2. INTRODUCTION
Xiaomi Corporation was founded in April 2010 and listed on the Main Board of the Hong Kong
Stock Exchange on July 9, 2018 (1810.HK). Xiaomi is an internet company with smartphones
and smart hardware connected by an IoT platform at its core With the vision of being friends
with its users and being the “coolest company” in the hearts of its users, Xiaomi is committed to
continuous innovation, with an unwavering focus on quality and efficiency. The company
relentlessly builds amazing products with honest prices to let everyone in the world enjoy a
better life through innovative technology. Xiaomi is currently the world's fourth-largest
smartphone brand, and has established the world's largest consumer IoT platform, with more than
150.9 million smart devices (excluding smartphones and laptops) connected to its platform.
Currently, Xiaomi products are present in more than 80 countries and regions around the world
and have a leading foothold in many markets. Xiaomi Corporationis a Chinese electronics
company founded in 2010 and headquartered in Beijing. Xiaomi makes and invests in
smartphones, mobile apps, laptops, bags, trimmers, earphones, MI Television, Shoes, fitness
bands, and many other products. Xiaomi released its first smartphone in August 2011 and rapidly
gained market share in China to become the country's largest smartphone company in 2014. At
the start of second quarter of 2018, Xiaomi was the world's fourth-largest smartphone
manufacturer, leading in both the largest market, China, and the second-largest market, India.
Xiaomi later developed a wider range of consumer electronics, including a smart home device
ecosystem.
Xiaomi has 15,000 employees in China, India, Malaysia, Singapore and is expanding to other
countries including Indonesia, the Philippines, and South Africa. According to Forbes magazine,
Lei Jun, the founder and CEO, has an estimated net worth of US$12.5 billion. He is China's 11th
richest person and 118th in the world. Xiaomi is the world's 4th most valuable technology start-
up after receiving US$1.1 billion funding from investors, making Xiaomi's valuation more than
US$46 billion.
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3. SWOT ANALYSIS
Strengths in the SWOT analysis of Xiaomi
1. One of the Largest Smartphone maker – Xiaomi is one of the largest smartphone makers
in the world. It is said to be the 5th largest smartphone manufacturer as of 2017.
Originating from China, the Smartphones are manufactured in huge quantities and have
wide acceptance across the world.
2. Highest selling Smartphone – The REDMI Note 4 became the highest selling smartphone
in India and China and practically in 50% of the Asian market. This shows that Xiaomi is
strongly rising in the smartphone market and has already beaten several giants.
3. Huge China and Asia market available – Another benefit to Xiaomi is that the whole
Asian market is their playground. As China lies within Asia and as Chinese mobile brands
are highly penetrated in the Asian markets, Xiaomi still has a lot of ground to explore.
4. Penetrative Pricing – Xiaomi has the strongest penetrative pricing advantage because it
generally uses direct marketing techniques and avoids dealer and distributor margins.
5. Good Quality products – Even at such low prices, no one can doubt the quality of Xiaomi
phones. The smartphones are regularly rated high on all E-commerce portals – a further
proof that Xiaomi does not compromise on quality even if lowers the price regularly.
6. Manufacturing Advantage – China has a huge manufacturing advantage because the
country in itself is known for manufacturing and exporting the products. China is also one
of the largest consumers in the Asian market.
7. Rising Brand Awareness – Xiaomi’s brand awareness is rising and more and more people
are getting to know about the brand thereby resulting in higher sales across the globe.
8. Growing year on year – The company which started manufacturing in 2011 has grown by
leaps and bounds and is regularly growing year on year.
9. E-commerce advantage – The Flash sale model is a very popular model which has
worked wonders for Xiaomi. In this model, the product is made available only in limited
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4. quantities and sold at a very low price. This model made the consumers crazy and each
Xiaomi looked like a price which was hard earned.
Weaknesses in the SWOT analysis of Xiaomi
1. Offline Distribution – Xiaomi mainly sold through the flash sale but at times, it was
difficult for customers to get their hands on a REDMI or MI model phone. This is
because their offline distribution is not upto mark and Xiaomi phones sell mainly via E-
commerce.
