Black Book

“A PROJECT REPORT ON XIAOMI”
Submitted
University of Mumbai for partial completion of the degree of
Bachelor of Management Studies (Marketing)
Under the Faculty of Commerce
By
BHAVNA NANIKRAM AHUJA
T.Y.B.M.S Semester-VI Roll No. 81
Academic Year 2019-2020
Under the guidance of
Dr. Nikisha Kukreja
R.D. & S.H. NATIONAL

AND S.W.A. SCIENCE COLLEGE
Barrister Hotchand Gopal Das Advani Marg
Opp. Linking Road,Bandra (W)
Mumbai-400050
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ACKNOWLEDGEMENT
At the beginning , I would like to thank Almighty God for his shower of blessing .
The desire of completing this dissertion was given away by my guide Mrs. Nikisha
Kukreja.I am very much thankful to her for the guidance, support and for sparing his
precious time from a busy and hectic schedule.
I am thankful to Mrs NEHA JAGITANI, Principal, of R.D.S.H. NATIONAL College.
My sincere thanks to Mrs NIKISHA KUKREJA who always motivated and provided a
helping hand for conceiving higher education.
I would fail in my duty if I don’t thank my parents who are pillars of my life.
Finally, I would express my gratitude to all those people who directly and indirectly
helped me in completing dissertion.
BHAVNA AHUJA
T.Y.B.M.S
Roll No.81
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DECLARATION
Date:-.
I, MS. BHAVNA NANIKRAM AHUJA the student of BMS (Marketing) Semester VI
(2019-2020) hereby declare that I have completed the project on “A PROJECT
REPORT ON XIAOMI.”successfully.
This information submitted is true and original to the best of my knowledge
Thank you,
Yours faithfully,
______________
(Signature of the student)
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CERTIFICATE
This is to certify that BHAVNA NANIKRAM AHUJA of BMS ( Marketing)
Semester VI (2019-2020) has successfully completed the project on “A PROJECT
REPORT ON XIAOMI”
Date :- 10TH MARCH,2020.
_________________ _________________
NIKISHA KUKREJA Mrs. NEHA JAGITANI
( Course Coordinator ) (Principal)
_______________
NIKISHA KUKREJA ________________

( Project guide ) ( External Examiner)
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STUDENT CERTIFICATE
Date :-10TH MARCH, 2020.
I,the undersigned, Mrs. NIKISHA KUKREJA have guided BHAVNA NANIKRAM
AHUJA for her project, she has completed the project “A PROJECT REPORT ON
XIAOMI” successfully.
I hereby, declared that information provided in this project is true as per the best of my
knowledge.
Thankyou!
Your’s Faithfully,
___________________
NIKISHA KUKREJA
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EXECUTIVE SUMMARY
Xiaomi Inc. privately owned electronics and software company founded in 2010 by serial entrepreneur
Lei Jun, along with seven other co-founders. The mobile internet company has established its presence in
70 countries and regions and it is amontg the top 5in 16 markets. Xiaomi currently employees about
18,000 people. In 2017 Xiaomi generated more than RMB 100 billion revenues and expected to get list
in the Fortune Global 500 list in foreseeable future.
Xiaomi business strategy is based on cost advantage. Moreover, the company gathers and utlizies its
large fan base in an efficient mannerwith positive implications on customer loyalty and the bottom line
for the business. An aggressive expansion of ecosystem of products and services is also placed at the
core of Xiaomi business strategy.
The mobile internet company has matrix and flat organizational structure. According to the framework of
Ansoff Growth Matrix, Xiaomi uses all strategies –market penetration, product development, market
development and diversification in an intergrated manner.
Efficient leadership by founder and CEO Lei Jun, impressive rate of growth and cost advantages
compared to competition are considered as major strengths associuated with Xiaomi. At the same time,
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the company has noteworthy weaknesses such as low profit margin, lower smartphone capabilities and
functionalities compared to major competitiorsand difficulties of sustaining competetive advantage.
INDEX
Sr.No. CONTENTS Page

No.
1. INTRODUCTION OF XIAOMI 11-14
1.1 Xiaomi : An Internet Company Info
1.1.1 The Birth of the Company
1.1.2 The Fans by the Fans
2. RESEARCH METHODOLOGY & HYPOTHESIS 15-24
2.1.1. Method Of Research
2.1.2. Data Collection
2.1.3. Need For The Study
2.1.4. Hypothesis Testing
3. LITERATURE REVIEW 25-30
4. BUSINESS STRATEGY 31-35
4.1. The Portfolio Companies Strategy
4.2. The Essence of the Strategy
5. LEADERSHIP 36-37
6. ORGANIZATIONAL STRUCTURE 38-39
7. ORGANIZATIONAL CULTURE 40-41
8. XIAOMI & ANSOFF MATRIX 42-44
9. INTERNATIONAL MARKETING STRATEGY OF XIAOMI 45-50
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9.1 Background
9.2 SWOT Analysis
9.2.1 Strengths
9.2.2 Weaknesses
9.2.3 Opportunities
9.2.4 Threats
10. PESTEL ANALYSIS 51-55
10.1 Political Factor
10.2 Economic Factor
10.3 Social Factor
10.4 Technological Factor
10.5 Environmental Factor
10.6 Legal Factor
11. MARKETING STRATEGY 56-67
11.1 The Scarcity Marketing
11.2 7Ps of Marketing
11.3 Segmentation,Targeting&Positioning
11.4 The Blue Ocean Strategy
10.4.1. More Value at a Lesser Price
10.4.2. Cost Innovation vs Product Innovation
11.5 Marketing Communication Mix
10.5.1 Print & Media Advertising
10.5.2 Sales Promotions
10.5.3 Events & Experiences
10.5.4 Public Relations
10.5.5 Direct Marketing
10.5.6 Personal Selling
12 . XIAOMI AND THE COMMUNITY OF FANS 68-70
12.1. The Customer-Centric Strategy
12.2. Xiaomi: Relationship Marketing and Co-Creation
13. THE COMMUNICATION STRATEGY 71-72
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13.1. Social Media
13.2. The Mascot
14. THE MIUI OPERATING SYSTEM 73-74
15. MARKET MATRIX ANALYSIS 75-80
15.1 Michael Porters 5 Forces
15.1.1 Bargaining Power of Buyers
15.1.2 Bargaining Power of Suppliers
15.1.3 Threat of Substitute
15.1.4 Threat of New Entrants
15.1.5 Rivarly Among Existing Firms

