Can Lenovo Become A Household Name?

While Chinese PC maker Lenovo aggressively tries to raise its brand awareness and grow market share in the consumer technology market, it continues to extend IBM's market-leading position in the corporate IT market.

Research firm Technology Business Research (TBR) last week made Lenovo's ThinkPad its top-ranked notebook in brand awareness and customer satisfaction among corporate IT buyers. Lenovo acquired IBM's PC business in 2005.

Now Lenovo has to find ways to translate that success to the consumer market--something IBM also struggled with.

IBM had claimed its success in the enterprise market trickled down to the consumer market, so it never had to go after the consumer market, explains TBR technology analyst Martin Kariithi. "But IBM had limited success in the consumer market, partly due to the fact that their notebooks were expensive and they didn't go after a sales channel."

Lenovo is doing it differently. "They have a more aggressive strategy and are not counting on the trickle-down effect [as IBM did]," Kariithi says. Lenovo has a few deals with big-box retailers like Best Buy--which has been selling 3000 series laptops since April 2006--and a newly announced deal to sell select models of its PCs at select Circuit City stores as well as online. It also has deals within the smaller sales channels with value-added retailers that perform services and sell PCs.

Lenovo also sells its machines via CDW, a leading provider of technology solutions, and has been doing co-branded TV advertising with them to promote its PC line and the ThinkVantage toolkit that comes with Lenovo notebooks. A software solution that helps users manage their PCs that had primarily been targeted toward IT managers, ThinkVantage could help Lenovo differentiate itself from the competition and build awareness, Kariithi says.

Lenovo has the rights to use the IBM brand name on its products until 2010, but is not allowed to use it in marketing campaigns. "What has been apparent is that they don't want to depend on the IBM brand. They've been pushing Lenovo-branded PCs in the U.S. and India," Kariithi says. "We'll see how that shakes out this year and in 2008."

Sports marketing has been the most prominent channel by which Lenovo has tried to raise consumer brand awareness. The company in October signed a multi-year marketing deal with the NBA to become its "Official PC Partner" and has sponsorship deals with Formula 1, the Olympic Winter Games, Carolina Hurricanes and Washington Redskins.

"Right now, Lenovo is investing heavily in investing their brand presence--they are going all over to promote. As they keep advertising these and raising awareness, they'll start to see better results in terms of sales to the consumer market. If they are successful in doing so and if they can form really good channel partnerships, they will start to see success in the consumer market, but it will take some time," Kariithi says.