2. Advertising and Marketing spends – The advertising and marketing spends of the brand is
very low. The brand launches ATL campaigns only when coming up with a new product.
However, the advertising is erratic at best and is never consistent.
3. Brand Image and Equity – Because the advertising and marketing efforts are poor, the
brand image is not so good as Samsung or Apple or other such competitors. The product
portfolio of Xiaomi is also limited which further effects the brand image. Service centers
too are limited and all these factors contribute to the low brand equity and reputation.
4. Low Skimming price – While other smartphone manufacturers survive on skimming
price, Xiaomi launches its own phones at low prices in the flash sales. As a result, it
cannot take advantage of the skimming price or the advantage is not as profitable as it
would be for Samsung or Apple or other such high end brands.
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5. Opportunities in the SWOT analysis of Xiaomi
1. Expansion – Covering the developing countries and the emerging markets should be the
priority for Xiaomi. As it mainly follows online sales model, which is becoming popular
in many countries, it should expand to countries where E-commerce mode of purchase is
well established or in the process of establishment.
2. Distribution – Besides online distribution, Xiaomi also needs to concentrate on offline
distribution if it ever wants to be consistent like some of its top competitors. Offline
distribution would also mean higher expenses and therefore a rise in price. But it will help
the brand to create a long term image and equity.
3. Brand Building – Brand building methods such as Sales promotions, Trade promotions,
ATL campaigns and BTL campaigns should be launched as regularly as possible to build
a better brand image. Xiaomi is far behind Oppo and Vivo where BTL Campaigns are
concerned.
4. Product Portfolio – Product portfolio of Xiaomi is limited and it has 2 major series which
actually contribute to the complete revenue of the brand. Expanding the product portfolio
will help the brand in brand building as well as in getting higher revenues.
5. Product innovations & Differentiation – Being a market follower is tough and Xiaomi
needs to get a step ahead by introducing highly differentiated phones which have
innovative touches to it. More over, it needs to advertise these advantages to get more and
more customers to buy their products.
6. Penetration of Smartphones – Across the world, the smartphone as a product is being
adopted and people are using more and more smartphones with combination of Internet.
This market penetration of Smartphones is for the benefit of Xiaomi. The better phones
they manufacture, the more they will be able to capture market share.
7. The dying need for expensive smartphones – People are tired of spending money every
year on a Samsung S8 or the latest Apple Iphone. People want cheaper alternatives so
that they can change their phone every alternate year. As a result, most potential
customers who have the potential to buy high end smartphones are also buying chinese
smartphones for their lower prices.
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6. Threats in the SWOT analysis of Xiaomi
1. Competition – Oppo and Vivo are 2 of the biggest competitor for Xiaomi because they
are themselves from China and have the same manufacturing advantages like Xiaomi.
Besides this, Oppo and Vivo have a strong offline presence and have huge distribution
network. Thus, they are a huge threat to Xiaomi.
2. Service – The lack of service centers equivalent to the number of sales by the brand is a
worrying statistic. Xiaomi needs to increase its sales and service centers both if it wants
to retain its customers.
3. Brand Differentiation is absent – The smartphone segment has become such that brand
differentiation is becoming very difficult. Each brand is coming up with products which
are almost similar, thereby making it difficult for the customer to choose one brand over
other. This will become especially difficult when more and more brands come from
China.
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7. SEGMENTATION, TARGETING AND POSITIONING
Xiaomi segmentation, targeting and positioning is needed to indentify the target customer
segment for the company and to develop products and services that are attractive to this segment.
Segmentation involves dividing population into groups according to certain characteristics,
whereas targeting implies choosing specific groups identified as a result of segmentation to sell
products. Positioning refers to the selection of the marketing mix the most suitable for the target
customer segment. Xiaomi uses mono-segment and imitative types of positioning.
The internet technology company uses mono-segment positioning, appealing to the needs of a
single customer segment. Specifically, Xiaomi targets a customer segment that want to use
smartphones and other technology products, but have limited budget to make such a purchase.