15.2 BCG Matrix Analysis
15.2.1 Xiaomi Stars
15.2.2 Xiaomi Cash Cows
15.2.3 Xiaomi Question Marks
15.2.4 Xiaomi Dogs
16. VALUE CHAIN ANALYSIS 81-86
16.1 Xiaomi Primary Activities
16.1.1 Xiaomi Inbound Logistics
16.1.2 Xiaomi Operations
16.1.3 Xiaomi Outbound Logistics
16.1.4 Xiaomi Marketing & Sales
16.1.5 Xiaomi Services
16.2 Xiaomi Support Activities
16.2.1 Xiaomi Infrastructure
16.2.2 Xiaomi Human Resource Management
16.2.3 Xiaomi Technology Development
16.2.4 Xiaomi Procurement
17. MCKISNEYS 7S MODEL 87-90
17.1 Hard Elements
17.2 Soft Elements
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18. ACTION & CONTROL 91-92
18.1 Performance Measurement
19. CORPORATE ECOSYSTEM 93-95
20. CORPORATE SOCIAL RESPONSIBILITY 96-99
20.1 CSR Programs & Initiatives
20.2 CSR Criticisim
21. CASE STUDY: PURE PLAY, THE UNSUSTAINABLE
BUSINESS MODEL 100-
102
21.1 The Brick & Click New Rule

21.2 Xiaomi’s Pure Play
22. XIAOMI ON INTERNATIONAL MARKETS 103-111
22.1 Internationalization: Globalization VS Localization
22.2 The Drivers of Internationalization
22.3 The Four Entry Modes
22.3.1 Export Modes
22.3.2 Contractual Modes
22.3.3 Investment Entry Modes
22.4 Xiaomi’s Expansion
22.4.1 Overview: Xiaomi’s Overseas Experience
22.4.2 The Drawbacks to the International Expansion
21.5 Xiaomi in India : A Success Story
22.5.2 Localization : Production
22.5.3 Manufacturing Power: India VS China
22.5.4 Localization : Marketing
23. DATA ANALYSIS AND INTERPRETATION 112-
24. CONCULSION & RECOMMENDATIONS
24.1 Conclusions
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24.2 Recommendations
24.3 Biblography / Webliography
Chapter No .1 Introduction of Xiaomi
1.1 Xiaomi : An Internet Company Info
1.1.1 The Birth of the Company
1.1.2The Fans by the Fans
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1. INTRODUCTION
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The "MI" in our logo stands for “Mobile Internet”. It also has other meanings, including "Mission
Impossible", because Xiaomi faced many challenges thathad seemed impossible to defy in our early
days. It is the brilliant idea by a serial entrepreneur Lei Jun in 2010. This private Chinese electronic
company headquartered in Beijing, China. Xiaomi company is the 4th largest smartphone maker.
"Just for fans" – that's our belief. Our hardcore Mi fans lead every step of the way. In fact, many Xiaomi
employees were first Mi fans before joining the team. As a team, we share the same relentless pursuit of
perfection, constantly refining and enhancing our products to create the best user experience possible.
We are also fearless in testing new ideas and pushing our own boundaries. Our dedication and belief in
innovation, together with the support of Mi fans, are the driving forces behind our unique Mi products.
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Xiaomi is not solely focus on design, develops, selling smartphones but also committed in creating
mobile apps and related consumer electronics. Their product include Mi TV, Mi band, Mi Power Bank,
MiCloud, Mi Box and others internet-peripheral. However in our page, we will focus on smartphone
which is the most popular device Xiaomi ever made.
One might doubt with its performance, but we guarantee its product never disappointing phone user. Let
the facts speak:
1) According IDC, Xiaomi is now the third largest smartphone maker in the world followed by Lenovo
and LG at fourth and fifth place respectively. (currently 6 years operate)
2) Xiaomi also became the largest smartphone vendor in China in 2014, having overtaken Samsung,
according to an IDC report.
3)Xiaomi ranks No. 2 in the list of 50 Smartest Companies 2015 by MIT Technology
Why Mi phones is an advantage for phone users ? Because the founder believes that high-
quality technology doesn’t need to cost a fortune. Simple saying that everyone can afford a ssshigh-
quality technology phone with low cost.
1.1. Xiaomi: An Internet Company Info
1.1.1. The Birth of the Company
Xiaomi is a Chinese technology start-up that was founded by eight partners (Lei Jun (CEO), Lin
Bin, Li Wanqiang, Zhou Guangping, Huang Jiangji, Hong Feng, Wang Chuan, and Liu De) in
Beijing, Mainland China, on April 6th 2010. Lei Jun and Bin Lin, the two leaders, started this
adventure because they strongly believed that world-class technological devices (e.g.:
smartphones, laptops, headphones) could be both made and designed in China, thereby turning
upside down the traditional value chain associated with the country (Dhillon and Ghupta, 2014;
Rowan, 2016). Lei Jun invested his own money as capital and managed to gather investment
money from a series of Asian venture capital funds, national investment funds (e.g.: Singapore’s)
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as well as component suppliers like Qualcomm Inc. Furthermore, the company’s landslide
success rapidly attracted new investors (Miller, 2015). Indeed, in the span of only four years, the
company became the world’s most valuable tech start-up, before quickly rising to the ranks of
biggest smartphone provider, right behind Samsung and Apple (BBC, 2014). The company
currently employs about 5,000 people in, among other Asian countries, Mainland China, Taiwan,
Singapore or India. (Dhillon and Ghupta, 2014).
1.1.2.Xiaomi: an Internet Company for the Fans by the Fans
Unlike what some would have in mind, the company did not start out its operations with
designing a smartphone but with launching an Android-based firmware called MIUI41 in August
2010. Xiaomi, in spite of it being mostly known for its smartphones, does not define itself as a
smartphone manufacturer but rather as an Internet company offering “a new kind of Internet-
enabled ecosystem42”: a digital platform of interconnected electronic products and services
aimed at monetizing customers’ engagement. Its primary business thus does not consist in selling
smartphones but rather services and digital content43. This specific strategy, called “the triathlon
model” in reference to the integration of software, hardware, and Internet services, stresses the
undeniable ambitions of the Chinese newcomer in the field of “the Internet of things”. This
Internet ecosystem is meant at creating a community of fans44 that would sweep off the old-
fashioned concept of “customers” as these fans would be invited to become co-designers of the
brand’s products and be so loyal to its name that they would willingly turn into “brand-
evangelizers”, thereby putting forward the epitome of the millennial marketing (Dhillon and
Ghupta, 2014; Rowan, 2016). Indeed, Xiaomi, through diverse means that will be exposed in the
following paragraphs, establishes a direct dialogue with the fans and manages to create a genuine
and strong bond with them, thereby understanding the utmost importance that lies behind driving
advocacy to increase sales.
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Chapter No. 2 Research Methodology
2.1.1. Method Of Research
2.1.3. Need For The Study
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2.1 Research methodology
• Sample Size : 206

