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School of Economics and Management

Group Final Project


(Marketing Management)

Xiaomi Smartphone
小米智能手机

Members : Calsy/LS1508221
Linda/LS1508222
Suntoso/LS1508223
Sangma/LS1508225
Nguyen Tuan Hung/LS1408211
Vu Thi Thu Hien/LS1508226

2016 年 01 月 11 日
ABSTRACT
This Marketing Plan provides a marketing report on Xiaomi Inc. a multinational corporation
based in Beijing, China. Xiaomi is privately owned Chinese Electronics Company founded by
Lei Jun and several partners in 2010, and which has now grown to be the world’s third largest
smartphone distributor. The report begins with an introduction Xiaomi and briefly highlights the
company’s background and history, highlights of the key market trends, customers’ trends to
Smartphone, Xiaomi’s competitor’s, competitive position and SWOT analysis, as well objectives
and strategy. The report concludes with a proposal on the key strategies and plans, along with 4P
marketing categories.

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1. Introduction
Xiaomi Inc. was founded only five years ago, in April 2010, headquartered in Beijing,
China, is a privately owned electronics company that designs, develops, and sells smart phones,
mobile apps, and other technology products(their product line include phones, tablets, smart TV's
,..Etc. and wearable). It was co-founded by eight partners (Lei Jun (CEO), Lin Bin, Li Wanqiang,
Zhou Guangping, Huang Jiangji, Hong Feng, Wang Chuan, and Liu De) on June 6, 2010.
In 2011, Xiaomi announced the Mi One phone. Xiaomi was now not only making its own
software, but its Xiaomi have launched other devices such as a smart TV, Wi-Fi router and are
even looking to launch their own tablet (if rumours are to be believed). Xiaomi are without a
doubt the company to watch in 2014 as they are estimating that they can ship over 60 million
units worldwide by the end of the year. That’s more than triple the amount they shipped in 2013.
Their presence is mainly in the Asian region such as China, Malaysia, Singapore and
Philippines. Xiaomi's focus is to produce reliable, user friendly, mobile applications and
affordable phones to customers. Xiaomi is currently the third largest Smartphone producer in the
world with over 5,000 employees worldwide.

2. XIAOMI's situation analysis


2.1 Key market trends
The worldwide Smartphone market grew 13.0% year over year in 2015, with 341.5
million shipments. Android dominated the market with an 82.8% share in 2015. Samsung
reasserted its global leadership with a renewed focus on lower-cost Smartphone (in figure I).
China is the biggest country for Smartphone sales, representing 30 percent of total sales of
Smartphones, the appeal of premium smartphones will be key for vendors to attract upgrades and
to maintain or grow their market share in China. Figure II shows variety of Smartphone brands in
china market (both domestic and international brands), with Xiaomi and Huawei (domestic brands) earned
the most market share in China's Smartphone market 2015. Xiaomi’s market share of 16.5% makes it the
upper hand in domestic Smartphone market, with only slight difference of Huawei’s market share of
16.1%.
2.2 Customers' trend to Smartphone
As consideration in the target segment comprising of Young Adults (20-29 years of age)
And Working Adults (30-45 years of age). This is the target segment which comprises of
All the middle class in the country, and which is continuously growing at a rapid pace. This is the
most important group of people in any country as they are the backbone of the workforce in the
country, and their jobs and purchases and taxes that they pay are instrumental in driving the
country’s economy.
2.3 Competition
China Smartphone industry is brutally competitive right now, the market continues to
mature, remaining stagnant quarter on quarter. Three of China’s major Smartphone vendors,
Lenovo, Xiaomi and Huawei are all battling for a place in the top three market shareholders.
Xiaomi Company makes 5.3% market share for the third quarter of 2014 and beat the rivals
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Lenovo on 5.2% and LG with 5.1% according to International Data Corp (IDC). Xiaomi has
aggressively targeted the Chinese market and was received well in China.
Xiaomi major competitor was Lenovo, Huawei, Apple and Samsung. Lenovo growth has
been slower in comparison to Xiaomi and big spending on purchasing Motorola makes Lenovo
growth slowed and the company hopes the loss-making Motorola Mobility unit will halt that
reduction in growth. For Huawei there are several advantages over Xiaomi. First, Huawei has
more financial report, making it easier to develop better devices and software. Second, Huawei
smartphone may become cheaper than Xiaomi because Huawei manufacturers its smartphones
itself. Third, Huawei started its business with communication devices, so it established good
relationships with the operators of communication market. While Apple (IPhone) has more
customer loyalty, and it has strong brand image compared to Xiaomi which is quite new.

