Lenovo’s global CMO on plans to build premium as a consumer brand
Lenovo’s legacy and acquisitions in the personal computing and server spaces has cemented a strong position in business markets – in which it’s done well, standing currently at number two in the commercial space in Australian PCs after acquiring IBM’s personal computing business a decade ago. But it hasn’t really tackled the consumer space, until now.
The Chinese technology company’s latest mission is to build itself into a premium consumer brand, and it’s doing that with innovative new products comprising tablets and models in the new ‘convertible’ category – a cross between a tablet and notebook with a detachable keyboard. It’s also completing an acquisition of Motorola to extend its smartphone push, a business for Lenovo that overtook PCs by unit volume some time last year.
Lenovo’s current major play towards this aim is the Yoga franchise, a line of premium consumer convertibles and tablets, that Lenovo sees as an opportunity to bring out some truly premium consumer products that are “very, very differentiated” according to its global CMO David Roman.
Roman chatted to Marketing during the recent launch of the Yoga range in Australia. Also in this interview is Nick Reynolds, who heads marketing in this region’s mature markets.
“The Yoga 2 Pro brings a completely different twist, literally, to the notebook world, and the Yoga Tablet 2 Pro also is just quite a different approach to what you can do with a tablet,” Roman says. “We focus on the entertainment aspect of the tablet, putting in a subwoofer, putting in a projector, putting in a very long 15-hour battery life, things that really are unique.”
For a marketing standpoint, that differentiation and uniqueness gives Lenovo leverage.
The company’s other ace in the hole is Ashton Kutcher.
Marketing: Ashton Kutcher brings to the table a very big following but could you elaborate on his involvement in product development?
David Roman: You know, it’s a little bit surprising to us as well: when I met him the first time we were just talking about what we potentially could do and we knew that he was very engaged in technology. He’s had his venture capital fund for the last five years [and been] very successful with that, actually.
He really is hardcore, I mean, he actually asked to be called the ‘Lenovo product engineer’ which was the last thing we would have imagined. When he joined, the first thing he did, actually – the week that we announced him, last October – he flew out to try to spend two days with the Yoga engineering team. They were talking about what we’re doing, how we’re doing it, where we’re going because he wanted to get very involved and since then he’s been very engaged.
He’s done some stuff that is entertaining as well. We showed the fun focus groups and so on [in promotional material, pictured above] but he did a lot much more serious stuff in terms of customer insight. Keep in mind he does spend a lot of his time looking in detail at new internet software for his VIC firm, so he really is heavily engaged in new things so he’s very, very comfortable working in the space.
M: That’s almost like a new breed of celebrity endorsement.
DR: It is. I mean, I think he is pretty unique in the sense that he just is who he is. So we sort of lucked out there. It just turned out to be a perfect combination.
And he also fits the profile of our audience. We really focus not only on the youth market but also on the market that is driven by what you can do with the device. And that’s why our tagline is ‘for those who do’. It really is an audience that appreciates the functionality of the device and the things that you can achieve and the things that you can do with technology. And that is exactly the description of Ashton. I mean, the guy is just out there doing things, he loves to do things, he loves to push the boundaries so it provides us with a great link to the best part of the audience that we want as well.
M: On your goal of building a premium brand in the B2C space, how challenging is that, given that consumer technology suffers from both being commoditised at one end and having a very strong player in Apple at the other?
DR: You know, I think it really starts with the technology with the products themselves, with the innovation. Often, people underestimate that. Technology’s state is driven by innovation. Lenovo’s been good at that, we’ve invested a lot in engineering. We know how to bring new features, new functionality, new technology then we bring it in at a good price point so it’s accessible. But it still is premium in terms of what you can do with it.
Therefore, I think building the premium brand without those products would be very difficult, but when you have the right technology, when you have the products, people respond to technology very quickly.
Ironically, I think it’s easier to build premium in a new category rather than to stay in the same category. So, for example, we really redefined the notebook PC with convertibles. We went from having a reasonable position in the notebook space to having almost 50% of the worldwide convertible space. The convertible space is a premium space and people believe they are getting a lot more from the product, which they are because they have more functionality.
I think that as you establish new categories and build a unique position in those categories, that gives a very fast way to build a sustainable premium in the space.
M: You mentioned that 18 months ago Lenovo’s sales volume of smartphones and tablets surpassed PCs on volume – how are you approaching those two sides of the business in terms of strategy?
DR: We’ve been growing both sides of the business. The difference is that PCs for us is a very global business [while] with smartphones you really have to build quite an ecosystem to smartphones in terms of the relationship with the carriers, the certifications, so we’ve been very selective.
