Lenovo Case Study 3 FINAL
LENOVO CASE STUDY
PROBLEM STATEMENT
Lenovo faced a crisis between its brand identity and its brand image. Lenovo wanted to be perceived as a quality product, but due to the Country of Origin effect, they had an image of being a lower quality Chinese made brand. After the acquisition of the IBM ThinkPad, a premium brand, Lenovo was faced with the problem of developing a branding strategy that would correctly reflect these two very different brands without compromising the other brand.
SITUATION ANALYSIS
Lenovo (formerly Legend Computer Company) was currently the leading computer manufacturing company in China. It had achieved a rapid path to success due to several conditions. Legend pioneered the first PC card that allowed the typing of Chinese characters, making the computer interface accessible to a huge Chinese population. It attached the card to motherboards prior to distribution, grew market share and gained new contracts. In 1990 Legend introduced its own line of computers, and by 1999, had a 21.5% share in China. Additionally, the Chinese government owned a 46% share of the company, and imposed trade quotas, tariffs on competitors and restricted ownership and channel access to the competition, further allowing the company to succeed.
Legend was reaching a new crossroads in its path to future growth. China joined the World Trade Organization in 2001, which eliminated the protection it had received. Competition, in particular Dell, Haier and grey-market clones, eroded Legend’s share in China. Although skeptics said that Legend was not ready for entrance into the global market place, it was clear that it had to in order to grow. While it was losing market share in China, it had a potential for growth in Europe, North America the Middle East and Africa. Due to existing trademarks, Legend became known as Lenovo for sales outside of China. From a branding perspective, they were starting over as a new brand in an already mature market saturated with big
PROBLEM STATEMENT
Lenovo faced a crisis between its brand identity and its brand image. Lenovo wanted to be perceived as a quality product, but due to the Country of Origin effect, they had an image of being a lower quality Chinese made brand. After the acquisition of the IBM ThinkPad, a premium brand, Lenovo was faced with the problem of developing a branding strategy that would correctly reflect these two very different brands without compromising the other brand.
SITUATION ANALYSIS
Lenovo (formerly Legend Computer Company) was currently the leading computer manufacturing company in China. It had achieved a rapid path to success due to several conditions. Legend pioneered the first PC card that allowed the typing of Chinese characters, making the computer interface accessible to a huge Chinese population. It attached the card to motherboards prior to distribution, grew market share and gained new contracts. In 1990 Legend introduced its own line of computers, and by 1999, had a 21.5% share in China. Additionally, the Chinese government owned a 46% share of the company, and imposed trade quotas, tariffs on competitors and restricted ownership and channel access to the competition, further allowing the company to succeed.
Legend was reaching a new crossroads in its path to future growth. China joined the World Trade Organization in 2001, which eliminated the protection it had received. Competition, in particular Dell, Haier and grey-market clones, eroded Legend’s share in China. Although skeptics said that Legend was not ready for entrance into the global market place, it was clear that it had to in order to grow. While it was losing market share in China, it had a potential for growth in Europe, North America the Middle East and Africa. Due to existing trademarks, Legend became known as Lenovo for sales outside of China. From a branding perspective, they were starting over as a new brand in an already mature market saturated with big