Gap Analysis of Lenovo

Introduction

Lenovo is a world famous Chinese computer corporation which is operated globally. Lenovo is focusing on developing, manufacturing and marketing desktops, laptops, workshops, servers, software as well as other computer related products and services. In the year 1988, Lenovo was founded in Hong Kong, China to the previous name- Legend. And then it changed the name Legend to Lenovo to fulfill the strict requirement of the global market. At the present time, there are many principal operation centers for Lenovo worldwide including China, Singapore, Morrisville and North Carolina. (Lenovo 2011)

As the global second largest personal computer manufacturer, Lenovo is famous for its ThinkPad line of personal computer and the laptops of its Think Centre line. Due to the acquisition of the personal computer division of IBM, Lenovo has been developing and expanding the ThinkPad brands to the world market relatively successfully. (Lenovo 2011)

Lenovo has also adopted a relatively cost save products delivery strategy to market most of its products to customers directly all over the world and also facilitates its business with deliver a small parts of its products to some middle size businesses, large firms, online sale station, flagship stores, chain retailers as well as some important technology distributors peddlers. (Lenovo 2011)

2.0 Operation

In the following, we’ll develop a relatively thorough analysis on the customer service operation aspects and some related excellence activities of Lenovo to help it to compete and sustain in the competitive environment in three main departments’ strategies including marketing, HR and operating via the application of 7 gaps model.

2.1 Concept of 7 gaps model

According to Parasuraman, Zeitham and Berry (1985) and Arash Shahin (2006), the well established and implemented of products quality and service delivery from companies may not often means the high customer satisfactions due to many gaps existing between the expectations and perceptions. And Parasuraman, Zeitham and Berry (1985) and Arash Shahin (2006) defined seven gaps in the areas of customer services.

The first gap is the distance between the expectations from consumers and the management’s thoughts on customers’ expectations. The second gap is the distance of the perception of the company’s management and the customer experiences of practical specification. The third gap is between the expectation of the service standard and the real practice of service delivery to customers. And fourth gap is between the actual service delivered to customers and the previous communication of the company to its customers. The fifth gap is between the customers’ expectation on the service and the real feelings and perceptions of the service received by customers. The sixth gap is between the expectations on the services from customers and the practices made by the company’s employees to customers. And the last gap is between the actual practices of employees to deliver services to customers and the management’s expectations and practices of the customer services.

And then let’s apply the gaps model as in figure 1.0 into the customer service practice of Lenovo to assure its good aspects and modify its insufficient practices.

Figure 1.0 the gaps model

7 gaps

 

Source: MSc and Phd in Energy & Resources at UCL Australia

2.2 Marketing strategy

According to Elliott et al. (2010, p. 3) marketing is the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large. Well designed marketing strategies may not only contribute to a good fame of the organization but also win a certain percentage of market shares for the company. In another word, it can bring good business results namely the profit for the organization. Lenovo as the world famous Chinese personal computer brand has been focusing on the marketing strategies developing and implementation for a long time. Let’s take a close look at its marketing strategies on the marketing mix and then develop an analysis on these strategies based on the gaps model.

2.2.1 Product strategy

In the Chinese market, Lenovo has designed and implemented the differentiable products strategy to maintain its dominant status in Chinese PC market via its better understanding of the market and its requirements compared to other foreign competitors. For example, the product services including the maintenance of high quality products, products diversification, products package and so to better fulfill the customers’ expectation on the products offered by Lenovo to offer customers considerate service on products aspect. In a word, these product categories from Lenovo is based on the real needs of customers to offer them the good feeling from the usage and services offered by the products, (Lenovo 2011)

2.2.2 Pricing strategy

As the leader of PC maker, Lenovo has been adopting the flexible price strategy to maintain its market share which is defined as high quality, high price to attract these customers who pursuit cost effective products. In a word, Lenovo offers a relatively satisfactory customer services for its consumers in the pricing aspect.

2.2.3 Distribution strategy

To better reach customers in the global market and enhance the flexibility of its customer services in products delivering aspect, Lenovo resorting to enlarge its supply china to better reach its products to customers with many overseas branches’ establishment including the U.S.A, Singapore, New Zealand, Norway, Philippines and so on as in figure 2.0 (Hu 2007).

Figure 2.0 International supply chain of Lenovo Group

7 gaps1

 

Source: Lenovo. Com

2.2.4 Promotion stratgey

The vertical marketing system is one of the shining points in Lenovo’s promotion practices. With the vertical marketing system, Lenovo integrates the producer, wholesalers and retailers into a united body to offer customers the products of Lenovo in the flagship stores without too much conflicts in interests from the members inside of Lenovo. And Lenvo has renamed such kind of vertical marketing as Lenovo 1 + 1 mode. (Lenovo 2011)

Moreover, Lenovo has also built up the customer guidance promoting strategy to base on the PC product and develop other related products and services accordring to the reqiorement and suggetsion from Lenovo’s customers. (Lenovo 2011)

In short, these promotion measures are aimed to offer customers better services to make full use of these products purchased from Lenovo.

2.2.5 Analysis

According to the gaps model, it is very important for Lenovo to narrow the gap between the actual practices and expectation of its business. The marketing mix strategy, which is focus on the real needs of customers via the relatively understanding of the domestic and international market and it is seemed to narrow the gap of customers’ expectations on the products services of Lenovo and Lenovo’s expectations. One newsworthy aspect implemented by Lenovo in the marketing strategy practice area is the adjustment in its sales system by the modern technology to help customers to save money from middle men by directly deliver nearly 90% of its products to customers, which is aimed to narrow gaps between customers’ expectations and the Lenovo’s perceptions on customers’ needs, Lenovo’s perceptions on customers’ needs and its actual quality specification, Lenovo’s actual quality specification and its actual products’ delivery, Lenovo’s actual products’ delivery and its communication with customers and so on. (Spencer & Jane 2006)

Generally speaking, these marketing strategies Lenovo used to narrow these gaps between its expectations and the real practices in customer services offering are relative outstanding and worth praising, which contributes to the great business profit as in figure 3.0 that the sales revenue of Lenovo group is predicts to reach 21,595 in 2011 compared to the 16,605 in 2010.

