Marketing Mix Strategy (Xiaomi Redmi Smartphones)

Running head: MARKETING MIX ANALYSIS OF XIAOMI REDMI

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Marketing Mix Analysis of Xiaomi Redmi Xiaomi Redmi Smartphone was launched with the tagline “Accelerate your life” targeting middle and lower class people. Xiaomi Redmi belongs to the Smart Touch Phone segment in the mobile phones market. It has positioned itself as the Budget Smartphone that comes with latest features at a reasonable price. Xiaomi has become world’s fourth largest smartphone manufacturer in just five years of its incorporation. Xiaomi became so successful in short span of time because of their brilliant marketing strategies and marketing mix. CEO of Xiaomi, Lei Jun is greatly inspired by Steve Jobs and even the Chinese media have nicknamed his company, the “Apple of the East” (Barboza, 2013). Mr. Lei has used an unusual mix of social-network marketing, fan appreciation festivals and his own tech-star status to capture smartphone-market share and now slowly setting eye on the global market (Dou, 2015). After Xiaomi Redmi has come into the market, it has minimized the gap between the high end devices with higher prices and basic devices with lower prices by offering high quality hardware embedded in the phone at lower prices. The higher price segment of the smartphone market was dominated by Apple and Samsung while other smartphone makers like Lenovo, LG, and Micromax dominated the lower price segment. But now Xiaomi has changed the rule of the game with its high-performance smartphone and low price strategy. As a result it has been able to gain 18% smartphone market share in China, world’s largest smartphone market (Mourdoukoutas, 2015). It is expected that Xiaomi’s low price strategy will start price war and eventually attack home base of its biggest competitors Apple and Samsung, who will then be forced to innovate ways to come out of the price war. The 4Ps of marketing mix includes Product, Price, Place and Promotion. 1. Product:

MARKETING MIX ANALYSIS OF XIAOMI REDMI 2 As said earlier, Xiaomi Redmi Smartphones are the high performance devices which come at low price. Because of such marketing strategy, Xiaomi has been able to skim off its two big competitors Apple and Samsung from its home market, China. Xiaomi has established its brand name with good quality phones and best features along with beautiful design & handy looks. It comes with high resolution screen, long battery backup, robust case and runs on Android based OS. It has more special features than any other standard smartphones at the same price level and even has lots of options for customization making it one of the most user friendly devices available in the market. It uses brand name “Xiaomi” which by the sound of it feels like it is from China and it has been able to change the perception of people outside about the products made in China. Xiaomi is a Software Company rather than hardware and that is the reason for its success by providing one of the best softwares and services to the purchaser of its hardware. In comparison to its Android based competitor Samsung Galaxy Note, features of Samsung Note is little bit better than Xiaomi Redmi Note but Samsung Note is lot more expensive. Samsung Note is even bigger than Xiaomi Redmi Note by .2 inches. Samsung Note is targeted to higher class people whereas Xiaomi Redmi Note is targeted to middle and lower class people. Brand name “Samsung” has been in the market since a long time but now slowly new and unique brand name “Xiaomi”, pronounced as “see-yow-mee”, is rising in the global market. 2. Price: Xiaomi sells its products at low price just to cover the cost of the device but they have the strategy to gain more from the future sale of application, services and accessories. They move with the strategy “sell low today but gain more in future”. Xiaomi does not own any physical store which reduces its cost of renting the store, hiring

MARKETING MIX ANALYSIS OF XIAOMI REDMI 3 staffs and keeping inventory. Most of its sale is done through online stores which have helped in keeping the cost of the phones at lowest level possible, even reducing the problems while dealing with the retailers and distributors. Xiaomi Redmi Note’s competitor Samsung Note is far more expensive than Redmi and yet they provide similar features. That’s why customers of Xiaomi Redmi Note feel that their product is worth the value of money that has been paid. 3. Place: Xiaomi sells its products online rather than opening physical stores and the company has been able to save a lot of money by not opening physical stores due to which phones are also cheaper. Even consumers have easy access to the products. Most of the countries of the world are dominated by smartphone giants, Apple and Samsung. Xiaomi is slowly expanding its market to countries like India, Malaysia, Singapore & Philippines and also planning to enter Turkey, Brazil, Mexico, Russia, Thailand, Indonesia and Vietnam. Entering into India’s market was one of the best decisions with India having huge population and increasing number of smartphone users (Mozur, 2015). In comparison to its competitor Samsung Galaxy Note, Xiaomi Redmi Note is limited to few geographical areas for now but it still has the largest customer base in its home country, China whereas for Samsung it has its market worldwide. But because of the Xiaomi phones, Samsung’s market share has declined drastically in most of the Asian countries and Xiaomi is continuously expanding its market and climbing the ladder of success. 4. Promotion: As mentioned earlier, CEO Lei Jun has used social-network marketing and he himself is the face of the brand. Xiaomi uses social media to actively communicate and broadcast messages to customers and get their feedbacks which shows the concern of the company towards its customers.

