Case-study of Xiaomi

How Xiaomi is Dominating the Global Smartphone Market?

Just have a look around yourself, there must be at least 5 people around you who would be using a Xiaomi phone. Today, we will be talking about the leading smartphone brand who has been able to establish trust among users worldwide.

Let us first deep dive into Xiaomi’s journey-

Xiaomi Corporation is a Chinese electronic company founded in April 2010. The company began its operations as a software company by ex-Kingsoft CEO Lei Jun, by creating a new custom ROM based on Google’s Android, MIUI. The company launched Mi 1 and Mi 2 smartphones in August 2011 in and 2012 respectively in Asia and East Asia Markets.

In 2015, Xiaomi Corporation decided to expand its business in India through major e-commerce sites and offline retailers. Xiaomi was a ground-breaking smartphone at the time in budget and was well received by Indian customers. Since then, the company has expanded in Pakistan, Spain, UK, Ireland, Austria, Denmark, Sweden, Paris, Milan and the USA.

Besides smartphones, the corporation has also launched various smart home products, fitness products, TVs, laptops, drones, Wi-Fi routers, cloud services and instant messenger services.

Xiaomi Business Model

With the main aim of providing quality technology at affordable prices to everyone, Xiaomi has captured third place in the global smartphone market. Xiaomi’s Chief Executive Officer Lei Jun fragmented the source of revenue-generation into four segments of the market:

  • Internet of Things (IoT) and lifestyle products
  • Smartphones
  • Internet services
  • Miscellaneous services and products

As the years of success passed, the revenue generation process became faster and enterprise value touched $100 Billion during the initial public offering. The company began to compete with tech giants such as Apple and Samsung.

When Xiaomi was struggling to gain profit in 2016, the CEO decided to sell products other than smartphones. They generated substantial revenue that was enough to make a strong base for a large company. Besides selling smartphones, the company also provides services like air purifiers, suitcases, televisions and much more. Xiaomi also provides paid cloud storage. Services offered by Xiaomi also include online games and TV shows. Xiaomi is also producing AI-engines which can impact the business model positively in future.

Now, let’s have a look at different categories in which Xiaomi is ruling the technology market:

  1. Xiaomi’s Global Smartphone Market:
    In the present day, the smartphones of Xiaomi are responsible for 65% of the total revenue. According to a survey, Xiaomi sold 119 million smartphones in 2018. It is the highest number for any brand to date.
  2. Internet of Things and Lifestyle Products:
    Xiaomi has always focused on making people’s life simpler with its innovative technologies. Xiaomi’s IoT and lifestyle products roughly made 25 percent of revenue generation in 2018. It produced around $6.4 billion approximately. The products include internet cables, Bluetooth Speakers, Smart TV, Electric Scooters, Vacuum Cleaner, Cameras, Smart Home systems and much more.
  3. Internet Services:
    The business model of Xiaomi also includes internet service business. These businesses include preloaded apps and apps in the Mi store. Around 9.1 per cent of the total revenue comes from these services. They also provide cloud storage which is again a paid service. Xiaomi always focused on its internet services. Its efficient internet services are for start-ups. Start-ups play a crucial role in Xiaomi’s success in terms of business.

Xiaomi’s Revenue Generation Model:

With ensuring better productivity at an affordable price, Xiaomi focuses on its customer acquisition and advertising strategy. The business model of Xiaomi includes a variety of electronic gadgets and internet services that are innovative and attractive. Miscellaneous additional services and products of Xiaomi also have their fair share in helping the company generate good revenues.

Customer reliability is one of the critical strengths of Xiaomi. Xiaomi always produces affordable products. This thing still fascinates the customer towards the brand. Xiaomi provides its users with an unforgettable experience which also helps them to retain their customer base. This lets the company have more subscribers for its proprietary services such as Mi Store, Music, MI Cloud and so on. All this helps the company make good money.

Marketing Approach adopted by Xiaomi:

Xiaomi has kept its marketing strategy minimalistic due to the cost leadership business strategy. Unlike other recent competitors like Oppo and Vivo, the mobile internet company didn’t adopt traditional marketing and utilised social media marketing to save on advertising costs.