Xiaomi also uses imitative type of positioning by closely imitating the products of market leaders
such as Apple and Samsung. The electronics and software company has even earned the
nickname “Apple of the East” due to its close imitation of Apple products and Apple product
presentation.
Typeof
segmentation
Segmentation
criteria
Xiaomitargetcustomersegment
Geographic
Region 70countriesandregionsglobally
Density Urbanandrural
Demographic
Age 18–65
Gender Males&Females
Life-cyclestage BachelorStage young,singlepeoplenotlivingathome
NewlyMarriedCouples young,nochildren
FullNestI youngestchildundersix
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8. FullNestII youngestchildsixorover
Full Nest III oldermarried couples with dependent children
EmptyNestI oldermarriedcouples,nochildrenlivingwiththem
EmptyNestII oldermarriedcouples,retired,nochildrenlivingat
home
SolitarySurvivorI inlabourforce
SolitarySurvivorIIretired
Occupation Students,employees,professionals
Behavioural
Degree ofloyalty ‘Hardcoreloyals’‘Softcoreloyals’‘Switchers’
Benefitssought Costattractiveness
Personality Easygoing,determinedandambitiouspersonalitytypes
Userstatus non-users,potentialusers,first-timeusersandregularusers
Psychographic
Socialclass Lowerclass,workingclassandmiddleclass
Lifestyle
Struggler,Mainstreamer,Aspirer,Explorer
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9. XIAOMI PORTER’S FIVE FORCESANALYSIS
Porter’s Five Forces is an analytical framework developed by Michael Porter (1979). Xiaomi
Porter’s Five Forces consists of five individual forces that shape an overall extent of competition
in the industry. These forces are illustrated in Figure 1 below:
Threat of New Entrants in Xiaomi Porter’s Five Forces Analysis
Threat of new entrants into the internet technology is low. There are entry barriers for potentially
new market players. Economies of scale is one of the major factors and entry barrier for new
companies. Xiaomi is able to offer its products for competitive prices because it purchases raw
materials in bulk and benefits from the economies of scale to a large extent. Moreover, entry into
the electronics and software industry requires formidable capital investments. Xiaomi was
initially funded with USD41 million in 2010 and the company went through series of funding
and debt financing of several billion USD to reach its current state.[2] It may not be easy for new
market entrants to secure funding at such a scale to enter the industry.
Additional range of factors that decrease the threat of new entrants to the industry include access
to distribution channels and likely retaliation from existing market players such as Apple,
Samsung, Xiaomi and Huawei.
Bargaining Power of Buyers in Xiaomi Porter’s Five Forces Analysis
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10. Bargaining power of buyers in technology and the mobile internet industry is significant. This is
caused by primarily high level of competition in the global marketplace. Nevertheless,
companies try to reduce buyer bargaining power through developing their ecosystem.
For example, “all products belonging to Apple ecosystem are highly compatible with each-other
and the purchase of one product belonging to the brand’s portfolio often leads to the purchase of
other products. Gradually, it will come to the point that consumers only give preference to
devices that work best in the ecosystem where they live. The current ecosystem carefully
cultivated by Apple is a powerful customer retention strategy.”Xiaomi is also working towards
reducing the bargaining power of buyers through strengthening its corporate ecosystem in
general and increasing inter-dependence of products and services within its ecosystem in
particular.
Rivalry among Existing Firms in Xiaomi Porter’s Five Forces Analysis
Rivalry among existing firms in internet technology industry is fierce. Increasing popularity of
smartphones and increasing integration of internet into a wide range of personal and professional
aspects of life are further intensifying competition in the global marketplace. As it is illustrated in
Figure 2 below, the global market of smartphone vendors is currently dominated by Samsung,
Apple, Huawei, Xiaomi, OPPO and LG, among others.
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11. COMPETITION FACED BY XIAOMI IN INDIAN MARKET
Despite losing its turf in India a little, Chinese smartphone maker Xiaomi retained its top
slot in the first quarter (Q1) of 2019, garnering 29 per cent market share, Counterpoint
Research said on Friday.
