“Netbooks will trigger the trend of one PC per person”
 Ramprasad L, Vice President, Transactional Sales, Lenovo India charts out the company’s strategy for consumer segment in a conversation with K R Nambiar
The global economy is facing a recession, and the Indian economy is entering a slowdown phase. How is Lenovo working with partners to ensure that growth continues?
Consumer spending in the metros is falling. This is the time when consumers will look for greater value in their purchases, and we believe that Lenovo products will provide them with that.
In India PC penetration is very low, especially in C- and D-class cities. We are targeting first-time consumers in these cities. We believe that the real market potential lies in these untapped geographies, and we are confident that our offerings will help emerging businesses meet their aspirations. Lenovo is extending its sales, service and support reach to C- and D-cities through its dedicated and established business channel network.
We also believe that netbooks will aid the growth of the PC industry. The ultra-mobile form factor, affordable price and competent performance in regular computing tasks make netbooks an attractive proposition. Netbooks will trigger the trend of one PC per person in the metros.
What retail initiatives has Lenovo undertaken during the past 12 months, and what can we expect in the next 12?
We are working towards reducing the investment from our partners in Lenovo Exclusive Stores (LES) by working out a scaled-down and cost-effective model. We have been investing in C- and D-class cities to set up such exclusive centers, and also to enhance our current relationships. Currently, we have 156 LESs in India. We are ensuring that every one of these stores, irrespective of its size, will look similar across the country, and our branding plan for the same will be rolled out soon.
Large format retail will be critical to the growth of retail in metros such as Mumbai and Delhi, where real-estate is a constraint. Reach is critical in India, and we will take our presence to markets where it matters.
How has the Idea branding been received here? Have you changed your retail store branding in keeping with Idea?
Initially, India and China were the only two countries where Lenovo had a product range for consumers, while in the rest of the world we were only selling the commercial brand. Based on the feedback we received from these two test markets, we decided to have a separate brand for consumers under Idea, which was launched globally.
In India we believe the new brand helps in providing the desired choice to the consumer segment in India. With the consumer PC segment being about one-third of India’s total PC market, it was important for us to see what the market demands, and then address it. Our recent announcements reflect that strategy. In October, we launched a futuristic range of consumer PCs—seven new notebook models offering five different screen sizes, plus a choice of color, design and style.
Lenovo has designed its new consumer range for the way people live, work and play, with cutting-edge features on notebooks. These features include VeriFace facial recognition, excellent multimedia capabilities with Dolby home theater systems, and a multi-media center along with attractive designs featuring textured covers and frameless screens. We believe this is the right way forward for our long-term growth and leadership in the market.
Are you as bullish about Atom PCs as the market seems to be? What is your company’s strategy to capitalize on the Atom opportunity?
Intel Atom-based PCs or netbooks are ideal for first-time PC buyers. We believe that netbooks will fuel the growth of notebooks in the PC market, and will increase the penetration of PCs in India.
Netbooks are not intended as replacements of traditional notebook PCs. Rather, they are intended to be secondary computing devices, ideal for a family. Over the years we’ve observed that as demand in the PC market picks up, prices fall simultaneously. We will have to watch how the netbook segment performs, and what consumers demand. That will determine the prices, along with the strategy, adopted by players in the industry. We will be introducing our nettop—Lenovo H200—soon; it is too early to comment on pricing and marketing.
Lenovo partners have been complaining about rebates and claims that are yet to be settled. What steps are you are taking to resolve such issues?
I have communicated to every partner about Lenovo’s channel policies. We have an extremely transparent policy to claim rebates. But let me make it clear that no claim will be entertained unless it has written approval from Lenovo’s side. We cannot entertain claims which state that there have been oral commitments made by channel sales personnel. I urge partners to have all communication, especially with regards to rebates and discounts, in black and white before they escalate the issue.
Another complaint is the service and support in C- and D-class cities.
We will be doubling the number of service centers to over 200 by 2010. At some point of time we want to be present in every district of the country. We have also recently introduced several new service initiatives such as six-day support, innovative service packs, and more spare warehouses across the country.
One of the challenges for most companies is controlling inventories in the second-tier market. How is Lenovo coping with this?
Do you know that we pay up to Rs 500 as a rebate if a reseller registers the name and details of an end-user who has purchased a Lenovo PC? This is one way of ensuring that we have a good idea of the stocks carried by our partners. Our price changes are also dependent on inventories carried by our partners, and we are committed to making sure that they do not run into losses. We need partners to keep us informed about the exact inventory pile-up so that we can plan better. |