Xiaomi adopted hunger marketing as an integral part of their digital marketing strategies. The company operated according to the emotional needs of their target customer segment by creating a shortage of supply in purpose, creating a buzz in the market and evoking desire in customers to own an MI smartphone.

Xiaomi focused primarily on the price element of the marketing mix compared to other elements of the 7P’s of marketing. Let us check out those 7Ps of marketing:
Product: The mobile internet company offered high-quality phones with latest features at unbelievable prices. The product consisted of high-quality hardware components and the final price was very low when compared to other brands.

  1. Pricing: The product was sold on its cost price through online platforms without involvement of any mediator.
  2. Place: After the huge success in China, Xiaomi launched its products internationally. They hired Hugo Barra (Ex-Google android Executive) to discover new opportunities for expansion.
  3. Promotion by Social Media: Xiaomi leveraged social media platforms beautifully to enhance their online presence. Engineers engaged with consumers and gathered feedback to refine the software and remove the bugs.
  4. Promotion by Brand Promoters: Xiaomi actively participates in the discussion on social media has succeeded in generating a dedicated fan base of millions of users.
    Promotion by Word of Mouth: The Flash sales created a buzz and everyone was talking about it. It helped Xiaomi to gather huge popularity.
  5. Promotion by CEO: Xiaomi’s head, Lei Jun, did a great job in making his brand look cool. He put a face to the brand. Lei Jen’s is quite similar to Steve Jobs in the way he talks about the brand.

Social Media Strategy adopted by Xiaomi

Leveraging the power of social media marketing, the Chinese mobile internet company didn’t invest a single penny in traditional advertising. The company employed 2000 people over social media and online forums to manage its online community. Xiaomi followed a well-strategized plan to expand its online presence:

  1. Building a strong tech fan base:
    Starting the company with a single product that was MIUI operating system, Lei Jun was not in the mood to spend money on advertising and marketing in the beginning phase. To create brand awareness, he with his team started to promote his product on online forums. They all worked very hard and spent a lot of time on forums, making comments, sending posts and advertising. They used the above method to do marketing with zero budget, they set up MIUI mobile phone forum, which became the base camp of “mi fan” with over 1 million registered users.
  2. Gaining the trust of the fan base:
    Xiaomi started to collect feedback from its users every week and implement it in the next release. Every week, a new version of MIUI was released which was again then analysed by a few hundred thousand hardcore users. Some of the users participated in product research, development, test, spread, marketing and public relation. Fans also organized offline city gatherings.
  3. Selling directly to your fans and Promote your brand’s name:
    Naturally, the 1 million “mi fan” users became the first buyers of MIUI smartphones. People bought the phones, liked it and recommended it to other users. The company now uses Flipkart, Amazon and offline stores as Point of Sale.

Campaigns by Xiaomi

Social media marketing is a very effective and reliable source for any brand, product which is going to be launched. If social media marketing is used with a proper plan and strategy then we can see a huge difference in traffic and terms of revenue. To connect with the customers, attract engagement and build the presence of the brand online, Xiaomi developed various social media campaigns. Let’s have a look into them.

  1. #MiIndia – A Social Media Campaign on Twitter by Mi India
    To attract new buyers for Mi 3 (the newly launched Smartphone by Mi India in July 2014), the brand connected with people on Twitter use the hashtag #MiIndia. Users were asked to show their interest in the Smartphone and register themselves on the official website. One lucky winner would win a power bank from Mi India.
    Twitter Campaign by Redmi

  2. #GuessTheCup- A Social Media Campaign on Facebook by Mi India
    To promote the Mi Bands, the brand connected with people across Facebook with a contest. The users were asked to guess the cup under which the band was present in a video uploaded. The lucky winners would get a chance to win bands from Mi India.
    Cup challenge by Redmi

  3. Redmi Note– A Social Media Campaign through Twitter by Mi India
    Mi India connected with people on Twitter to promote their new Redmi Note phone and convinced them to participate in the contest. The users were asked to follow the brand and re-tweet the official launch tweet for Redmi Note. 10 lucky winners would win priority passes for the grand launch of the Smartphone.To amplify the effect, Xiaomi debuted television with its first ever TVC for the Indian market in 2015. The ad film promoted its newest offering- Redmi Note 3.
    Campaign

