To what extent have the marketing strategies contributed to improve the net profit

of the multinational company Huawei between 2014 and 2016?

Candidate number: MCO210

Word count: 1470

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 TABLE OF CONTENTS

INTRODUCTION ......................................................................................................3

1. SWOT analysis of Huawei .....................................................................................4

2. The marketing mix analysis of Huawei ..................................................................5

2.1. Huawei’s 4Ps ..................................................................................................5

2.1.1. Product .............................................................................................. 5-6

2.1.2. Price............................................................................................................... 6

2.1.3. Place ...........................................................................................................6-7

2.1.4. Promotion ..................................................................................................7-8

3. Market share of Huawei between 2014 and 2016............................................... 8-9

4. Analysis of Huawei’s net profit between 2014 and 2016 .....................................10

CONCLUSIONS .......................................................................................................11

REFERENCES..........................................................................................................11

5. Supporting documents ..........................................................................................12

5.1. Supporting document N°1 .............................................................................12

5.2. Supporting document N°2 .............................................................................13

5.3. Supporting document N°3 .............................................................................14

5.4. Supporting document N°4 .............................................................................15

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 INTRODUCTION

Huawei is a multinational networking company founded by Ren Zhengfei in 1987. It is

recognized to be one of the largest leading global information and communications

technology solutions provider. According to the Market research institution International

Data Corp. (IDC), Huawei is the third largest smartphone maker in the world, which

comes after Apple and Samsung. Initially, Huawei was a very small company, now has

become a famous multinational company that provides products and high quality

solutions to a third of the population countries. Its business growth was clearly due to the

implementation of multiple marketing strategies that are detailed later.

The aim of this commentary is to know to what extent the marketing strategies

have contributed to improve the net profit of the multinational company Huawei. To

present the mutual contribution between both business functions (marketing and finance),

the study will show Huawei’s SWOT analysis and marketing mix analysis implemented

in recent years. In the same way, this study will use reliable sources about Huawei’s

financial reports, which show the net profit achieved between 2014 and 2016. Using this

data, it is possible to realize a comparison of the business performance among those years

and evaluate to what extent marketing strategies influenced in this change.

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 1. SWOT analysis of Huawei:

STRENGTHS WEAKNESSES

• Innovative touch screen phones which • Huawei is not recognized as compare

capture the expectations of the
Market1.
• Huawei is well known for cool
essential gadgets2.
• Huawei cell phones’ price is
reasonable for anyone, and it could be
an advantage over the competitors.
• Huawei invested a high amount in
market research.
• The company is implementing
marketing strategies to accomplish its
marketing objectives.
with the competence (Samsung and
Apple).
• The Huawei brand is not targeted
towards business3.
• Huawei do not have own channels and
media to be recognized for the
community.
• Lack of experience outside Telecom.
• Pressure margin because of low prices
of its products4.

OPPORTUNITIES THREATS

• Because the financial state is strong, • The competition is increasing because

the business can target more market
segments5.
• The company has help of Chinese
government to achieve international
expansion.
• Huawei Company have the opportunity
to receive supplies from UFONE and
ZONG6.
• The cheap labor of workers in Chinese
industries allow Huawei to stablish a
low-price product directed to the low-
income market.
produce a cell phone is easier than
before.
• The profitability of the business could
fall because the competitors can
undercut the price of their phones7.
• Huawei's old cell phone models may be
forgotten when appear new and more
advanced ones from the competition.

1
See Appendix N°4
2
See Appendix N°4
3
See Appendix N°4
4
See Appendix N°4
5
See Appendix N°4
6
See Appendix N°4
7
See Appendix N°4

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 In the SWOT analysis are visible multiple strengths of the company, such as the

production of innovative low-priced handsets, the investment of Huawei in market

research and the emphasis on implementing marketing strategies. Thanks to these

strengths, the company has managed to sell many products and increase its net

profit. However, many of its weaknesses have played against them, such as the

level of recognition on its competitors and the lack of experience in the market.