• Primary Research : Questionnaire
• Sampling Technique : Random Sampling
• Secondary Research : Internet
2.1.1 Method Of Research
A Survey is a complete operation, which requires some technical knowledge Survey methods are mostly
personal in character. Surveys are best suited for getting primary data. The research obtains information
from the respondents by interviewing them.
• Sampling
It is not always necessary to collect data from whole universe. A small representative sample may serve the
purpose. A sample means a small group taken in a large lot. This small group taken in a large lot. This small
group should be emanative cross section and really “representative” in character. This selection process is
called sampling.
• Sample size
Samples are devices for learning about large masses by observing a few individuals.
The selected sample is 100.
a. Methods of Sampling Random
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• Sample Method
The method adopted here is random sampling method. A Random sample is one where each item in the
universe has as an equal chance of known opportunity of being selected.
• Research Instrument
b. Questionnaire
A questionnaire is a carefully complied logical sequence of questions directed to a define objective. It is the
outline of what information is required and the framework on which the data is built upon. Questionnaire is
commonly used in securing marker information that its preparation deserves utmost skill and care.
• Characteristics of a good questionnaire
➢ Should be concerned with specific and relevant topic

➢ Should be short
➢ Directions and wording should be simple and clear
➢ Questions should be objective
➢ Embarrassing questions, presuming questions and hypothetical questions should be avoided
➢ Should be presented in a good order
➢ Should be attractive, neatly printed and clearly arranged
• Advantages of questionnaire
➢ The questionnaire is easy to construct. Distribution is easy and inexpensive.

➢ Responses are easy to tabulate.
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➢ The respondent’s replies are free.
➢ Confidential information may be given freely.
➢ The respondent can fill out the questionnaire at will.
➢ The respondent can give more accurate replies
One of the important tools for conduction market research is that availability of necessary and
useful data. Date collection is more of an art than a science. The methods of marketing research are in a way
the methods of data collection.
The choice of method is influenced by the data collection strategy, the type of variable, the accuracy
required, the collection point and the skill of the enumerator. Links between a variable, its source and
practical methods for its collection can help in choosing appropriate methods.
The main data collection methods are
• Registration
Registers and licenses are particularly valuable for complete enumeration, but are limited to variables that
change slowly.
• Questionnaires
Forms which are completed and returned by respondents. An inexpensive method that is useful where
literacy rates are high and respondents are co- operative.
• Interviews
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Forms which are completed through an interview with the respondent. More expensive than questionnaires,
but they are better for more complex questions, low literacy or less co-operation.
• Direct observations
Making direct measurements is the most accurate method for many variables, such as catch, but is often
expensive.
• Reporting
The main alternative to making direct measurements is to report activities. Reporting requires literacy and
co-operation, but can be backed up by a legal requirement and direct measurements.
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The sources of all information under two categories.
• Internal sources
Every company has to keep certain records such as accounts, reports etc. these records provide sample
information which an organization usually keeps collection in its working.
• External sources
When internal records are insufficient and required information is not available, the organization will
have to depend on external sources.
a. Primary data
The data collected for a purpose in original and for the first time is known as primary data. The
researches collect this data to study a particular problem. Here the primary data is data collected through
questionnaire by directly meeting the customers.
b. Secondary Data
The data, which is collected from the published sources i.e., not originally collected of the
first rime is called secondary data. Here the secondary data is data collected from the company’s
brochures, pamphlets, catalogues and the website. For this project, I got Customer database with
Addresses and contact details of Ratnagiri district customers from “Quality Office Equipment’s,
Chiplun” which was very useful for me while conducting survey. With the help of that database, I
contacted customers and collected information in the form of Questionnaire.

