XIAOMI – Rising trends in India and World
Xiaomi – Rising trends in India and worldPradeep Kumar Maurya ( 17 MC 56), SRCC Title- Decoding the Average Priced mobile market; XIAOMI REDMI key marketing strategies in IndiaSubject area –Marketing of cellphones, 4P’s of marketing mix, marketing strategies, cultural environment, consumer behavior , growth strategies, retailing, innovation as a global entry strategy and marketing research.Study Level/ Applicability- This case can be used as teaching tool for postgraduate programs and executive programs in management to explain the key concepts like marketing of luxury products, marketing mix, retailing and consumer behavior. The content of the case would also be appreciated by marketing executives, advertising professionals, marketing academicians and researchers. The case investigates the pertinent questions like how marketing strategies are designed by global companies to cater to local demands, how Flash Sale play a role in shaping customer’s brand perception and how the product offerings of an MNC are influenced by cultural and social environment of a host country.Case overview- Xiaomi Corporation is a Chinese electronics and is a leader in mobile market across the world through its concept of Flash sales via various E-commerce website and its own website also. Xiaomi is the brain child of a serial tech investor and entrepreneur Lei Jun, who is creating the next wave in the Smartphone industry with the launch of smartly designed Android phones at very moderate costs. The company after coming into existence in June 2010, has already shaken the Chinese market in a span of 4 years and is aiming to be the next buzz word in the international market. Xiaomi entered the Indian market on July 15 2014 with an exclusive sales tie-up with Flipkart for smartphone Mi 3. With the rising economic development in the second and third world innovative countries such as China, the taboo associated with the “Made in China” brand is being redefined, especially in the Smartphone industry. Some serial entrepreneurs are relying heavily on innovation instead of the government connections and financial powerhouse, to let an incumbent and startup enter a mature market.
One such prominent example is of Xiaomi.For many years, China’s mobile phone market had been dominated by foreign companies such as Nokia, Motorola, Apple, and Samsung. But the situation suddenly changed with the arrival of smartphones. Nokia quickly disappeared from the market. Motorola was sold to Google and sold again to Lenovo in 2014. Although Samsung still has the largest share of the Chinese market, its performance has lagged, with not only revenue but also profit showing negative growth. Apple is still growing, although the pace of growth has slowed. In contrast to this is the leap of Chinese businesses, with Xiaomi making especially impressive gains. According to data from IDC for worldwide smartphone shipments in the third quarter of 2014, Xiaomi made the top five list for the first time, coming in at number three behind Samsung and Apple.Expected Learning Outcomes – After studying the case, one should be able to understand the four P’s of marketing mix, learn the role of innovation as a global entry strategy , analyse the relevance of overseas environment and exapansion in the success of an MNC , and understand the important advertising strategies and pricing strategies of Moderately priced Cell phones.Company ProfileXiaomi was founded in 2010 by serial entrepreneur Lei Jun based on the vision “innovation for everyone”.
HEADQUARTER- Beijing ChinaMi ProductsMi and Redmi smartphones Mi TVs and set-top boxesMi routersMi Ecosystem products including smart home products, wearables and other accessories.Mi believe that high-quality products built with cutting-edge technology should be made accessible to everyone. We create remarkable hardware, software, and Internet services for and with the help of our Mi fans. We incorporate their feedback into our product range, which currently includes With presence in over 30 countries and regions, Xiaomi is expanding its footprint across the world to become a global brand. Xiaomi followed a unique business model where it sold its smartphones at cheap prices and later took advantage of the revenue streams generated by selling its software such as apps, cloud computing, and games. The company sold its smartphones at US$ 200 or US$ 300 whereas smartphones developed by Samsung Electronics Ltd.
First there were the European and American brands – Nokia, Ericsson, Alcatel and Motorola. They got outwitted by the Japanese brands like Sony and Panasonic. The Japanese were in turn outwitted by the Koreans — Samsung and LG. And now it is the Chinese who are taking the pole position in Smartphone Mobile Handset Market — with Xiaomi leading the charge.Samsung never had it so good with the demise of Nokia in 2013. The Finnish brand once held sway over the mobile handset market with almost 90% market share. But their disastrous decisions of relying on Symbian and Windows operating system earned them a huge disfavor among the customers. The market share of Symbian was 44% in 2009, 3% in 2012 and 0% in 2015. On the contrary, Samsung earned kudos by latching on to Google owned Android operating system that had a market share of 4% in 2009, 67% in 2012 and 62% in 2015 (Source of Data: IDC).Samsung has also consistently held a market share of 20-30% between 2014 to 2017. The number of smartphones shipped in 2013 touched a figure of 1 billion, with Samsung alone having shipped one-third of them. In the third quarter of 2017, Samsung has been a market leader by shipping 83.3 million smartphones with a market share of 22.3%. Apple holds the second position with 46.7 million shipments and a market share of 12.5%.They used an unusual marketing strategy called ‘Flash Sales’ through the e-retailer Flipkart. There was such a mad rush to buy the Mi3 that the website of Flipkart crashed on 15th July, 2014. The press reports said that Xiaomi had sold 5,000 units of Mi3 in 30 minutes and gone out-of-stock. The madness continued in the subsequent weeks. In Mid-August of 2014, Xiaomi sold 20,000 units of Mi3 in 30 seconds!!!Since then, Xiaomi has been launching several value-for-money smartphone models like Redmi , Redmi Note, Mi MIX, Mi A1 and Redmi Y1 and creating one record after another.
