XIAOMIS MARKETING

STRATEGY
Presented To
Prof: Kishore Thomas John
On

16 september 2014

In partial fulfillment of the requirements of the

course
Marketing Management

By Thomson
joseph (p14214)

TABLE OF CONTENTS
1

INTRODUCTION

MARKEING STRATEGY

OBSERVATIONS

CONCLUSION

REFERNCNCE

INTRODUCTION
Xiaomi, a frequently heard name in newspaper headlines and a
familiar name if you do purchases from e-commerce websites like
Flipkart. As a marketing student I was tremendously surprised
with success of this company, especially its extraordinary sales in
India, through flipkart. I investigated further and it revealed the
fact that Xiaomi had started the smartphone production only
three years ago. It first introduced its first Android-based firmware
MIUI On August 16, 2010. Later it started to produce smartphones
known as Xiaomi Mi1 smartphone in August 2011. MIUI is the
user interface of Xiaomi smartphones. It is very easy to use and
learn compared to Apples and Samsung OS. Many smartphone
manufacturers failed to make presence in Mobile Apps segment,
but Xiaomi had created a large pool of apps for customers in
china and moreover Xiaomi users spend 7% more time using apps

than Apple iPhone users. The company drew the comparison with
the iPhone because it iPhone in the past six years, had beaten
every Android phone that it had been tested against, on app
usage in china. Taiwanese Foxconn is the manufacturing
contractor of Xiaomi, which means Xiaomi could save both time
and money concerned about production. Xiaomis main line of
attack is to make products that consumers scream, rather than
what they want at present.
MARKETING STRATEGY
Xiaomi grabbed the world biggest smartphone market with help of
unique marketing and product strategy. Few years from its arrival
it had 39% of Chinese smartphone industry. Oliver Verot, the
founder of Gentlemen Marketing Chine has remarked Xiaomis
strategy as purely marketing operation based on late Steve Jobs.
It is actually creating demand by limiting supply. This Start the
rumor of production may be insufficient to stimulate desire in
love brandeur trigger envy and the purchasing act quickly and
therefore ensure maximum sales rate. The increase in purchasing
rate will stimulate media attention and other sort of publicity.

Xiaomi has been more aggressive where other competitors were

lenient and it has been lenient where others were aggressive. This
strategy paid off! , When 4G was introduced many smartphone
manufactures tried to incorporate 4G compatible technology to
their smartphones, but Xiaomi didnt do it because most
customers were reluctant to move 4G. Xiaomi offers are much
more adapted to customers than others are. After analyzing many
of their strategy I have divided it to the following based on price,
promotion, product and geography (place).

#1: Product Quality concern

Xiaomi was cheaper compared to Apple and Samsung .Price was
one of xiaomis major strategy, but it does not mean that it was
only their core competences. There were many other Chinese
companies who had cheaper products however all of them had
major flows poor quality. Essentially, those devices are reverseengineered versions of Samsung and other major brands models
built from cheaper materials. Xiaomi was able to provide good
quality phones with cheaper price. The phone has a tough body,

high quality screen and a credible battery. It doesnt break easily,

unlike cheaper copycats that start having issues after just a few
months of purchase. Providing good quality phone at lower price
range was the key strategic move that made Xiaomi resolutely on
the map. By building its own Android-based OS called MIUI, xiaomi
got new exciting features not found on typical Android
devices moreover it had many customizable options. MIUI was
easy to use and learn which has made Xiaomi more preferred
choice.
#2: Price selling at cost of production
Xiaomi was selling their phones at cost of production, means they
had little profit on selling units. Xiaomi has also become conscious
that selling cheaper phones near their actual cost was not a
viable long term strategy, so they decided to go with the
Amazons model just cover the cost of the devices and make
money from selling content. Although, Xiaomi is often compared
to Apple of china, especially considering the fact that their
creator, Lei Jun, resembles Steve Jobs in his style and charisma, it
is clear that Xiaomis true encouragement comes from Amazon.