2.4 Xiaomi's competitive position


 SWOT analysis of XIAOMI

STRENGTHS WEAKNESSES
- Trusted brand in China - Difficulty to obtain loyal fan base and brand
- Innovative marketing approach advocates outside China
- Effective online business model - Low cost distribution strategy may not be
-Flexible and customizable products effective in other markets
- Lower Price compared to other brands - Quality and after sales services are weak
OPPORTUNITIES THREATS
- Expansion to retail channels - Price war from other low cost competitors
- Build a core set of hardcore fans - Large competitors moving into low cost market
- Create a strong user experience and unique (Lenovo, HTC)
branding and ecosystem - Potential loss of control over supply chain
- Over reliance on e-commerce as primary
distribution channel

 Competitive position of XIAOMI

The driving force behind Xiaomi’s success is its “high-performance, low price” strategy.
China has experienced an unprecedented development in the mobile phone market in recent
years. There are three main factors to Xiaomi’s success. The first is the company’s specific and
clear market positioning. The second is its excellent R&D and management team. The last factor
is its fast and effective sales model.

3. OBJECTIVES AND STRATEGIES


XiaoMi Smartphone Market Share in China has been increasing over the years (figure 3),
according to XiaoMi competitive strategies (“high-performance, low price”), we believe for the
next 1 to 2 years XiaoMi is able to reach market share of 20% of China Smartphone market as

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XiaoMi is still in its developing period, there is so much space to grow before it enters the
maturity period.

4. KEY STRATEGIES AND PLANS


4P Marketing categories (product, price, place, and promotion):

1. Product - Not just another knock-off


 By coming up with a good quality phone at lower price range was the key strategic
move that put XiaoMi firmly on the map. The phone has a robust case, high
quality screen, and reasonable battery. It doesn't breaks easily, unlike cheaper
copycats that start having issues after just a few months of use.
 By building its own Android-based OS called MIUI, XiaoMi phones got new
exciting features not found on standard android devices as well as plenty of
customization options.
 For short term Xiaomi can improve the MIUI software and for long run Xiaomi
needs to create a new model of Premium Smartphone.
2. Price – Pay less now, pay more later
 Xiaomi selling cheaper phones near their actual cost was not sustainable long
term strategy, so they decided to go with the Amazon’s model – just cover the
cost of the devices and make money from selling content.
 Xiaomi mostly sells online which further reduces cost of sales and overheads
related to brick and mortar stores or dealing with distributors and retailers.
 Changing brand image by increasing its Smartphone price.
3. Place – Gain strength at home first
 The company seems to stay focused on China with 97% of the shipments locally
and they also prefers staying focused in its home base where the market is still
booming.
 Even though Xiaomi has service store and official store but still there are few less
people who know about the store so Xiaomi need to expand more branches.
4. Promotion – The power of word of mouth
 They have pioneered flash style sales which were done with little or no
advertising where flash sales basically mean selling limited quantities during
limited periods. The units were sold quickly and talked over a lot all over China’s
vibrant social media.
5. Promotion – active use of social media
 Xiaomi has also managed to harness the power of social media by not only
broadcasting their messages and announcements but by actively engaging with
their customers.
 Xiaomi also need to make more advertisement in banner, television, newspaper,
or magazine to make their brand more popular among other people.

5. Appendices
Figure I: 2015 Total Global Smartphone market share in worldwide

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Global Smartphone Market share in 2015

Samsung; 21.40%

others; 45.70%
Apple; 13.90%

Huawei; 8.70%
Lenovo*; 4.70% Xiaomi; 5.60%

Figure II: Total Smartphone market share in china, 2015

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Total China smartphone market share in 2015
Xiaomi Huawei Apple OPPO Vivo Samsung
Meizu Coolpad Lenovo ZTE TCL Other

16.53%
1.60% 6.01%
2.40%
4.51%
7.11%
4.81% 16.13%
8.92%
12.42%
9.72%
9.82%

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Figure III: XiaoMi Smartphone Market Share in China

XiaoMi Smartphone Market Share in China


18.0%

16.0%

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%
2013 2014 2015

References

 http://www.sootoo.com/content/657881.shtml 速途研究院:2015 年第三季度智能


手机市场报告
 http://www.askci.com/news/chanye/2015/03/31/165951pn8.shtml
 Marketing Proposal and Strategy for New Xiaomi Product “MiSpectacles”.Kyaw
Soe Hein.2015
 http://www.gizchina.com/2015/12/31/xiaomi-chinese-premium-phones-for-2016