This month the Beijing-based company will begin to deliver Lenovo-branded IdeaPad laptops and IdeaCentre desktop computers to 15 countries including the U.S. The computers are aimed squarely at consumers and will be backed by a broad marketing and advertising campaign dubbed “Ideas,” featuring an iconic cartoon lightbulb that will appear in much of Lenovo’s marketing communications.
The campaign, created by Ogilvy & Mather, marks Lenovo’s first effort to sell computers under its own name to American consumers. Until now, the Lenovo brand was only advertised through business-to-business channels, while consumer laptops and desktops retained IBM’s ThinkPad logo.
“We’ve always wanted to address the consumer space because it represents over 40% of the PC opportunity worldwide,” said Craig Merrigan, VP of global consumer marketing for Lenovo in Raleigh, North Carolina.
Lenovo already has more than 30% of the consumer PC market in China and entered that market in India two years ago, largely by re-deploying what worked in China, where Lenovo is the largest domestic computer maker as well as the biggest local mobile handset manufacturer. Advertising focused on durability and low prices. That strategy seems to have worked. Lenovo claima 22% of the consumer PC market in India, according to company figures.
But India, like China, is a developing Asian market. The company needs different tactics in the U.S. and Europe, where Lenovo is also introducing IdeaPad laptops in countries like France and Russia.
The challenges for Lenovo are myriad in the U.S. The PC market is already highly competitive with several entrenched players. Analysts agree that Lenovo needs to build more brand recognition, continue to innovate and convince retailers to carry the company's products.
“’Think’ is for business and ‘Idea’ is for consumers, with the ‘pad’ and ‘center’ as connectors. We are purposefully trying to build out a master brand reputation for Lenovo,” Mr. Merrigan said. He likened the business model to an automaker like Toyota, with both the Lexus and Camry brands.
When Lenovo, the world’s fourth-largest PC maker, acquired the PC division of IBM for $1.25 billion in 2005, it obtained the right to use the IBM logo for several years. The company immediately embarked on an ambitious plan to grow its product portfolio and brand beyond China, namely through global sponsorship of the 2008 Olympic Games.
It also backing prominent Olympic athletes like Liu Xiang, a Chinese track-and-field star, as well as non-Chinese Olympic athletes like Australian swimmers Lisbeth Lenton and Eamon Sullivan, American volleyball player, Kerri Walsh and Japanese sprinter, Shingo Suetsugu.
Late last year, it decided to jettison the IBM logo two years ahead of schedule. With the games now just eight months away, Lenovo is eager to capitalize on the brand awareness that comes with global sponsorship as a way to jumpstart its overseas growth strategy.
Lenovo's worldwide market share of PCs shipped, according to IDC’s third-quarter survey, was 8%, coming in third behind H-P and Dell. Its consumer PC share, however, was much smaller with just 4.6%, ranking fifth behind H-P, Acer, Dell, and Toshiba.
“The big challenges for them are the Dells, H-Ps, and Acers and Gateways–-and getting into retail stores,” said IDC analyst Richard Shim in Framingham, Mass. “It’s a competitive time in the market, and (many other manufacturers) already have shelf space, and as you know, at retail, it’s all about shelf space.”
Mr. Merrigan acknowledged there are definitely challenges in entering the crowded U.S. market. “If it were easy, we probably would have done it two and a half years ago.”
But Lenovo, he added, wanted to make sure everything about its consumer product would stand up to the competition, and did extensive testing against top brands Hewlett Packard, Apple, and Sony.
Marketing will play a key role in the new brands' introduction, but that doesn’t necessarily mean a big ad budget. Mr. Merrigan said that while Lenovo will commit a significant amount of money to the “Ideas” campaign, and make an even bigger commitment to its Olympic sponsorship, a key part of the marketing strategy is to reach reviewers, bloggers, and consumers and help them “find our brand and advocate our products.”
Roger Kay, an analyst with Endpoint Technologies Associates in Wayland, Mass., said, “As an organization, they’re pretty new and the competition is pretty well entrenched. I’m not ready to bet on their success on this yet, but they’re certainly done the homework they need to get into this market.”