Marketing mix success of Xiaomi Essay

BackgroundFounded in 2010 in Beijing, Xiaomi first began by engraveing tailor-made Android-based firmw be- MIUI. Backed by tech savvy early adopters andenthusiast, it thrived on feedback to improve usability. A year afterwards they entered the hardware market with their flagship phone, the Mi One which featured the top specifications at a low price. Today, Xiaomi has launched its 4th series of their flagship phone the Mi 4 and have expanded their fruit line to mid(prenominal) tier smart phones, smart TV, r let oners, set-up boxes and new(prenominal) accessories. In just four short years, Xiaomi has become the ternion largest smartphone manufacturer just behind technology terass orchard apple tree and Samsung (Appendix B).IntroductionThis essay forget discuss the selling mix, a combination of selling tactics which consist of four elements known as the 4Ps- product, price, place, and promotion that is derived from the marketing dodge of the company (Kotler and Armstrong, 2012) and the efforts made to adapt each mix to reach its intended auditory sense in a foreign market.PriceXiaomi aims to provide similar specifications phones to competitors but at a often lower price. Currently they offer 2 series of flagship phones, the Mi and Redmi (or Hongmi). The Mi 3 has specifications that is similar to Sonys Xperia Z1 that is priced only at CNY 1,999 (USD$322.62) as compared to Z1 retailprice of USD$935 (Appendix C). The Redmi series, a mid tier range is priced at CNY 799, targeting the lower income in emerging markets such as China, India with plans to expand into Brazil and Mexico.As the first company with such an aggressive penetration pricing strategy, Xiaomi changed the perceived value of smart phones (Ramesh Kumar, 2007). Anticipating that consumers would be skeptical about(predicate) the quality of its low priced Redmi series, Xiaomi chose to first launch their top tier Mi before launching Redmi in each new market so that the reduction in market p rice would non be too drastic and that consumers could gain confidence in the quality (Snoj, Pisnik Korda and Mumel, 2004) of its Redmi series.Product irrelevant other phone manufacturers that make their products obsolete with product refreshes within a year, Xiaomis phones have a longer product life cycle of 24 months. As the product enters the maturity stage, volume gross gross revenue starts declining. Yet from a technological standpoint, Moores law dictates that a longer product life meant that its cost to manufacture the same product becomes lower. This defy in volume sales profit will be counteracted by a higher profit margin achieving overall profit sustainability.Similar to Apple & Amazon, Xiaomi has developed an ecosystem of software & services such as cloud service, messaging app, theme broth and app broth which preloaded to its custom firmware. An integral part of this ecosystem isMi Market (app store) since Androids default app store is not accessible in China. Chin as market for apps has fragmented into many app stores birthed from startups to the likes of search giant Baidu. Thanks to the popularity of Xiaomis phones, Mi Market is currently one of the largest app stores in China.PlaceTo eliminate the cuts that retailers and distributors would get, Xiaomi has sell their products entirely online, on their own website. However since expanding into new markets, Xiaomi has more recently adopted a swimming marketing system to build upon retailers expertise in the region. In India, Xiaomi chose a mate to sell exclusively through Flipkart, Indias largest e-commerce company.Xiaomi needs to understand the local distribution methods in gear up to mitigate the loss of potential customers especially when they employ exclusive distribution which would impair the availability of their products (Pride and Ferrell, 2011). For instance, due to purchasing behavior, cash-on-delivery remains as one of Indias primary mode of payment. Buyers would perform an i nspection of the product before payment. In short,accounting for less than 1% of the total retail market, e-commerce is still in its infancy stage in India.As Xiaomis mobile phones shifts into the maturity or even decline stages of its product life cycle, it might want to employ selective distribution through traditional brick and daub stores. Bilgin and Whrer (2014) points out that products not adapting to maturity stages will find themselves soon in the decline. In format to prolong its products life, Xiaomi should change their distribution strategy. Though it may not be economically feasible to sell their phones with thinner profit margins or perhaps even selling at a loss, it should be noted that Xiaomis goal is to make profits through services and apps kinda than purely hardware sales- similar to the relationship between printers and ink cartridges (Appendix D).PromotionReleasing fixed quantity of handsets at specific times, Xiaomi primarily engages in flash sales for new p roducts that often results in phones selling out within seconds. Xiaomi meticulously limits supply to artificially create more demand than supply- a strategy known as hunger marketing (Chen et al., 2014 p. 1950-1957). Hungry consumers through word of mouth created buzz which in due time transits into hype where consumers mimic one another in the buying craze (Mourdoukoutas and Siomkos, 2009 p. 82), just raising demand.In Xiaomis advertisements, it is evident that marketing messages are focused on hunger marketing. there is always emphasis on how fast their products have been sold (Appendix D) , editorial tone that communicate a sense ofurgency (Appendix E), statistics to provide an impression of popularity (Appendix F), and multiple teasers for product launch over a effect of time to create hype (Appendix G).ConclusionXiaomis marketing