine. Delivery adaptation by domino pizza in different Countries because of culture because in Britain anybody knocking on the door is rude Domino pizza home delivery to get positing difference or country Of origin effect Tokyo beer

12. Global brand strategy: we need to get attention over few basic issues while making product brand in global market - Identify differences in consumer behaviour. How he purchase and use product. - Adjust the branding program accordingly through the choice of these customers - Then have a leverage secondary association programme according to the market. After the application of these factors over the brand we need to focus on the implication, control and measurement of these factors

13. Making the brand by the use of CBBE model : Salience- awareness about the product useful for product recall and recognition Performance-its basically related to the product features and its performance. Tailor product according to the globally market Increase brand awareness Favourable brand association Positive reaction Increase brand locality

14. Imagery: imagery means what is your product having mental map in the mind of costumer. Should be carefully because each word symbol and picture represent different meaning. So it hurt sentiment of people Source of imagery- Core brand association Identifying points of parity and point of difference By origin effect Judgement and feeling: brand judgement can be negative or positive like good quality , credible and worthy. At this point judgement provide feeling to the consumer like excitement, happy etc. making product brand by the use of LSA in global market-

15. LEVERAGE SECONDARY ASSOCIATION BRAND Other brand placespeople things alliance ingredient extension company employees endorsers events Third party Channels Country of origin

16. Celebrity endorser: all good character related to celebrity gets transfer to product and influence to the decision of the consumer. trustworthy intelligenc e Likeabilit y Familiarit y attractiveness attractivenes s trustworthy Familiarit y Likeabilit y

17. Resonance: it is a final stage in making any product globally brand here costumer is having locality towards your product Resonance is depend on the success of other parameters in the CBBE model. And you can have your product as a brand now.

18. Ten Commandments of Global Branding 1. Understand similarities and differences in the global branding landscape 2. Dont take shortcuts in brand building 3. Establish marketing infrastructure 4. Embrace integrated marketing communications 5. Cultivate brand partnerships 6. Balance standardization and customization 7. Balance global and local control 8. Define operable guidelines 9. Implement a global brand equity measurement system 10. Leverage brand elements

19. LENOVO:BUILDING A GLOBAL BRAND In the year 2004 IBMs personal computer acquired by Lenovo. By the year of 2004, 90% of revenue comes from china market. Lenovo sponsor Turin Winter Olympics in order to gain strong market share in china and Asia.

20. The Global PC Industry 1970s- IBM introduced its first PC after microcomputer and home computer. IBM relied on three key technical contributor- 1. Intel for 8080 processor 2. Microsoft for DOS operating system 3. Software for VisiCalc Art

21. 1990s Internet Boomed Launching the set of basic standard for PCs by Microsoft and Intel. Increase in the number of outsourcing and off shoring. Early 21st century major consolidation had taken place between HP-Compaq and Gateway-e machines.

22. Contd. By 2004 half of the PCs sold around the world came from Dell , HP and Lenovo including IBMs market share. RISE OF LEGEND: 1984- china academics of science invest $25000 to form the New Technology Developer. 1987- Introduced its original product Legend card.

23. Contd.. 1990- Company launched their own PC. 1996- Launched their first laptop and marketed its PCs carrying Intel Pentium chip. DEAL: IBM was an opportunity to shed Unprofitable operation. Lenovo gained the right to use IBM think pad laptop and think centre

24. Think Pad Legacy The research showed that in customer mind IBM and Think pad are hard to separate. OPPORTUNITY: The way IBM and Lenovo sold PCs was very complementary. CHALLENGES: Lenovo focus on the SMEs while IBM focus on corporate and enterprise customer.

25. Organizational Changes September 2005 Management restructuring that integrated the original Lenovo and former IBM New international composition and scope Companys working language changed to English Working via conference calls posed challenges 12-hour time difference between Beijing and U.S. east coast also caused some strain

26. Branding Opportunities Opportunity and Challenge to build an international brand using IBM legacy. Turin Olympics Sponsorship a platform to showcase its capabilities to the world Right to use IBM logo for five years

27. Best from East and West From Lenovo Understanding of emerging markets Excellent efficiency Focus on long-term strategy From IBM Deep insights into worldwide markets Best practices from western companies

28. Main concerns with customers Innovation would slow down Quality would suffer Service and support would be outsourced overseas

29. Branding Alternatives 1. Master Brand Strategy 2. House of Brands Strategy 3. Synergy Approach 4. Lexus/Toyota Strategy

30. One-Two Punch Strategy Two main elements: 1. Build up Lenovo as a strong master brand 2. Continue to strengthen the ThinkPad product brand, which was a special franchise that could be leveraged to support the Lenovo master brand. Differentiation: Innovation and Efficiency

31. Advertising Plan Maintain ThinkPad brand and use that brands strength to build the Lenovo brand Three phase advertising plan: 1. Worldwide Advertising campaign ThinkPad instead of Lenovo (maintain ThinkPad sales momentum) 2. ThinkPad Unleashed campaign Lenovo making ThinkPad even better 3. Third campaign stress innovation for Lenovo master brand

Agenda Brief Summary about the case Global PC Industry Lenovo: From Emerging to Surging Key Challenges of Lenovo from the case Recommendations

