Project Based

Learning

Submitted to
MS. RITU ARORA SEHGAL

Submitted by
SARTHAK VASHISTHA
BATCH 1 SEM 5
17GSO101252

ACKNOWLEDGEMENT
 Research work on Xiaomi Inc. is a combined effort, so one
should thank all that have helped in making the report
purposeful. Hence, We as of whole group members thank to
all that have been instrumental in helping us to prepare this
report. It is great honour to be assigned this topic. I am
immensely grateful to Ms. Ritu Arora Sehgal for her
continuous support and guidance while pursuing the project
and for taking pains to give her valuable inputs to the
structure of report and guidelines, the completion of this
project would not have been possible. We specially wish to
thank all other people directly or indirectly related with our
research & study and our friends, colleagues, and other
members of group as without their valuable support
successful completion of this report would not have been
possible.

PREFACE
 It is a great privilege for us to present this report to the Ms.
RituArora Sehgal . This report is concerned with “Xiaomi Inc.”

1. EXECUTIVE SUMMARY
2. OBJECTIVE OF THE STUDY
3. INTRODUCTION
4. CORPORATEMISSIONAND VISION
5. ENVIRONMENT ANALYSIS – PEST ANALYSIS
6. INTERNAL AND EXTERNAL ANALYSIS – SWOT ANALYSIS
7. MARKETING OBJECTIVESAND GOALS
8. FOUR P’s OF XIAOMI – MARKETING MIX
9. COMPETITORANALYSIS
10. SEGMENTATION,TARGETING AND POSITIONING
11. PRODUCT LIFE CYCLE
12. CONCLUSION

EXECUTIVE SUMMARY ON
 SMARTPHONE INDUSTRY

AN OVERVIEW OF SMARTPHONE INDUSTRY IN INDIA (2016)

Western smartphone makers, like Apple and Google, are
increasingly looking east for growth, giving countries like
India significant influence over the sorts of features they
build into their phones. "Normally what happens in emerging
markets is they leapfrog others in terms of forging ahead,"
said Satish Meena, forecast analyst at Forrester. "India has
the advantage of volume — they have sufficient volume so
they can tell smartphone makers to build certain features.
The smartphone makers can then try and use them in the
African market, and the Middle East market, for example.
The African market has similar problems in terms of
purchasing power and penetration of smartphones," said
Meena, indicating towards India’s scenario. Although we all
know that India has the fastest-growing smartphone market
in the world, the smartphone market in India crossed the 30
Million unit shipments milestone for the first time ever in a
quarter in CY Q3 2018 maintaining its healthy traction with
11% Year-on-Year growth. According to the International
Data Corporation's (IDC) Quarterly Mobile Phone Tracker,
smartphone shipments clocked 32.3 million units in CY Q3
2016 with 17.5% growth over the previous quarter. “This
seasonal spike in third quarter of the year can be attributed
to the channel preparation for the festive season, mega
online sales and early import of smartphones owing to
Chinese holidays in October” says Karthik J, Senior Market
Analyst, Client Devices, IDC India. Mobile subscriptions are
expected to hit 1.4 billion by 2021, according to the Ericsson
Mobility Report, released in June. "Everybody is looking at
India as a huge landing ground for their innovation and also
as a next big step in that part of the world," said Sanjeet
Pandit, Qualcomm senior director for business development
and sales for Asia-Pacific and India. Qualcomm's chips are
used in about 30% of smartphones in India. Online share of
smartphone increased to 31.6% with impressive 35%
Quarter-on-Quarter (QoQ) growth due to strong
performance by key online players primarily from China-
based vendors, namely Xiaomi, Lenovo and Motorola. Also,
closing weeks of the quarter witnessed incremental supplies
as many vendors were preparing their inventories for the
online festival sales in October. Lenovo Group continues to
lead online channel followed by Xiaomi. “Lenovo Group
accounts for almost one-fourth of total online smartphone
shipments driven primarily by Lenovo’s K5 series and
Motorola’s G4 series models. Also, Xiaomi’s Redmi Note 3
and newly launched Redmi 3S fuelled the online shipments to
a large extent”, adds Karthik. 4G smartphone shipments grew
24.8% over previous quarter in CY Q3 2018. Rollout of
Reliance Jio network has further increased the share of 4G
enabled smartphones in India. 7 out of 10 smartphone
shipped in Q3 2016 were 4G enabled and 9 out of 10
smartphone sold by eTailers were 4G.
SMARTPHONE OEMs AND BRANDS LEADING THE
MARKET:

Samsung leads the Indian smartphone market with 23%

share with 8% sequential growth and 9.7% growth from the
same period last year. Despite the recall of Samsung’s
flagship Note 7, multiple new launches across both offline
and online channels added onto the its strong portfolio
helped vendor to grow at a healthy rate in CY Q3 2016.
Lenovo Group (including Motorola) climbed to second place
with 9.6% share of smartphones. Similar to the CY Q3 2015
trend, Lenovo Group’s shipment spiked in CY Q3 2016 with
growth of 46.1% over previous quarter. Motorola’s volume
almost doubled Quarter-on-Quarter. Micromax slips to third
position with a 32% decline in smartphone shipments over
previous quarter. The vendor is facing tremendous pressure
from other local vendors in sub US$ 100 segment and with
Chinese players in US$100-150. Xiaomi grabs fourth position
and makes its debut in Top 5 as its shipments doubled over
previous quarter. With primary focus on online and
minimalistic product portfolio, vendor has grown more than
2.5 times over the same period last year. As the vendor plans
to expand its footprint in the offline channel, competition is
likely to get intense in Indian smartphone market. Reliance
Jio sustains its fifth position in CY Q3 2016 despite a healthy
20.9% growth over previous quarter. With the commercial
launch of Reliance Jio Service with attractive introductory
offer, the LYF branded smartphones saw a sharp demand
with reports of stock outs at some locations.
 OBJECTIVE OF THE STUDY CONDUCTED:

The Objective of this study TO ANALYSE BUSINESS PLAN FOR

INDIA and reports included are to focus solely on the Indian
Smartphone Industry, both in terms of the major players
involved in the market as well as the Chinese counterparts
which have entered into the market in the last years which
are highly effecting the smartphone and smart devices
market in India. While we understand that every player has a
great national as well as a global presence, We being
representatives to the Chinese technology company, Xiaomi
Incorporation which is just five and a half year old company
and former start up, felt that it’s important to analyse the
company on Strategic Marketing and how the company has
made it this large in these five years, which once as a start-up
used to build custom ROMs over Android OS. The Objectives
are covered and highlighted by conducting Environmental
Analysis of external environment of the company which is
provided using the PEST analysis & SWOT analysis discussing
company’s Strengths, Weaknesses, Opportunities and
Threats in light of its operating environment, followed by its
Corporate Goals and Objectives and the strategies followed
by the company through which it’s able to capture the
market, enjoying a very favourable growth rate.
 INTRODUCTION:

Xiaomi Inc. is a Beijing-based company which was founded on

6 April, 2010 by Chinese serial entrepreneur Lei Jun, along
with eight other partners, Xiaomi’s team of professionals
includes people from reputed organizations and industry
leaders such as Google, Microsoft, Yahoo, Kingsoft and
Motorola. It has shown meteoric growth in the few years
since its inception. The company began its activities with the
development of Android based firmware MIUI, which was
launched that same year in August. A year later Xiaomi
unveiled its first flagship which was a smartphone with pre-
competitive MIUI firmware. In April 2014, they hired former
Google employee Hugo Barra as Xiaomi VP to expand their
business to international markets. And, then launched itself
in INDIA in July, 2014 with their then flagship product, a
Smartphone name Xiaomi Mi3 which offered same
specifications as Samsung Galaxy S4 or Apple iPhone 5s was
providing. The company saves the operational cost by
minimizing expensive marketing and touting its products
through micro- blogging, user forums, social networking and
social media marketing. Xiaomi is known for being responsive
to feedback and suggestions submitted by their customers, as
well as updating their interface weekly. The company’s
product lines includes Mi Phones, Mi Pads, Mi TV, Mi
Routers, Power banks, mobile accessories and wide range of
Smart Home devices. Xiaomi has 8,100 employees and it is
currently operating in China, HongKong Taiwan, Singapore,
Malaysia, Indonesia, Philippines, and India. Xiaomi’s
Company Mantra: “Always believe that something wonderful
is about to happen”
 CORPORATE MISSION AND VISION:

1. MISSION:
Making Quality Technology accessible to everyone:
Xiaomi is a company which believes that high-quality
technology doesn't need to cost a fortune and create
remarkable hardware, software, & internet services for
and with the help of their users whom they call ‘Mi
Fans’.
2. Engaging Users or Fans helping them develop their
new Products: Xiaomi runs dedicated user forums, and
keeps in touch with their fans conducting many activities
and taking user feedback which helps them create their
next best products.
3. Creating an Internet Ecosystem through their
innovation in technology: With their innovation in
technology & services they’re winning hearts and
acquiring market share with their loss leader strategy,
they are creating an internet ecosystem linking one
product with another because they are having a huge
product line-up.