2.1.3. Need for the study:
For the success of every business customers are at the core center. Customers are the
one who consume and use the product. So they decide what to buy and what not to buy. Products or
services which meets the requirement or the needs are preferred. But in any business or industry there is
no monopoly of one company, there are always competitors. These competitors never let you standby.
External environmental factors, internal factors, influence the scope of the business. So in such a
competitive environment customer satisfaction becomes of prime importance. If customers are satisfied
they will become an asset for the company on whom it can rely. But if the customers are dissatisfied
they will switch over to competitors brand and will be a loss for the company.
Effective marketing focuses on two activities: retaining existing customers and adding new customers.
Customer satisfaction measures are critical to any product or service company because customer
satisfaction is a strong predictor of customer retention, customer loyalty and product repurchase.
Customer who are satisfied are also loyal. So there is less possibility that they will revoke to the
company. So in such scenario customer satisfaction needs to be analyzed. It will give an insight into
where the company is falling short of the expectations of the customers. So that it can improve upon it
and gain customer satisfaction.
Defining the objective is the crucial part of any research. If the objective are not clear the research
cannot identify the problem and thus cannot find a solution to the problem.
a. Primary Objective:
➢ To study customer satisfaction of Xiaomi company users in ulhasnagar town.
b. Secondary Objective:
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➢ To identify the areas of dissatisfaction related to Xiaomi Phones.
➢ To identify the areas on which company should focus to improve the product.
➢ To tap the Latent market for the MI brand.
➢ Promotion of different phones, airpods and all in one watches.
• Product Scope :- This study is only restricted to the mobile phones.
• Geographic Scope :- The project was conducted for the Ulhasnagar town only.
Also this project is limited to 200 samples only .
2.1.4. Hypothesis Testing
Research has used a descriptive study where I have formulated hypothesis related to the topic.
The hypothesis are:-
H1- People are more concern to the quality of mobile phone they preferred.
H0- People are not very concern to the quality of mobile phone they perferred.
H2- People are well satisified with the price range as their preferred mobile phone.
H0- People are not well satisified with the price range as their preferred mobile phone.
H3- People will give more importance to price, brand & design in upcoming purchase.
H0- People will not give more importance to price, brand & design in upcoming purchase.
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H4-People will give more importances to the mobile phone features & quality rather than
design, user friendly.
H0-People will not give more importances to the mobile phone features & quality rather
than design, user friendly.
H5-People will be more satisfy with the unique design in their preferred mobile phone.
H0-People will not be more satisfy with the unique design in their preferred mobile phone.
H6-People would likely to have more unique features in their preferred mobile phone.
H0-People would not likely to have more unique features in their preferred mobile phone.
H7-People are well satisfied with the color & shape of their preferred mobile phone.
H0-People are not well satisfied with the color & shape of their preferred mobile phone.
H8- Female are more involved in buying decision related to Xiaomi products than male.
H0- Female are not involved in buying decision related to Xiaomi products than male.
H9-Age of below 40 are more attractive towards Xiaomi products.

H0- Age of below 40 are not more attractive towards Xiaomi products.
H10-Undergraduate people are more preferred of Xiaomi products because it is

affordable.
H0-Undergraduate people are not more preferred of Xiaomi products because it is
affordable.
H11-People have experienced between 0-2 years in Xiaomi mobile phone.

H0-People do not have experienced between 0-2 years in Xiaomi mobile phone.
H12-Other than Xiaomi products, people choose more samsung products.

H0-Other than Xiaomi products, people do not choose more samsung products.
H13-Most of the people own only one mobile phone in their hand.
H0-Most of the people do not own only one mobile phone in their hand.
H14-People use their mobile phone more than a year.
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H0-People do not use their mobile phone more than a year.
H15-People ranked samsung brand more than other brand, according to their preference.
H0-People do not ranked samsung brand more than other brand, according to their
preference.
H16-Discount offer attracts the people most towards promotion of Xaimoi products.
H0-Discount offer does not attracts the people most towards promotion of Xaimoi products.
H17-Suggestion from friends & relatives affects the people purchase decision towards
Xiaomi products.
H0-Suggestion from friends & relatives does not affects the people purchase decision
towards Xiaomi products.
H18-The features of the product influence the people’s on their purchase decision’s.
H0-The features of the product does not influence the people’s on their purchase decision’s.
H19-Internet medium of advertisement influence the buying of purchasing power.

H0-Internet medium of advertisement does not influence the buying of pruchasing power.
H20-People purchase their mobile phone frequently once in a year.

H0- People do not purchase their mobile phone frequently once in a year.
H21-People will postpone their purchase or switch the brand if their preferred brand is not
available in their market.
H0-People will not postpone their purchase or switch the brand if their preferred brand is
not available in their market .
H22-People do not prefer the same product of the brand appear in the market.
H0-People prefer the same product of the brand appear in the market.
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Chapter No. 3 Literature Review
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3. LITERATURE REVIEW
1. Dr. Priyanka Rawal Assistant Professor (Department of School of Management Jagran

