Submitted to: Prof.Narsiman

Submitted by: GROUP 4

Aditya Jain 09PG303

Chawla Manisha 09PG313

Karthik V 09PG 323

Pooja Prasad 09PG333

Sandeep Babaji 09PG342

Swati Ray 09PG352

Strategic Marketing Management:

Report on Brand Image of LENOVO

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CONTENTS

S. No. Particulars Page 1 Company Profile 4

2 Market Research Process

2.1 Need for Marketing Research 6

2.2 Defining the Problem 6

2.3 Research Objectives 6

2.4 Research Design 9

2.5 Information Types and Sources 9

2.6 Methods of Accessing Data 9

2.7 Data Collection Form 9

2.8 Sample Plan and Size 11

2.9 Data Collection 11

2.10 Data Analysis 12

3 Conclusion 15

4 Recommendations 15

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1. COMPANY PROFILE

Lenovo Group Limited is a multinational technology corporation that develops, manufactures and markets desktops and notebook personal computers, workstations, servers, storage drives, IT management software, and related services. Incorporated as Legend in Hong Kong in 1988, Lenovo's principal operations are currently located in Morrisville, North Carolina in the United States, Beijing, China, and Singapore, with research centers in those locations, as well as Shanghai, Shenzhen, Xiamen, and Chengdu in China, and Yamato in Kanagawa Prefecture, Japan. Lenovo acquired the former IBM PC Company Division, which marketed the ThinkPad line of notebook PCs, in 2005 for approximately $1.75 billion.

Lenovo is the fourth largest seller of personal computers in the world. The company is the largest seller of PCs in China, with a 28.6% share of the China market, according to research firm IDC in July, 2009. It reported annual sales of $14.9 billion for the fiscal year ending 2008/2009 (ending March 31, 2009).

Lenovo markets its products directly to consumers, small to medium size businesses, and large enterprises, as well as through online sales, company-owned stores (in China only), chain retailers, and major technology distributors and vendors. As of October 31, 2008, 50.4% of Lenovo is owned by public shareholders, 42.3% by Legend Holdings Limited, and 6.6% by Texas Pacific Group (TPG Capital), General Atlantic LLC and Newbridge CapitaLand 0.7% by the directors. Because the Chinese Academy of Sciences, a Chinese government agency, owns 65% of Legend Holdings, effectively the Chinese government owns about 27% of Lenovo and is the largest shareholder.

IBM became the owner of 18.9% of Lenovo in 2005 as part of Lenovo's acquisition of the IBM personal computing division. Since then IBM has steadily lowered its shareholding in Lenovo. In July 2008 the IBM shareholding went below the 5% reporting disclosure threshold

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Type Public company (Red chip)

Founded Lenovo Group Limited联想集团有限公司

Headquarters Beijing, China; Morrisville, North Carolina, United States; Singapore.

Area served  Worldwide

Key people Liu Chuanzhi, Chairman, Yang Yuanqing, CEO

Industry Computer Systems

Computer Peripherals

Computer Software

Products Desktops, Servers, Notebooks, Peripherals,

Printers, Televisions, Scanners, Storage

Revenue ▼ $ 14.901 billion (2009)

Net income ▼ $ 226.3 million (2009)

Total assets ▼ $ 6.308 billion (2009)

Total equity ▼ $ 1.310 billion (2009)

Employees Approx. 23,000 (2008)

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2. MARKET RESEARCH PROCESS

2.1 ESTABLISHING THE NEED FOR MARKET RESEARCH

Why is Lenovo less popular among the youth?

2.2 DEFINING THE PROBLEM

As IBM is taking out the contract with Lenovo, it might affect the Brand Image of Lenovo.

Most of the market shares have been covered by HP and DELL due to their service, quality and promotions, which the Lenovo could not do. Can have the enough opportunity to improve in its deficiencies

2.3 ESTABLISHING RESEARCH OBJECTIVES:

Three most important reasons are:

1. A highly lucrative yet competitive home market.2. Lack of brand equity in the consumer computer market.

3. Negative effect of "China Brand Effect" in the Western markets.

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Explanation of the above factors:

A highly lucrative yet competitive home market: China is one of those rare cases which offer the double whammy of a thriving and highly competitive domestic market along with offering an excellent base for exporting to the global market.

Being a Chinese company, Lenovo has guarded its home turf very aggressively. Lenovo is the market leader with 16.4% of the Chinese computer market. But given its ambition to expand beyond the home turf, it has had to focus increasingly on the US and other Western markets.

Such a division of resources and strategic focus has allowed competitors to inch closer to Lenovo in China. Compared to 2007, all competitors have increased their China market share in 2008. Dell increased its share from 7.2% to 9.1%, HP increased its share from 13.8% to 15.1%, and Acer has gone from 5.6% to 7.2% of the market. This in turn poses increasing challenges to Lenovo and its brand. Till date, it has not been able to effectively do two things at the same time - thwart competition at home and take market share from competitors in their home market - the United States.

Lack of brand equity in the consumer computer market: When Lenovo acquired

IBM's PC division, its main aim was to leapfrog to become one of the largest computer companies in the world. Lenovo became the third largest computer company in the world, but not necessarily the biggest in the consumer market. IBM's traditional strength was in the business segment. IBM's Thinkpad laptops were the gold standard in business computers. But Lenovo did not restrict itself just to the business market.

