marketing segmentation.docx
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marketingsegmentation
Introduction
Inthepastdecade,Lenovo,aPCcompanyinChina,hasincreasinglygrowthtothefourthlargestPCCompanyallovertheworldandtheannualreport2009ofLenovoillustratesthatithasoccupiedapproximately30%marketshare,makingLenovobecomesthelargestcomputerretailerinChina.ThereasonsWhyLenovoachievedgreatsuccesshasbeenarguedbysomeexperts.ThepossibleexplanationcouldbethatappropriatemarketstrategyandmarketplanleadLenovotorequireaccomplishment.Moreover,howtochoosesuitablesegmentation,targetingandpositioningofproductsplayedvitalroleinthisprocess.Thisreportfirstlyaimstoanalyzethesegmentationcriteriaofcomputerindustry,then,usingsegmentationcriteriawhichhavebeenpresentedbeforetofindouttargetmarketandmarketpositionofLenovo.Lastly,theconclusionofreportwouldbeillustrated.
Segmentationofcomputerindustry
AccordingtoJobberandFahy(2009)that“Marketsegmentationdivideamarketintodistinctgroupofbuyerwithdifferentneeds,characteristicsorbehavior,whomightrequireseparateproductsormarketingmixes.”KeeganandSchlegelmilch(2001)alsoindicatedthat“eachgroupcouldbechosenasamarkettargettobereachedwithadistinctivemarketstrategy.”Itmeansthatmarketsegmentationisanessentialpartwhenacompanywantstoenterinmarket.Anappropriateandclearmarketsegmentationprocesscouldhelpcompanytoidentifythebestwaytotransfertheirproductstoconsumer,andhelpcompanytoestablishstrategicmarketplanaswell.
geographicsegmentationofcomputerindustry
Ingeneral,fourmarketsegmentationcriteriahavebeenwidelyusedtosegmentcomputerindustrywhicharegeographic,demographic,andpsychographicandbenefit,respectively.Writingin2001,KeeganandSchlegelmilchdefinedthat“geographicsegmentationmeanssubdividetheworldintodistinctgeographicgroupswhichproximitytolocations.”Forinstance,owingtocomputerhasbeenwidelyusedallovertheworldindifferentarea,itcouldbedividedintodifferentcountiesanddifferentcontinents.Indeed,ineachcountry,italsocouldusethisapproach;becauseofdifferentregionshavedifferentsituation.Forexample,inAsia,thenationalaverageincomelevelinSouthKoreaislowerthanJapan;therefore,whenacomputercompanywantstosaleitsproductscouldconsiderthissituationaswellasincomelevelindifferentregioninonecountry.
Demographicsegmentationofcomputerindustry
Thevariableswhicharebasedonconsumercharacteristicscouldbecalleddemographicsegmentation.Suchas,age,income,educationlevelandoccupation.(Wood,2004).Forcomputerindustry,thenationalincomeisanimportantcriterionforsellingproductsduetodifferentincomelevelmeanspurchasingpowerofconsumerwhichisdirectlyrelatedtobenefitforcompany.Moreover,differentoccupationrepresentsdistinctneeds.Forexample,businesspeopleandstudentsfocusondifferentfunctionandappearanceofcomputer,therefore,computermanufactoryshouldpaymoreattentiononthisvariables.
Psychographicsegmentation
“Psychographicsegmentationisemphasizeonlifestyle,buyingmotives,interestandpersonality”(Charles,etal,2008).Thereisnodoubtthattheseelementsleadtoconsumermakedecisionofbuyingacomputer.Ontheonehand,differentpeoplehavetheirownlifestyleandinterest.Itislikelythatconsumersconcentrateoncolor,appearanceanddesignconcept.Ontheotherhand,somepeoplewanttousecomputerforplayinggamesandwatchingmovie.Incontrast,theothergroupofpeoplepreferstousecomputerforworking.Incertainextend,theseelementswillinfluencethesales.
Benefitssegmentationofcomputerindustry
Thebenefitssegmentationcouldberelatedwithhowtodesignanddeliverproductstoconsumer,then,providingrelevantserviceinordertomeetpeople’sneeds.(DonovanandHenley,2010)Itcouldbeusedtomeasurewhatextendtheconsumersatisfiedwiththeproducts,theserviceandthecompany.Itispossiblethatthissegmentationfocusuponanalyzingthereasonswhyconsumerbuystheproductsandwhattheywanttorequirefromproductsorservice.Indeed,whethertheparticularcomputercompanycouldprovidehighqualityafter-saleserviceintimeisavitalparttoattractconsumer’sattention.
Inaddition,accordingtoWood(2004),consumerbuyingprocessshouldbeconsideredinmarketsegmentationprocess.Infact,marketsegmentationisaprocesscouldberelatedtofindthereasonswhyconsumerwantstobuytheproductsorservice.Theunderstandingofconsumerbuyingprocesscouldmakethesegmentationbecomemoreclearlyanddetailed.Inthefollowingaspect,itwillusesegmentationcriteriatoevaluateLenovocompany’stargetingandpositioning.
