As part of WARC Marketer's Toolkit 2023, Bhasker Choudhuri, Chief Marketing Officer for Asia Pacific at Lenovo, spoke to WARC’s Biprorshee Das about the ESG imperative, supply chain resiliency as a brand advantage and brand-building in an economic downturn.
WARC subscribers can access the full Marketer’s Toolkit 2023 here. Non-subscribers can access a sample version here.
Economic challenges are impacting most markets and categories to different extents. What are the challenges or opportunities that Lenovo has seen so far?
We were among the rare categories which benefited significantly because of changing conditions (in the last three years). Firstly and fundamentally, in terms of devices, a significant amount of work and study from home was accelerated.
The part that happened underneath it is something a bit more important and interesting. Lenovo has been trying over the last few years to move away from being known only as a device organisation to being a service and solutions-led one. This has opened up the playing field of getting digital transformation projects for retail consumers, SMBs and large enterprise businesses.
The environment actually forced a lot of organisations, small and medium businesses, and to an extent even retail consumers to embark on this journey in a very sudden way, beyond just device adoption. It looked into things like the cloud and how often you are using cloud servers. Once you started work-from-home, everybody obviously didn't have the access to ready networking, as well as computing speed. Security became a very paramount challenge.
It's fairly logical that once things started returning to normal, especially on the IT front, things slowed to an extent. With more people going back to offices and schools, the need for remote working and remote education has declined to a certain extent. The political scenario across the world, war, and currency devaluation in primarily high-growth economies and developing economies… these are acting as headwinds.
If you look at Lenovo's journey, one of the key success factors of our growth in the PC industry and the smartphone industry has been our ability to harness supply chain at scale. We do have access to multiple production facilities and fairly fast supply chains, which has allowed us to alleviate these headwinds to a significant extent. In that context, we feel quite fortunate or privileged that we are among the few smartphone manufacturers that is also profitable.
Despite headwinds, the fact that we've managed to not only ring-fence, but actually grow our profits significantly is testimony to our ability to manage some of the macroeconomic challenges.
What's the role of marketing with supply chain issues? Do you think marketing should be more, or less involved perhaps?
Obviously, marketing has a critical role to play. Marketing's role, to put it very simply, is going to be how assiduous and insightful you are as a marketing organisation as a forecaster of demand.
Search string is a great forecaster of demand, i.e volume of searches for both for the category and brand. Using that as a parameter to check demand is one way that we look at it. Marketing is uniquely poised, specifically in the PC and server industry, because there is a fair amount of it that gets done in partnership with our key strategic partners such as Intel, AMD, and Microsoft.
What has been your brand's response to the current economic volatility, both internally and externally?
Having worked in CPG/FMCG for a primary part of my career prior to joining technology, what I'll say is that technology marketing inherently forces you to be very, very disciplined and lean. The profit margins have been different in this category. It is something that is instilled in you from the time you join the category.
You operate in certain ratios between brand building and how you generate demand. If the conventional ratio during normal times is 60-40 or 65-35, as classical rules of marketing would mandate, how would you change that ratio when you get into a lean period? That is one of the things that we consciously do. So, how do you shift the amount that is getting spent in brand building versus the amount being spent on demand generation?
There are two points of view. One says this is absolutely the best time to build your brand; because one, your share of voice is bound to be higher with most of your competitors cutting down investment. In adversity, if you're managing to address consumer pain points, they will tend to remember you frequently and for longer. The other point of view, which often comes from the business leadership, is to take a step back and skew more towards demand generation because that's the need of the hour. This is the ratio that we operate or monitor, and moderate when things go up or down more than looking at the overall quantum of investment.
In these current times, what do you think will be the most important priority or metric for marketers to measure effectiveness?
Some of the classical parameters – whether it's top-of-mind, awareness, consideration, preference – you will need to check whether they are going up or down. These will act as a very good indicator of whether you've been investing and how you are being perceived by consumers.
If you look at the classic consumer behaviour model – which is awareness, interest, desire, action – how your search volume or share of search is doing versus others is a great indicator of interest. You can monitor that to check how your awareness building is going because your search is a forecaster of your future demand. In our case, it varies anywhere between four to six weeks because that's generally how we see the consumer purchase decision cycle is.
There is an entire volume of marketing data which suggests price promotion in these times is not sustainable. Your ability to pivot to certain long-standing customer considerations or anxieties is something which helps you… sensitivity and openness especially in difficult times goes up and, thus, so does affinity for a brand. People are looking for hope, for messages that are more around kinship, which say ‘we are in it together’.
How has the economic climate impacted your brand's commitment to sustainability?
COVID accelerated or triggered concerns around the well-being of the world. There is a sensitivity and a degree of selflessness that is coming in; there is a heightened belief that we are in it together and we need to do something more for the planet.
