Marketing Week (MW): What is Lenovo’s focus this year?
David Roman (DR): One of the big events this year is the launch of ultrabooks, with the new processors coming out from Intel this April and May. We think they will re-energise notebooks as a category because they bring some of the things that people now associate with tablets, including the ability to run apps.
The focus in the second half of the year is going to be on Windows 8. From a technical standpoint, it will allow us to introduce a new category of machine similar to the Yoga notebook that was on our stand at this year’s Consumer Electronics Show. Yoga is a hybrid that can be run as either a notebook or a tablet, and we will see more of these coming out.
We see some major things happening in the PC business, and we want to be focused around redefining and repositioning Lenovo. There will be more of a product focus this year.
MW: What is your ambition for the company?
DR: Our share of the global PC market is up from number four to number two (see graph). But as thrilled as we are to be there – and if we continue at this rate we should become number one within a year – it is not really our focus as a company.
For the last quarter of 2011, units sold grew 35% but in revenues, we grew 44% and our profit grew 59%. Had we been just going after market share, we would have sacrificed a lot of that profitability.
Our long-term plan is to be the leading PC brand and to evolve the company into the new technologies, including tablets, smartphones and smart TVs. To be able to do that, we need scale.
The ‘protect and attack’ strategy we described three years ago is still very much the original strategy. There are some businesses where we have core strength. In the UK, the commercial business-to-business segments are strong. We use those to build the resources and assets that allow us to attack new spaces. We are very disciplined and balanced.
MW: We spoke a year ago about how the brand is catching up with the business. How is that going?
DR: We track it through purchase consideration. We look at people in around 10 countries who are in the market to buy a PC in the next six months, asking what brands they are aware of and which ones are on their shopping lists. We don’t care that much about awareness because unless they are going to consider buying a Lenovo product, that doesn’t mean anything.
We’ve seen the consideration metric grow by up to 200% in the nine months that we have been running the campaign, but we still have a long way to go. The company is still much bigger than the brand would suggest. However, in the countries where we are focused the brand is actually catching up.
MW: If marketing is meant to help identify what the consumer wants or needs, how involved do you get in product development?
DR: It is crucial that I get involved with product development. We were very much an engineering company with fragmented groups that carried out product development work in isolation.
A true consumer company is at the other end of the spectrum. You look at what the market wants, work out a specification and then go and develop it. We are trying to evolve into something that is a little bit in between. In the tech space, there will always be things that you do because you have a new technology breakthrough which allows you to do certain things. So you are not going to wait for the market to ask for that, you are going to figure out a way to make that relevant.
But at the same time, we have to be much closer to what the market is looking for. We have added a product launch function to the marketing group that started in April, which will allow marketing to feed more directly into product development.
There is always a balance. Technology companies are inherently different from FMCG companies that are driven by market demands, so marketing has a different role.
MW: How do the regional teams connect up with one another?
DR: We run a marketing award every quarter, called the Give and Take award.
For example, the Mexican team came up with the idea of doing a reality TV show that started on the web. It was about finding ‘doers’. One of the tasks was to find the email address of football star Lionel Messi and request a meeting with him. A teenager won by figuring out how to do it, and that got picked up with our team in Spain. Although they had nothing to do with it, they thought it was a really cool thing because he plays for Barcelona, so they did a similar thing.
The Mexican team might have come up with the idea, but they made sure that everyone around the world knew about it. As a result, both the Mexican and Spanish teams won the Give and Take award.
MW: How do you make sure your marketing is consistent globally? Do you have sign-off on everything?
DR: No I don’t. We have a process called the Creative Kitchen, a two or three-day meeting that we do region by region. We bring in the marketing people and agencies we work with to focus on understanding the key ingredients we use for the campaign.
We go through the creative and identify what works. The rationale is that if you get enough people who are trained ‘cooks’ for the campaign, then they can go and create a recipe that is going to work for them in their region.
That is going to be consistent with the others because the ingredients are the same, so we don’t need to create very complex guidelines.
Local teams tend to be competitive and it also creates an environment where people can swap around their ideas because the ingredients are common.
We do have a central production hub, which is located in Bangalore in India, so if Germany wants to develop and run a campaign, they use the hub.
The real story
Lenovo is registered in Hong Kong, where it has a large share of the market, but it wants to be seen as a global company, rather than one with a particularly Chinese identity.
It bought IBM’s personal computer arm in 2005 and is now the second largest PC manufacturer in the world after HP, overtaking Dell this year.
Of all the regions it operates in, it grew fastest in India for the three months to the end of December 2011. Globally, its best-selling products are its notebook laptops, which generate 53.3% of its revenue, followed by desktop computers, which generate a third of the company’s revenue.
Lenovo is expanding the range it offers in China to include smart TVs, tablets and smartphones, while it will roll out Yoga, its tablet/laptop hybrid later this year.
The company focuses on selling to people aged 18 to 34 and last year launched a global marketing campaign using the strapline ‘For those who do’.
While it is undeniably a large global company, it is less well known as a consumer brand in the UK and, as chief marketing officer David Roman says, the business has been growing faster than the brand. Its ongoing challenge is to raise its brand profile and consideration to buy in the areas where it is less well known.
The real statistics
How Lenovo compares to other PC manufacturers around the world
Lenovo had $8.4bn (£5.2bn) in sales for the final quarter of 2011, making a pre-tax profit of $192m (£119m) for the quarter.
China made up 42% of sales, followed by mature markets with 43% and 15% from emerging markets, such as Africa, India and Latin America, for the final quarter of 2011.
The company has a presence in more than 160 countries, making PCs, tablet computers, laptops and servers.
How Lenovo is targeting the youth market
Lenovo chief marketing officer David Roman acknowledges that marketing to 18to 34-year-olds requires a different mindset to what he has been used to.
He says: “This is something new for my generation of marketing people, but you don’t go through all the steps we are so used to when you go after the youth market.
“You used to craft a tight and clean message and a lot of the focus was on how you communicated that in a very controlled way. But with the youth audience today and the type of media we have, social and online, it is much more of a two-way street. It is about asking what is of interest to that audience and how can Lenovo present itself in a way that is relevant to that debate?”
The brand has worked with YouTube on a Space Lab competition, which tied in with Lenovo’s products that are already being used in space, by asking children to create an experiment to be performed at the International Space Station.
“It was about the fact we were associating ourselves with education in schools – cool, fun education. They had to come up with a whole scientific theory and have a cool way to present it.
“That creates an opportunity for us to present Lenovo as a company that is relevant to them. Building the brand in that way doesn’t give you the control that more traditional marketing campaigns provide.”
Entrants posted their video entries on YouTube. The winners received Lenovo products, which they are encouraged to talk about on Twitter or Facebook.
“Working with some of those partners is a great way to be more relevant to an audience. Years ago, the strategy would have been to put up some Lenovo logos in a football stadium and hope that people will see it. We do that as well but mass media communication generates awareness but not relevance.