Marketing Insight: Xiaomi

In the July–September quarter of 2017, the Chinese smartphone brand Xiaomi, with 23.5 per cent
market share of India’s smartphone market, was poised to overtake Samsung, the long-time leader.
Xiaomi’s market share was just 6.4 per cent in the corresponding quarter of the previous year, and its
ranking was fifth.

Xiaomi Towards Leadership in Smartphones

The first three smartphones sold in the country, now, are Xiaomi models.
Within three years of entering the Indian market, Xiaomi conquered market leadership in
smartphones. Its Xiaomi Redmi Note 4 model, priced between `9,999 and `12,999, is now the top-
selling smartphone in India, with over two million units sold in Q2 of 2017. It sold a million units within
a few days of the launch. Its budget phone Redmi 4A, priced at `5,999, launched later, is also a winner
for the company. Xiaomi had already crossed $1 billion revenue mark in India in 2016. They are now
setting up the third manufacturing plant in India.

According to Counterpoint Technology Research, Hong Kong, some of the

major factors that contributed to this performance of Xiaomi are as follows:

• Xiaomi entered the Indian market in 2014, a time when Indian consumers were almost
desperately looking for an affordable yet reliable smartphone. The existing models—from reputed
brands—were priced upwards of `30,000.

• Xiaomi offered a good-quality smartphone in a critical price segment: the sub-`15,000 block.

• It pinpointed the young, tech-savvy generation as its main customer segment.

• It started with ‘online only’ sales. The model suited the select audience.

• There was no celebrity advertising; social media and fans’ meetings were used to spread the
product message. This choice was also in sync with the chosen customer segment.

• Updates were given free; customers were not forced to switch to the latest model. Even a
three-year-old model could run the latest OS/software; they were ‘migratable’.

• The costs saved on both channel and promotion were utilised to drastically bring down the
price, the entire benefit passed on to the customer. The result: a phone that would otherwise cost the
customer `30,000 was offered at `15,000 and below.

• The absence of big competition on online space helped Xiaomi grow fast. The brand soon held
50 per cent share of online smartphone sales.

• With every new model, Xiaomi ensured that the quality–price equation became more
attractive. On practically every product feature—chipset, graphics processing unit (GPU), random-
access memory (RAM), battery, camera, connectivity, security, OS, display, water resistance, network,
dimensions, weight and colours—Xiaomi satisfied its young and tech-savvy customer base.

• When sufficient market was taken, Xiaomi took to the offline distribution too. This further
extended the brand reach.

Xiaomi Illustrates the Contours of Marketing Strategy

Now, Xiaomi offered a product which carried features appealing to the intended buyers, offered a
price attractive to them, kept engaging them, provided easy purchase facility and promptly delivered
the product. The result was that Xiaomi connected well with the customer, and the customer found
the offer acceptable, valuable and satisfying. This is what marketing strategy is all about. What Xiaomi
did with its product carries the very elements/factors that constitute marketing strategy. When a
‘product’ of quality with an appropriate ‘price’ is ‘promoted’ properly and ‘distributed’ efficiently to
reach the ‘intended customers’, they would normally ‘buy’ it; over time, they would adopt it and stay
with it. On the one side, there are the product, its price, its promotion and distribution, gelled together
properly and made available as the firm’s offer. On the other side is the target customer. When the
two meet, the latter accepts the firm’s offer, once he finds value in the offer. And that situation sums
up a well-executed ‘marketing strategy’. In fact, this is what marketing strategy is all about.

Marketing strategy:

► Is the instrument for value delivery

► Has to achieve the marketing objectives set for each product/brand of the business unit:
achieve the targeted income, profit, market share and so on

► Specifies in respect of each product/brand:

How the targeted income, profit, market share, etc. be achieved?

Which market segments will the brand serve? What segments will it consciously avoid?

How the brand will be positioned?

On what differentiation strength it will compete?

What kind of pricing strategy will be followed?

How the brand is going to be distributed?

• When sufficient market was taken, Xiaomi took to the offline distribution too. This further
extended the brand reach.

Xiaomi Illustrates the Contours of Marketing Strategy

Now, Xiaomi offered a product which carried features appealing to the intended buyers, offered a
price attractive to them, kept engaging them, provided easy purchase facility and promptly delivered
the product. The result was that Xiaomi connected well with the customer, and the customer found
the offer acceptable, valuable and satisfying. This is what marketing strategy is all about. What Xiaomi
did with its product carries the very elements/factors that constitute marketing strategy. When a
‘product’ of quality with an appropriate ‘price’ is ‘promoted’ properly and ‘distributed’ efficiently to
reach the ‘intended customers’, they would normally ‘buy’ it; over time, they would adopt it and stay
with it. On the one side, there are the product, its price, its promotion and distribution, gelled together
properly and made available as the firm’s offer. On the other side is the target customer. When the
two meet, the latter accepts the firm’s offer, once he finds value in the offer. And that situation sums
up a well-executed ‘marketing strategy’. In fact, this is what marketing strategy is all about.