Lenovo roadshow visits 1,000 cities across China

Olympic theme helps market kid-friendly PCs

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BEIJING--When Lenovo Group became the first Chinese company to join the Olympic Partner Program in 2004, joining the ranks of the world’s largest marketers like Coca-Cola Co. and McDonald’s Corp., the investment was quickly perceived as a way to jumpstart the computer maker’s global expansion strategy.

Lenovo certainly has encouraged this view. It made its global brand debut at the Olympic Winter Games in Turin last February, just one year after it first made international headlines by acquiring IBM Corp.’s personal computing division.

But the world’s third-largest computer manufacturer is also leveraging its Olympic sponsorship at home, and not just in big cities like Beijing and Shanghai, where Olympic mania is already passé. Through an ambitious roadshow program, Lenovo is visiting 1,000 tier five and tier six cities and towns, ranging from the capitals of outlying provinces like Lhasa, Tibet to small cities such as Sanya in Hainan province.

“Lenovo is one of the few to actually take Beijing to the people with this initiative. It’s more designed to help close the digital divide than be a sales promotion. It views itself as a crucial symbol of national pride, a truly global Chinese company,” said Beijing-based Greg Paull, founder and principal of R3, an independent marketing consultancy that is tracking brand and star performance connected to the 2008 games. "But when I first heard about their 1,000 city tour, I thought it was a mistranslation, it's so many cities," he laughed.

The average population of the towns is 250,000, and “none are larger than one million,” said Alice Li, Lenovo’s VP, Olympic marketing at its Chinese headquarters on the outskirts of Beijing, who orchestrated the roadshow. “We've provided many young Chinese with their first experience using a PC, and their first close-up view of China’s sponsorship of the Olympics, brought right to their door."

Since computers are not common in China’s smaller cities, and they are rarely found in schools and homes, Lenovo’s technology would probably be enough to stir up interest on its own. But the roadshow’s real draw for many rural residents is the Olympic theme. The full-day events offer information and photographs about the history of the games, Olympic sports, traditions like the torch relay and a lucky draw in which participants win prizes for answering trivia questions about the games.

With help from the Beijing Organizing Committee for the Olympic Games (BOCOG), Lenovo has recruited about 40 former Olympic athletes like gold medalist Wang Yifu to give lectures and pose for photos, usually influential local celebrities who enjoy reliving the Olympic experience in their hometown. At least one Olympic athlete takes part in every event.

As part of the promotion, Lenovo has donated about 1,000 computers, mostly to country schools, but fanning out into the countryside is more than a public relations maneuver. With the promotion now about two-thirds finished, sales in China’s tier five and six cities have grown over 50%. And 80% of participants said the roadshow improved their image of the company.

Growth in China's small but fast-growing cities is welcome, because Lenovo has faced a bumpy ride outside its home country. While Lenovo's PC sales in the mainland grew 25% in the third quarter last year, according to a Lenovo financial statement released in late 2006, they fell 9% in the U.S., where the company has lost market share. Overall sales were stronger in the fourth quarter of last year, but Lenovo's worldwide market share is still flat at 7.3%, according to research company IDC.

The tier five and six cities on Lenovo’s itinerary account for much of the company’s market growth within China, despite relatively low income levels there as well as price wars with rivals like Founder Technology Group Corp. and Tsinghua Tongfang Co., China’s second- and third-largest PC manufacturers, respectively.

While Lenovo products are pricey for consumers who earn less than $500 per month, local values come into play. Chinese spend a disproportionate amount of their disposable income on education. Computers--plus the internet connections they make possible--are seen as a valuable resource. To meet that demand, the roadshow events include ample Lenovo branding and specifically promote its Jiayue desktop PC, a low-cost computer designed for kids to use at home.

To reach families across such a wide territory, Ms. Li relies on a “well-designed schedule” at Lenovo’s 18 branch offices that deal directly with the company’s 5,000 retail stores spread out across China. Upcoming events are promoted through local newspaper ads, online marketing and storefront posters at retail sites. On average, the events attract about 4,000 people. By the end of the promotion this spring, it will have reached over two million consumers directly, and millions more through media exposure.

About half of the company’s 200 marketing staff in China is involved with the roadshows. Two or three small teams from each branch office oversee the events, sometimes handling more than one per day. Those teams, in turn, rely on about 20 contractors, such as local public relations firms, ad agencies, event organizers, and consultants, as well as the support of local government officials. Lenovo works with three multinational agencies in China. Ogilvy & Mather handles creative for IBM-branded products, Dentsu oversees advertising for consumer products, and JWT works on business-to-business products. None of them are involved directly in the roadshows.

Despite the scope of the one-year program, the budget is just $2.6 million, said Ms. Li, “because we aren’t buying expensive TV time, although the [free] local TV coverage of our events has been very good.” The road show isn't a big financial investment, but it is “an effective and efficient way to promote Lenovo and the sales results are very encouraging,” she said.
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