Xiaomi sells mostly through online because it reduces cost of

sales and other operation cost related to distribution and retailing
etc. Xiaomi also used social media not only for advertisement but
also for engaging with customers. They promoted fans club for
their smartphones as well as for their MIUI. The company
encouraged their technician to interact with customers and
gather feedback about their product and apps. Customer
feedbacks are analyzed by Xiaomi for the renewal of their
product.
#3: Place capturing home market

FIG (1), source @canalys

This shows how Xiaomi controls the top market share in china
about 14%. . The company has claimed that it had sold more than
10 million smart phones in China in the first quarter of 2014.
Xiaomis target is 40 million, which they are expected to achieve
if they are doing well.
Although there are rumors of Xiaomis expected coming to India,
Europe and North America, the company seems to stay focused
on their home market, China with 97% of the shipments locally.
Moreover they have lot of difficulties to start their operations in
EU and US, like spy stuff. BRICS is xiaomis main target market
especially India and Brazil, since along with China it constitutes
most of the mid segment smartphone users in the world.
#4: Promotion Flash style sales
Flash style sales means selling limited quantities during limited
periods. They always create anticipation and urgency great
factors to win consumers minds and hearts. This was case for
crashing of flipkart, were lots of anticipated customers queued to
register for xiaomi mi3 for online purchase. Due to this huge
number the website crashed, this in turn made xiaomi phones

famous within one day. Word of mouth marketing worked very

well for Xiaomi and they continue to take full benefit of it.
#5: Promotion social media based
Xiaomi has also managed to harness the power of social media by
not only broadcasting their messages and announcements but by
actively engaging with their customers. Engineers are regularly
encouraged to speak directly to clients and use gathered
feedback to refine software as well as the products. They used
online media for marketing.
#6: Promotion Fan club
By using social media, Xiaomi was able to succeed in building a
dedicated fan base. The Mi-fans are very active in social media
and are, in some ways, comparable to those hardcore Apple fans
that we are familiar. Mi-fans are present at Xiaomis product
launches .where they are known for loud cheering and
applauding. This fans are best marketers of the xiaomi products.
#7: Promotion charismatic leader

Apple had Steve jobs and xiaomi have Lei Jun, he does a great job
in making his brand look cool. Lei Jun is known for his die hard
resemblance to Steve, including jeans and dark shirts. But xiaomi
is different from Apple in many factors like Xiaomi has no
physical stores nor does it partner with third-party distributors.
Instead, all Xiaomi products are sold directly through the
company's website in India (flipkart). While there are some
resemblances to Apple in many aspects, the ability to customize
the software based upon user preferences sets makes xiaomi a
class apart.
#8: Promotion and price: based on apps and OS

Fig (2) indicates the usage of apps

provided by Smartphone companies by customers in china. This shows

how Xiaomi expanded and reached top of the segment in china,

surpassing all major players

From this we are able understand that xiaomi apps are doing well,
which enables the company to recover money from apps. Apps in
turn will help companies to promote their products.

OBSERVATIONS AND CONCLUSION

Xiaomi has successfully sold many units of Smartphones around
the globe. Xiaomi is expanding its presence across the globe. In
India they have joined hands with flipkart to sell their
smartphones. I firmly believe that they are hyping their demand
by limiting supply. Even crash of flipkart website is a marketing
tactics to get public attention. Xiaomi will be the ultimate killer for

mid- smartphone segment. As Samsung is leader in this segment,

they will be ripped off from their pie. The Chinese sales results
shows this trend . They have particularly have gained Chinese
markets major share about 14%. Hugo Barra, Vice President of
International, Xiaomi and Lei Jun, CEO of Xiaomi are both
visionaries, they are keen to expand their presence around the
globe. Their marketing strategy is both different and promising.
Xiaomi smartphones are having great hardware compared to its
competitors. Due to small size its manufacturing and servicing
sector is very small. Moreover, if ONE PLUS ONE another
imminent Chinese brand with superior specs, manages to nail the
price and make superior models, it will eventually cause problems
to xiaomi.