To overcome its weaknesses, Huawei has seen fit to use one of its strengths

(marketing strategies) to be recognized and to be at the market level. Another

factor that has allowed Huawei to overcome its weaknesses is the country where

the business operate (China), because there the price of labor is cheaper and the

business receive constant support of the government. Nonetheless, Huawei like

other companies are in a constant struggle of competition in which marketing

strategies can make a difference.

2. The marketing mix analysis of Huawei:

1.1. Huawei’s 4Ps:

1.1.2. Product:

Due to the high competition in the telecommunications technology market,

Huawei has diversified its products, with the aim to distinguish itself from its

competitors. To do this, Huawei ensures the production of innovative high-

quality electronic equipment to offer them at a low price. In addition to well-

known its products, Huawei has implemented wearables (Huawei watch, fit

and Talkband B2), PCs (Huawei Matebook), tablets (Mediapad M2 8.0) and

smartphones (Huawei P9 lite, P10 plus, etc.). Thanks to the great variety of

innovative products with unique applications, Huawei has managed to attract

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 customers and increase its market share. Among them is its advanced camera

(professional camera of 5 to 16 megapixels), long battery life, incredible

sound and the large size of its screen (4-6 PX). All these characteristics can be

considered as the unique selling point of Huawei managed to excel among all

its competitors and to increase the consumer satisfaction. In the event of a

problem with the electronic device, Huawei provides after sales warranty

services, which ensures consumer confidence and product quality.

1.1.3. Price:

Huawei’s products are characterized by having a low price, with the intention

of being accessible to all socioeconomic level of consumers. An external

factor allows Huawei to achieve low prices without affecting its profits; this

is the cost of the labor of workers in Chinese industries. This external social

factor contributes to Huawei's forming reasonable price policies that help to

obtain high incomes with low-priced products and these are in turn highly

demanded in international markets. Huawei also uses e-commerce to sell its

products at an elastic price, that is, more reasonable and cheap due to the low

costs demanded by an online platform. In that way, the purchase process

become much easier for the business and more beneficial for the customer.

1.1.4. Place:

Huawei offers its products in more than 140 countries worldwide8. In addition,

Huawei has 21 R & D institutions in various countries such as Russia and

United States. In each of its branches the company ensures the quality of its

products with approximately 170000 employees who work efficiently. To

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(Bhasin, H., 2016)

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 cover the market and distribute its products, Huawei has managed to use the

selective distribution strategy by creating two channels. One is the seller's

channel for which an office is established in the market segment for direct sale

of products and the other is the joint venture with other businesses (alliance

marketing) for building further brand channels9. To distribute its branches,

Huawei uses the market segmentation strategy10, such as demographic

segmentation focusing on male and female gender from 15 to 60 years,

geographic segmentation focusing on urban areas and psychographic

segmentation focusing on young generations11.

1.1.5. Promotion:

The promotion and advertises is an important factor to establish loyal

customers, with the goal of generating a positive customer response. To

achieve this goal, Huawei uses social media marketing (SMM) as Facebook

(currently 44 million followers) to post information about new products and

its website to provide consumers its commitment with society and show them

its efficiency as a strong company with regard to consumers. As part of its

social marketing, Huawei participates in the Green Action Plan developed by

the Chinese government to reduce carbon footprint, energy used in industries

and environmental impact. To promote its products, Huawei also uses

television advertisement (telemarketing) with the contribution of successful

celebrity collaborations as well as billboards and street ads to avoid the digital

branch that can be found among the consumers of different economic

resources. Huawei has introduced its slogan "Make It Possible" to convince

9
(Bhasin, H., 2016)
10
(Botahala, 2016)
11
(Botahala, 2016)

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 low-income consumers that getting a high-quality Huawei smartphone may be

possible at a lower-price. This has the function of convincing consumers to

buy Huawei's product, allowing the company a high profit by selling large

quantities of them.

3. Market share of Huawei between 2014 and 2016:

Market share is defined as the percentage of one firm’s share of the total sales in

the market. The increase in market share could mean that a business is successful

against its competitors and has adopted effective marketing strategies12.

