marketing segmentation.docx

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