Over the last three years it has made a very aggressive entry into the consumer computer market with two new Thinkpad models and the new line of Ideapads. But given the recessionary economic conditions in the US, this move has not yielded any credible results so far. Furthermore, for a company that is still learning the rules of the global brand game in the computer industry, Lenovo has bitten more than it can possibly chew. Entry into the very highly competitive US consumer

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computer market where DELL and HP have a near strangle hold, leveraging IBM's

brand name in the business market, building equity for the Lenovo brand and guarding the home turf in China have all together put Lenovo under immense stress.The China Brand Effect: As one of the recent articles in a leading US daily

reported, for US consumers Lenovo (even after acquiring IBM’s PC division) is still a Chinese brand. Given the general perception of China, Chinese products, controversies about China's counterfeit markets (and products), the questionable quality of "Made in China" products and the overall macro socio political sentiment towards China have heavily impacted the perception of Lenovo among the US and other Western consumers.This reflects the lack of Lenovo's efforts in building a strong brand. Even though Lenovo had a golden opportunity to capitalize on IBM's co-brand name for three years, it has turned out that Lenovo has not managed to create a strong brand image among the Western consumers. While sales in China grew by 18% during the first quarter of 2008 compared to 2007's first quarter, sales in the US increased only by a paltry 3%. Furthermore, Acer's acquisition of Gateway has catapulted Acer's position within the US market and Acer is inching closer to Lenovo.

Given these apparently insurmountable challenges Lenovo faces both at home and in the Western markets, it is not surprising that Lenovo is taking a beating of its stock. In spite of reporting sales of US$3.74 billion and revenues of US$140 million in the first quarter of 2008, Lenovo's stock is down by 14% for the year 2008 as against a 15% drop for Dell and an 11% drop for HP. The same saga has continued in 2009 as well. Lenovo reported sales of US$3.5 billion for the June 30 quarter. This sales number is down 17.9% for the same period in the previous year.Furthermore, Lenovo posted a loss of US$16 million for the quarter as against a net profit of US$119 million for the same period in the previous year. With competitors chipping away at its market share in China, Lenovo will have to aggressively build its brand in the US and European markets in order to survive long term. The strategy has to be carried out by management.

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2.4 DETERMINING RESEARCH DESIGN:

Our research design is done on scientific as well as systematic data.

2.5IDENTIFYING INFORMATION TYPES AND SOURCES:

Information is based on the Internet from various websites and through personal

findings i.e. questionaire.

2.6 METHODS OF ACCESSING DATA

a) Visiting websites.

b) Questionnaire.

2.7 DESIGNING THE DATA COLLECTION FORMS:

Forms were designed, keeping in mind the percentage awareness of the Lenovo Brand as a preference of the people.

Sample data collection form:-

We request you to give you valuable feedback and spare 2minutes for it.

Questionnaire

Please answer the options in the bracket provided.

1) What Brand comes to your mind, when you hear Laptop…………….. ( )a) HPb) DELLc) Lenovod) Others specify….

2) Which Laptop gives value for money…………… ( )a) HPb) DELLc) Lenovo

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d) Others specify

3) What do you look for, when buying a Laptop…………… ( )a) Configurationb) Pricec) Quality/Durabilityd) Looks and designe) Others Specify

4) How do you rate the Lenovo Laptop as per you…………… ( )a) Excellent b) Goodc) Averaged) Below Average

5) Have you purchased Lenovo Laptop…………… ( )a) Yes b)No

6) If Yes are you satisfied with Lenovo…………… ( )

a) Yes b) No

7) Will you prefer to buy Lenovo Laptop in the future …………… ( )

a) Yes b) No

8) How did you come to know about Lenovo Laptop …………… ( )

a) Print media/News paper

b) TV Ads

c) Friends

d) Others Specify………

9) Did you know that IBM and Lenovo are having joint Contract……… ( )

a) Yes b) No

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10) What is Lenovo as a brand for you in one word………

We thank you very much for your valuable suggestions.

sbabaji@gmail.com (Mail your response to the above said email ID)

2.8 DETERMINING THE SAMPLE PLAN AND SIZE:

Sample Plan was designed by following steps given below

a. Defining the objectiveb. Finding the target to get reviewc. Preparation of questionnaire to know the Brand Image of Lenovod. Analysis of the datae. Finding corrective measures and Implementations

2.9 COLLECTING DATA:

The questionnaire was mailed to about 500 people for quick survey results. Among these people were those who are already laptop users and also those who will in future be laptop users. The questionnaire was prepared on a free online survey site (www.freeonlinesurvey.com).

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2.10 ANALYSING DATA:

From the graph, it is evident that Lenovo is not very popular among students as compared to HP and Dell which together covers 82%.

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From the graph, it is clear that Lenovo is not offering value for money. Example in configuration and design.

By analyzing this graph, people have rated Lenovo as an average and good product. That means Lenovo has a chance to increase its market share by improving the quality and features.

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By this graph, it is clearly evident that more than half the percentage of students don`t prefer to purchase Lenovo laptop in future.

From this graph, we came to know that awareness of Lenovo laptops among students is more from print media.

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From this graph it is evident that almost 75% of students know about its contract with IBM. So Lenovo should try to continue its contract with IBM to increase its popularity as a brand which will help them to increase their market share in futuressss.

3. CONCLUSION

The above analysis shows that LENOVO does not have a good brand image in the Indian market as compared to other players. As is evident from Question 1, that the brand penetration of Dell and HP is more as compared to Lenovo which is 7.14% only .Also since Lenovo is a Chinese company, there is ambiguity about its durability in the minds of the customers.

4. RECOMMENDATIONS

The following steps should be taken so as to make LENOVO a popular brand in the market:-

a) Product design: - Weight should be reduced, should be available in some more colours.

b) Target customers: - Focus on students and small business firms.

c) Promotions :-

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Advertisements: -Ads on television, magazines should be more frequent. Brand Ambassador:- Brand ambassador should be someone who has a greater impact on public or someone who is techno savvy like Pranabh Mistry.

d) Post Purchase Services :- More customer service centre’s should be

opened.

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