MARKETING MIX ANALYSIS OF XIAOMI REDMI 4 No one has ever seen a single commercial of Xiaomi but it has been able to reach to its customer because of its sales strategy where it uses flash sales, selling product in limited quantities in a limited time. This strategy has been able to grab people’s attention and they talk about it on social media. That is the power of word of mouth which has helped Xiaomi in saving advertisement cost and promoting new products. In the case of its competitor Samsung Galaxy Note, Samsung uses lot of advertisements, banners and even sponsorship in lots of events for its promotion. Position of Xiaomi Redmi in the market Xiaomi Redmi is positioned as high performance smartphone with reasonable price in the market that provides the features and services worth its value to its customers. Its strength is the sharpest and best display among its competitor phones along with high-resolution camera for taking sharp and clear pictures. Price has always been the great strength for Xiaomi phones. Xiaomi Redmi is targeted to middle and lower class group who can now use more than a basic phone at an affordable price. Perception of Xiaomi Redmi on consumers mind Though Xiaomi Redmi Smartphones are available at cheaper price, customers don’t have the perception that these phones are low quality phones because they really are not. After the launch of these phones, even in new markets, people have loved its specifications along with its durability and reliability of its hardware and software. And because of the power of word of mouth, people have great positive perceptions about Xiaomi Phones. Xiaomi spends less than 1 percent of its revenue in marketing and the company relies mostly on social networks and free press publicity CEO Lei gets as a national tech hero (Stone, 2014). Differentiation from similar product

MARKETING MIX ANALYSIS OF XIAOMI REDMI 5 Xiaomi Redmi has been able to differentiate itself from the competitors being a remarkable product that people talk about and when they talk they are doing the marketing by spreading the idea (Godin, 2007). How it has been able to create a remarkable product is by following a different approach of marketing i.e. providing phones at the level of cost but then focusing on sale of applications and services after the sale of hardware. Due to this approach huge population of middle and lower class people are able to use the product and even contribute to the company’s revenue by availing its services afterwards. Beside these, Xiaomi Redmi has better features compared to other standard android phones at the same price level. With further development, after Xiaomi Redmi Note, Xiaomi has come up with advance phone ‘Xiaomi Mi Note’ to compete with Apple’s iPhone 6 which is available at less than half the price of iPhone 6 in China (McDonald, 2015).

MARKETING MIX ANALYSIS OF XIAOMI REDMI 6 References Barboza, D. (2013). In China, an Empire Built by Aping Apple. Retrieved September 2015, from The New York Times: http://www.nytimes.com/2013/06/05/business/global/in-china-anempire-built-by-aping-apple.html?_r=0 Dou, E. (2015, June). Xiaomi, China’s New Phone Giant, Takes Aim at World. Retrieved September 2015, from The Wall Street Journal: http://www.wsj.com/articles/xiaomichinas-new-phone-giant-takes-aim-at-world-1433731461 Godin, S. (2007, April). Seth Godin : How to get your ideas to spread. Retrieved September 2, 2015, from Ted Talks: http://www.ted.com/talks/seth_godin_on_sliced_bread/transcript McDonald, J. (2015). Xiaomi's New Smartphone Could Be An iPhone Killer. Retrieved September 2015, from Huffington Post: http://www.huffingtonpost.com/2015/01/15/xiaomi-mi-note_n_6478486.html Mourdoukoutas, P. (2015). Xiaomi Takes Up Samsung In Its Home Base, Changes The Rules Of The Game. Retrieved September 2015, from Forbes: http://www.forbes.com/sites/panosmourdoukoutas/2015/08/29/xiaomi-takes-up-samsungin-its-home-base-changes-the-rules-of-the-game/ Mozur, P. (2015, April). With Mi 4i Smartphone, Xiaomi Turns to India. Retrieved September 2015, from The New York Times: http://bits.blogs.nytimes.com/2015/04/23/with-mi-4ismartphone-xiaomi-turns-to-india/ Stone, B. (2014). Xiaomi's Phones Have Conquered China. Now It's Aiming for the Rest of the World. Retrieved September 2015, from Bloomberg Business: http://www.bloomberg.com/bw/articles/2014-06-04/chinas-xiaomi-the-worlds-fastestgrowing-phone-maker

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