According to the Huawei Investment & Holding Co., Ltd. Annual Report, Huawei

had a market share of approximately 7.8% with respect to the Market in 2014. In

relation to 2015, the company achieved a market share of 9.9%, so it can be said

that Huawei occupied 2.1% more on the market than the previous year.

Progressively in 2016, Huawei had a market share of 11.9%, which means that

the business grew its market share in relation to 2014 by 4.1% and in relation to

2015 by 2%.

Market share of Huawei between 2014 and 2016

PERCENTAGE OF MARKET SHARE (%)

11.9
9.9
7.8

2014 2015 2016

YEARS
Market share of Huawei between 2014 and 2016

Graphic 1. Source: Own elaboration

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(Pierce, R., Muchena, M. & Lominé, L., 2014).

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 Through the above graph, it is possible to mention that the marketing strategies

used by Huawei are efficient for its growth in the market. The percentage of

market share increases as the years go by, so Huawei tends to grow and will be

able to become a brand leader in the market if the business continues to use

established marketing strategies.

4. Analysis of the financial state of Huawei between 2014 and 2016:

Huawei obtained in 2014 a net profit of 27,866 CNY Million, in 2015 a net profit

of 36,910 CNY Million and in 2016 a net profit of CNY 37,052 Million13.

Net Profit of Huawei's sales between 2014 and

2016
40,000 36,910 37,052
NET PROFIT OF HUAWEI'S SALES (CNY

35,000
27,866
30,000
25,000
MILLION)

20,000
15,000
10,000
5,000
0
2014 2015 2016
YEARS

Graphic 2. Source: Own elaboration

To find Huawei's market growth percentage between 2014 and 2016, it is necessary

to do the following:

𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑜𝑏𝑡𝑎𝑖𝑛𝑒𝑑 𝑖𝑛 2016

∗ 100%
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑜𝑏𝑡𝑎𝑖𝑛𝑒𝑑 𝑖𝑛 2014

37,052
∗ 100%
27,866

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(Huawei company, 2016)

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 32,965%

After dividing the net profit obtained in 2016 and 2014 and multiplying it by 100%,

it has been calculated the percentage of growth that the company has had between the

aforementioned years that the company used multiple marketing strategies. It can be

observed that the company grew by 32.965% in net profit.

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 CONCLUSIONS

To conclude, the different marketing strategies used by the multinational company

Huawei as the social marketing, product diversification, market segmentation,

telemarketing, alliance marketing, selective distribution strategy and social media

marketing (SMM) are effective in median extent to increase the net profit of the company.

The efficiency of marketing strategies is evidenced by the increase of the market share of

the company between 2014 and 2016 by 4.1%. With respect to Huawei’s net profit, it

should be noted that the quantity obtained in 2014 increased by 32.965% with respect to

2016, this means that the marketing strategies in conjunction with other factors have

contributed moderately to improve the state of the multinational company, by helping

attract new customers they would be willing to buy the innovative, low-priced, high-

quality product creatively promoted in the right place.

REFERENCES

Bhasin, H. (2016). Marketing Mix of Huawei – Huawei Marketing Mix. Retrieved from:

http://www.marketing91.com/marketing-mix-huawei/

Pierce, R., Muchena, M. & Lominé, L. (2014). Business management. United Kingdom.

Oxford University Press.

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5.1. Supporting document N°1:

Huawei company. (2016). Huawei Investment & Holding Co,. Ltd. 2016 Annual Report.

Recovered from: http://www-file.huawei.com/~/media/CORPORATE/PDF/annual-

report/AnnualReport2015_en.pdf?la=en

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5.2. Supporting document N°2:

Marketing strategies ensure Huawei’s unmatched success

PR LAHORE - For the past five years, as Huawei stepped into the smart phone world,

this brand has been ubiquitous globally because of its diverse and futuristic marketing

strategies. Huawei has ensured the visibility to the masses at every level, throughout the

world, starting from China. These tactics have led the company to the heights of

unmatched success and has also helped it to control the reins of the high-end smart phone

market, beating giants such as Apple and Samsung. According to the recent status

revealed by a research firm, Canalys, Huawei, with its 3rd quarter shipments has

surpassed Apple and Samsung.

