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Xiaomi frenzy and the tactical marketing stratagem

Xiaomi frenzy and the tactical marketing stratagem

By Aishwarya Puri

Edited by Shambhavi Singh, Senior Editor, The Indian Economist

Indian markets and consumer fraternity have always held a skeptical approach towards Chinese products and services. Who could have gauged the upheaval that Xiaomi cellphones would create with their stupendous yet quiet entry in the Indian mobile phone space. With literally no company showrooms to execute sales and minimal-to-nil marketing strategy, Mi 3 has placed itself at the highest pedestal of much sought after phones, and has already created an enormous potential market for Mi 4, which is to be released in India by December 2014.

Chinese cellphone company Xiaomi has had a huge market to cater to in China (of course), Singapore, Malaysia, Hong Kong, Philippines and Taiwan since its establishment in 2010. In fact, the entire market in China is so amazingly obsessed with Xiaomi’s “Apple-like gears” that it has virtually knocked off Apple iPhones from its consumers’ memory. With this immense success in its native vicinity, Xiaomi began its global expansion targeting South-Asian countries, including India. India was being looked over by Hugo Barra and Bin Lin, who are two high seated officials in the corporate. The first flash sale happened on 15 July clearing the entire stock of 15,000 pieces in just 40 minutes. Flipkart got jammed with heavy access load when Mi 3, its flagship product, was introduced for its second flash sale on 29 July selling 20,000 cellphones. Xiaomi’s online retail partner in India, Flipkart, ran out of its stock in just 2.4 seconds on August 12th!

Understanding the corporate strategy of Xiaomi enterprise, market analysts figured out that the production cost of each headset is not much margined to its selling price. That means on every sale the company does not make much profit as such. But unlike typical cellphone companies which use traditional methods to market and distribute its products, Xiaomi has resorted to Internet and e-commerce to create a selling space for its smart phones. Hence, it saves on a lot of cost on conventional brick and mortar investments, traditional marketing methods and human resource maintenance. Xiaomi has no real stores or service centers across its market land. Neither does it have many workers, executives or dealers to spend on. A lot of cost cutting is practiced on advertisements and infrastructure, nonetheless, Mi 3 generates a profit of around $100 on an MRP of $229. Xiaomi has very diligently focused on the current trend of internet shopping and e-commerce. It has targeted the youth which is already much comfortable with online shopping and social networking advertisements. Therefore, the company relies on virtual marketing and press releases to spread the word. Present contented customers also serve as real-life marketing agents to create a wider market for the product. Hugo Barra and Bin Lin themselves interacted with consumers in India to gather the response, a recent session happened in Bangalore. This way, Xiaomi is running with an astounding pace of selling an aimed number of 60 million smart phones this year, out of which 11 million have been sold already. Spoiler- A strength of 3000 workers pull of a turnover of around $6 billion (US) for the 5th largest smart phone company in the world!

Xiaomi looks at software market as its prospective future agenda. The company aims to sell software based themes and personalization accessories for its cellphones online. This year, the company is setting its eye on newer geographical markets including Russia, Mexico, and Brazil etc. Hugo Bara says that his goal is for “India to be together with China and all other key markets”. India will soon be home to many exclusive localized services that will cater to the needs of the Indian consumers especially.

I sat down with my brother and asked him if it was a deal worth it; of course his knowledge base in the field of smart phones and technology is much more accurate and informed. He said that Mi 3 is an amazingly affordable Snapdragon 800 smartphone. I could not understand what he meant by this but then he explained that such a high-end operating software only happens to exist in costly phones such as Google Nexus 5, Samsung Galaxy S4, LG G2 and Sony Xperia Z1. With an “Ah” followed by an exclamatory marked expression, I said that now I knew what the frenzy was all about. He said that he was eager for Mi 4 to be released, high hopes indeed.

 Aishwarya is a  student of English Literature at Hindu College, Delhi University. An aggressive enthusiast of Politics and an avid reader of articles on public policy and national politics. A leader, orator, anti patriarchal and loud on expression of words and public speaking. She believes in her dynamic administrative qualities and swears by candid human resource management. Her analysis of any life experience is majorly scientific and pragmatic, yet never misses a touch of spiritualism and philosophy.

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