Growth of Laptop market in India.

• Indian Laptop market is now in sync with global market.

• In 2005 that sales of laptops surpassed the sales of desktop computers for 1st time.

• Laptop market has registered 79% Year-on-Year (YoY) growth during 2006.

• Market share of laptops would be 35-40% in the next two years.

Present Market scenario

The major players in the laptop category are: • Hewlett Packard (HP)• HCL• Toshiba• Compaq• Dell Computers• Sony• Lenovo.

• HP has the largest market share of 21 per cent in the Indian laptop market, followed by HCL and Lenovo.

Legend to Lenovo

• 1984: Chinese Academy of Science founded the New Technology Developer, Inc (NTD).

• 1987: Legend character card which translated English language operating systems into Chinese.

• 1989:NTD renamed Legend Computer Company.• 1990: Legend launched its own computer.• 1996: Legend introduced itd first laptop model.• 2004: Legend renamed Lenovo (Le + novo) the same year a

deal with IBM PC.

4 Ps of Marketing

• Desktops• Laptops (scratch

resistant, protective & titanium cover).

• Servers• Client base is small

business and customers.

• Workstations• Projectors

Product Place• Lenovo has the

highest market share in China, of over 35%

• Currently it has the third place in Global PC market

• Its market share is constantly increasing in Asia

•Product Map

Putting more innovation in the hands of more people so they can do more amazing things.

Everyone

• Few

• Commodity •Innovation

Price Promotion

• Reasonable rates of laptops• Follows competitive pricing

strategy• Prices for all range of

customer base• Follows a different price

range for products in India and China

• Accessories and After-sales services is very cheap compared to its competitors.

•Promotion in India – ‘’Who wants to be a millionaire.

• Turin Olympics sponsorship

•Product oriented messages in advertising.

•Public relation campaigns.

•Advertisements focused on quality and innovation

Branding decisions

•Customers concern:

i. Innovation

ii. Quality

iii. Service and support

•Branding alternatives:

i.Master brand

ii.House of brands

iii.Synergy approach

iv.Lenux/toyota strategy

Building the Masterbrand

• “one-two punch” ; build up Lenovo as a strong Master brand

and continue to strengthen the ThinkPad product brand

• Three phase advertising plan

• Worldwide advertising campaign

• “ThinkPad Unleashed” during Turin Olympics opening

ceremony

• Lenovo as a Masterbrand for innovation

Innovations

•Think Pad 60 –needed something appealing .

•Titanium cover

•Protection

•Scratch resistant

•Built-in EVDO wireless broadband card and antenna.

BCG Matrix

BCG Matrix

Market share

Market growth

The BCG matrix method is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit.

Categories of BCG Matrix

Use large amount of cash and are market leaders.

Low in vestment required, it keeps profit high

Absorbs huge cash and growth decrease

High Demands but Low Returns

Lenovo in BCG Matrix

GE Matrix

GE Matrix

Competitive Strength

Market Attractiveness

The GE Matrix works in 3x3 Matrix

Market Attractiveness Market size Market growth rate Market profitability Pricing trends Competitive intensity / rivalry Overall risk of returns in the industryEntry barriers Opportunity to differentiate products and servicesDemand variability Segmentation Distribution structureTechnology development

Competitive Strength Strength of assets and competencies Relative brand strength (marketing) Market share Market share growth Customer loyalty Relative cost position (cost structure compared with competitors) Relative profit margins (compared to competitors) Distribution strength and production capacity Record of technological or other innovation Quality Access to financial and other investment resources Management strength

Lenovo in GE Matrix

Michael Porter’s

FIVE COMPETITIVE FORCES

The purpose of Five-Forces Analysis

• The five forces are environmental forces that impact on a company’s ability to compete in a given market.

• The purpose of five-forces analysis is to diagnose the principal competitive pressures in a market and assess how strong and important each one is.

Threat of Substitute Products

Threat of Substitute Products

Threat of New EntrantsThreat of New

EntrantsThreat of New

Entrants

Rivalry Among Competing Firms in

Industry

Rivalry Among Competing Firms in

Industry

Bargaining Power of Buyers

Bargaining Power of Buyers

Bargaining Power of Suppliers

Bargaining Power of Suppliers

Porter’s Five Forces Model of CompetitionPorter’s Five Forces

Model of Competition

Threat of New EntrantsThreat of New Entrants

Government Policy

Economies of Scale

Product Differentiation

Capital Requirements

Switching Costs

Access to Distribution Channels

Bargaining Power of SuppliersBargaining Power of SuppliersSuppliers are likely to be powerful if:

Supplier industry is dominated by a few firms

Suppliers’ products have few substitutes

Buyer is not an important customer to supplier

Suppliers’ product is an important input to buyers’ product

Suppliers’ products are differentiated

Suppliers’ products have high switching costs

Bargaining Power of BuyersBargaining Power of BuyersBuyer groups are likely to be powerful if:

Purchase accounts for a significant fraction of supplier’s sales

Products are undifferentiated

Buyers face few switching costsBuyer presents a credible threat of backward integration

Product unimportant to quality

Buyer has full information

Threat of Substitute ProductsThreat of Substitute Products

Products with similar function limit the prices firms can charge

Products with similar function limit the prices firms can charge

Keys to evaluate substitute products:

Products with improving price/performance tradeoffs relative to present industry products

Example:

Electronic security systems in place of security guards

Fax machines in place of overnight mail delivery

Cutthroat competition is more likely to occur when:

Rivalry Among Existing CompetitorsRivalry Among Existing Competitors

Numerous or equally balanced competitorsSlow growth industryHigh fixed costs

Lack of differentiation or switching costs

High storage costs

Capacity added in large increments

High strategic stakesHigh exit barriers

Diverse competitors

Porter’s

Five forces

New World, New Thinking.

