The Strategic Marketing Management Analysis of Lenovo Group - A.pdf

The Strategic Marketing Management Analysis of Lenovo Group Wang, Wen Cheng, Dept. of Business Management, Hwa Hsia Institute of Technology, Taiwan Chu, Ying Chien, Department of Tourism and Leisure, National Penghu University,Taiwan Chen, Ying Chang, Department of Hotel and Restaurant Management, Ching Kuo Institute of Management and Health ABSTRACT In recent years, market competition in the market economy is fierce, the different economic performances and behaviors based on the enterprises own interests, to enhance their own economic strength and to achieve the exclusion of similar economic agents. Competition in the IT market is to drive their own material interests, because of the inherent dynamic of all economic actors, as well as the loss of their material interests are similar in the market by crowding out of economic actors. But How a newly established global brand build its brand awareness and be a successful global brand become a critical issue. 2005, Lenovo PC merge IBM computer and become the No.3 computer company in the world. As for Lenovo Group, in order to achieve success in the fierce competition of the products market it needs effective marketing strategy to attain profit and improve its development in Chinese IT market. The Lenovo Group operating activities are often completed through marketing products, producing, research, marketing portfolio. The Lenovo Group product and the quality of products constrain the results of pricing, promotion, and marketing. Therefore, the Lenovo Group managers attention should also be given to brand-name marketing, addition to make efforts in the flexibility of the marketing. Marketing strategy, especially the brand strategy is the real insight beyond product and services specific forms, and can be able to give consumers the direct interests, the image of the expression. To establish the product brand, it should be to establish the Lenovo Group brands, because good corporate image is the fundamental point of the brand building. This research is going to present the conclusion of a set of practical marketing modules applied in the IT industry; it will further enhance the Lenovo Group marketing in the computer market. Keywords: marketing strategic、Lenovo Group、global brand、IT industry INTRODUCTION Merge has become a common and efficient strategy for a local company to become global brand. But How a newly established global brand build its brand awareness and be a successful global brand become a critical issue. (Chen, 2006) Along with Chinese economic and political reform getting thorough, the society has changed huge; the development of Lenovo is facing the unprecedented opportunity and the challenge. According to the basis characteristics of macroscopic external environment, if Lenovo wants to develop, it must reform the management system, establishes the unification guiding ideology and the reasonable management mechanism, and adopts strengthened core competitive power, market development, and product development etc. integration strategy. Only then can consolidate the leading position of Lenovo, win in the intense extracurricular market competition, and receive the good social efficiency and the economic efficiency. Study on Lenovos developmental strategy plan is the application and development of strategic management theory in Lenovo Company. By analysis of internal the external environment and study the future development direction of Lenovo, this article has utilized the knowledge and method of the economic, the management, the marketing, the pedagogy etc to make a localization for future development and propose the strategy plan and tactics conception localization of Lenovo. During try to instruct practical work of our national Lenovo, this article also developed some new thoughts about the strategic management content. THE CASE STUDY OF THE LENOVO The Introduction of the Lenovo Lenovo is one of the largest famous personal computer makers in the world. Today, Lenovo strives to be the global market share leader in each of the market we serve. On September 24, in 2004, Lenovo purchased the personal computer business and the brand “ThinkPad” famous computer IBM in the IT industry all over the world. This landmark transaction is taken as its most important stage of the international strategy in the computer industry. This marks the trinity Lenovo's internationalization strategy has risen to a new stage, which indicates that Lenovo already in the United States established a brand-name image localization. Now, the Lenovo has become the global application company (sales) that have their own package plants in more than 7 countries and cooperation plants in many countries and make the local enterprises business license and distribution contract. Lenovo is also one of the major global companies (sales), and it has its own production plants in 7 countries, its products are marketing in nearly 80 