the Marketing Strategy of Xiaomi

I. Basic concepts about marketing.

The marketing concept is the belief that companies must assess the needs of their
consumers first and foremost. Based on those needs, companies can make decisions in
order to satisfy their consumers needs better than their competition.

The management process responsible for identifying, anticipating, and satisfying

customer requirements profitably.

The main task of Xiaomi’s Marketing department is understand what customers need,
then treat them by your heart to create a huge fan club, thereby creating loyal fan - the
main free - marketing force for Xiaomi (word - of - mouth)

II. The key roles and responsibilities of the marketing function in

organizational context and in the context of current marketing
environment.

1. Understand the Marketplace and Customer Needs:

All products of Xiaomi are cost - advantage, they provide a better configuration compare
to others in the same segment, same price. Targeted customer are tech - fan who
understand and want to stay up to date with new technology and who do not need to
show off by expensive products.

Xiaomi’s Customer Research

Lei Jun – CEO of Xiaomi, experienced in high technology, was said:

“Even a pig can fly if it stands in the center of a tornado”

Immediately this statement became one of the mouthpieces of start - ups, implying that
anyone can succeed by following the economic and social development trend.
And this is exactly what Xiaomi did. Smartphone became popular in China since 2009.
The market was divided into two side:

1. High - end Smartphone: Apple, Samsung with high price: $500 - 750.

2. Affordable Smartphone: Cheap but no truthfully brand, low quality.

And Xiaomi was born to meet the needs of the market including products manufactured
by a good brand, high quality, with a pleasant price for Chinese consumers at that time.

At the time of its launch in April 2010, Xiaomi with its luxurious, eye - catching design and
its own customized system based on Android platform called MIUI, created a revolution
in the smartphone market. Not only that, the product also has an extremely attractive
price. According to that, Xiaomi quickly received much love from consumers.

Another important things is Xiaomi have created Xiaomi’s ecosystem, Their solution is
to create an ecosystem of 100 startup partners to provide Xiaomi with home - connected
products and other internet - connected technology products that can attract customers
to their stores. Xiaomi Vice President Wang Xiang explained how the ecosystem has
increased customer traffic: “The purchase of a phone or a television is a low frequency
event. How many times will you go back to the store. But if you need a Bluetooth speaker,
an internet - connected rice cooker, or an affordable air purifier - and each one is not only
the best on the market, it costs less than other products in the same category? Our
ecosystem can provide users with new products they don't know it even exist. So they
will keep going back to Xiaomi's Mi Home store to see what we have”.
2. Designing a Customer-Driven Marketing Strategy
Zero Advertising, only Social Marketing

Xiaomi aim to use the power of the community (word of mouth) right at the beginning,
senior executives often spend time meeting face - to - face with users to answer their
questions. These customers continue to tell the others about Xiaomi – This is an unique
and money - saving marketing way that no other organizations have done before. By this
strategy, Xiaomi can reduce budget for marketing  Reduce products price.

“When it comes to the recipe for success, there are some universal things. The first is to
understand the customer and make friends with them, instead of talking as a brand”
– Amanda Chen – Xiaomi’s International Marketing Manager.

The main process of this marketing strategy include 3 steps:

Step 1: Build a tech-fan community:

The first product of Xiaomi is MIUI operating system (2009). Xiaomi’s Founder Lei Jun
did not want to spend a ton of cash on marketing so his team have to build a brand
awareness in forums. Their staff spent a lot of time on forums, making comments, sending
posts and advertising. They used the same method to do marketing with zero budget,
they set up MIUI mobile phone forum (Mi Community), which became the base camp
of “Mi fan” with over 10 million downloads (CH Play Statistic).

Step 2: Engage with the fans:

Make Xiaomi fan “loyal”. Every week, Xiaomi releases a new version of MIUI, its
customized Android skin, which is then scrutinized by a few hundred thousand hardcore
users. “Mi fan” participated in product research, development, test, spread, marketing
and public relation. Fans also organized offline gatherings.
Step 3: Sell to fans. Let them spread the euphoria via social site:

Sina Weibo is the most popular social network in China. In December 2012, Xiaomi
announced that it will sell phones directly from Sina Weibo.

The unusual marketing tactic proved successful: within two days of the announcement,
Xiaomi said it had sold 50,000 smartphones in five minutes, with 1.3 million additional
reservations.

It happen with the same way in Vietnam, a large amount of truthfully - technology
reviewers had write about Xiaomi: tinhte.vn; Vat Vo Studio; Mobile City;
thegioididong.com, …

Mi Community: The main marketing site of Xiaomi

There is an online community built by Xiaomi from its inception called MIUI. This is a
forum where Xiaomi users - Mi Fans - update all information about the company:
instructions for use, new applications ... MIUI is also the place for online competitions, or
where Xiaomi fans invite each other to join the meetup.

Xiaomi actively interacts with its fans through MIUI. The company's engineers are always
taking the time to explain the technical features or new applications. Senior executives
also regularly answer questions online on the platform. And they don't just listen.