We started off in China. Last year we expanded that out to India, to Indonesia, to Russia. Now we are doing Brazil. We’re taking it market to market so we can build up the right ecosystem. The Motorola acquisition, when it’s closed, will allow us to accelerate that because Motorola has a very complementary presence to ours – they have a very strong presence with the carriers and many of the mature markets, so that accelerates our whole push into smartphones.
M: For this Yoga campaign, how much localisation in Australia and New Zealand is there compared to the global campaign as a whole?
Nick Reynolds: when you have some great creative, you don’t really need to go recreate the wheel. The first part of the answer is we’ve heavily leveraged Ashton because he is so well known here and he’s so well liked.
We’ve very heavily made an investment in social and digital marketing first and we’re targeting the millennials – so 18 to 24 year olds – that are really fashion and design leaders and really interested in technology. So we’ve got two very targeted focus segments that we’re going after.
In Australia we’re going to spend $10 million US in total in the next 12 months driving consumer, driving marketing and building our brand.
What we have done differently here is as very heavily got a lot influencers into our business and using our products. So, we’ve seeded and targeted people over the last six months to make sure that they could get these products first before anybody else and then they agreed to become the advocates. You can spend money on advertising but the best [marketing] is obviously word of mouth.
In Australia, we are doing a few localisations, making sure we have a lot of advocates. We’re being very targeted in our digital and social media so about 75% of our expenditure is going into that, and also at retail.
We’re partnering very closely with Harvey Norman and JB Hi-Fi. We now have in-store placement and in-store signage and fixtures. We’ve got dedicated Yoga areas in store where people really can see Lenovo products at their best.
We’ve found that the retailers spend a lot of money above the line and then we’re really activating on social, digital, influences at a local level. Combined with great, breakthrough creative with Ashton, so far out of the gates it’s going really, really well.
M: How are you measuring?
NR: One thing that David and I were talking about earlier was passing the ‘BBQ test’. Here in Australia, when you go to a friend’s BBQ with a few people you haven’t met and they ask you what do you do and you say I work at Lenovo, at the moment we’re not winning, we’re passing that test. Our job is really to change that. My thing, my job is to pass that BBQ test.
We measure that in terms of brand consideration. So, when you’re considering to buy a PC or tablet and in the future it will be a smartphone, you know, what are the brands that you actually consider. Being in that consideration set, being very high up, you need a very high number. I’m not going to disclose to you what we are today but we’ve got some improving to do.
This is why we’ve really launched big. Our strategy was quite simple: launch very big, build brand consideration very quickly, launch with big ‘wow’ products that cut through and are really leading-edge technology, target millennials that are recommending technology and really get them online, and then close them at retail and have a great retail experience.
Combined with the retailer advertising, I think those four areas are very simple marketing strategies but in Australia-New Zealand it’s very targeted, it’s very localised and it’s going to work.
M: For the convertible model of the Yoga specifically, do you consider that a brand new category here or do you compare against tablet and notebook?
NR: Technically – and IDC are the people that track this – part of the notebook market is convertible and the Yoga is in that convertible space. Worldwide, we have just on 50% market share so we’re really bullish here in Australia because people have been buying convertibles and now they can get their hands on a Yoga notebook convertible.
When it comes to tablets, the Yoga tablet, although it had four different modes it is technically a tablet, an eight-inch, a 10-inch and, now, the 13-inch with the inbuilt projector and subwoofer. So we’ve got a great line up [running] Windows and Android as well.
M: On those local influencers you mentioned, what kind of people are they? Would they be recognisable names or is it more, sort of, grassroots?
NR: We actually mapped with one of our agencies the entire social network in Australia and looked at who are the fast growing influences and we targeted lifestyle areas where we found our products would resonate and resonate well. So people in fashion, they’re in design, you know, some of them are in technology but they are also in things like food.
We had some really diverse groups but these are passion points for young people 18 to 24. They love their music, they love their fashion, their design and their technology. So, these are really the four areas that we focused on.
[For example] Bridget, she’s an internet chef, she’s got about 19 million views, she’s got about a half million people following her on Google Plus, I mean, she’s a really amazing individual that’s using her Yoga in stand mode in the kitchen so she can use it hands free and she doesn’t need to touch it.
It’s people like that that we’re really targeting and interested. They’re not known famous celebrities. We’ve shied away from that. They’re people that integrate the product into their daily use.
M: And you’ve already got that covered off with Ashton Kutcher, really.
DR: Yeah, Ashton certainly has a very large following worldwide on Twitter and on Facebook so it’s great. I think the key thing is that it’s also authentic. I mean, this audience wants something that’s real and I think that, as brands, we now understand that better and better. To be successful over time and to have a real relationship with this market you have to genuinely understand what they’re doing with technology, engage with them in order to make sure that we bring the right products, the right solutions, work with them to develop the right products for them all the time. It’s actually quite satisfying to see that happen.
From a marketing standpoint it’s actually a lot more fun… I enjoy the process.