Xiaomi's India shipments declined by 2 per cent year-on-year(Y-o-Y) as it had recorded
31 per cent market share in the same quarter last year.
South Korean giant Samsung with 23 per cent market share stood second, and Vivo
gained much ground to hit the third spot with 12 per
The market share of Chinese brands in the Indian smartphone market reached a record 66
per cent during Q1 2019, according to Counterpoint's "Market Monitor" service.
Overall, India's smartphone shipments grew 4 per cent Y-o-Y.
"Data consumption is on the rise and users are upgrading their phones faster as compared
to other regions. This has led to users spending more on their purchase which is driving
up the overall average selling price (ASP) in the market.
As a result, the premium specifications are now diffusing faster into the mid-tier price
brands.
Volumes for the Chinese brands grew 20 per cent YoY, mainly due to the growth of
Vivo, Realme and OPPO.
Xiaomi's newly-launched Redmi Note 7 series (Note 7 and Note 7 Pro) crossed the one
million mark within the first quarter of its launch.
➢ Xiaomi's offline contribution was highest in March.
Samsung's A-series shipments surpassed two million units.
The newly launched online-only M series started well too, but it will need a strong
follow-up device to continue its momentum on the online platforms," said Counterpoint.
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12. ➢ Samsung also recorded a strong sell-in of its premium Galaxy S10 series which drove
overall ASP for Samsung.
➢ Huawei's ASP reached the highest-ever level driven by the recently launched HONOR 10
Lite, HONOR View 20 and end of life for its entry-level segment.
Realme continues to figure among top five brands for the second successive quarter while
Vivo's market share reached its highest ever level in India in Q1 2019," the report added.
Xiaomi Redmi 6A remained the top model, following multiple price cuts followed by
Xiaomi Note 6 Pro, Redmi Y2, Samsung Galaxy M20, and Galaxy A50.
The top 10 models contributed 35 per cent of overall smartphone shipments.
"Xiaomi remains the market leader driven by new product launches. However, it faced
strong market competition as compared to a year ago. Samsung did a major refresh in its
product portfolio launching a new online-only M series," said Counterpoint's Anshika
Jain.
➢ Inadequate After-sales Services The main after-sales service of Xiaomi includes direct
hotline and online customer service. However, according to Internet users, Xiaomi's
hotline is always too busy and always engaged; online and MIUI community customer
service does not do well in solving users' problems. Without enough after-sales service
center and a lack of employees who are skilled in local language in overseas markets,
Xiaomi's after-sales service is the issue that Xiaomi phone users concern most. As the
quality issues have led to users' hatred in many markets outside of China, the after-sales
service of Xiaomi is becoming more and more serious. Weakness in R&D Compared with
Foreign Competitors Compared with established international manufacturers and
powerful local mobile phone vendors in overseas market, Xiaomi is dwarfed. As mobile
phone industry is developing rapidly, the industrial concentration will become higher. In
other words, just like the household appliance industry there are only a few first-class
enterprises such as Skyworth, TCL, and Hisense left ultimately and participated in market
competition.
➢ To increasing the patent reserves, solve the patent dispute about SEP of smartphones. The
easiest way is pay the license fee, all company which has patents wants to make more
money from their patent but not use by other freely. Such as the Ericsson mentioned
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13. before, Ericsson requested Xiaomi pay for the patent in July, 2014, but xiaomi didn’t
answered, as a result Xiaomi sued by Ericsson. Although pay the license fee can get the
patent, the cost you can’t control by yourself, pay constant percentage of turnover or
profit which negotiate with the authorizer, can’t get the economics of scale. In the
negotiations, the licensee always is in the passive side.
MARKETING STRATEGY OF XIAOMI IN INDIA
Price in the Marketing Mix of Xiaomi:
Most of the money spent on Xiaomi products are strictly spent on design and production. The
company tries to save as much as it can, thus offering products to the market at an affordable
rate. In other words, on average, Xiaomi products are lowly priced. The company mainly
employs marketing strategies that don’t cost a lot. In addition, most of the products are sold
online thus reducing the cost that would have been spent to set up offline stores.
