Marketing mix success of Xiaomi Essay

BackgroundFounded in 2010 in Beijing, Xiaomi first began by engulfing custom Android-based firmw ar- MIUI. Backed by tech savvy early adopters andenthusiast, it thrived on feedback to improve usability. A year afterward they entered the hardware commercialize 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 proceeds line to mid grad insolent phones, smart TV, r appearers, set-up boxes and other accessories. In just four short(p) years, Xiaomi has become the third largest smartphone manufacturer just behind technology giants orchard apple tree and Samsung ( accompaniment B).IntroductionThis essay go away discuss the marketing commix, a gang of marketing tactics which consist of four elements known as the 4Ps- harvest-tide, price, place, and forward motion that is derived from the marketing strategy of the company (Kotler and Armst rong, 2012) and the efforts made to adapt each mix to reach its intended audience in a unknown market.PriceXiaomi aims to provide similar specifications phones to competitors but at a lots cut down 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 sellprice of USD$935 ( accessory 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 the quality of its low priced Redmi series, Xiaomi chose to first launch their top tier Mi sooner launching Redmi in each rising market so that the diminution in market pri ce would non be too forceful and that consumers could gain confidence in the quality (Snoj, Pisnik Korda and Mumel, 2004) of its Redmi series.Product impertinent other phone manufacturers that make their carrefourions obsolete with product refreshes within a year, Xiaomis phones have a longer product life unit of ammunition of 24 months. As the product enters the maturity stage, volume gross revenue starts declining. up to now from a scientific standpoint, Moores law dictates that a longer product life meant that its cost to manufacture the same product becomes lower. This objurgate in volume sales pelf will be counteracted by a higher profit margin achieving overall profit sustainability. uniform to apple & Amazon, Xiaomi has developed an ecosystem of software & run such as blur service, messaging app, theme ancestry and app store which preloaded to its custom firmware. An total part of this ecosystem isMi commercialise (app store) since Androids default app store is non accessible in China. Chinas market for apps has scattered 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 sellers and distributors would get, Xiaomi has sold their products just online, on their own website. However since expanding into new markets, Xiaomi has more recently adoptive a horizontal marketing system to build upon retailers expertise in the region. In India, Xiaomi chose a partner to sell easy layly finished and through Flipkart, Indias largest e-commerce company.Xiaomi needs to understand the local distribution methods in order 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 roosts as one of Indias primary mode of payment. Buyers would perform an inspection 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 mortar stores. Bilgin and Whrer (2014) points out that products not adapting to maturity stages will find themselves soon in the decline. In order 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 noteworthy that Xiaomis goal is to make profits through services and apps or else than purely hardware sales- similar to the relationship between printers and ink cartridges (Appendix D). advancementReleasing fixed amount of handsets at specific eons, Xiaomi primarily engages in scare off sales for new products that often results in phones selling out within seconds. Xiaomi meticulously limits supply to artificially create more use up than supply- a strategy known as hunger marketing (Chen et al., 2014 p. 1950-1957). esurient consumers through word of mouth created buzz which in due time transits into hype where consumers mimic one another in the buying furore (Mourdoukoutas and Siomkos, 2009 p. 82), further 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 period of time to create hype (Appendix G). shuttingXiaomis marketing mix is a combination of both Apples strategy of producing high quality products and lim iting supply to dilate consumer hype as wellas Amazons catch fire 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 report 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 every Android phone. Xiaomi must continue to innovate and integrate its solutions and services even tighter to its own firmware to remain rivalrous and profitable. It needs to pry its customers away from the many alternatives available 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 Pricewater houseCoopers.Bilgin, F. and Whrer, G. (2014), multinational 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, age accessed 15/12/14.Chen, Y., Kuo, C., Jhan, Y. and Chiu, P. (2014) Hunger marketing on smartphone, Proceedings of the Management of Engineering & engine room (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), Marketing 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 just 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 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 Sales Prove Popular in India) Chinese smartphone ecclesiastic Xiaomi, which has overtaken Apple and Samsung in China, is working its way into the Indian market apply 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 surrounding 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 packa ge isnt yet known, IDC says competition among companies 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 old-timer Executive Vineet Taneja told media at a launch event for a new phone last 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 September it began offering one of its devices on Snapdeal.com, a Flipkart rival.Source jetty Street Journalhttp//blogs.wsj.com/digits/2014/10/17/xiaomi-flash-sales-prove-popular- in-i ndia/Appendix B (Top quintet Smartphone Vendors, Shipments, Market Share and Year-Over-Year Growth, Q3 2014 Preliminary Data (Units in Millions) )Source IDC worldwide 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 post flash sale update to inform customers that the sale has ended)Source Mi India Facebook rogueAppendix F (Announcement of flash sale)Source Mi India Facebook pageAppendix G (Post Christmas sale infographic)Source Mi Singapore Facebook pageAppendix H (Teaser for new product)Source Mi Singapore Facebook page