I agree with you that there lots of benefits associated with the use of a master brand. You mentioned that there are costs savings associated with such a strategy which is true. Sometimes companies have certain products that are cash cows. For IBM the ThinkPad was a cash cow since this product has been generating sales and profits for decades. A cash cow can be defined as a consistently profitable business, property, or product whose profits are used to finance the company’s investment (Merriam-wesgter, 2012). Now that Lenovo took control of this product they should continue to exploit it. You also mention that problems with a master brand can spill over into the other house brands. Lenovo has to ensure that to maintain an excellent reputation with customers. This can be achieved by providing superb customer service, quality, reliability, and value.
The company’s strategy of being one of the most innovative companies in the industry will help the firm achieve high customer retention. Customer retention is important due to the 80/20 rule. Pareto’s 80/20 rule states that 80% of a company’s sales come from 20% of its customers (Reh, 2012). In the computer industry innovation and efficiency are two critical success factors. The deal Lenovo made with IBM was a great strategy move that will bring synergies to the company. The ability to advertise the laptops using the IBM logo will drive the sales of the company upwards. The company has to have a long term plan in place because the marketing deal with IBM only lasts five years.
References
Merriam-webster. com (2012). Cash cow. Retrieved January 31, 2012 from http://www. merriam-webster. com/dictionary/cash%20cow
Reh, J. (2012). Pareto’s principle – The 80-20 rule. Retrieved January 31, 2012 from http://management. about. com/cs/generalmanagement/a/Pareto081202. htm