2. VISION:
1. To make Xiaomi an Indian Company: Xiaomi’s Global
VP, Hugo Barra has always showed Xiaomi’s dedication
towards India and its culture and want to make it an
Indian Company.
 2. To lay more focus on After-Sales Service: Major focus
of the company is on providing the Customers better
after-sales service and to open 100+ own service centres
across the country.
3. To open 10,000+ Offline Stores by early 2017: Xiaomi
makes 90% of its sales from online and has existing
stores are in Tier I and Tier II cities, and would now enter
Tier III cities too, while increasing presence in the two
former categories, visioning to open 10,000+ offline
stores by early 2017.
 EXTERNAL ENVIRONMENT ANALYSIS (PEST):

Political factors:
1. In August 2014, just after launch when Xiaomi was accused
of sharing user data, like Phone no., IMEI no., Text messages,
contacts etc. to a server in Beijing, without notice of users, it
became an issue for the company. Which when investigated
came out to be a 4 month old report of even before when
Xiaomi started selling smartphones in India. It could have had
a political impact on its business. The Company for being on
the safer side shifted its servers out of Beijing.
2. Later in 2014, Xiaomi's smartphone Redmi note 4G's
imported was banned in India when directed by Delhi High
Court, following a lawsuit filed by Ericsson India, where
Xiaomi was using Ericsson's Standard Essential Patents
without paying out a royalty to the company in India. The
smartphone (after two successful flash sales) was
permanently discontinued to be sold in India.

EconomicFactors:
1.This November only, the Indian Government implemented
Demonetisation Policy which affected the online
smartphones sales. One of the sectors reeling from the
impact of demonetisation is that of feature phones and
affordable smartphones, which are priced under Rs 10,000.
Since most of these purchases are made using cash payments
even now, the initial impact was as high as 90%. Sales of
Xiaomi products, the Smartphones had a worse-hit and other
products too suffered from bad sales, ie. Powerbanks,
Bluetooth speakers, Mobile accessories, and Earphones.
Social Factors:
1. Lack of customer service centre: The main problem behind
Xiaomi is lack of service centre as compared with
Samsung. As in the todays era service has become a part
of a product so this is the factor which can create the
problem for Xiaomi to decrease in sales.

Technological Factors:
1.Xiaomi's line of smartphones which use Android,
support the cause for open source systems which are
being championed by many technology-savvy people, as
compared with Apple which strongly protects its
proprietary and closed system. Xiaomi has aggressively
offered “MIUI” which lets its users take the lead in
customising their own user experience with unparalleled
flexibility.
2. Xiaomi's technology captures the heart of its customers
by allowing them more freedom than Apple’s IOS or even
the standard Android handsets. Thus Xiaomi capitalises on
user innovation, which is one of the main factors that
drives the Xiaomi fortune today. 3. Another strong point is
that Xiaomi promotes online shopping which erases the
cost for intermediaries
 INTERNAL AND EXTERNAL ANALYSIS OF XIAOMI
- SWOT ANALYSIS:

 STRENGHTS:

1. Having Skilled and Experienced Workforce in which the

professionals from other leading companies like Google,
Microsoft, Kingsoft, and Yahoo are also included.
2. It has Competent and Experienced Business Units. Have
wide distribution and sales network to expand its business to
new existing markets.
 3. Providing Quality Components in Smartphones and other
products at the most affordable prices, with specifications that
won’t obsolete till next 12-18 months.
4. Added with Strong Management Team and has direct
consumer sales as well.
5. Use Word of Mouth Advertising rather than other sources.