countries. Analysis of the Marketing and Management Capabilities In the domestic market, according to statistics of ZhongYikang Company: Lenovo is actually the first brand in Chinese IT industry: Lenovos overall share of computer market in China has reached 21%, significantly ahead of competitors; Lenovo has a monopoly status in the personal computer market; Lenovos personal computer market share is 24%, which is much higher than the internationally recognized monopoly; Lenovo also surpasses in the business computer market; Lenovos business computer market share is 14%, which is higher than domestic computer suppliers and the strong brand ranks the first. In the international market, Lenovo has three products occupy the first three positions in the world market share of the computer industries. According to the results of the latest survey of the global authority consumer market survey and analysis institutions, EUROMONITOR show that on turnover statistics, the Lenovo Group ranked the third in the world personal computer manufacturers, Lenovo's goal is to become the world's first personal computer manufacturers in the near future. SWOT Analysis of Lenovo In order to propose and justify a forward strategy for Lenovos goods, we use the method of SWOT (strength, weakness, opportunity and treat) to analysis the Lenovo in the follow: Table 1: SWOT Summary of the Lenovo STRENGTHS WEAKNESSES - The Lenovo goods and services have good quality - The brand recognition and traditional reputation of Lenovo are very good - Expanding global markets strategy of the marketing - The diversification of products - Owns very convenient and beautiful images - Good public relationship and sponsorship - Single marketing channel, the products and services are mainly sold by monopolized stores - Large number of product lines lie in the expansion of overseas - Product styles are too fewer to choose - Marketing sources are not rich - Prices are not cheap - Takeover Lenovo to become the largest computer seller - Specialty business computer industry takes larger market in the world - European countries market exploration, such as England, France, Italy, Germany, and so on - Division of products - There are too many cheap products appearing in the world - Competition from other shoppers embedding on form factors more pleasing to the consumer - The market protect in some countries is strong - Foreign exchange rate fluctuations OPPORTUNITIES THREATS Today, Lenovo continues to carry out the proud tradition of the good product and services quality founded by Lenovo long time ago that will be of great benefit to companies in the coming years. And the purpose of this Lenovo tradition pioneered by Lenovo is just the best quality of raw materials, the production of the best quality products. Miles (2) explorer (Prospectors), its goal grows in the pursue product/market's innovation as well as the expansion, therefore, seeks the market opportunity continually, favors holds the post of the change in the industry innovation (Creator); (3) assayer (Analyzers), its goal in the choice by the explorer was confirmed that has the development potential the new domain to promote the improvement fast the new product, therefore, is the fore-mentioned two kind of syntheses, moreover is in a product - market change domain manages (4) reactor (Reactors) in a relative stabilization, lacks the consistent strategy, is only makes the simple response to the environment pressure. With an increasingly competitive market, competition among enterprises gradually evolved from short-term competition to long-term competitiveness, that is no longer focused on a certain stage, winning or losing the competitiveness of certain products, and to focus on the product, pricing, marketing, promotion strategy, combined with a clear positioning of the brand strategy to accumulate, fostering sustainable market advantage. Although Lenovo is already the leading enterprises of computer industry in the world, however, in the face of other powerful and internationally renowned brands, it still appeared too weak and feeble in the industry. FINANCIAL ANALYSIS AND EVALUATION OF THE LENOVO Financial analysis and evaluation refers to the stakeholders using related accounting, statistic and management materials, especially the word information, such as corporate financial reports and combine the external environment such as the industry and market to analyze the effects of company operation, financial statement and the reasons in order to comprehensively evaluate the company business performance and entire competitiveness and to provide a series of analysis for the further business and financial activities such as investment, finance or management control decisions (Dollar, 1990). According to the annual report of Lenovo, we can get information on DuPont analysis of the financial indicators, as shown below: Table 2: Lenovo DuPont Analysis of the Related Financial Data indicators 2007 2008 Net profit ratio of equity 