Ultralight PC Marketing Plan: Liberta Netbook Strategy

Introduction: The Ultralight PC Market Opportunity

With the rapid growth of Web 2.0 technologies (O'Reilly et al.) and the rise of social networks (Bernoff & Li, 36), there has been a proliferation of devices for accessing the Internet. The need for a more fully featured device that can function as a laptop yet be affordable enough and functionally equipped enough to provide Internet access has emerged. Technologies in this area include netbooks or ultralight PCs (Ricadela et al.). Market factors driving the adoption of netbooks also include Software-as-a-Service (SaaS) models (Swiercz & Lydon, 389) and the development of low-power-consumption microprocessor architectures (Ricadela et al.).

What is also fueling the development of ultralight PCs is their low power consumption and the ability to stay connected to the Internet at all times through the use of Evolution Data Optimized (EV-DO) technology (Lee, Kwak, Kim, & Kim, 296). This technology is significant in that it allows an ultralight PC to remain connected to the Internet regardless of location. From a market differentiation standpoint, creating an ultralight PC that can stay always connected to the Internet also represents a market innovation that may eventually lead to the consolidation of larger, more expensive laptops that require either a hard-wired connection or a Wi-Fi hotspot to operate.

Market Analysis

The intent of this section is to analyze the global market for ultralight laptop PCs. The most successful competitor in the netbook segment today is Asus, a smaller company that has successfully created distribution channels and service teams throughout the U.S. Asus has also built social-networking-based marketing campaigns to recruit key bloggers and thought leaders in the Internet and PC hardware market. As a result of the exponential growth predicted by International Data Corporation (IDC) for this category of digital devices, Dell, Gateway, and HP are also actively competing in this market (Ricadela et al.). Their entrance into the ultralight — or netbook — market has legitimized it and is driving greater growth.

Figure 1 (Worldwide Netbook Unit Forecast) illustrates how rapidly sales of ultralight or mini-notebooks are expected to expand (Source: Ricadela et al.). Ultralight PCs are also acting as a catalyst of product strategy change within the global laptop market. This effect has been to accelerate the adoption of direct marketing channels (Al-Obaidi & Gabrielsson, 5), a major factor in redefining laptop shipment distribution and volume growth, as shown in Figure 2 (Global Laptop Unit Volume Growth, 2007–2012; Source: Ricadela et al.).

Competitive Analysis

There are nearly two dozen companies today manufacturing ultralight or netbook-form-factor systems. What is fascinating about the competitive dynamics of this marketplace, however, is that market leaders Dell and HP are not dominating it through their traditional multi-tier and multichannel distribution approaches. Instead, entirely new competitive approaches using social networking (Bernoff & Li, 36) and Web 2.0 applications have been used successfully by Asus to gain market share in the U.S. According to IDC market estimates (Ricadela et al.), Asus now accounts for nearly one out of every four ultralight or mini-notebooks sold.

Asus has accomplished this by concentrating on a unique approach to managing its marketing mix, with a heavy reliance on social networks, thought leaders, and key influencers who have a strong impact on purchases of new electronics products. A detailed analysis of competitors is provided in Figure C of the Appendix.

Marketing Mix: Product, Price, Place, and Promotion

The core differentiator for the proposed ultralight PC is the combination of Solid State Disk (SSD) drives — which can be accessed and used at significantly faster speeds than traditional hard drives — with EV-DO technology (Lee, Kwak, Kim, & Kim, 296). The combining of very fast access speed, high battery life, and always-on Internet access will significantly differentiate this product and create entirely new opportunities for channel partners (Al-Obaidi & Gabrielsson, 5). High-tech distributors will find the modular architecture well suited for adding their own enhancements and for expanding the market into vertical areas including healthcare and insurance.

The proposed product will also be specifically designed to support user customization, giving buyers the opportunity to create a unique identity with the device. Mass customization as a differentiator accomplishes the strategic marketing goal of delivering an exceptional customer experience (Swiercz & Lydon, 388). Having the opportunity to customize the ultralight to specific requirements — including unique designs on the device casing — not only makes the purchasing experience more distinctive but also enhances customer loyalty to the product (Swiercz & Lydon, 389).