WEAKNESSES:

1. Online Advertisement model and the Word of Mouth

advertisement is not as effective as other sources like TV
advertisements or Celebrity endorsements. Also Social
media marketing is becoming popular but it is still in under
developing stage and it takes time to get success in online
business.
2. Lack of consistency in bringing more and more
professionals in the company, who can guarantee its
success. And Logistics issue due to direct consumer
selling.
3. Weak After-Sales Service and Lack of enough technical
staff to carry on their electronic work and introduce new
and fresh specifications in it (System updates are rolled out
every week in China).

OPPORTUNITIES:

1. Adopting Offline Sales Channel can really help

company boost its sales along with the Online Sales
Channel.
2. Explore new and existing markets while expanding the
exhibition of their products, because they have a huge
product line in China.
3. Having a huge product line consisting of many smart
home devices, they can dominate Indian market and can
create a great Internet Ecosystem outside China too.

THREATS:

1. Face strict Government Regulations and the effect gets

transferred on manufacturing and transportation of their
products.
2. Their Loss Leader strategy is laying a question mark on
sustainable future of Company.
3. Profitability in future at stake, because many
competitors are coming up with affordable products with
handsome specs.
 MARKETING OBJECTIVES AND GOALS OF THE
COMPANY:

1.Earning Profits from Its Software:

Xiaomi’s revenue stream comes from its software — the

highly-customizable MIUI firmware that is based on
Android which already has more than 30 million users.
Thus unlike Apple, for example, which makes money from
margins on selling its phones, Xiaomi is a more like
Amazon where it wants to earn via its ecosystem by
selling various goodies and reap profits like an ecommerce
company.

2.Retailing Directly:

Another objective is going directly to retail to cut out the

margins and, in turn, pass on the benefits to the
consumers. Xiaomi will sharpen its focus on its own Mi
online stores to sell its wares, a strategy which has paid off
rich dividends in its home market.
 FOUR P’s OF XIAOMI –
MARKEING MIX:

Product:
Having a cheap price in the market does not always refer
to low quality. Xiaomi’s prices are lower than their two big
competitors, Apple and Samsung. Presenting itself as the
good Quality phone maker with the low prices is the good
strategy that drives Xiaomi to the top spot in the
smartphone industry in China. The phones consists of
good quality, robust case, high Resolution screen,
reasonable battery, and runs on the Android-based OS
ROM called MIUI. It has more special features than the
standard Android phones and has options for
Customization. The biggest key that drives Xiaomi on
becoming successful is the software rather than the
hardware.

Price:
Xiaomi sells its phones at a price that just covers the cost
of the device rather than its cost of production. Xiaomi is
focusing more on selling its phones at a low price today,
but gaining more in the future from selling contents such
as applications, services, and accessories. Moreover,
Xiaomi mostly sells its products online which can reduce
costs of opening stores, hiring staff, and inventory
keeping, and also may lessen the problems in
communication when dealing with distributors and
retailers.

Place:
There are many countries outside China where the
smartphone market is dominated by Apple and Samsung.
This is the main obstacle for Xiaomi in expanding its brand
internationally. Xiaomi already has a strong base in
mainland China, Malaysia, and Singapore. Currently,
Xiaomi is expanding its market to India and the
Philippines. Despite its expansion into other markets, the
company’s main focus is still in China where its largest
consumer base is located. And second most focus in all
other developing countries in Asia Pacific, in which India is
on the top. Xiaomi mostly sells its products online instead
of opening physical stores. This is a win-win situation for
both the company and consumers. The company can save
a lot of money from building the stores while consumers
can easily access the products. Because the company
spends less money, the price of the phones will also be
cheaper.

Promotion:
Promotion of word of mouth. Xiaomi uses flash sales, a
mean of selling their product in limited quantities within a
limited period as part of their sales strategies. This
strategy enables Xiaomi to save money from doing
advertisement because it creates the anticipation and
urgency on consumers. Only limited quantities are
available in the market and they will be sold out quickly
which means many people have to wait for the next slot.
This strategy therefore makes people talk a lot all over
China including in the social media. This also grabs lots of
the consumer’s attention and makes the advertising less
important for Xiaomi in promoting the launch of new
products. Social media. Xiaomi uses social media not only
to broadcast messages to actively get in touch with its
customers, but the engineers from Xiaomi also use this
platform to routinely communicate directly with users to
get feedback. The engineers listen to the consumer’s
needs and refine the software to complete those needs
weekly. This distinguishes Xiaomi from other brands
because it shows that the company is always concerned
about its customers and immediately takes actions to
improve the products.
COMPETITOR ANALYSIS