6.21% 5.68% Asset net profit ratio 3.01% 3.46% Equity multiplicator 2.06 1.87 Asset turnover rate 53% 60% Main business net profit 5.68% 5.66% Net profit 4,493,451 4,931,286 Main business income 79,087,124 87,048,831 Asset debt ratio 51.39% 46.51% Cost amount 72,823,086.00 80,078,255.00 Main business cost 36,488,433,00 41,063,184.00 Operating cost 24,138,337.00 26,174,190.00 Management cost 10,500,241.00 11,741,560.00 Financial cost 1,696,075.00 1,099,321.00 Asset amount 149,038,395 142,629,989 Liquid assets 17,246,183 15,275,757 Currency asset 5,317,489 5,754,033 Short-term investment 0 0 Account receivable 5,229,980 4,548,429 inventory 3,114,632 2,107,812 Other liquid assets 3,584,082 2,865,483 Long-term assets 131,792,212 127,354,232 Long-term investment 0 0 Fixed assets 118,492,120 116,056,432 Intangible assets 3,136,557 3,143,983 Other assets 10,163,535 8,153,817 From the report of the Lenovo in 2007/2008 2008 this year's net assets net interest is 6.47% higher than the in 2007, 6.21% by 0.26 percentage points, Because the change in net assets Margin assets is the result of asset net profit and equity multiplication, and the assets Margin of the company from 2007 3.01% rose to 3.46 percent 2008, an increase of 0.45 percentage points, while the equity multiplication decreased from 3.01% 2007 to 1.87% 2008, a decrease of 0.19. The negative impact of financial leverage on the profit is less than the positive impact of assets on profits. As assets net profits = major business Margin * asset turnover rate, the turnover rate of 2008 is higher than 2007 by seven percent, the level of asset management is significantly higher than 2007. Fixed and current assets turnover rate are higher than in 2007, turnover days of accounts receivable and inventory were lower than the number of days in 2007 which indicates that the company intensify the accounts receivable and inventory management, so enterprises asset turnover rate is higher than in 2007. The 2008's main business margin declined slightly, only 5.66 per cent, but in recent years there is a continuous downward trend, so the Lenovo should strive to improve the level of profitability. Otherwise, the Lenovo has the verge of a loss situation. Since the Lenovos assets and liabilities rate decreased in 2007 from the 51.39 percent to 2008 46.51 percent, so equity Multiplicator fell from 2.06% of 2007 to 1.87% of 2008. From the perspective of profit, as long as pre-tax income and profit margins are higher than the interest rate of loan capital, at this time, we should improve the debt ratio, and make full use of financial leverages Effect. MARKETING STRATEGY OF THE LENOVO In 1964, American Marketing expert, Boughton (1964) produced the marketing mix concept, it is an integrated activity that marketing personnel comprehensively use and optimize the various controllable factors in order to achieve its goals of the marketing. A successful and complete marketing activity means with the appropriate products, the appropriate price, the appropriate channels and the appropriate means of promotion, enterprise products and services are devoted to a specific market. According to the marketing theory, we will pick up the following marketing strategies of the Lenovo based on the above case study. Target Marketing Choice of Lenovo At present, Lenovo considers the following factors when choosing target market: 1) Strong brand awareness, city customers who have advanced concepts. In the personal computer market, the impact of Lenovo brand is comparative advantage, so choosing such target customers can cater to the needs of such customers. 2) Cities customers who have the high level of education, higher on admission, and are aged below 45. Lenovo called this crowd high-end crowd, the crowd is conducive to high-end products sales. 3) Developed rural market, those customers have strong brand awareness. This crowd has formed part of purchasing power, Moreover, Lenovo early did the act of the “free movies for countryside“ to develop the rural market, the activities have brought the brand impact, so choosing this part of the crowd as the target customer group, apparently can quickly enter the rural market. Market Position of Lenovo Lenovos marketing position mainly considers the following three factors: Take mainly to the high-end, middle and high-end combination of market positioning methods. Middle and high-end positioning can not only guarantee the consistency of Lenovo position in the market, also continue the image and status in consumer's mind, while the computer industry present status such as the profits decline also decides the only choice for high-end positioning, will it be possible to maintain the long-term favorable market competitive position (Gan, 2002). Generally speaking, the high-end products unit profits are 2 -3 times more than low-end products, in the pressure of the rising cost situation, low-end products have no guarantee of profits, the profits of enterprises is the key to taking