Problems Identified

 Customer Acquisition: How an Unknown Products will attract Customer or Building

Brand Name.
 Tie-ups and Negotiation with Suppliers: Suppliers were not ready to work with the
Unknown Ventures or Start-ups.
 Sales Decline: The Revenue and the Market Share of Company also were decreased
due to a Sales Decline in 2015.
 Embrace Niche Products: Should Xiaomi Enter into Niche Product, which Might
Eventually attract a Bigger Market?

Analysis of the Problems

1. Customer Acquisition:
 The founding members strongly believed that they understood the Chinese
Customer and could be able to design a better product for them. As they were
checking out what the customers are checking in the smartphone.
 Their concern was how their unknown company in market attract an audience.
As the company is not having any manufacturing background.
 They didn’t have the capability to build stores or a distribution network.
Because they wanted to keep only one intermediary between manufacturer and
consumer.
 How would they able to bypass old channels of selling and sell exclusively
online. Because of dominance of traditional channel of sales.
 How could they sell an unapproved product through online sales channel. As
there was no goodwill or any as such brand name existing in the market.

2. Tie-ups and Negotiation with Suppliers:

 No suppliers were ready to work with the unknown ventures even if there is no
financial constraint.
 The suppliers were supplying their components to the big players in the
market like Samsung and apple.
 Negotiation with the vendor was one of the major challenges faced during the
product launching.
 3. Sales Decline:
 There was a sales decline in the year 2015 where the company targeted the
sales of 80-100 millions but the company was able to sold less than the
forecasted sales.
 Intense competition with the rivals is the reason behind the sales decline which
affected market share as well as revenue efficiency of the company.

4. Embrace Niche Products:

 Through “niche” products xiaomi is able to attract the bigger market.as MI
launched a new Product MI Max just after the sales of company declined in
2015.
 Launching new product after declining of sales attracted users who want larger
screen to fit for their using habits.
 Company also posted a growth in revenue by 27% after introducing new
products just after sales decline in 2015.

Comment on Effective strategy

1. Customer Acquisition:
 Xiaomi has extended and built up itself as an esteemed start-up and it gets an
opportunity of turning into the world's top most smart phone company. There
are two essential competitive strategy followed by Xiaomi that are
manufacturing or producing items with superior qualities or characteristics and
includes and delivered at a lesser cost or an affordable cost.
 Furthermore, there are sure additional features that are available in Xiaomi
smart phones that drive the attention of the customers towards it. Prior to
launching of its smart phone, the company had surveyed the market
aggressively and analysed the strategy like Apple and Samsung.
 The competitors were having strong customer loyalty and having a robust
operating system that is Android. Android was chosen as the operating system
for them and Xiaomi designed MI UI which is its own customized operating
system that is based on Android with added cloud services, security, apps,
music, video player, browser and many more
 2. Tie-ups and Negotiation with Suppliers:
 Xiaomi would have find suppliers from its own country, which is known for
the leveraging of economies of scale on the large basis, which would saved the
company’s logistics cost that, have incurred from supplying components from
japan to china.
 Or the company could have tied up with many small suppliers locally rather
than finding the big supplier abroad, which would also saved them from
holding any kinds of inventory cost and would have increased the efficiency of
the company.

3. Sales Decline :
 Xiaomi was emphasising on the online channels for selling their products, but
the demographic report says that 80% revenue are in offline stores. So they
introduced brick and mortar model,
 The issue with brick and mortar model was products were only for the purpose
of display. If someone wants to buy the products he/she may have to order
from the online mode only.
 Xiaomi was providing very innovative product but it should also consider the
competitive strategy of competitor rather than copying from apple and
Samsung.

4. Embrace Niche Products:

 In order to scale any business it is always recommended that the company
should embrace the “niche” product as it will help the company to attract a
very huge or bigger market.
 Embracing of Niche product will lead to creating the values for the cutomer of
huge market which will ultimately help in the improvement in the revenue
efficiency of the company.

References

 Dann, J., Bennett, K., & Ogden A. (2017) Xiaomi: Designing an Ecosystem for
the“Internet of Things”. HBS SCG-527. Boston, MA: Harvard Business School
Publishing
 Jingli Song (2016) Xiaomi targets niche smartphone market as growth slows down,
https://www.thejakartapost.com/life/2016/05/11/xiaomi-targets-niche-smartphone-
market-as-growth-slows-down.html

 Lee Melanie (2016), Why China’s Xiaomi Missed its 2015 sales target,
https://www.forbes.com/sites/melanieleest/2016/01/15/why-chinas-xiaomi-sold-a-
disappointing-70-million-smartphones-in-2015/#6076bedc6106

 Xia Li (2019), Xiaomi targets young users with new smartphone series ,
http://www.xinhuanet.com/english/2019-07/03/c_138195463.htm