Xiaomi has many competitors with Samsung being the

biggestof them and the nearest toughest competitors are:
 Lenovo (Motorola including) with 9.6%,  Micromax with
7.5% if we go by market share, which is constantly falling
due to non-satisfactory sales, poormarketing strategies
and non-competent products.  Reliance Jio
Smartphones,which as Smartphone product line started
up in Q1 2016 and has gained 7% market share due to
overwhelming marketing strategies such as free Jio 4G sim
offeron buying their LYF branded smartphones.
SEGMENTATION, TARGETING AND POSITIONING
OF XIAOMI IN INDIA:

Segmentation:

Xiaomi has followed the Demographic Segmentation

strategy and used factors like, Age & life cycle, Age stage,
Income, and Generation to target its customers. Xiaomi as
an Internet company has segmented the market to those
group of people who are tech savvy, mostly use e-
commerce platforms for shopping, and see electronic buys
as Value for Money i.e. Brand value is not the priority to
them, but VFM is. The consumers in Indian market wanted
Smartphones and devices to be distinguished with
customisations in the Android OS without compromising
with their budget. And, Xiaomi India gave a combination
of both, a better OS and high quality components in their
budget, and then the other consumer segment by word of
mouth followed.

Targeting:
Xiaomi targeted consumer who are tech savvy as well as
who are in the group of age 18-35 i.e. from students to
working class people, who wanted good quality products
and knew that market leaders like Samsung, LG, and Apple
were overpriced for the specifications they were providing
in their products. So, the targeted audience are: Students,
Working class people, Heavy internet & social media
users, who are driving the e-commerce market in India.
Positioning:

Positioning is the act of designing a company’s offering &

image to occupy a distinctive place in the minds of the
target market. The goal is to locate the brand in the minds
of consumers to maximize the potential benefit to the
firm. Xiaomi has positioned itself on the behalf of its
smartphones so well in the Indian market that whatever
product it comes up with, is taken cheerfully by the mass
that they become massive hits along with their existing
smartphone line-up. These products include, Power banks,
Earphones, Bluetooth speakers, Smartphone accessories
and wearable. The company has set up and gained such a
place in the customers' hearts because they come up with
such specifications & high quality components that make
their products' life cycle near to indestructible for next 15-
18 months.
 PRODUCT LIFE CYCLE:

Introduction-
Xiaomi was founded in 2010 by serial entrepreneur Lei
Jun, who believes that high-quality technology doesn’t
need to cost a fortune. The company creates remarkable
hardware, software, and internet services for and with the
help of Mi fans. It incorporates their feedback into its
product range, which currently includes the Mi Max, Mi 5,
Mi Note Pro, Mi Note, Mi 4S, Mi TV, Mi Band, Mi Smart
Home gadgets and other accessories. With more than 61
million handsets sold in 2014 and products launched in
Taiwan, Hong Kong, Singapore, Malaysia, Philippines,
India, Indonesia and Brazil, Xiaomi is expanding its
footprint across the world to become a global brand.
Xiaomi entered the Indian market in July 2014 via flipkart.
Xiaomi launched its first made-in-India smartphone
named Redmi 2 Prime at a price of Rs.6999.
Growth- sales were up 33% year-on-year. But the lack of
growth between the end of 2014 and the first half of 2015
means dark clouds are gathering for Xiaomi, just as they
are for nearly every smartphone maker that isn’t Apple.
“Good enough” smartphones are becoming a commodity,
and to stand out, phone makers need to be reduce prices
or sell add-on products and services. There are several
specific factors behind Xiaomi’s stagnation. In China,
Xiaomi leads the Android hardware market, beating out
Samsung for market share in 2014.
 CONCLUSION

In conclusion,Xiaomi has a unique business modeland a

very interesting method which is disrupting the
smartphone and technology world. It has been
successfulat incorporating a crowd sourcing strategy into
its product developmentprocess.At the same time, it has
dispensed with all traditional marketing methods and is
fully engaged in utilising online communities & social
marketing for its marketing. With this innovative model,it
has taken the world by storm and has created a huge cult
following here in India. In just 6 years after its founding
and 2 years of setting up in India, it has already become
the world’s third largest smartphone maker (in
shipments)and is the world’s most valuable technology
start-up company which has just been valued at US $46
billion.