Marketing Mix Strategies of Lenovo Company - Case Study Example

Marketing in Global Economy: The Case of Lenovo Company 7.0 Marketing Mix Strategies The marketing mix is an organizational tactical toolkit which includes the elements of marketing such as product, price, people, physical evidence, process management, promotion, and place with which companies executes effective and efficient marketing strategy. Companies adjust the various marketing mix elements with the objective of gaining optimum environment fit and subsequently satisfy the diverse needs, expectations and preferences of consumers (Onkvisit and Shaw, 2008, p.7). Product, pricing, place and promotion strategy are employed by multinational brands such as Lenovo to influencing cognitive, affective and the behavioural responses of consumers in a manner that enhances consumer experience of such brands. The consumer’s search and purchase decisions are significantly informed by how they perceive a particular brand of product (Hanzaee and Yazd, 2010, p.3775). The Lenovo Company recognizes that their understanding of the needs, aspirations, expectations and preferences of their consumers plays a crucial role in using and adjusting the marketing mix strategies to influence the buying decisions of their consumers to the advantage of the company (Muzondo and Mutandwa, 2011, p.2). The strategies used by a company to adjust its marketing mix is determined by how effective a company communicates its brands, products and services to target consumers. This is crucial since it enables a company shape the perception of consumers regarding its brand of products. Effective marketers are able to not only design, but also manage the various inputs of the marketing mix to influence the search and purchase decisions of consumers to their advantage. Lenovo has been successful due to the fact that it has been able to provide its consumers with unique and distinctive experience through effective company representation, visual identity and supervision provision. 7.1 Product: Core, Actual and Support Components The product component of the service marketing mix is considered to be the core offering of multinational business companies such as Lenovo Company. The Company has remained competitive, relevant and highly profitable due to the fact that the company provides its customers with highly competitive computer and related products and services. Other than being competitive, the company’s computer products/services are designed to enhance consumer value. The Lenovo Company exhibits a highly differentiated product/service continuum. The company recognizes that without competitive and highly differentiated computer products/services it can loose a significant margin of the global computer products and services market share to competitors such as Dell and HP among others especially in the US, China and most parts of the Asian market (Technology Envy, 2013). The company’s products are highly innovative (Lenovo, 2013). Most of the company’s products such as laptops are based on the thin pad technology while others are loaded with AMD-based processors. Other than the provision of PCs, the Lenovo Company also provides products such as Smartphone and Tablets. According to Technology Envy (2013), the company hopes to venture into the other computerized products and accessories. Its is due to this innovativeness that Lenovo ranks second in the world having overtaken both HP and Dell and achieving approximately 16.7% of the global computer products and accessories sales (Norton, 2013; Xing, 2010). The Lenovo Company exhibits an impressive geographic presence across the globe. The company’s target market has significantly evolved since its establishment in 1984 (Lenovo, 2013). The company’s global strategy can be clearly demonstrated by Ansoff’s matrix (1957). When the Lenovo Company begun in 1984, its primary strategy was to provide affordable but innovative computers in order to gain market share especially in China before going international (Lenovo, 2013) . The company employed market penetration strategy to establish its product in the home market via increasing product usage and consequently market share. This informed the launching of the product in the international market as the company targeted new geographical areas as well as market segments. To penetrate the new geographical areas and market segment, the company employed product development strategy to developed new products. This was accompanied by diversification strategy to successfully venture into new products market segments. Table 1 below summarizes the Ansoff’s matrix and demonstrates the Lenovo Company’s product strategy since its foundation in 1984. Current Products New Products Current Markets Market penetration strategies Increase market share Increase product usage Increase frequency of product usage Increase quantity of product used New product application Product development Strategies Product improvement Product line extensions New products for same market and market segments New Markets Market development strategies Expand market for existing products geographic expansion Target new market segments Diversification strategies Vertical integration Forward integration Backward integration Diversification into related businesses i.e. concentric diversification Diversification into unrelated businesses i.e. conglomerate diversification 7.2 Price: Price Setting and Plan Lenovo Company ensures that their computer products and services are affordable to the target customers. For instance, in order to provide customers with competitive prices, the company realized that household in China had limited income which undermined their ability to acquire computer products. As a result, Lenovo Company started providing computer products that undercut other imported PCs by approximately between 20% and 30% in China in the mid 1990s (Lenovo, 2013). Burrow (2008, p.34) reiterates