ThetargetingofLenovo
Afteranalyzingthesegmentationcriteria,itshouldevaluatetheeachsegmentandchooseoneormoresegmentationinordertoensurethetargetofbrand.(KeeganandSchlegelmilch,2001:
223-225).HartlineandFerrell(2008)alsopointedoutthatthesegmentationprocessshouldconcernwithcompany’scapabilitiesandresources.RelatingtoLenovoCompany,itislikelythatLenovoCompanycouldchoosethesefoursegmentationcriteriatopositionitsproducts.However,itishardtoimplementduetothecompetitors,suchas,HP,DellandAcer,haveoccupiedmarketshare.Therefore,howtopositionitsproductsinappropriatesegmentissufferingLenovo.Inthefollowingaspect,thereportwillfocusonanalyzingLenovo’spositioningstrategy.
ThepositioningofLenovo
AccordingtoLenovoannualreport2009,LenovodividesmarketintofourareawhichareGreaterChina,Americas,EMEA(Europe,MiddleEastandAfrica)andAsiaPacific(excludingGreatChina).Toaccomplishthisstrategy,Lenovoexpend$1.75bnpurchaseIBMPCbusinessinordertooccupymoreoverseasmarketshare.(Ftchinese,2007)However,thisstrategycouldnotbringthebenefitsasLenovo’sexpectation.Thestatistic(seeAppendixB)showsthatLenovooccupied8.7%marketshareinglobalcomputermarket.Incontrast,HPandAceroccupied19.8%and11.5%,respectively.ItispossiblemeansthatLenovoishardtoimpactitscompetitors’marketshareinoverseamarket.
Moreover,inordertoattractmoreconsumersLenovodeigneddistincttypesofcomputertosaletheirproducts.Forinstance,notebookcomputers,homeassociation,businesscomputersareinventedbyLenovoCompany,itislikelyconsumercouldchoosedifferenttypesofproductsaccordingtotheirneed(Lenovo2010).Inaddition,accordingtodifferentoccupation,Lenovorecommendsdifferentpriceproductsforconsumer.Forinstance,ifconsumerisastudentLenovopreparespecialpricewhencheckintotheirwebsite(ibid).Thesepricestrategiesbringmorebenefitbothconsumerandcompanyandimprovethereputationofbrand.
Inaddition,thepolicyofgovernmentisanotheressentialpartwhichcouldnotbeignored,incertainextend,itcandirectlyinfluencewhencompanytargetitsposition.Forinstance,agovernmentprogramforruralusers'subsidizedcomputerswasimplementedin2007andLenovograspedthisopportunity.Lenovodesignedlowpricecomputerandexpandedtheirpromotionincountrylevelandbelow.ItmakesLenovooccupy40%marketshareinthisemergingmarketinChinaandbringmorebenefitforcompany(Xi,2010).Indeed,Lenovoalsojudgedtheirmarketstrategyinoverseasmarket.AccordingtoFtchinese(2006),Lenovowouldpaymoreattentiononlowendmarketandreducethecostofproductsowingtoquarterlyperformanceofcompanywasworsethanexpected.ItmeansthatalthoughLenovohasoccupiedcertainmarketshare,itwasdefeatedbyitscompetitorsinHigh-endmarket.ItispossiblethatLenovoshouldaddmoreinvestmentindevelopmentdepartmentandadjusttheirstrategyinHigh-endmarket.
Furthermore,onbenefitsegmentationaspect,Lenovotrytopaymoreattentiononaftersaleservice.AccordingtoAnnualreportofLenovo2009,Lenovodevotetoprovidethebestserviceforitsconsumer.Forinstance,Lenovodesignednewsoftwareforconsumerwhoneverusecomputerbefore,itmakesusercouldoperatethecomputerjustfollowthecuewithoutreadingthehandout.Italsoprovidesserviceforcorporateuserstotellthemhowtoprotectandmanagetheirsecretdocuments.Lenovo’safter-salesservicenetworkcoveringallpartsoftheChinawhichcouldhelpconsumertorequiretheserviceintime.Itislikelythatthesestrategiesfacilitateconsumersandbringmorebenefitsforthem.However,aftersaleservicealsohassomeproblems.Forexample,whenconsumerhasproblemsintheirjourneytheserviceisnotconvenient,especiallyforoverseasstudents.Therefore,Lenovoshouldpaymoreattentiononthissituation.
Lastbutnotleast,accordingtoKeeganandSchlegelmilch(2001),Lenovopositioncouldberangedin“Hightouch”and“Lowprice”area.
Conclusion
Allinall,asmentionedbefore,firstlythisreportpresentedthesegmentationcriteria,then,usingsegmentationcriteriatofigureoutthatLenovousesdifferentstrategyindifferentsegmentationandalsohavesomeproblems.ItispossiblethattheseproblemsleadtopotentialrisksandrestrictthedevelopmentofLenovoandLenovoshouldconcentrateonsolvingtheseproblems.ThisreportalsoillustrateLenovo’smarketpositioningisthelowpriceandhightouchareabyanalyzeddata.
Charles.M.L.,Joseph.F.H.J.,McDaniel.L.,(2008).EssentialofMarketing.Mason:
South-WesternCengageLearning
Donovan.R.,andHenley.N.,(2010).PrinciplesandPracticeofSocialMarketing:
AnInternationalperspective.NewYork:
CambridgeUniversityPress
Frchinese.(2006).Lenovowillpaymoreattentiononlowendmarketinovers