Xiaomi earned over $1 billion in 2016 by selling their popular models like Mi, Redmi and Redmi Note mobile phone brands. In 2016, Xiaomi sold a million smartphones in 18 days in October during the celebrations of Diwali mainly because of the buzz created by Flipkart and Amazon around the brand. This year, in 2017, they broke the record and sold 4 million phones in one month during Diwali and festive season through Flipkart, Amazon and Mi.com.In 2017, they reversed their fortunes with the release of Samsung Galaxy S8. They have retained the top position with a sale of 83.3 million smartphones with a market share of 22.3%. But Xiaomi has outsmarted them by doubling their shipments from 13.6 million in Q3 2016 to 27.6 million in Q3 2017. In India, they are tied at top place jointly with Samsung. Both Xiaomi and Samsung have 23.5% market share each in smartphone sales in India, followed by Lenovo-Motorola combine at 9%, Vivo at 8.5% and Oppo at 7.9% (Source of Data: IDC). Xiaomi has sold 9.2 million smartphones in Q3 2017 in India, registering a 300% growth on a yearly basis. Samsung, on the other hand, registered a 23% growth year-on-year and a 39% sequential growth, as per the IDC report.Xiaomi is growing very aggressively in India with their latest models Mi A1, Mi MIX2 and Redmi Y1 ,Y2, Redmi Note5 Pro getting great response from buyers. They have signed Katrina Kaif as the brand ambassador. They have bolstered their offline presence through a direct-to-retail approach and company owned stores called Mi Homes. They have also roped in ‘Big Bazaar’ to sell the Redmi 4 and Redmi Note 4 models. The offline sales contribute to 20% of Xiaomi’s total India sales, more than doubling from less than 10% share early that year.At this moment, Xiaomi’s value-for-money strategy seems to be winning the game against Samsung’s dealer-incentive push strategy. Whether the Chinese or the Korean brand will have the last laugh is a matter of conjecture. But customers are certainly getting the best deals in this battle for supremacy in the smartphone mobile handset market.
The research team’s competitor analysis is based on Germany’s mobile phone market with two main competitors Samsung and Apple. The group will be focusing on their latest models, which are the iPhone 6, Galaxy S5 and MI4.While the team was comparing the prices, it was identified that Samsung and Apple smartphones are in the higher price segment with a luxury brand status. Whereas Mi4 is in the medium price range but Xiaomi offers high quality phones. In Germany, phone carriers provide contracts with Samsung and Apple phones. These contracts make their products more approachable because you have to pay monthly instead of the full amount at once.Due to Xiaomi’s philosophy of keeping costs low, they prefer selling their phones online instead of in actual shops. Whereas Samsung and Apple have physical stores where customers can try their products before deciding to purchase. Samsung is more available in Germany as they also have stores in smaller cities and partner up with consumer electronic retail stores like Mediamarkt and Saturn.In terms of promotion, Xiaomi and Apple share the same goals. They both focus on social media and word of mouth because they believe the brand speaks for itself. In contrast to Apple and Xiaomi, Samsung follows a more aggressive marketing model with printing ads and TV commercials
Introduction to SWOT analysis method: SWOT analysis method is a kind of enterprise strategy analysis method, which is based on the enterprise’s own inherent conditions to analyze, find out the advantages, disadvantages and core competitiveness of enterprises. The internal factors: S represents strength , W represents weakness; The external factors: O represents opportunity, T represent threat. Xiaomi mobile phone SWOT analysis: Strength: Xiaomi mobile phone can win the hearts of the people, its advantages are mainly summarized as five aspects: the enterprise internal advantages, mobile phone itself advantage, price advantage, sales channel advantage, unique promotional strategy. Weakness: Xiaomi phone shortcomings are: mobile phone itself defects , lack of credibility, after-sales service has been questioned. 1. There are many hardware problems The screen become warped foot problem The phone off the paint problem The back cover closing cracks imprecise problems Phone body shaking have a sound problem In the original accessories without headset Battery heating problem2. Lack of credibility 3. After-sales service has been questioned Worry about the system stability and the quality of the product workmanship of people each accounted for 63.64%, worry about after-sales service and battery heating problem respectively accounted for 63.36%, 43.18%, and 9.09% are worried about other issues