that for businesses to be successful, they must adopt appropriate approaches to pricing. Lenovo Company adopts a cost-friendly approach in pricing its computer products, accessories and services in the various computer products and accessories market segments. An important strategy in pricing by multinational companies such as Lenovo is the provision of discount prices on products. As the tug of war shapes between the Lenovo Cola Company and its competitors especially HP and Dell, the company is increasingly becoming keen on segmented price-packaged strategy for its major brands of computer products. Successful companies are keen on boosting their revenue and profits by scaling back on volume per transaction even though there has been a rise in the prices of associated raw materials (Hanzaee and Yazd, 2010, p.3775). Analysts indicate that the Company is more prompt and aggressive in pushing the prices of its product brands to reasonable levels (Xing, 2010). Chiang, Wang and Chen (2010, p.757) postulate that one of the most significant strengths of multinational companies such as the Lenovo Company is ability to produce and distribute affordable products. The company’s pricing strategy is designed in such a manner that it provides target consumers with distinctively competitive prices for greater value (Lenovo, 2013). Burrow (2008, p.34) argues that the success of a company is dependent on its ability to adopt appropriate strategies or rather approaches in pricing its products. The Lenovo Company has been successful due to the fact that the company has a cost-friendly approach to product pricing in the various market segments. 7.3 Place: Channel Strategy According to Muzondo and Mutandwa (2011, p.6), place refers to spatial distribution as well as presence of product/services of a given business. This element of the marketing mix represents both physical place as well as time in marketing of products and services. Lenovo Company’s computer product and services, and accessory outlets are easily and conveniently accessible to customers all over the globe. Over the past couple of years, the company has increased the network of its local outlets and global service centres with the rationale of enhancing customer satisfaction. A significant aspect of the place element (channel strategy) of the company’s marketing mix strategy is the fact that the Lenovo Company has a wide distribution network for its computer products, easily accessible service centres as well as online stores. These are aimed at ensuring that the company’s computer products are not only easily accessible, but also widely available for its target consumers. The company has also ensured that her channels of product distribution are less fragmented as compared to those of her key competitors in the marketplace thereby effectively creating barrier to competitors especially the new entrants into the computer products markets. 7.4 Promotion: Communications Plan Hanzaee and Yazd (2010, p.3775) reiterate that the promotion element of the marketing mix strategy is a crucial link between a company’s brand of products and potential or target consumers. Grundey (2008, p.133) on the other hand posits that the promotion element also includes education and provides a platform through which consumers get to know the products or brands of a company and their perceived quality. The Lenovo Company uses the promotion and education element of the marketing mix through word of mouth (WOM) campaigns, online advertisement, as well as mass media communication. According to Xing (2010), Lenovo Company has innovative and fresh advertisement emphasizing competence, sophistication as well as sincerity. The communication plan adopted by the company especially after being banned in global markets in the US, Australia, UK and Canada enabled the company to double its global computer sales to 260,000 units between 2008 and 2009 (Xing, 2013). In addition, the company has recognized and acknowledged the need for personalized advertisement of its computer products and accessories. This is aimed at enhancing the company’s target market and achieving competitive advantage against key competitors in the global computer marketplace. Multinational companies such as the Lenovo Company acknowledge the role that effective promotion strategy plays in their success (Chiang, Wang and Chen, 2010, p.757). The company uses global communication to ensure proper appeal to its target computer products and accessories consumers. As such, the company has employed massive global advertisement and communication strategy in order to promote the company’s computer brands all over the world. Bibliography Burrow, L. J 2008, Marketing, London, Simon and Schuster. Chiang, D.A., Wang, Y and Chen, S 2010, Analysis on Repeat-buying Patterns, Knowledge Based Systems, Vol. 23, No. 8, p.757-768. Grundey, D 2008, Experiental Marketing vs. Traditional Marketing: Creating Rational and Emotional Liaisons with Consumers, The Romanian Economic Journal, Vol. 11, No. 29, p. 133-151. Hanzaee, K. H and Yazd, R. M 2010, The Impact of Brand Class, Brand Awareness and Price on Two Important Consumer Behavior Factors; Customer Value and Behavioural Intentions, African Journal of Business Management, Vol. 4, No. 17, p. 3775-3784. Leneovo 2013, Our company, [Online] Available at: [Accessed 17 October 2013]. Muzondo, N and Mutandwa, E 2011, “The Seven Ps of Marketing and Choice of Main Grocery Store in a Hyperinflationary Economy”, Contemporary Marketing Review, Vol. 1, No. 9, pp.1-18. Norton, L 2013, Lenovo attacks. [Online] available from: [Accessed 17 October 2013]. Onkvisit, S. and Shaw, J. J 2008, International marketing: strategy and theory, New York, Routledge. Technology Envy 2013, Lenovo ranked largest PC Company in the world! [Online] available from: [Accessed 17 October 2013]. Xing, W 2010, Lenovo changes market strategy. [Online] available at: [Accessed 17 October 2013]. Read More