Lake city University, Bhopal, India..): For any multinational brand its marketing strategy varies
from country to country where the marketing department should be aware of various marketing mix
strategies which will significantly impact the cumulative success of the firm. Either the companies
can make use of conventional marketing mix or can customize this existing mix as per the country
they are carrying out their business in. when assessing the appropriateness of certain strategies the
performance of the company is one of the most crucial aspect (Jain, 1989). To exceed customer
expectations it is extremely important to offer right product/service offerings to the target market
which forms the value proposition (Slater 1995).
For a successful marketing strategy it is very important to design and deliver product/service
that satisfies customer needs. To create brand loyal customers, marketers should strive hard so that
the customer experiences with the brand should meet if not exceed their expectations as per Keller,
(2003).to satisfy customers it is essential to exceed their expectations so that they always remain
loyal towards the company offerings.Companies when trying to expand their market rely on forces
which influence either the adaptation or standardization strategy with an aim to improve the
company performance (Samie & Roth, 1992).When entering a foreign market any firm needs to
make modification in their marketing mix so as to satisfy the needs of the customers. In case of an
adoption strategy any element of the controllable marketing mix is altered so as to achieve a
competitive advantage when an entry has to be made in the foreign market. When considering an
international marketing adaptation approach it is important that brands put a lot of emphasis of
customization in order to meet diverse customer necessities. When firms use the same marketing mix
as in the domestic markets in the export country to attract customers a firm makes use of
standardization strategy as it requires less investment as compared to the adaptation strategy. As
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proposed by some researchers in case of standardization there is a union of cultures along with the
customer interest across the world (Jain, 1989; Levitt, 1983).Author also is of an opinion that
companies have moved away from customizing products to that of providing globally standardized
products which are functional, reliable and even low priced. Companies make use of various
strategies to increase the awareness level about the benefits offered by their brand offerings and one
such strategy is known as Guerrilla marketing which is low cost marketing (Manker, 2014).Brands
also make use of social media like facebook and twitter in today’s era to market their products.
Xiaomi became very successful by using guerilla marketing where they concentrated their
marketing efforts mostly on Weibo (in China) and Facebook when they expanded in global
markets. For a successful guerilla marketing marketers need to follow certain success driven
strategy (Levinson, 1994)
1. To achieve temporary dominancy over your customer’s marketers need to be highly focused
especially with respect to particular place, time or event.
2. Prevailing marketing trends should never be blindly followed.
3. Post marketing campaign analysis has to be carefully done.
4. Flexibility is the key to success and should be made possible for all variables in the plan.
Xiaomi took only 4 years to position itself as the fourth largest Smartphone manufacturing company of
China as pointed out in a study conducted by of Kharpal (2014).Founded by ex-CEO Lei Jun of
Kingsoft Xiaomi earlier was basically a software firm having an expertise in creating customized ROM
based on Android OS of Google (HalukKoksal, and Ozgul, 2010. The pace at which smart phones have
dominated the life of all of us is phenomenal and is no more a product to own for luxury.(Nature
Methods, 2010).Smart phones are now considered as the most essential necessity where firms are
approaching with new marketing strategies leading to cost cutting and a better ROI.E-Mails are the
most cost effective way to attract consumers to buy the product (Mele, 2015).In past few years
marketing has become highly innovative where acceptance of such devices by consumers is rising
exponentially, giving marketers lot of new opportunities to target customers (Ajax Persaud, 2012).
2. Niopat Jitphrasong(Siam University, 3Bangkok, Thailand): With the rapid development of

China's mobile communication industry, the total number of Mobile phone users in China reached
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900 million, China has become the world's largest mobile phone market.Facing mobile phone
environment huge market capacity, competitiveness, Xiaomi mobile phone in the domestic Mobile
phone brand, the new power suddenly rose. Through a group of excellent marketing strategy, caused a
Strong reaction. First of all, a brief introduction on the Xiaomi mobile phone, through the SWOT
analysis, comprehensive analysis of Xiaomi's strengths, weaknesses, opportunities and threats, etc.
Then further analysis on the marketing strategies of Xiaomi mobile phone currently used, the
establishment and implementation of the whole marketing system of Xiaomi mobile phone is
expounded in six aspects: advertising strategy, promotion strategy, online promotional distribution
strategy, product strategy, pricing strategy and channel strategy and find out the problems in the
marketing process, then the analysis of Xiaomi mobile phone marketing problems, to bring forward
corresponding solutions.
At the same time for the development of other domestic mobile phone provide reference basis,
I suggested the appropriate marketing strategies and profitable way for reference. So this article
by analyzing management problem, market positioning problem, quality and profit problem,
the brand value is low, because of "hunger" and injured and after-sales service problem they face,
combined with its current marketing strategy, solve counter measures for the existing problems, make
Xiaomi mobile phone to maintain steady growth.
3. Ashok Panigrahi\(NarseeMonjee Institute of Management Studies): With the

intense development and growth of China's mobile communication and technology industry,
many manufacturers have come up to take the advantage of growing market of mobile
phone users.Approximately 1 billion people own a smartphone. This has led to birth of
many of the world’s famous mobile phone brands. One of the major brand, emerged in
2010 was Xiaomi. In this paper, background of Xiaomi’s, its marketing strategies, business
models have been presented. Also, comparative analysis of marketing strategy of Xiaomi
and other manufacturers has been done to understand the reasons for the market success and
the exponential growth exhibited by the company. The current state of information available
through various platforms has been used to perform the study. It has been inferred that, the
primary reason for this exceptional growth has been the product quality at cheaper rate with
a focus on customer feedback and requirements. The testimony to this fact is its ever
expanding portfolio into various domains such as smart TVs, Speakers, home appliances,
personal computers to name a few.
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4. Li Kai-Sheng (International Business School, Jinan University, Qianshan, Zhuhai,
Guangdong, China):This paper mainly talked about the problem faced and the recommend
solution of Xiaomi Company in India. The first two parts are introduction and why Xiaomi targeting
at the India respectively. The third part is the three problems faced when Xiaomi operate on India,
first is low brand awareness can’t attract consumes; second, lack of patent reserves and Standard
Essential Patent which result
in patent dispute; at last, the quality problems after-sales service problems which will Influence the
purchase intention and word of mouth. The fourth part analysis the cause of the problem by the
SWOT analysis of Xiaomi. The fifth part is the decision criteria and alternative solutions for the
problems proposed above. The last part has described the recommend solution, in short, firstly, make
good use of original advantage and increase the advertising investment in spokesman and TV show;
then, in long run, improve the its ability of research and development; next, increase the number of
after-sales service staff and service centers, at the same, the quality of service; finally, train the local
employee accept company’s culture,enhance the cross-culture management capability of managers,
incentive different staff with different programs.
5. Kameswara Rao Poranki (Dire Dawa University, Dire Dawa, Ethiopia):The

markets for Mobile phones are one of the most turbulent today due to increased competition
and changing consumer brand preferences. The Researchers of this paper aimed to address
the question by analyzing brand is preferred most by mobile phone users in Hyderabad town
while purchasing mobile phones and status and impact of the technical, economical, social
and personal criterion by mobile phone users in Hyderabad. And also wishes to found out
the process of decision making while choosing and purchasing the branded mobile product
with respect to their current satisfaction level on the particular brand. To gather data from
250 respondents we have selected them from mobile recharge centres, mobile phone shops
and public places in Hyderabad town. The data thus collected were analysed by using
simple percentage analysis and by chi-square test.
6. Prof. Dr. Rashad Yazdanifard (Malaysia University of Science and Technology