There is a story told about how Xiaomi listen to Xiaomi's customers: A customer was so
drunk that he could not find the flashlight app on his phone to find the key and then asked
if Xiaomi could do it by hold down the fingerprint sensor key. This idea was supported by
other fans and later, it became reality on Mi UI operating system.

Scale up the Business

When success with word - of - mouth strategy, Xiaomi realize that they are leaving out a
large amount of customers in the countryside, and who want to see the products directly
before purchase it or who do not very good with buying things online. The solution is open
Mi Home Store where people can easily experience the products.
Xiaomi had its first store in the 1st Quarter of 2015. In 2018, Xiaomi had 264 store in China,
500 store in India and 7 store in Viet Nam. In 2019, Xiaomi’s target is 500 store in China
and 5000 store in India. (Xiaomi’s CEO Lei Jun)

3. Preparing an Integrated Marketing Plan and Program: Xiaomi’s

Marketing Mix:

*Product

Xiaomi is one the fastest growing consumer electronics companies based out of China.
Xiaomi initially started off as a mobile brand but now offers a wide range of consumer
electronics products. The products in the collection of Xiaomi are:
• Smartphones
• TV
• Notebooks
• Smart devices
• Power bank and charging devices
• Speakers and headphones
• Drones
Xiaomi’s biggest seller are its smartphones with the MI and the RedMi range of products.
These products are mostly run on Qualcomm processors in India due to a case pending
with the court with Ericsson on the usage of non-Qualcomm products in India. Similarly,
it has customised the products to the requirements of the region it operates in to
incorporate the local market and political conditions. (mbaskool.com) (mbaskool.com)
*Price

The key resource of Xiaomi success is the high - end products with cheap price. Its
flagship products are priced at mid - range but full of powerful features that compete
directly with high - end devices of the big brands in the mobile industry.

Imagine, if a manufacturer doesn't have to pay for these services, ignoring the concept of
a retail store chain but instead selling online, not having to worry about warehousing costs
and distribution, costs will definitely go down. That's how Xiaomi sells its premium phone
at such a cheap price!
Before Xiaomi's appearance, there were many low - cost phones on the Chinese market.
However, those products are of low quality and give the Chinese phone market a less
favorable look. Now, Xiaomi are bringing positive signals to this market by selling
high - end products at affordable prices - that's exactly what consumers want.

(Unit: Yuan)

*Place

97% of Xiaomi’s products are consumed in the Chinese market. When it dominates the
domestic market, the next target is Southeast Asia. Xiaomi is not in a hurry to enter the
markets where the iPhone and Samsung are storming. It also shied away from European
and North American markets, where allegations of cyber security allegedly occurred.

*Promotion

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.
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. (Hanhui Huang, Research Publish, Vol. 4, Issue 2, pp: (629-638), Month:
October 2016 - March 2017)

4. Building Customer Relationships:

It is important to connect with customers. Building relationships is key to learning your

customers’ needs. And, you may gain more returning customers, referrals and net
income in the process.

“Joining the Xiaomi community makes me feel like I have achievements too”
– Zhao – A Mi Fan in Gansu Province

Zhao – a fulltime worker – but always spend his free time to answer others question on
Mi Community Forum.

This is the reason why Wanqiang Li – Xiaomi’s Co - founder said that: “Xiaomi is not just
selling a product, but selling demand of being a part of something”

Zhao Ruiping is just an assembly worker, but can still attend a party at one of most
luxurious nightclubs in the city as a Xiaomi's VIP guest.

"I have never been to a nightclub. I am just a normal worker, so I have no money to go to
these places" - Zhao said. This party for about 300 people is one of the reasons why
Xiaomi has climbed to the top of the Chinese smartphone market. They have hit the
psychological phenomenon to increase the social status of a large number of young
people in the country.

Part of the reason for Xiaomi's success is to help customers feel like they belong to a
unique group, by hosting parties for guests across China every few weeks. Xiaomi is
trying to prove this model can work around the world. However, this is particularly
challenging. The company succeeded in part because its customers were proud of their
nation as Xiaomi was the first global Chinese brand to truly pioneer. (Wall Street Journal)
(Dou, 2015)

5. The Hunger Marketing:

In terms of MI, its marketing method is different from that of other brands. As we
mentioned before, there are no physical stores. All the sales are performed online. In the
first quarter of 2014, MI’s sales reached 1,040,000 sets in China, more than that of Apple
for the first time. In 2015, its sales exceed that of other domestic brands, such as Huawei.
Why is it so successful? The reason lies in its hunger marketing. Before launching a kind
of new product, on one hand, MI will promote its new products with the help of various
online platforms such as Qzone, twitter. On the other hand, nearly 6 million fans will
recommend it to each other, making young people full of expectation and curiosity. After
the launch, new products will be sold out. This is calling “It is precious when the one is
scarce” (Atlantis Press) (Price, 2015)

6. Capturing Value from Customers:

The “Business Insider” (Price, 2015) use the word “rabid” to describe Mi Fans in China.
Mi Fans here have their own Fan Club and mascot (Mi rabbit wearing a Ushanka hat).
6/4 yearly is Mi Fans’s day. Xiaomi also use this day to advertise new products. “Mi day”
2014 witness a record of sales: $243 million a day.