The company employs a pricing strategy that will help them get profits in the future. It is a sell-
low-today but gains later strategy. They, therefore, sell their devices at the exact cost that only
covers production costs. Their profit generation focus is on the accessories, apps, and services
that are to be used with their phones and computers etc. Xiaomi has proven that cheap pricing
doesn’t always mean cheap products
CHOOSING THE RIGHT CHANNEL:
• Gross domestic product per capita
• The growth rate of the smartphone market
• Number of active internet users
• The growth of the e-commerce market
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14. Are a few factors that Xiaomi take into account while entering a market. Xiaomi signed an
exclusive partnership with India’s biggest e-commerce player “Flipkart”. Selling phones online
helped the company reach out to wider audience base and also keep the cost in control which is
what they were famous for. Xiaomi used to hunger marketing strategy and ran flash sales for new
model launches, with the sales typically ending within seconds of opening. For instance, in a
flash sale for the Redmi 1S model in September 2014, around 40,000 pieces were sold out in just
4.2 seconds.
HUNGER MARKETING IS THE GAME:
Ever heard of a concept called ” Hunger Marketing ” – The company entered the market in
partnership with Flipkart, India’s leading online retailer, using hunger marketing tactics to market
its value-for-money smartphones. Customers needed to register for the sale and Xiaomi only
made available a limited stock of devices that were sold out in a few seconds. This tactic not
only created a sense of scarcity but also made customers curious about the product which added
in on the urge to buy the phone in the next sale.
CUSTOMER IS THE KING BUT CUSTOMER SERVICE IS THE
KINGDOM:
Even though Xiaomi managed to create a big dent in the Indian smartphone market by giving
giants like Apple and Samsung a run for their money, it was its sloppy-after-sales service that
was hurting the customer experience and brand reputation. To counter this problem, Xiaomi
shifted its focus to improve the after sales service being provided to the customers. Recently,
Xiaomi opened its 500th service center in India to help customers with all their problems.
ENTERING THE OFFLINE CHANNEL:
With only 1/3rd of smartphone sales in the country happening online, Xiaomi needed to crack the
offline market for a sustainable market share. Opening offline stores were one of the major
decisions in the marketing strategy of Xiaomi. Xiaomi used three-pronged strategy for building
its offline business which involved large format retailers (where Xiaomi puts up a pop-up store at
big electronics retailers), Mi Preferred Partner stores, and its own Mi Home stores. Mi Preferred
Partner stores are key multi-brand retail stores which carry differentiated Xiaomi branding and
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15. get stock from Xiaomi on priority. While these stores continue to sell devices from other brands,
as usual, they get additional business by being an outpost for Xiaomi.
CONCLUSION:
Keeping India as its prime market, the company aim to capture the largest market share in the
country in the next three to five years. With a marketing strategy as well defined as it is now, we
surely see Xiaomi give a very hard time to Apple and Samsung in the coming future.
CORE COMPETENCY
Xiaomi can boast of some remarkable milestones in just its third full year as a gadget maker. The
Chinese startup is on course to sell 60 million smartphones this year, and it has made some sure-
footed (if rather slow) steps into a number of markets in Asia, such as Indonesia and India.
The company’s growth is more remarkable when you see how it does so many things very
differently from more established phone brands. But the case may be that those quirks are
Xiaomi’s secrets to success.
A recent social branding report on Xiaomi produced by Resonance China picks apart a large
variety of the startup’s strategies and shows how they’re working out quite nicely. The beauty of
these is that Xiaomi can export them all to its new markets – even into challenging emerging
nations across Southeast Asia or, eventually, Latin America.
1. Xiaomi is basically an ecommerce company
Serial entrepreneur and Xiaomi co-founder Lei Jun likes to say that his newest startup is an
ecommerce company – which is one of many reasons he dislikes the frequent comparisons
between Xiaomi and Apple. He thinks that likening it to Amazon is closer to the mark. Xiaomi
has its own estore and also has a storefront on Alibaba’s Tmall.
