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Pricing strategy of Lenovo

There are many companies in the market, which have a better reputation than Lenovo in the computer world. Hard work of the company and a strong commitment to providing the best for the people helped with the harvest of a global customer base. This is the main reason why Lenovo has become the worlds fourth largest provider of PCs worldwide in a very short time. If a person decides to buy a computer system, Lenovo India is the name of a very respectable place in the priority list.The company also tightened its grip on the PC market through the acquisition of IBMs PC division in 2005. Lenovo is not a name that is restricted for a certain product, but that there is a long list of products that are sold under the same brand needs. Some of them are as follows: Lenovo Think Centre Think Station Lenovo Idea Centre desktop Lenovo Think Server consumer-oriented IdeaPad notebooks Lenovo 3000 J Series desktops Lenovo 3000 C, N and V series notebooks and LCD monitors CRT projectors and Think Vision monitors

Lenovo signed an agreement allowing them to sell under the brand name of IBM laptops and desktops by 2010. Lenovo notebooks and business machines are available with Linux preinstalled.

Lenovo Pricing in India

Pricing strategy of this company is one that takes note of the key considerations of the customer, which is nothing more than the price of the product. Probably for this reason, almost every product that comes from the production of the parent company is reasonably priced. Lenovo has been very aggressive in its pricing strategy with its different series of laptops and respective models. Lenovo initially followed IBMs pricing policy. This can be considered skimming done by a company which wants to earn as much as possible. Lenovo Laptops prices are in the range of Rs.24,500 to Rs.54,000.There are several high end models also which cost more than Rs. One Lakhs. Dell is the market leader which offers an AMD Athlon processor in its lowest costing desktop worth 16000Rs.In the same category, Lenovo introduced the 3000H series-a P4 processor for Rs 18000/-.Lenovo has always maintained a product mix such as bread and butter products like 3000H series and high end products like Thinkpad and Think centre

which helps Lenovo develop a vast range in its prices. The product mix of IBM is more powerful than before. They are doing what IBM did not do.

Be a big firm and give world class products

Dont forget to generate volumes

Maintain your market share

The pricing of some models are as follows:

Lenovo Y Series Laptops are priced from Rs. 32000-54000/Lenovo G Series Laptops are Priced from Rs. 25000-36000/Lenovo N Series Laptops are Priced from Rs. 35000-56000/Think pad XX&Z series are priced from Rs. 58000-1,10,000. Lenovo constantly offers discounts on its products through its showrooms and online purchases which are often in the range of 25-30%.Also there are many coupon codes and promotional codes available on all product models which add to the total discount.

In a recent promotional scheme, a 10 mega pixel canon camera was being offered with the Ideapad Y& Z series notebook. Capturing Market share: The objective of the company is to capture a substantial market share and attract more and more buyers to buy its products. Indian consumers are very price sensitive .Dell dominated HP over the last few years because of their low pricing model. Highly priced brands like Sony have also reduced the prices of their laptops .The Indian market is slightly different .At around 8 million units a year, it is a sixth of chinas market. For Lenovo ,to win in Asia, it believes it has to win India ,Its market share is about 7% and is the number five player in the Indian market. Competitor Pricing: The pricing strategy of Dell has been to offer the lowest pricing based on the configuration chosen. The customer has the flexibility of choosing the configuration and gets the same at competitive prices. HP follows a perceived value pricing for its pavilion range of laptops and an extremely low cost pricing strategy for its Compaq Presario range of notebooks. Sony follows a skimming strategy in all its models. The following table compiles the current market rates for various players. Dell Core i5,500GB,3GB RAM-44000/Dell Inspiron 14R Core i5-Rs 39000/Core 2 Duo,4GB RAM36500/Dell Vostro Laptop A840, 1GB RAM29000/HP HP Pavillion DV 646500/HP Pavillion 1404TU39500/HP Pavillion DV2,4GB RAM-34000/HP Pavillion DV2,1GB RAM-32900/Lenovo Lenovo Edge series core i5-39000/Lenovo Ideapad G430-30500/Lenovo Ideapad G450-26500/Lenovo S10 ,1 GB RAM-19500/-

Sony Vaio core 2 duo,i5 - 45000/Sony Vaio core i337000/Sony Vaio,1G RAM32500/Sony Vaio VPCYA15FG29000/-

Based on competitors price and market position, lenovo has two options for pricing.

Value pricing-offering the customers high quality at lower price Going rate pricing: following the pricing strategy of the competitor and pricing the laptops at a rate just lower than that of the market leader.

Lenovo in India has selected the value based pricing. It is not directly involved in price wars with competitors. It offers a large range of products in the Indian market with substantially lower price and unique product features. The main goal of the company is to capture the maximum market share and then go for alternate pricing. Alternate pricing strategy. Lenovo is now following the protect and attack strategy globally Protect: China / Mature Relationship; Attack: Emerging / Mature Transactional Profit Engine: Think & Relationship; Growth Engine: Idea & Transaction In order to maintain its market share and remain competitive in the Chinese as well as the global market it is important that the company adopts different pricing strategies for different segments of the market. Some of the strategies can be useful: 1) For the developing markets of Asia, the company should adopt going rate pricing strategy after achieving sufficient economies of scale. Lenovo is a market follower in India after Dell &HP and this strategy can allow them to ensure values as well as the optimal price of the product. With its Protect and Attack global strategy, Lenovo India has already grown from an overall 7.2 percent market share in Q1 2010 to 10 percent in Q1 2011. Of late it has been following the going rate pricing for some of its products like Lephone and ideapad tablet. Lenovo has launched LePhone as an Apple iPhone rival with a low price strategy and customized for Chinese users. LePhones price is only equal half of the iPhones, even when Apple just cut the prices of iPhone handsets in the Chinese market. Also, it has launched IdeaPad A1, at a price of the $199 Android tablet. 2) Lenovo should create a deeper impact in the Asian markets by encompassing aggressive retail push, deeper channel penetration and channel engagement, and introducing an exclusive product range. The company should increase its touch points by adding exclusive retail outlets, resellers and authorized service centers. Lenovo currently has 540 retail outlets in India. It should also expand into Tier 3 & 4 cities. 3) Lenovo should adopt Multi-Model Strategy to Battle competitors. It should increase its brand recognition and be a more active player in the Tablet and i- phone markets to take over other competitors heads on. Like the personal computers market, the company should realize that users tend to have different demands when it comes to their tablet computers. Their main focus should be targeting specific users with specific products.

4) For European markets, Lenovo can adopt a perceived value based pricing. The customers in the developed markets will be better able tpo understand the product value. The recent acquisition of Medion: Mobile Internet device and services business provider in Western Europe Complements Lenovos growing Mobile Internet and Digital Home business .It will boost device and services capability. Medions existing relationships and experience with retailers and telcos will be a great asset for Lenovo. 5) For the Chinese market, company should continue its competition based pricing. The Chinese market is huge and flooded with number of competitors. Lenovo should strengthen China leadership and retain its market share by widening the gap with the competition.

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