As part of delivering the total customer experience, each ultralight will include an SSD drive that can be completely backed up online into a 25 GB, 50 GB, or 150 GB partition provided with the customer's personalization options. This will also give customers motivation to share how they are using their ultralight. This feature is central to the product concept because for any ultralight to be integral to how customers use the Web, it must enable collaboration and the ability to share information (O'Reilly et al.). As a result of all these features and the support for a social networking community for customers, the product will be given the Italian name for freedom: the Liberta Ultralight.

Pricing communicates more about a product's value and market position than much of its marketing communications or public relations, because price connotes value (Swiercz & Lydon, 387). For the Liberta Ultralight, the pricing strategy needs to convey high quality, durability, and reliability — all at a competitive price point. The competitive analysis in Figure C of the Appendix reveals major variation in competitors' pricing strategies. A few are pursuing a skimming approach, primarily due to high cost structures and overhead; Dell and HP fall into this category. Other competitors are using the lowest-cost components and open-source operating systems to minimize costs, attempting a penetration pricing strategy.

It is well established that aggressive pricing does not work in high-tech electronics markets (Mohr & Sarin, 85). In general these markets are highly inelastic and do not respond to dramatically lower prices with proportional improvements in sales. Of all high-tech electronics markets, PC pricing has consistently been the most inelastic and least responsive to major price cuts over time (Stavins, 350). This is due to the exceptionally fast rate of innovation in the PC industry, rapid commoditization across many segments, and distribution channel strategies that quickly erode margins (Stavins, 350).

The pricing strategy for the Liberta Ultralight should therefore focus on communicating its unique market position as the only customizable ultralight and the only one with EV-DO technology. These two highly differentiated features can support a value-based pricing strategy that commands a price 20% or more above the median price of competing ultralight PCs.

In launching the Liberta Ultralight, it will be critically important to rely on a multichannel selling strategy to quickly gain sales throughout the U.S. The use of multichannel selling strategies in the PC industry has proven to be among the most effective approaches for minimizing risk while achieving significant market share growth (Al-Obaidi & Gabrielsson, 5). The distribution strategy will primarily focus on forming alliances and agreements with distributors that have the financial capability to stock products and carry inventory, which they in turn will sell to retailers and their value-added reseller (VAR) partners.

The direct selling channel will be a website that includes a product configuration application. A distribution partner portal will also be created, giving distributors and dealers the ability to customize the Liberta Ultralight in quantity for their customers. Intensive dealer and channel training will be used to actively promote mass customization as a product differentiator (Swiercz & Lydon, 388). Finally, an integrated Partner Relationship Management (PRM) system will be created to give channel partners the flexibility to support resellers on a 24/7 basis. The intent is to create sufficient channel support so that channel partners can produce 60–70% of overall revenue for the product line.

There are many different aspects of promotion that must be included in the launch of the Liberta Ultralight. First, there is the need to quickly and convincingly differentiate its value proposition with thought leaders, key influencers, and members of the analyst and industry press. This can be accomplished through a series of outreach campaigns and by providing these key influencers with the first production units so they can test and evaluate them. All key influencers should also have direct access to engineering teams so that their questions can be quickly answered and any problems promptly resolved.

Another aspect of the promotional strategy is generating online buzz through social networking technologies. A representative set of these applications is shown in Figure B (Web 2.0 Applications) in the Appendix. Creating Facebook, FriendFeed, and Twitter accounts — and continually producing new blog content — is critical. These strategies are interlinked with the third major promotional element: ensuring that search engine optimization (SEO) is achieved on the company's website through targeted keywords and blogging activity to drive up search engine rankings. Paid search through Google AdWords should also be included in the promotional launch, so that when someone searches for "ultralight PC" or "netbook," the Liberta Ultralight advertisement appears prominently. All of these activities need to be coordinated into a single consolidated strategy to ensure that the freedom the Liberta Ultralight provides is clearly and effectively communicated.