(MUST)): As the world evolved, people were not only able to grow and produce more crops
but they have also found the ability to mass produce. With the ability to mass produce,
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people start to trade with traders that come from all over the world. All those exchange and
trading activities are done through physical appearance of two or more people. In the 21 st
century, most businesses are beginning to be transacted online.Buyers no longer need to go
out from the house and go through all the hassle just to buy certain products. Xiaomi took
advantage of the changes of world of internet and succeeded. As Xiaomi grew bigger, other
phone manufacturers saw the opportunity to be as successful as Xiaomi. This paper looks
into the current phone purchase behavior of the consumers and how the behavior is able to
create opportunity to the other phone manufacturers to copy Xiaomi's success.
7. Agnieszka Kaliszewska (Instytut Badań Systemowych Polskiej Akademii Nauk):

At present, digital documentation recorded in the form of raster or vector files is the
obligatory way of inventorying historical objects. Today, photogrammetric is becoming
more and more popular and is becoming the standard of documentation in many projects
involving the recording of all possible spatial data on landscape, architecture, or even single
objects. Low-cost sensors allow for the creation of reliable and accurate three-dimensional
models of investigated objects. This paper presents the results of a comparison between the
outcomes obtained when using three sources of image: low-cost Xiaomi cameras, a full-
frame camera (Canon 5D Mark II) and middle-frame camera (Hasselblad-Hd4). In order to
check how the results obtained from the two sensors differ the following parameters were
analysed: the accuracy of the orientation of the ground level photos on the control and check
points, the distribution of appointed distortion in the self-calibration process, the flatness of
the walls, the discrepancies between point clouds from the low-cost cameras and references
data. The results presented below are a result of co-operation of researchers from three
institutions: the Systems Research Institute PAS. The Department of Geodesy and
Cartography at the Warsaw University of Technology and the National Museum in Warsaw.
8. Erika Augustina Sulistiyowati(Widya Mandala Catholic University Surabaya, 2019):
This research was conducted to determine the effect of Brand Image, Brand Love, Brand Trust, and
Customer Loyalty on Word of Mouth at smartphone Xiaomi in Surabaya. This research is causal
research. The sampling technique used in this research is non probability sampling by means of
purposive sampling. Respondents in this study are all Xiaomi smartphone users in Surabaya, while
samples taken as many as 180 respondents. Data in this study were collected by distributing
questionnaires. The data analysis technique used is Structural Equation Modeling (SEM) using the
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LISREL program. The results in this study can be concluded that: Brand Image has a positive effect
on Customer Loyalty, Brand Love has a positive effect on Customer Loyalty, Brand Trust has
a positive effect on Customer Loyalty, Customer loyalty has a positive effect on WOM at
smartphone Xiaomi in Surabaya.
Chapter No. 4 Business Strategy

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4. BUSINESS STRATEGY
Xiaomi business strategy can be classified as cost leadership. According to its founder and CEO Lei
Jun ,Xiaomi was founded on the belief that “ High-quality technology doesn’t need to cost a fortune”.
Accordingly, the company offers smartphone and other internet-technology products and services for
affordable prices.
On a wider prespective, Xiaomi business strategy based on the following four pillars:
1. Gathering and utilising a large fan base.

Xiaomi ahs a large fan base involving millions of people across the globe. Fans spend countless
hours online discussing Xiaomi products on various forums, thus increasing the
level of brand awareness with no extra cost for the company. The mobile internet company enjoys
the cult-like following, the same way as its major competitior Apple.
According to its business strategy, Xiaomi fosters, develops and encourages its fans MI fan
festival that involves discounts and gifts. The motto of the company is “ Just for Fans ” and the
company is also known to recruit its employees and among new fans.
2. Designing great products at reasonable price.
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Xiaomi practices ‘design as you built’philosophy, incorporating MI fans feedback in a constant
manner
at all stages of new product development. Xiaomi competitive advantage is based on cheaper
cost of its products and services. In simple terms, cheap costs of Xiaomi products and services is
the main reason for consumes buying those products and services.
3. Constant optimization of products through eco-chain.

The mobile internet company is aggresively increasing the ecosystem of its products and
services. This is another important aspect of Xiaomi business startegy. Currently, Xaiomi
ecosystem comprises 55 companies including 29 companies which were incubated from the
ground by Xiaomi. The ecosystem produces ever-increasing range of products ranging from
smartphones to rice cookers.
4. Xiaomi Traithlon: Hardware + New Retail + Internet.