  4. #Shot on RedmiNote7s
    On Instagram, the camera quality of the Mi phones was explored and promoted in the best way. Xiaomi relied on Social media to engage with Mi fans, consumers and used the platform to share thoughts, converse with like-minded people and generate high-quality content.#ShotOnRedmi helped communicate the value of a phone for a potential consumer and also helped in retaining followers for the brand.
    Instagram Campaign by Redmi

  5. Note Kiya Jaye – #RedmiNote7Pro
    With the launch of Note 7 Pro, Xiaomi launched a new campaign “Note Kiya Jaye” that featured their new brand endorser, Ranveer Singh who had the power to play multiple characters with his strong comical tone. Note Kiya Jaye effortlessly played out humorous scenarios while showcasing the features of the phone and innovative technology for customers.Xiaomi left no stone unturned to promote its product. They used 360 degree marketing strategy slowly and steadily. They have also conducted several influencer marketing campaigns to promote its product among the youth.

  1. DurSeDekho- Redmi Note 7 Pro
    In the classroom scene, the Father (Ranveer Singh) while casually inspecting the classroom environment uses the double-tap double-zoom feature on Redmi Note 7 Pro’s 48MP camera to zoom into the student’s desk to find that he is reading a comic book instead of a textbook.


Key Takeaways from Xiaomi’s Business Strategy

Xiaomi’s business strategy depends upon time and trends. Here are some key-takeaways from the strategy that we must study and implement to further growth:

  1. Assembling and Employing a fan base:
    Since 2012, the brand has created a huge fan base that involves millions of people across the world. Fans spend countless hours online discussing Xiaomi products on various forums which increased the level of brand awareness at no extra cost to the company. Just like Apple, every mobile company enjoys a hardcore following.
  2. Manufacturing Exceptional Products at Pocket-friendly services:
    With the aim of providing people with exceptional products at pocket-friendly prices, Xiaomi with MIUI interface created a practical design with their latest technology, By providing exceptional technology, they have also targeted the lower-income group. They can buy these smartphones easily. Xiaomi mainly competes with the market on providing cheap products and services.
  3. Regular Optimizing of Products and Services:
    The mobile company is actively developing the ecosystem for its products and services. Xiaomi’s business strategy attracts business from 55 companies of which 29 companies were originally started by Xiaomi itself. Besides manufacturing smartphones, Xiaomi also deals in various products ranging from gaming laptops to homemaking products.
  4. Large Community and Social Media Engagement:
    With more than 1 Million monthly users, MI community has become a strong platform to interact with the Mi users. When compared to other brands, some of the biggest tech giants do not provide a common platform to share their views. The tech giant also invites its fans for its launch of any new product. Xiaomi also does its engaging part with the users on the other social media platforms and remains active with them.
  5. Flash Sales:
    Xiaomi builds its market by creating a demand for its newly launched product. People get the Fear of Missing Out (FOMO) and eventually end up discussing when the next sale goes on. This leads to curiosity and free promotion. This type of marketing strategy is called hunger marketing.
  6. Beta Access to Gadgets:
    To create a hype in the market, Xiaomi chooses a limited number of beta users which can be up to 500. They can buy gadgets for less selling price and loyalty points before its ahead of the official launch. Xiaomi teased its MiPad in May, selected Xiaomi fans got hold of the Android-based tablet a few weeks before it hit Xiaomi’s online sales.The strategy used created hype and enhanced word-of-mouth advertising. It’s usually a period when newly-revealed gadgets drop off the radars of most gadget enthusiasts.

Conclusion
Truly, Xiaomi is a perfect example of a start-up business. It has been a unique blend of business strategies, digital marketing strategies and social media marketing strategies which has transformed the business in just 5 years of its inception. Cost competitive strategies have been boon for the brand. There are opportunities for Xiaomi to become the world’s No. 1 smartphone company as the company is already giving a tough competition to other competitors.

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