8. About Lenovo:From Emerging to Surging1984 Established as Legend Group in Beijing Had product anddistribution facilities in US, UK, Mexico, Malaysia, Hungry,China, and Brazil2003 Changed its brand from Legend to Lenovo2005 Acquired IBMs PC division and became the worlds thirdbiggest PC-maker2006 Lenovo started becoming a partner sponsor in sportsevents and sigh the contract to become the sponsor of BeijingOlympic 20082007 Started implementing a worldwide expansion plan by building the secondplant in India. Lenovo tried to solidify its presence in US by selling both brandLenovo and ThinkPad (a brand of IBM)In August announced the taking over Packard Bell BV, the 5th biggest PC-makerin Western Europe

9. About Lenovo: From Emerging to Surging2008 Lenovo enters the Worldwide consumer PC market withthe new "Idea" Brand.2009 Launched the new strategy Protect and Attack2010 Lenovo introduced over 20 new devices at the consumerElectronic show in Las Vegas2011 In January Lenovo formed a PC joint venture with JapaneseIT company NEC, In quarter 3 Lenovo acquired Medion, aGerman electronics manufacturing company .2012 Lenovo took the 2nd place in global PC market share withthe share around 15%

10. LENOVOS GLOBAL BRAND BUILDING STRATEGIESTRANSACTIONAL MODEL 11. LENOVOS GLOBAL BRAND BUILDING STRATEGIESChinaRelationship model: bulk orders from big enterprisesTransactional model: serving customers withcommon requirements and who need lessercustomization. Target small- to mid-size companies andindividual customers

12. LENOVOS GLOBAL BRAND BUILDING STRATEGIESGlobalRelationship model: acquire IBM PC divisionTransactional model: become tech-sponsor for Turin& Beijing Olympic games, partner with NBA, offerboth ThinkPad and Lenovo brand complement theproduct offeringChina-based supply chain model: fulfills everyorder on time with better IT system

13. Agenda Brief Summary about the case Global PC Industry Lenovo: From Emerging to Surging Key Challenges of Lenovo from the case Recommendations

14. Key Challenges of LENOVOraise from the case 15. Key Challenge #1 Brand Building ChallengesBuilding a global brand inhighly commoditizedPC industryHurdles in buildingstrong brandin the US market

16. Key Challenge #2The Backyard CounterfeitsChinese counterfeits of IT products & components

17. Key Challenge #3Intense Competition Growing competition from international players At home competition with local PC producers & companies with lower prices

18. Key Challenge #4Cost-Cutting is the only solutionto profit margin Supply chain network internationallyOutsourcing Trends (CMs: Contract manufacturers)

19. Key Challenge #5Proliferation of technologies Dual Multiple All in One Functions and Interconnected digital technologies

20. Agenda Brief Summary about the case Global PC Industry Lenovo: From Emerging to Surging Key Challenges of Lenovo from the case Recommendations

21. How Lenovo, as a state-owned Chinese company, could prevent the negative viewpoint as endanger to US national security?

22. How Lenovo, as a state-owned Chinese company, could prevent the negative viewpoint as endanger to US national security? Brand Portfolio Strategy - Focusing more on Product brand rather than Corporate Brand PR & Sponsorship/CSR Campaign - Marketing and Partnership with world-class events and exhibition i.e. Olympic Games, World Cup, or even NBA in US - Donations, Social Responsibilities Program in US to gain good corporate image

23. How Lenovo, as a state-owned Chinese company, could prevent the negative viewpoint as endanger to US national security? Focus on Quality and Innovation - Build key competencies on quality and innovation to to overcome state owned Chinese company image and narrow the gap of country of origin effect Household PC market in US - Better penetrate to household PC market segment in US where low loyalty to US origin brand and concern more for affordable price and efficient features

24. How to build a global brandin a highly commoditized PC industry? 25. How to build a global brand in a highly commoditized PC industry? Customized products and services higher value added, unique product design, new product category Continuous R&D for new innovation Efficient resource utilization Effective distribution channels

26. How to build a global brand in a highly commoditized PC industry? Create strong brand loyalty such as excellent customer service, after sales service Rebranding Lifestyle products

not discounted products Advertising and sponsorship for global event - Olympic games National Basketball Association

27. How to cope with Counterfeits? 28. How to cope with Counterfeits? Continuously deliver new innovation to its products R&D investment Building Brand loyalty Trust in quality Secure intellectual property when outsourcing more operations to suppliers partners Transition of technology and know-how to suppliers should be done appropriately

29. How to improve SUPPLY CHAIN internationally? 30. How to improve SUPPLY CHAIN internationally? Why is supply chain important? IT product: depreciate and become outdated easily Past: 30-day shipping from China to USA Present: Fully integrated global supply chain

31. Global Supply Chain 32. Current Supply Chain Management Lean Six Sigma: To eliminate 7 kinds of waste:Defects, Overproduction, Transportation, Waiting, Inventory, Motion and OverProcessing SAP Software: To deal with wide range of customers Key KPIs: Cost, On -time delivery, Cash conversion, Quality

33. Lean Six Sigma 34. How to sustain in Global Competition? 35. How to sustain in Global Competition? Maintaining competitive advantage on low cost Continue with global brand image Make use of the strong B2B market to expand to B2C market Quickly adapt to any customer change

36. Other Recommendations Forecasting System Risk Management: Sensing and Responding Known-Unknown Risk Commitment Review by Executive Management Be Prepare Collaborators turning to competitors Foreign governments Exchange rate fluctuation