Lenovo challenged by branding weakness overseas
The recent thresholds Lenovo faces aboard have their roots in flawed sales and marketing strategies, China Business Post reported.
According to the statistics from Interactive Data Corp (IDC), an American market intelligence firm, Lenovo’s share of the US market suffered from a 0.1 percent down in the second quarter while its competitor HP has its share of the market increased by 1.5 percent.
Lenovo has invested much on sales and marketing in the second quarter. As the first year of going global, Lenovo started new low pricing strategy, together with heavy advertising during the World Cup, with the aim to generate sales revenue. However, such strategy failed to earn Lenovo the market share it aimed for.
ISC’s statistics showed that in the second quarter, the top three global PC brands were still Dell, HP and Lenovo with 19.2 percent, 15.9 percent and 7.7 percent shares of the market respectively. Excluding Japan, Lenovo has 20 percent share of the market in Asia-Pacific, which is a 2 percent year-on-year jump. The expansion of business mainly involved with the markets in India and China. HP and Dell have 12 percent and 9.4 percent shares of the Asia-Pacific market respectively.
In contrast, Lenovo fails to achieve similar sales in the US market. IDC’s second quarter statistics showed that Lenovo ranked fifth in the US market with 4 percent share of the market and 640000 units sold. This is far from satisfactory especially when Dell and HP have 34.2 percent and 20.1 percent shares of the market with 54370000 and 31950000 units sold respectively, which is 8.5 times and 5 times more than Lenovo.
Analyst said that Lenovo fails to occupy significant share of the market in the US where it is headquartered constructed an unfavourable publicity that would be damaging to its global image.
“The successful acquisition of IBM PC department helps change Chinese mentality towards Lenovo’s internationalization. However, it hasn’t changed the attitude towards Lenovo in the States,” said an analyst.
IBM had spent years to polish its PC branding. The acquisition is supposed to be constructive in improving Lenovo’s image among US consumers. Since Lenovo continues to use low pricing as a marketing strategy in the States, the top-end image of IBM’s subsidiary, Think, is at grave risk.
Analyst pointed out that such price-cutting actions spring from its dissatisfaction towards IBM PC’s share of the US market. However, Lenovo fails to understand that blurry branding and unfavourable image, instead of prices and quality, are the keys to the situation. As a Chinese brand that relies on low prices to gain overseas market share, Lenovo suffers from the setbacks that lie deeply with its strategies in the long run.