2. Homepage is an estore
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16. That online commerce focus finds its apotheosis in the Xiaomi.com website. Most gadget brands
use their homepages as showrooms or glorified online adverts. Xiaomi, however, cuts to the
chase by making its home on the web into a pure ecommerce store. Xiaomi’s web home updates
daily to put an emphasis on which products are next available in its ongoing flash sales.
3. Makes use of a new kind of social commerce
Because Xiaomi largely sells its phones online, social media is an important part of the way it
remains visible and engaged with both customers and prospective buyers. It does this in China
mainly via Weibo, and in new markets it’s making use of Facebook, Twitter, and – primarily
through Hugo Barra, ex-Googler turned Xiaomi VP for international operations – Google+. On
Weibo, Xiaomi often sees engagement levels well over 60 percent, according to the Resonance
China report, thanks to frequent daily posts on a surprising variety of topics.
4. Every product range has a social hub
Another crucial part of Xiaomi’s social media strategy is that it runs Weibo accounts for every
product range. Xiaomi has 10 main Weibo accounts, the most popular of which is the Xiaomi
Mobile Weibo with close to 11 million fans; the newest one, for the MiPad (pictured above), has
just surpassed 500,000 followers. Xiaomi’s corporate Weibo has four million followers,
indicating that people would rather interact online with gadgets (so to speak) rather than a
company. Gadgets are very personal, but companies tend to be rather faceless, so this makes
sense from a human perspective – yet it’s something that so few companies do, particularly
outside of China.
5. Creates scarcity
Xiaomi’s flash sales help it rein in inventory and reduce wastage, avoiding the kind of over-
production disasters seen recently with Amazon’s Fire Phone and Microsoft’s Surface RT. While
that makes it harder to get a Xiaomi gadget, the company has managed to spin that into a
positive, creating periodic hype as flash sales of a limited number of devices open up each week.
Xiaomi’s social media accounts, particularly on Weibo and WeChat, play a key role in driving
people to the registration page for each new flash sale.
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17. 6. Offline is secondary to online
Xiaomi has 451 national service centers, but they’re not stores – although they do look rather a
lot like Apple’s iconic shops with their pine desks and lots of space for playing around with the
gadgets. These relatively small shops – usually just outside of a city’s main shopping area –save
Xiaomi spending on premium retail real estate.When Xiaomi ventures offline – such as with
events or its service centers – it’s all very much secondary to its ecommerce core.
7. Lowers the price of “premium”
For Apple, premium starts at about US$700. For Samsung it’s about US$600. But Xiaomi
chopped that in half in 2011 when it debuted the first of its smartphones, which packed premium
specs (but a rudimentary, blocky design) into a tiny price – just US$325. Xiaomi has kept that
price for its flagship phone, which is now the Mi4. Xiaomi has also upped its hardware design
game so that the aesthetics of the phone itself are no longer too much of a compromise compared
to models from Apple and HTC.
8. Runs its own community
Along with its careful social media stratagem, Xiaomi is also pro-active in running its own
community forums, or BBS. This is where the brand’s most hardcore fans, dubbed “Mi fans,”
meet to discuss gadgets, share knowledge, and generally hang out. This is something common to
Chinese companies, but largely unused by major brands overseas. Xiaomi’s BBS has 30 million
registered users and sees 579,000 new posts daily.
9. Loyalty program
Being a Xiaomi VIP entails getting points with each new purchase, which counts towards your
status in the Xiaomi online community as well as for discounts on future purchases. VIPs can
also opt into participating in online “missions” and special events offline.All the BBS registered
users are technically part of this, though only 90,000 of those have earned a VIP badge that’s
emblazoned on their Xiaomi BBS profile.
10. Beta access to gadgets
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18. The strategy here is clear – to build up hype and word-of-mouth advertising in the time it takes
for the first batch of devices to roll off the production lines. It’s usually a period when a newly-
revealed gadgets drops off the radars of most gadget enthusiasts, but Xiaomi keeps people tuned
in until the first flash sale is ready for pre-registration.
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