According to the report published by Canalys, which is an American market research company, the shipments of Xiaomi’s smart phones have exceeded Sumsung’s during the second seasonin 2014 in China. To be specific, Xiaomi’s mobile phones occupied 14% of the total shipments in China while Sumsung’s were slightly over 12%. It is a great honor for a company established just for 4 years. And I think there are several reasons make this goal realized.
Firstly,Xiaomi has its own specific target customers. The company’s slogan is “Born to a fever”, which means Xiaomi will provide smart phones to its clients equipped with the best screen, fastest CPU, and so forth, while the price should be low enough to grab the potential customers who cannot pay a lot of money for a smart phone, otherwise, these people will buy an iphone instead. That definitely meets the preference of consumers in China. What’s more, the mobile phone market in China has experienced a fast growth in last 4 years, according to the report of IDC, the shipments of smart phones in China will reach 450 million in 2014. The market in the first-tier and second-tier cities in China may have been matured, while the demand in third-tier cities is still very large, so the features of Xiaomi’s smart phones abovementioned can be an advantage in these areas.
Secondly, Xiaomi really produces phones with high quality. The CPU is the high-end series of Qualcomm, the resolution of the screen is better than most competitive products and the pixel value is large enough to capture high quality pictures. These main technical specifications are eye-catching. Xiaomi also provide software services to the clients like Mitalk, Millet reading and so on. The most important aspect is the continuous update of its MIUI system based on the reflections of the consumers. The combination of these soft wares and Xiaomi’s phones is hoped to create a more using-friendly environment for the clients.
Thirdly, Xiaomi sets an acceptableprice for its product. According to the analysis report of ZDC, in 2013, 27.8% of the consumers, which ranked NO.1, focused on products range from 1000 to 2000 RMB, and the price of Xiaomi’s phones, 1999, falls into this range. When Xiaomi first entered the market, several companies had already dominated the smart phones market like Sumsung, HTC and Apple. The market barrier is high. Therefore, based on the company strategy and target consumers, Xiaomi adopted penetration pricing strategy which means they wanted to grab potential consumers in a lower price and expand its market share in a short time. And, to be honest, 1999 RMB for such a high quality smart phone is very attractive in 2011, at that time the options were kind of limited.
Next, the promotion activities of Xiaomi can be a typical marketing case in business schools. In my opinion, Xiaomi use fourdifferent marketing methods in the promotion activities. The first one is hunger marketing, in this way Xiaomi sets a limited supply amount in sales, such as 300 thousand phones a month. This strategy helps to enhance the brand value and have the customers an impression that they need to catch every opportunity to buy Xiaomi. The second one is Weibo marketing. Weibo is a popular media in public life, and the comments posted on it can guide public opinions on one product. Xiaomi uses Weibo to communicate with the consumers and express its unique idea, the information of the product and build a good company image. The third one is forum marketing. People who buy a Xiaomi phone will have a Xiaomi account, and they can land on the Xiaomi forum to search the resources they need and reflect their user experience. Therefore, with more and more people attending the topics discussed in the forum, the impact of Xiaomi will get larger. The final one is marketing hype. From the comparison between Xiaomi and Meizu to the suspicion of supply shortage, all of these discussions make Xiaomi to be exposed to the public. To be frank, all these promotion activities make Xiaomi become a super star in Chinese info-tech industry.
Finally, the channel of distribution that Xiaomi adopts is mainly direct channel. People book a Xiaomi phone from the official website then the company will deliver the phone to the clients directly. This kind of distribution channel is like the channel that Apple.inc adopts. Xiaomi does not need to share profits with the entity stores in this way. And the young people really like it since it looks fashionable. Right now, Xiaomi has settled agreements with the telecom operators to sell its phones in contract way, which will help broad its market.
Although, Xiaomi really does well in the mobile phone market, it has challenges. Firstly, more and more domestic companies join this industry such as Huawei and ZTE, both of them have a profound technical foundation and they can sell high quality smart phones in a lower price than Xiaomi. Thus, the competition is become more and more intense. Secondly, the functions of mobile phones are inclining to the same, and the difference of products become smaller, which means that the goal of “Born to a fever” is harder to reach nowadays. Xiaomi needs more innovations to keep its attraction. Thirdly, Xiaomi needs oversea marketS, however, are the promotion activities suitable in other countries is still a question.