Three years back, there were only a handful of brands that were leaders in sustainability. Most of those brands are either premium or luxury. The big thing that has happened – not just only over the last three years, but even in this tough scenario we are seeing – is that sustainability is no longer a nice-to-do or something to pay a premium for. It is becoming table stakes.
It is not: I am sustainable; therefore, I charge you a premium. It is: I have to be sustainable for you to prefer me. This has been the biggest shift.
As a brand among the top three to five in most categories that we operate in, it is the width of our portfolio that needs us to address different segments as opposed to only the premium one. We've had to adopt sustainability, environmental and diversity measures as an all-encompassing move for the entire organisation.
What does real change or tangible performance look like? How does the brand hold itself accountable?
There has been a fair amount of backlash against brands that are considered to be disingenuous in what they're saying. It's very valid that you ask about quantitative measures. There are a slew of fairly ambitious goals, and the biggest one is that we are committed to having net zero emissions by 2050.
Lenovo was honoured to be chosen to test the ‘net zero’ standard for SBTi, helping to test and provide feedback on much needed standardisation for net zero targets. We cannot have self-developed standards; they are going to be found out by vigilant customers. We need to operate and deliver on commonly acceptable standards. We have made great progress. We already had a 50% reduction in scope one and scope two direct emissions.
We have embarked on an ambitious project to increase participation in the circular economy. When you go upstream, ESG also is reliant on activities like the circular economy. A significant amount of work has been done in integrating new recycled materials like magnesium aluminium, a fair amount of raw rare earth metals that gets into most of our devices, as well as ocean-bound plastic. Since 2008, we've almost eliminated close to 3,700-odd metric tonnes of packaging consumption by weight. In the last year itself, the packaging team working in Lenovo reduced packaging consumption by 497 metric tonnes.
Increasingly, we're also finding our customers and a certain number of enterprising small and medium businesses who are asking us what we, as their technology service provider, can do to help achieve their sustainability goals. We are the top-ranked IT company on the Hong Kong Hang Seng Sustainability Index. It propels us to continue doing more and take more ambitious targets as we go ahead.
How can marketers better partner across the value chain in their brand sustainability marketing efforts?
Marketing's role in ESG can be three-pronged. One is straightforward: how to promote the brand and the organization's ESG efforts at the corporate and product level. You have to be the awareness builder and the spreader of the message.
Some things that most don't look at closely is how to factor self-sustainability into your own operations. For example, when you are doing events, how much of recyclable materials are you using? How are you using your devices and display within retail stores? How can you use AI – and I am saying that because we use a fair amount – in your retail display? Now you have the technology so you don't need to change the display, POS materials and keep printing on paper.
And thirdly, it’s how you are showcasing and building your teams around diversity and being inclusive… We have a dedicated diversity office. The mandate for this office is to meet the needs of people from all backgrounds and abilities. We have an ambitious goal for that too. By 2025, 75% of our products will be rated for inclusive use by design experts. So that's the third way we as marketers can feed it back to the design level and the product, and consciously speak at different segments, which we might have neglected maybe five or 10 years ago.
What's the one piece of advice you will give to brands in order to embed sustainability, across business from communications, innovation, operations, etc.?
At a product level, if you want to make a difference, you have to look at each element of the supply chain and product design to see the energy footprint that you are delivering and how you can optimise it. One of the biggest waste generators is packaging. Lenovo has adopted sustainable packaging in a big way with ocean-recycled plastic and bamboo. A lot of ThinkPad packaging is made of recycled bamboo.
Brands should have a very close view of the value chain and where they are adding value as a product, then they can optimise at each and every level. These are things which, as an output, you never start with, but your solution is going to be radically different from your competitors.
How can brands create shared meaning and target multiple tribes or communities and still ensure that the messages are interpreted correctly?
As a brand, you need to think about what your different consumer touch points are and what the role of communication on the ground is. In some cases, you act as the signpost; in some cases, you act as the trusted guide; and in some cases, you do come across as a bit of a broadcaster.
So, at those touchpoints where you're coming across as a broadcaster: what are the shared human values or concerns that are diverse? In many cases, it may not be one piece of communication which you run across the globe. But are you addressing that same shared concern in a different way across different geographies?
We have this vision of “smarter technology for all”. The critical part as a brand is not the smarter technology part, which you might say is not particularly differentiated. But, what is more important for Lenovo is “for all” because then you're coming across as egalitarian rather than an exclusive brand.
Technology for a long time has been seen as exclusivist because primarily or without exception, your early adopters are people who are wealthy. How can technology iron out economic prosperity in the way that we come across or deliver products? Why should your 5G offerings, for example, not be at mass price points?
Taking on the for all part for Lenovo as a brand is also more important because that really differentiates us when you look at other technology brands, and that's something that you find testimony when you look at our portfolio of products.