Huawei smart phone shipment has grown to 27.4 million units in 3rd quarter, beating

home competitors and elevating Huawei significantly, i.e. by 33pc, in the mid and high-

end smart phone market, world-wide. Huawei owes this dynamic and mega robust in

sales, to its versatile and multi-dimensional marketing and advertising strategies which

have conquered the hearts of the masses. With the launch of Mate S, in Pakistan, Huawei

has set up striking Billboards, all over the country. These Billboards are unique and eye-

catching and leave an everlasting effect on the minds of those passing by. Billboards set

up, especially, at Mini Market Gulberg, Allah Hu Chowk, Lahore and at Teen Talwar,

Karachi, are structured to cast a spell and radiate an enchanting aura, of the brand.

Huawei’s attractive outdoor advertising and diverse marketing, like done in the local

newspapers, magazines, local commercial core store posters, etc. has made Huawei a

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mega star among its competitors. Huawei’s Head of Devices, Shawn has said, “Huawei

has adopted such marketing strategies which aim at making Huawei a domestic brand and

a name which is known to all. Our undeniably outstanding products and excellent after

sale services have rendered our brand as one of the most trusted one and this stance is

supported by our record sales in the third quarter. We aspire to take our brand to the skies

and set new benchmarks in the field of pioneering technologies and success.

”Huawei has been operating in the market for more than 23 years now and its R&D

department has developed tremendously and it has become rich and prolific. Huawei

prodigies, do not only carry a signature, ultimately impressive design, but also has high

tech and modern features incorporated in it. Owning patented technologies, also gives

Huawei an edge over the competitor mobile enterprises. Continuing with the pace of

growth which Huawei has maintained till now, it can be believed that soon Huawei’s

name would be seen everywhere. This brand has successfully secured the position of the

3rd largest mobile phone the year, it will certainly go higher along the ladder, mounting

each step of triumph with its technological wonders, capturing the smart phone markets,

worldwide.

The Nation (2015). Marketing strategies ensure Huawei’s unmatched success. Retrieved

from: http://nation.com.pk/business/16-Nov-2015/marketing-strategies-ensure-huawei-

s-unmatched-success.

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5.3. Supporting document N°3:

HUAWEI RESEARCH ESSAY

11 May 2016

University of Arkansas System (2016). Huawei Research essay. Retrieved from Study

Moose: http://studymoose.com/huawei-research-essay

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 5.4. Supporting document N°4:

Huawei SWOT Analysis

Strengths:

 The Huawei has wide range of innovative touch screen phones which can be helpful in
capturing the Pakistan market

 The all-new touch screen phones of Huawei recognizes multi finger gestures, just as
the human hand normally behaves

 Huawei is well known for cool essential gadgets like the fixed wireless terminals,
Broadband modems along great technological innovations like the original gateways
in Pakistan market

 Huawei mobile phones would be sold at a reasonable price for its value which can be
there competitive advantage.

Weaknesses:

 It is not known in mobile phones as compare to its other strong competitors in the
market

 The Huawei brand is not targeted towards business people and does not have a
reputation as being compatible with the corporate world Threat

 Distribution channel is not so strong and have no service center in Lahore

Opportunities:

 Financial muscle is strong, can target more market segments.

 As in Pakistan they are giving supplies to UFONE and ZONG so they have opportunity
to interconnect with other telecom companies in Pakistan

 There is high hype and interest of keypad phones in Pakistan since smart phones are
better known and already widely used

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 Threats:

 Phones are easier to make now more than ever. More companies may enter the market,
and competition is increasing

 The Huawei is marketed as a high-end phone worldwide, but phone prices in Pakistan
are almost certainly going to fall when other companies undercut the price of their
phones

Botahala (2016). Huawei Marketing Plan. Retrieved from: https://bohatala.com/huawei-

marketing-plan/

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