Xiaomi Traithlon sources of revenues consist of hardware, new retail and internet. Xiaomi
positions itself as an internet and software company to a graeter extent than a hardware company.
The company preceives the sales of hardware as a means to deliver the software and services in
the long term prespective. Xiaomi founder and CEO Lei Jun considers smartphones as a
distribution channel for other products and services, but not the primary sources of revemnues.
Neverthelessy, currently around 80% of the company’s revenues are generated for selling
smartphones.
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Figure 1 . Xiaomi Business Model Map
On Mi.com, its online platform, Xiaomi sells smartphones and a wide range of electronic devices.
However, the range of products it designs itself is limited: out of the 600 items sold, Xiaomi only
designs smartphones, tablets, TVs, set-top boxes and routers. Everything else is left to independent
companies to produce (Rowan,2016). Indeed, instead of expanding in other fields, the company invests
in other start-ups active in a specific Internet industry. Lei Jun, CEO, explains that Xiaomi investing in
these Internet start-ups is part of a larger business strategy aimed at squeezing costs without restricting
the range of business opportunities. Xiaomi helps the companies design and produce the items and
grants them direct access to its sales channels, supply chain, branding and financing, thereby acting as
a supervisor more than a mere investor (Rowan, 2016). In exchange, the products and services of these
companies are then sold on Xiaomi’s main website, which serves as a main digital sales platform for all
the partner companies. As such, Xiaomi manages to offer a diversity of products and services at a
lesser cost while creating a larger Internet ecosystem whose devices are all interconnected through a
single vehicle: the Mi phones that allow customers direct access to the platform. The main reason
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behind this strategy of portfolio companies lies in the fact that Xiaomi regards smaller companies
as more compatible with a fast-paced environment to which they have to adapt easily and in which
they have to be flexible in order to take decisions quickly. By adopting such a strategy, all companies
forming the Xiaomi ecosystem can be independent from each other and develop faster whilst having
access to a larger consumer base built up through the community of fans gathered by the Mi brand.
Designing a platform that would allow Xiaomi to build volume and scale is also part of a larger cost
strategy since increasing the volume sold allows the start-up to significantly reduce its costs over time
thanks to economies of scale (Rowan, 2016).
Xiaomi does not position itself as a smartphone company but as the Chinese pioneer in the field of the
Internet of things, seeing the smartphone, its main product and success, as the connector of all the
product and services in which it invests with the larger aim to fundamentally change and better lead the
Chinese Internet industry (Rowan, 2016). In other words, the main goal of the company consists in
creating a mobile Internet platform for which smartphones would constitute the main distribution
vehicle. This strategy would easily be achievable in China given that the company would enjoy the first
mover advantage in the country. In order to build scale and increase market share against its rivals on the
market, Xiaomi vowed to accept smaller initial margins(i.e.: it almost sells at the cost of production) and
cut its costs via direct sales on its e-platform (Miller, 2015). As explained by Hugo Barra, the
former chief of the internationalization of the brand, “the true value of a Chinese Internet business lies
simply in ‘having a tonne of users’ ” (Rowan, 2016). Hence the first step of the strategy lies in
increasing the customer base. By doing so, the Chinese start-up followed the steps of giant e-retailer
Alibaba in building a significant customer base even if it should not provide sizable revenues in the
beginning.
According to Seifert (2013), Xiaomi also adopted a strategy similar to Google’s. Indeed, American
gain mostly makes profit out of advertising while providing the users with services either sold at a low
cost or offered for free. Given that Bin Lin quit Google to start the Xiaomi journey, it would make
sense to consider that the Chinese company might have found some inspiration in this approach to
monetize services. It appears clear that selling smartphones does not constitute the main business of
Xiaomi but rather only allows the company to provide its customer base with the means through which
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it will build its Internet ecosystem. By selling smartphones, the company increases traffic on the mobile
platform that constitutes the essence of its business. The platform also incorporates its own chat
service (i.e.: MiTalk) that serves as the main gateway where consumers interact with the brand through
instant feedback, direct dialogue and the sharing of ideas. Through this virtual network nurtured by
millions of fans, Xiaomi will be able to launch services and products in a myriad of different industries
ranging from games to movies, music and finance or other industries along the suggestions made by the
fans (Rowan, 2016). Without even realizing it, the Mi fans, when using their smartphones, actually
exploit a network whose services and products have been designed and engineered to be so intertwined
that the use of one urges for the use of the other. Such a strategy, which ultimately aims at monetizing
fans’ engagement, makes the Mi brand and accessories indispensable to any user whose products
are incompatible with other competitors’. Needless to say, Xiaomi managed to raise the barriers
protecting its business by putting high switching costs on the customers.
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Chapter.No. 5 Leadership
5. LEADERSHIP
Effectiveness of Xiaomi leadership can be considered as one of the main competitive advantages for the
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business. Xiaomi CEO Lei Jun is a respected businessman in china who previously led Kingsoft and
founded Joyo.com that was sold to Amazon in 2014.
It is said that Lei has never yelled at his staff. When he encounters a problem, he just smiles and get
down to business, and tries to find a solution. In social gatherings, Lei is always a good listener. Named
a businessmen of the year by Forbes in 2014 and along with Alibaba Founder Jack Ma, Lei Jun is
rightly considered as a face of China Inc. Xiaomi CEO is recognized as an effective charismatic leader
worldwide.
Along with Lei Jun, seven co-founders of the company have senior leadership roles with the title of
president and vice-presidents. Having co-founder in the senior management team is an important factor
due to increased sense of ownership with positive implications on the performance of executives.
Xiaomi has been dubbed as “Apple of China ” for its emulation of design of Apple’s products, as well
as Lei Jun style of product announcements and his general image that resembles late Apple founder
and CEO Steve Jobs. However, Lei Jun leadership style is fundamentally different from Steve Job
leadership. Specifically, while Steve Jobs was known for his centralized and micro-managing
leadership style, Xiaomi CEO has a reputation for being good listener and takes into account views of
others members of his senior management team.
Xiaomi leadership challenges at present include maintaining cost leadership poistion amid intensifying
competition from other budget internet technology brand such as Oppo and Vivo.
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Chapter No.6 Organizational Structure
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6. ORGANISATIONAL STRUCTURE
Xiaomi organzational structure classified as matrix. Specifically, Xiaomi organizational structure is
decentralizied, where different business units are managed independently. Despite the large size of the
business involving presence in 70 countries with more than 18000 employees, the company has less
layers of management comapred to other businesses of similar sizes.
Chairman CEO& Lei Jun
Co-founders 2 Senior Vice Presidents
Senior Vice President Chief Financial Officer

President
Vice President & Managing Director, Xiaomi India

Chief Brand Officer
3 Senior Vice Presidents 3 Vice Presidents
Figure. Xiaomi Organizational Structure:

