Lenovo has announced that it not only wants to be the world's strongest computer brand in a few years, but it also has aspirations in cell phones and other high growth consumer electronics markets. It's a wake up call to CEOs of formerly invincible U.S. brands. Try as they might through legislation, lobbying, and outsourcing they will not win the war with price-based commodity strategies.
U.S. powerhouse brands must focus instead on differentiation and tangible value for end-users, be they business buyers in industrial markets or consumers in retail markets. Price-based commoditization is a choice that senior executives make. Any end user faced with undifferentiated alternatives will make the rational decision to buy on price. The powerhouse multinationals emerging in China - and other parts of the developing world - will always win that game!
As much as embattled senior executives of losing U.S. corporations would like to argue that there have been ugly shifts in their marketplaces, nothing has changed on the demand side of their businesses. Buyers in every marketplace have always demanded differentiated offerings (with tangible value) or lower price. What has changed is that corporate executives in the U.S. took their eyes off the ball, and allowed rough and tumble low-cost players to redefine their battlefield. It's hard to fathom how they believe they can ever win that game.
It's time for the pendulum to swing back - the rise of Finance-groomed executives must give way to a Marketing resurgence. The comfort that derives from having CFOs turned CEOs steer the helm during times of declining margins and differentiation is illusory!
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