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Chinese Computer Companies Adopting Multi-Model Strategies to Stay in Market

Tuesday, August 9th, 2011

When Apple first released the iPad2 in March of this year, it kept the price the same as the original tablet PC, marketing the new version as an improved version available at the same price. Two months later, Chinese enthusiasts finally got to see this newer iPad version, but Apple made a different marketing move this time, lowering the price by as much as 300 yuan. This maneuver by Apple is putting a lot of pressure to other computer companies based in China, such as Samsung, Motorola and Lenovo, who are all now considering redesigning their existing products to complete with the latest iPad. These computer manufacturers will have to adopt multi-model strategies in order to compete with Apple in the blossoming tablet PC market in China.

Competition in the Chinese Computer Market

International Data Corporation reported that more than 800,000 units of iPads were purchased by Chinese buyers in 2010. This figure is expected to double this year and may reach levels of up to 2.5 million units sold. The first quarter of 2011 is showing a strong trend for Apple, with the iPad taking up to 78.33 percent of the tablet market there. Samsung’s sales of its Galaxy Tab are way behind at only 5.12 percent of the market share.

According to Analysts International, tablet and smartphone products from Apple are considered like Louis Vuitton bags in China, as the leading goods from a branded accessory perspective. This popularity can be attributed to fast introductions of new and better products coupled with the strategy of cutting down the price tags of existing products for a new product launch.

Other computer makers are now more pressured to compete with Apple. China’s leading computer maker, Lenovo, has joined the tablet bandwagon in China when it launched its Androidbased LePad. Two versions were made available, either supporting WiFi or 3G. Planning to gain a larger share of the tablet of the tablet market and catching up with Apple’s big lead, Lenovo will launch an upgraded version of their tablet PCs by the fourth quarter of this year.

Other manufacturers, whether global or local manufacturers, will be introducing various models of products with different functionalities and price ranges. Some of these products will be made available at a much lower cost, as many consumers in China would want to have a tablet PC that would cost less than 1000 yuan. This multi-model strategy is what many computer manufacturers are adopting now to reduce Apple’s dominance of the market.

Multi-Model Strategy in the Computer Market

In the consumer market, it is common for a particular company to have a multiple model approach in marketing their products through segmentation. This strategy can also be effective in the Chinese computer market, with companies like Lenovo releasing multiple models, each having their own different set of unique features.

Market segmentation can increase a manufacturer’s influence on consumers, particularly if they have products that can cater to each of their customer’s specific needs. A single product simply cannot position itself in the whole market and provide relevance to each of the various sectors.

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