N,

ppda

Threats of new entrant

Threats of substitute

Rivalry among

existing firmsEasy entrant

Profitable sector

New technology

Ultra light laptop’smobile pc’sThink padsPDSDesktop, Smartphone

Cont..

Supplier’s power

Buyer’s power

it has excellent supply chain.Intel corp.Seagate's technology etc

Customers who are enterprises have less power as compared to individual buyers.

The Five Forces of Competition Model

LOW

HighMODERATE

INTENSE

HIGH

SWOT Strength Weakness Lean cost structure Effective business modelInnovation leadership Event sponsoring Good marketing and distribution strategies Quick responsiveness Strong R&D National image.

Unable to maintain sustained growth rate in all market segment Ignoring potential market Retaining of largest shares by competitors Poor global perception Globally not well known.

Opportunity Threat

Increasing global demand for PC Specialty shops proving one stop platform for distribution Government organizations increasing their spending on IT Internet boom Increase product lines Converting manual orders to automotive orders.

Competition threat from both local and international market Industry reaching maturity Software piracy and clone market Price warEmerging small firms International competitors forming alliance with local competitors.

•Product Map

Putting more innovation in the hands of more people so they can do more amazing things.

Everyone

• Few

• Commodity •Innovation

Lenovo’s growth Strategy• Changed its name Lenovo from Legend in 2003.• In 2004 LENOVO acquired IBM’s PC division.• Adopted direct distribution technique leaving traditional technique.• Lenovo established new Innovation center in 2005.• Lenovo introduced the first Dual-core ThinkPad notebook PCs in

2006.• Sponsored 2006 Olympic Winter Games in Torino, Italy, supplying

5000 desktops.• Increasing the range of product categories

(diversification) in order to maximize the number of customers and to face fierce competition

• Efficient international management.

PROFIT IMPACT OF MARKETING STRATEGY(PIMS MODEL)

The PIMS (Profit Impact of Market Strategy) of the Strategic Planning Institute is a large scale study designed to measure the relationship between business actions and business results.

The project was initiated and developed at the General Electric Co. from the mid-1960s and expanded upon at the Management Science Institute at Harvard in the early 1970s.

Since 1975 The Strategic Planning Institute has continued the development and application of the PIMS research

continued

The comprehensive profiles of over 3,000 strategic experiences constitute this unique data pool.. The data covers the important characteristics of the MARKET ENVIRONMENT, THE STATE OF COMPETITION, THE STRATEGY PURSUED BY EACH BUSINESS AND THE RESULTS OBTAINED.

PIMS is:• a database of business strategies, used to generate benchmarks and

identify winning strategies.• a set of data-derived business strategy principles to guide strategic

thinking and strategic measurement. • a methodology for diagnosing business problems and opportunities,

and for measuring the profit potential of a business.

PIMS• The data constitute a key resource for such critical

management tasks as evaluating business performance, analyzing new business opportunities, evaluating and reality testing new strategies, and screening business portfolios.

• The primary role of the PIMS Program of the Strategic Planning

Institute is to help managers understand and react to their business environment. PIMS does this by assisting managers as they develop and test strategies that will achieve an acceptable level of winning as defined by various strategies and financial measures.

• The PIMS database allows for the identification of those critical

strategic factors that enable a business to achieve an improved sustainable position.

KEY STRATEGIC FACTORS INFLUENCING BUSINESS PERFORMANCE

• Competitive Position • Market Environment • Stage of Lifecycle • Market Share • Marketing/Sales • New Products/Sales • Relative Market Share • Customer Concentration • R & D/Sales • Relative Quality • Customer Purchase Amount• Real Market Growth

• Relative Price • Industry Concentration • Capital and Operating

Structure • Investment / Sales • Receivables / Investment • Investment / Value Added • Capacity Utilization • Gross Book Value of

P&E/Total Investment • Value Added / Sales • Operating Effectiveness

THE STATISTICS

• Lenovo market share 0.01% (November 2009) Devices Market Share • Lenovo i966 0.01% • Lenovo V800 <0.01% • Lenovo P780 <0.01% • Total market share 0.01% (0.01%) • Other than Lenovo devices, unknown devices and PC browsers 99.99% • Total market share 100% (99.99%)

Consumer satisfaction index

CRITERIA OF PIMS-QUESTIONS TO BE ASKED

• Return on Investment Report - What level of profitability is "expected" for comparable businesses? (106.42%)

• Market Share Change Report - What level of share gain/loss is

"expected" for comparable businesses? (.01%) • Marketing Budget Report - What level of marketing expenses is

"expected" for comparable businesses? • Market Attractiveness/Competitive Strength Report - How

attractive is the market/competitive position of comparable businesses?

CONTINUED

• Important Strategic Principles Derived From PIMS • In the long run, product quality is the single most important

factor affecting performance • Market share and profitability closely correlated • High-investment intensity reduces profitability • Cash implications of growth rate and relative market share are

affected by many factors • Vertical integration is profitable for some businesses only

• Most factors that boost ROI also contribute to value

LIMITATION OF PIMS

• Key market-share variable is sensitive to product-market definition

• Other variables depend on subjective judgments • Inherent limitations of cross-section analysis • Sample biased toward larger firms that are industry leaders

• THANK YOU

PRESENTED BY:HARSHA ABHISHEKMUKESHMANALIPANKAJPRIYANKA