Opportunity: 1. Competitors to weaken 2.Mobile phone computerized trend 3.The development of future mobile terminal 4. China market advantage Threat: 1. The smart phone market is highly competitive 2.The independent property rights is not high 3. Public opinion pressure challengeMarketing StrategyPromotion strategy: 1. Manufacturing media hype topic: This rumor – Mobile phone is stolen by Xiaomi has been appeared, Xiaomi is no official clarification or denial this kind of rumors , so caused Xiaomi phone supporters and another purpose is also for Meizu mobile phone enthusiasts supporters slobber battle. So that Xiaomi phone once again won the attention of consumers, but also makes Xiaomi phone more mysterious.2. Xiaomi phone high-profile release: As one of the co-founder of Xiaomi Lei Jun successful interpretation a clone Steve Jobs. With its reputation and appeal in the software industry, Xiaomi Company held a conference in Beijing. Xiaomi mobile phone has thus opened a precedent for domestic mobile phone, got the attention of consumers, especially Internet users attention. 3. Hunger marketing tools: The so-called hunger marketing is make a such surprise price, to attract potential consumers, then limit the supply, resulting in demand exceeds supply hot sell illusion. Initially Xiaomi just online sales, only pre-sale of test machines, the provisions of the day must be listed in the Xiaomi forum has 500 points in order to get Xiaomi phone snapped up qualifications. As a result, the emergence of a large number of Xiaomi phone forums willing to act as free Xiaomi water army.
Online promotional distribution strategy
Online promotion strategy: (1) Xiaomi Company’s official website designed a personalized home page, not only establish a 2, online news release. Xiaomi website site directly face to the public dynamically publish Xiaomi news, let the public keep abreast of Xiao mi updates. (2) Network promotion activities At present, Xiaomi company and Alipay jointly launched a lucky free week activities, users through the Alipay quick payment will have the opportunity to get free opportunity. Xiaomi phone airborne the most popular “Singles’ Day”, HuiYuan Network lead the rechargeable card lucky draw ordering system planning. customers custom Xiaomi mobile phone need to register as a member first, and then select the goods to confirm orders, through the order tracking, inspection and sign to complete the order process.
Online distribution strategy
Production network planning. Xiaomi company adopts flexible production, so that the production network can be adjusted at any time according to the requirements of consumers, in order to produce consumer need personalized products.
Online direct marketing. Xiaomi company did not set up distribution channels, but through the establishment of different offline outlets, in major cities have the house of Xiaomi .
3.Service network planning. Xiaomi website with online customer service, consumers can through the Xiaomi customer service email, forum, micro-blog , customer service hotline, so as to realize apply for repair and return. Xiaomi company also implemented the invoice system, IMEI number query, to provide consumers with timely service.corporate image, but also attract more Internet surfers to access, played a role in advertising
Xiaomi mobile phone sales group is mainly aimed at enthusiasts and young consumers. The core selling point is mainly high configuration, high cost performance, for enthusiasts. Hardware and software are relatively consistent with the Chinese habits. But its positioning can be said to be a “pseudo” positioning, relatively speaking, Xiaomi phone is mainly for some of the young people have two mobile phones, the main role is to replace the cheaper that two phones. This complexity of a simple product practices, makes some potential customers to maintain a wait -and-see attitude, and thus lose these potential customers. The early Xiaomi mobile phone is mainly rely on enthusiasts stimulate sales, but although the main sales target is the enthusiasts and brand loyalty is not high of young people, but not equal to say “Xiaomi phone is the enthusiast phone”.
Xiaomi mobile phone Production research and development has been “enthusiasts” to participate, the purpose is to promote its products, so that it is not sale but it is hot ,have a certain reputation. But its innovative production mode, really played a very good effect. Its main also want to let consumers participate in this model, so as to achieve the purpose of pleasing the consumer, evoke consumer’s purchase desire.
Packing. Especially anti-fall and anti-heavy, but also a way to highlight the Xiaomi mobile phone product quality characteristics. The quality of the product has been the main in Xiaomi phone On the other hand, the quality problem of the domestic mobile phone has been a weakness in the eyes of consumers, Xiaomi mobile phone makes a lot of publicity in this aspect, when purchase the mobile phone consumers will consider mobile phone quality factor at first, according to the survey, the vast majority of consumer mobile phone life can have two years, nearly 20% of consumers mobile phone life can be up to two years.Pricing strategy: Xiaomi mobile phone sales price from the initial M1 1999 yuan, to today’s Redmi 699 yuan, has been using cost pricing strategy, compared to the same price on the market of smart phones, Xiaomi series high configuration hardware ,can be said to be attractive and high cost performance. Xiaomi phone price is one of the main factors influencing the market demand and purchase behavior, directly related to the benefit of the enterprise.