mix is a combination of both Apples strategy of producing high quality products and limiting supply to magnify consumer hype as wellas Amazons kin dle strategy of making products as widely as possible and to profit primarily from its services.Though Xiaomi has seen exponential growth in retailing smart phones, its key focus should remain in distributing mobile applications and services while maintaining the quality of smartphones instead of diversifying into other electronics. Without the access restrictions in China, Google remains dominant for app distribution as well as its services which are preloaded to all(prenominal) Android phone. Xiaomi must continue to innovate and integrate its solutions and services even tighter to its own firmware to remain agonistical and profitable. It needs to pry its customers away from the many alternatives procurable in the heavily saturated mobile app market perhaps through technological acquisitions or strategic partnerships.ReferencesASSOCHAM, 2014. E-Commerce Evolution in India Creating the bricks behind the clicks. India PricewaterhouseCoopers.Bilgin, F. and Whrer, G. (2014), intern ational marketing compact, Wien Linde Verlag GmbH.Chen, E., Huang, K. and Cheng, L. (2013), Xiaomi Chinas answer to Apple, http//asiaresearch.daiwacm.com/eg/cgi-bin/files/china_tech_food_chai n_130925.pdf, particular date accessed 15/12/14.Chen, Y., Kuo, C., Jhan, Y. and Chiu, P. (2014) Hunger marketing on smartphone, Proceedings of the Management of Engineering & Technology (PICMET), 2014 Portland International Conference, Kanazawa, 27-31 July. United States IEEE Xplore, pp. 1950-1957. Kotler, P. and Armstrong, G. (2012), Principles of marketing, Boston Pearson Prentice Hall.Kumar, A. (2014), What India taught Xiaomi On Flipkart, lessons and future plans,http//yourstory.com/2014/09/india-lessons-xiaomi-flipkart-future-plans -hugo-barra/, Date accessed 15/12/14.Pride, W. and Ferrell, O. (2011), selling express, Mason, Oh. South-Western Cengage Learning.Ramesh Kumar, S. (2007), Marketing and branding, New Delhi Dorling Kindersley (India).Ridge, M. (2014), e-commerce in India not ju st cash on delivery to a man on a bike,http//blogs.ft.com/beyond-brics/2014/09/22/e-commerce-in-india-notjust-cash-on-delivery-to-a-man-on-a-bike/, Date accessed 15/12/14. Siomkos, G. (2009), The Seven Principles Of Wom And Buzz Marketing, New York Springer Berlin Heidelberg.Snoj, B., Pisnik Korda, A. and Mumel, D. (2004) The relationships among perceived quality, perceived risk and perceived product value, Jnl of Product & Brand Mgt, 13, 3 156-167.Triggs, R. (2014), Hugo Barra talks business sector models and Xiaomi success, http//www.androidauthority.com/xiaomi-business-model-success-5596 81/, Date accessed 13/12/14.AppendicesAppendix A (Selected case article Xiaomi Flash gross revenue Prove Popular in India) Chinese smartphone maker Xiaomi, which has overtaken Apple and Samsung in China, is working its way into the Indian market using sudden online sales and high-end handsets priced at close to cost.On Tuesday alone, Xiaomi says it sold 100,000 of its 5,999 rupee ($97) Redmi 1S smartphones in 4.2 seconds. It has sold about 500,000 total handsets using similar sales since its July launch in India, it says.The Beijing-based company sells its products exclusively online through Flipkart, one of Indias largest online retailers, via flash sales at specific times. The phones are sold at close to the manufacturing cost, with Xiaomi making profit through services such as mobile applications. Xiaomi has used the sales tactic in other countries, as well.Analysts say Xiaomi is taking off in the worlds second-biggest telecommunications market because Indians see value in its low-cost products. Word of mouth has created a buzz skirt the brand, and theflash sales help create a scarcity of the companys products.The way they carried out their PR was key to the success, says Karan Thakkar, an analyst with research firm IDC. With the flash sales they have created a competitive spirit among the consumer.While Xiaomis market share isnt yet known, IDC says competition among c ompanies selling low-cost smartphones is expected to increase in the coming quarters thanks to similar low-cost makers, such as Mozilla, which offers a $33 smartphone. Indeed, smartphone sales in India should double through 2018 as devices priced below $200 enter the market, IDC says.Meanwhile, rivals such as Indias Micromax remain skeptical of Xiaomis success.Selling for PR is different from selling for business, Micromax Chief Executive Vineet Taneja told media at a launch event for a new phone demise month.Micromax, Indias second-biggest smartphone seller by market share after Samsung, sells about three million phones every month through its 130,000 outlets spread across the country.But that hasnt stopped Micromax from adopting an online sales model. In phratry it began offering one of its devices on Snapdeal.com, a Flipkart rival.Source Wall Street Journalhttp//blogs.wsj.com/digits/2014/10/17/xiaomi-flash-sales-prove-popular-in-i ndia/Appendix B (Top Five Smartphone Vendors, S hipments, Market Share and Year-Over-Year Growth, Q3 2014 Preliminary Data (Units in Millions) )Source IDC ecumenical Quarterly Mobile Phone Tracker, October 29, 2014Appendix C (Smartphone pricing and specification comparison)Source Companies, DaiwaAppendix D (Net revenue comparison of hardware vs supplies (Units in millions) )Source Hewlett-Packard Annual Report 2011Appendix E (Typical mail service flash sale update to inform customers that the sale has ended)Source Mi India Facebook pageAppendix F (Announcement of flash sale)Source Mi India Facebook pageAppendix G (Post Christmas sale infographic)Source Mi capital of Singapore Facebook pageAppendix H (Teaser for new product)Source Mi Singapore Facebook page