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Xiaomi Market Strategy

Essay by   •  August 12, 2016  •  Case Study  •  4,306 Words (18 Pages)  •  1,760 Views

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Assignment 2        

Introduction        

Situation analysis        

SWOT analysis        

Strengths:        

Weaknesses:        

Opportunities:        

Threats:        

PESTLE analysis        

Economic situation        

Social situation        

Technology situation        

Target market of Red Mi Note        

Red Mi Note’s brand position        

Marketing strategy        

Product strategy        

Price strategy        

Place strategy        

Advertising and Promotion strategy        

Service strategy        

Brand strategy        

Conclusion        

Assignment 2

Introduction

Xiaomi is a multinational corporation based in Beijing, China. It was founded by Lei Jun in 6th April 2010 and now Xiaomi has become the third largest smartphone producer in the world with over 5000 employees worldwide. The main target selling area for Xiaomi is in Asia such as China, Malaysia, Singapore and Philippines. Xiaomi is popular because of the reliable product, friendly user experiences and affordable price. (Hakuhodo, 2013)

In 2014, Xiaomi has sold more than 61.12 million smartphone all over the world and China is the biggest market that contributes more than 18 million hand phone sales. Compare with the selling data in 2013 it has increase 227% and because of the good selling Xiaomi had about US$ 12 billion revenue in 2014. The forecast selling in 2015 is about 80 million to 100 million and in the first half year of 2015 Xiaomi has sold 34.7 million smartphone. (Mims, C. 2015)

The marketing strategy in Xiaomi is different from other telephone brands. They focus on their selling through Internet that it is higher margin and maintain close relationship with customers. (Kapp, M. 2009) Red MI is one of the smartphone brand manufactured by Xiaomi, which is through use less-expensive components and more customer-oriented. It is designed for young adults and working adults that really care about the configurations of smartphone and big screen but don’t have enough money to spend.

Situation analysis

With the rapid development of economy and technology, our life have changed a lot because of the convenience of Internet it is almost every people in China start to use smartphone. The population of 1.3 billion in China makes a great demand of smartphone, so it is a good chance for smartphone companies to catch up this opportunity. As a result, all mobile phone companies in the world attach great importance to the Chinese market. However, it is also a reality problem that China is still a developing country and a huge number of customers are not rich enough to buy an expensive smartphone like apple and Samsung. For many customers they don’t want to spend too much money on their smartphone especially some young working people and poor people without job. But the main smartphone brands in the world such as apple, Samsung, SONY and HTC are all focus on the high-end product and the competition between smartphone companies is also very fierce. Therefore, mid-and-low range smartphone is an attractive market in China and Xiaomi is a company that focuses on this kind of products.

SWOT analysis

Strengths:

(1) Clear market position. Xiaomi has targeted the young people as their main customers and this group of customers also the most sensitive customers to the IT product. Xiaomi designed their smartphone for young people with strong configuration and friendly MIUI system. There are four characteristics for Xiaomi’ smartphone: dual core, large screen, high battery and good signal. For the out looking of their product Xiaomi believe that no design is the best design and the only design philosophy is make it simplification. It is also cater to the taste of the young people.

(2) Fast and effective sales. The innovation online selling model is one of the successful that Xiaomi has made. Because of the Internet marketing mode, Xiaomi mobile phone saved the after market and channel cost. Compared with the traditional mobile phone industry, which will save a lot of cost of stores and employee. On the other hand, because of the life pressure and the intense working environment makes people prefer to shop online. In China, online shopping is a new trend that is suitable for the young people’s value faster, easier and cheaper.

(3) Affordable price but good quality. Compare the selling price with other smartphone brands like apple, Samsung, HTC and SONY we can find that Xiaomi is the lowest. But, there are also some brands in China that is cheaper than Xiaomi but don’t accept by customers. Quality is the key, the low price doesn’t mean Xiaomi is not good, the configuration and quality in Xiaomi is also very good even better than others. Because of the strong collocation makes Xiaomi mobile phone whether daily applications or games can run smoothly.

Weaknesses:

(1) Hard to build up customer loyalty outside China. In China, one of the main reason that Xiaomi succeed is they have a lot of MI fans and they buy Xiaomi products not only for its cheap price but also an value of the brand. Customers have seen Xiaomi as the pioneer of the innovation and reform. However, this kind of customer loyalty is based on the development of MIUI system, which is their first product for Chinese customers to know about Xiaomi. But when Xiaomi goes out to China, customers just buy their product because of the cheap price.

(2) Low cost strategy may not work in other country. As the great development of Xiaomi, they had speed the global strategy and expand the oversea market. However, a serious problem coming out that they can’t follow the low cost strategy as before. Online shopping outside China is not so popular and if they don’t work with local retailers Xiaomi can’t survive. Otherwise, it is difficult to guarantee the quality of production if they products abroad, but products in China the production transportation cost is too high.

(3) Bad after sales service. Because of the low cost strategy Xiaomi also meet a big challenge not only in the oversea market but also in China – bad after sales service. The number of after sales service center is too limit and it is not convenient for Xiaomi users to find the maintain department. As a result, how to build their sales service support system is a big issue that Xiaomi has to face with impending.

Opportunities:

(1) Expanding sales outside China. From now, Xiaomi has successful expand their oversea market to Tai Wan, Hong Kong, Malaysia, Indonesia, India, Singapore and Philippine. In 2015, they are planning to expand to more countries and to increase their sales.

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