Loyal fans are the marketing force for Xiaomi. On the MIUI online community, fans
explained to each other about new applications and functions, as believers spread
information about its new products. And loyal fan also comback to Mi Store again and
again because of it ecosystem.

Statistical data for Q4 / 2017 of the top 5 Smartphones companies:

Sale turnover, Market share, Growth over the same period
(Sale turnover: million pcs)
Sale Market Sale Market
Growth
Company turnover Share (%) turnover Share (%)
(%)
Q4 - 2017 Q4 - 2016
 Apple 77.3 19.20 78.3 18.20 - 1.30
Samsung 77.3 18.40 77.5 18.00 - 4.40
Huawei 74.1 10.20 45.4 10.50 - 9.70
Xiaomi 41 7.00 14.3 3.30 96.90
OPPO 28.1 6.80 31.6 7.30 - 13.20
Others 27.4 38.60 183.7 42.70 - 17.60
Total 151.3 100.00 430.7 100.00 - 6.30
Source: The Bureau tracks IDC global mobile statistics

According to SMCP (Yang, 2019), In 2018, smartphone sales increased by 41.3% to

$16.9 billion, net profit $2 billion (IoT and lifestyle products generate significant
revenue: $6.53 billions). Sales reached 118.7 million units. The company claims it is
one of the few companies in the industry that maintained a high growth rate in 2018.
Xiaomi said that although the market share is on a downward trend in China, the
domestic market revenue still maintains thanks to an increase in the average selling
price of products, an additional 17%. In the foreign region, the average selling price of
Xiaomi phones also increased by 9.7%.

(Q & Me, 2018)

Chart has shown, Xiaomi has an extremely high loyal fans rate. This is the result of
Xiaomi’s speacial marketing strategy.

III. The interrelationship between marketing function and other

functional units of a business:

1. Human Resource:

Human resources department is responsible for recruiting and searching employees

according to the criteria of the marketing department.

2. Accounting:

Hugo Barra - Xiaomi’s Vice President said: “We don’t spend pretty much any money
buying media, maybe [just] a little money boosting a Facebook post.” (O'REILLY,
2015)

The maximum price of a facebook advertising is about $250/day and Accounting

department must caculate for that advertising.
 3. IT and UX/UI design:

Public new theme on Mi Community Forums, answer customer question, talk, guiding
customer about new apps, technique. Listen to customer idea to enhance user
experience  Building Customer Relationships.

IV. Conclusion:

Xiaomi - from a startup company has risen to compete with the giants Samsung,
Apple,... in the tech industry in a short - term of time thanks to smart marketing,
business strategies and innovative ideas.

References
Dou, E. (2015, April 6). Wall Street Journal. Retrieved from wjs.com:
https://www.wsj.com/articles/to-lift-brand-xiaomi-fosters-phone-fan-club-
1428345473

Hanhui Huang, N. J. (n.d.). The Analysis of Xiaomi Mobile Phone. Retrieved from
Research Publish Journal:
http://www.researchpublish.com/download.php?file=The%20Analysis%20of%20
Xiaomi%20Mobile%20Phone%20Marketing%20Strategy-3998.pdf&act=book

Hanhui Huang, N. J. (Vol. 4, Issue 2, pp: (629-638), Month: October 2016 - March
2017). Research Publish. Retrieved from researchpublish.com:
http://www.researchpublish.com/download.php?file=The%20Analysis%20of%20
Xiaomi%20Mobile%20Phone%20Marketing%20Strategy-3998.pdf&act=book
mbaskool.com. (n.d.). Xiaomi Marketing Mix (4Ps) Strategy. mbaskool.com.

O'REILLY, L. (2015, March 4). Business Insider. Retrieved from businessinsider.com:

https://www.businessinsider.com.au/xiaomi-vp-hugo-barra-at-mobile-world-
congress-2015-2015-3

Price, R. (2015, January 9). Business Insider. Retrieved from businessinsider.com:

https://www.businessinsider.com/xiaomis-secret-weapon-its-fans-2015-1

Q & Me. (2018, May). Q & Me. Retrieved from qandme.net:

https://qandme.net/en/report/smartphone-brand-image-among-vietnamese.html

Wikipedia. (n.d.). Retrieved from vi.wikipedia.org: https://vi.wikipedia.org/wiki/Xiaomi

Yang, Y. (2019, March 9). South China Morning Post. Retrieved from smcp.com:
https://www.scmp.com/tech/big-tech/article/3002378/xiaomi-posts-135-billion-
yuan-annual-profit-amid-higher-global

Yuan Xiao, L. Z. (2017, September). Atlantis Press. Retrieved from atlantis-press.com:

https://www.atlantis-press.com/proceedings/icsshe-17/25884411