Figure 3.0 sales analysis by geography (US$ million)

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Source: Lenovo 2010 annual report

2.3 HR strategy

According to the experience of business expansion of Lenovo, in its beginning expansion in global market, it was seemed to be very smooth and successful. And sometimes, the pure Chinese staff was seemed to lack in a thorough understanding of the host market and the preference of its customers. In short, the gap between the customers’ expectation on the services delivered by Lenovo and its employees’ actual practices, and the gap between managements’ expectations on employees’ practices and the real performance of employees performed were relatively large. (Spencer & Jane 2006)

Due to the pressure from the environment especially the different requirements of customers in the global market, which requires a deeper interaction and communication with customers to remove misunderstanding and better enable the business to have a better understanding and communication with its customers so as to improve the brand loyalty of customers (Cascio 2010). To better fulfill the trend and narrow the gap between customers’ expectations and employees’ practices, Lenovo resorted to the diversity management to meet customers’ expectations on their service in the global market.

On the one hand, women in Lenovo leadership program is launched by Lenovo to enhance the involvement of women staff in the decision making process in Lenovo which is aimed to the women customers in the global market. Because the same as female, female staff in Lenovo such as being as the sale assistance or PC designers, they may understand the female group’s preference and purchasing preference better than male. On the other hand, Lenovo has recruited many local staff to take part in its business because the local staff may have a better knowledge with the requirements of the local customers and may be able to fulfill their expectation on Lenovo’s service much better. (Hu 2007; Dow Jones & Company, Inc 2006)

With such kind of HR practice, it is possible for Lenovo to narrow its expectations on employees’ performance for customers and customers’ expectations on Lenovo and its working staff.

2.4 Operating strategy

In Lenovo’s operating strategy aspect, there are two practices worth mentioning. The first one is the changing name practice. The previous name of Lenovo was legend and it changed legend to Lenovo in order to announce its determination and perseverance in maintaining the high quality of the products and pursuing the products innovation. The other practice of Lenovo was the acquisition of IBM’s personal computer division. (Hu 2007; Dow Jones & Company, Inc 2006)

With reference to the good performance of Lenovo, we may find that these operating strategies and practices of Lenovo Company have enabled it to offer more opportunities and chances to communicate with its customers. For example, the new name Lenovo is to address customers its business visions and the acquisition of IBM’s PC department is to make its product service for customer more properly and diversified so as to narrow down the gaps as the gaps model mentioned (Parasuraman, Zeitham & Berry 1985; Arash Shahin 2006)

3.0 Conclusion

As the above discussion, we may find there are gaps between Lenovo’s customer services offering and customers’ expectations.

Firstly, as we all know Lenovo has adopted the vertical marketing strategy to reach customer directly. Although it may narrow the gap of customers’ expectation of the products price and the considerate products delivery services, the expectation and requirements of customers on the real using experience may be seemed to be restricted. Based on this, we suggested the cash on delivery plan for Lenovo to enhance the confidence and preference towards Lenovo’s customer services. In another word, customers can order their desirable products of Lenovo online or by other quick ordering means and then receive the products from Lenovo’s direct delivering and then to check whether the products they ordered are fit for their requirements and then pay for the bill. If Lenovo is able to carry out such measure, the gap between customers’ real requirement and the service Lenovo offering may be shorten as well. (Elliott et al. 2010)

Secondly, as the fast expansion and products diversity strategy development in the global market, the after sell service should also be take great consideration by Lenovo. Based on this issue, we also recommend Lenovo to strengthen it’s after sale service to customers. For example, some door to door services, customers’ call back and other related service are all vital for Lenovo to get the real needs of customers to really shorten the gap between their business practices and customers requirements. (Elliott et al. 2010)

Thirdly, the human resource development programs for employees in Lenovo is suggested to help employees in Lenovo to be more competitive and capable to understand the market needs and customers real requirement in order to offer the customer more desired products and services. (Cascio 2010)

Reference

Cascio, W.F. 2010, Managing human resources: Productivity, quality of work life, profits, 8th edn, McGraw Hill.

Dow Jones & Company, Inc 2006, China’s aggressive buyers suffers setbacks on some overseas deals, The Wall Street Journal,

Elliott, G. Rundle-Thiele, S. & Waller, D. 2010, Marketing, John Wiley & Sons Australia, Milton, p. 3,

Hu, H.S. 2007, Lenovo wants incentives for Guilford County, Triangle Business Journal, pp. 22-38,

Lenovo 2011, About us, Lenovo, viewed 18 November 2011,
<http://appserver.lenovo.com.cn/about/Introduction.html>

Lenovo 2011, Lenovo annual report: Lenovo for those who do, Lenovo, viewed 19 November 2011,
<http://www.lenovo.com/ww/lenovo/pdf/report/E_099220110620a.pdf>

Parasuraman. A., Zeitham, V.A. & Berry, L.L.1985, A conceptual model of service quality and its implications for future research, The Journal of Marketing,

Shahin, A. 2006, Servqual and model of service quality gaps: A framework for determining and prioritizing critical factors in delivering quality services, ICFAI University Press, Andhra Pradesh,

Spencer & Jane 2006, Lenovo Net Falls 16 Percent, Wall Street Journal, p. B2,

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