Matrix organizational structure allows the mobile internet company to develop its new products and
services in a short duration of time. This is due to absence bureaucracy that is associated with hierarchal
organisational structures. However, disadvantages of organizational for the business may include lack
of strict control by the top management over separate business units and lacxk of intergration betwwen
the operations of individual business units.
Nevertheless, it is important for Xiaomi to maintain is flat organizational structutre in order to remain
flexible, so that the mobile internet company can adapt to frequent changes in global market place.
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Chapter No. 7 Organzational Culture
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7. ORGANIZATIONAL CULTURE
According to Harrison’s model of culture, Xiaomi organizational culture can be classified as power
culture. Specifically, powers of decision making at the internet technology company are concentrated
in the hands of fou8nder and CEO Lei Jun. Inspirational and effective leadership style of Lei Jun
jusifies the neccessity of power culture of Xiaomi.
Xiaomi organizatioanl culture integrates the followiung three elements:
1. “ Just for Fans ” concept. The tagline “ Just for Fans ” is placed at the core of Xiaomi
organizational culture. Founder and CEO Lei Jun explains that “the culture of fandom of
becoming friends with our consumers”. There is a story of master’s student who spends free
time doing Xiaomi fan forum that nets 2,00,000 posts everyday as a volunteer.
2. Innovation and Creativity. Company’s official website claims that “we are incredibly flat,
open, and innovative. No never-ending meetings. No lenghty processes. We provide friendly
and collaborative enivornment wherev creativity is encouraged and flourished”. In other words,
Xiaomi aims to promote informal organizational culture at all levels with positive implications
on employee creativity.
3. Intense working culture. Xiaomi organizational culture can be characterized as intense. This is
due to cost leadership business strategy followed by a company in a way that effective application
of this strategy involves in deriving the maximum benefit from resources, including human
resources.
Departure of former Google executive Hugo Barra from the key post of Xiaomi international
vice president has been said to be linked to negative elements of Xiaomi organizational culture.
Specifically, Barra said he was leaving because difficulties of living in “such as singular
environment” had “taken a huge toll” in his life.
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Chapter No. 8 Xiaomi & Ansoff Matrix
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8. XIAOMI AND ANSOFF MATRIX
Xiaomi Ansoff Matrix is a marketing planning model that helps the mobile internet company to
detemine its product and market strategy. Ansoff Matrix illustrates four different strategy options
available for businesses. These are market penetration, product development, mafrket development and
diversification.
Within the scope of Ansoff Matrix, Xiaomi uses all four growth strategies in an integrated manner:
1. Market Penetration. When using market penetration, company focus on selling existing
products and existing customers. Xiaomi successfully uses market penetration strategy in its
home market of china. According to Q1, smartphone sale result in china, Mi smartphone ranked
third with the local market share of 12.8%, aftewr Huwaei (20.8%), Oppo(18.5%), iphone
(18.2%) and Vivo(16.4%).
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2. Product Development. This strategy option involves developing new products to sell to existing
market. Xiaomi has ever-increasing product portfolio ranging from smartphines to water
purifiers and tooth brushes. Product development strategy is likely to be continued by Xiaomi. This is
because Xiaomi positions itself as a “company that provides innovation to everyone at every level –
from smartphones and technology of Iot connected smart products to the basic everyday tools like power
banks, backpacks and pen ”.
3. Market Development. Market technology strategy is associated with finding new market for
existing products. Xiaomi started market development in 2014, only four years after the
company was founded. In mid-2013, the company hired Hugo Barra away from Google and
Android to work on international expansion. Since that time, the electronuc and software
company has established its presence in rapidly developing markets such as India, Singapore
and Russia. The mobile internet company has also plans to enter US market.
4. Diversification. Diversification involves developing new products to sell new markets. Xiaomi
is engaged in an aggressively diversification strategy. Xiaomi ecosystem is vast and comprise
55 companies, including 4 unicorn companies. Companies within the ecosystem produce a wide
range of products and services such as TVs, set up boxes, robot vacuum cleaners, headphone
even towels and rice cookers.
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Chapter No. 9 International Marketing Strategy Of
Xiaomi
9.1 Background
9.2 Situational SWOT Analysis
9.2.1 Strengths
9.2.2 Weaknesses
9.2.3 Opportunities
9.2.4 Threats
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9. INTERNATIONAL MARKETING STRATEGY OF XIAOMI
9.1. Background
Xiaomi has the opportunity to expand into global markets such as India, the United States, the United
Kingdom, and less-developed parts of Africa and Latin America. Before expanding, company
executives must assess the competitive environment, determine marketing objectives, and develop a
competitive strategy. With a viable marketing strategy in place, Xiaomi has an excellent chance at a
successful expansion effort. In 2012 Xiaomi shipped a total of 7.2m smartphones and in 2013 Xiaomi
shipped a total of 18.7m smartphones and even shipped more than Apple in one quarter. In the first
quarter of 2014 Xiaomi had already shipped over 11m smartphones, more than they sold in the entirety
of 2012 and just over half the 2013 sales numbers. Demand continues to increase due to the high
specification hardware of their devices and the price they sell their products at. International markets
such as Hong Kong,
Taiwan and Singapore where Xiaomi are also officially availbable have seen similar demand to China.
This continued expansion out of China also prompted the high-profile hire of Hugo Barra (ex-Google
android executive) whose job it is to discover new markets. Malaysia, Philippines, Thailand, Indonesia
and India will see Xiaomi phones next. This may eventually lead to an official European and US launch
but nothing is confirmed yet. And besides, those that want Xiaomi phones (and many do) are willing to
pay the money to import the world’s best smartphone.
9.2. Situational Analysis
SWOT Analysis of Xiaomi
Despite its weak branding in the Western hemisphere, Xiaomi is one of the largest tech companies in
the world. Standing at rank four, Xiaomi competes against electronic manufacturing giants such as
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Apple, Google, and Microsoft.
In this SWOT analysis, we’re going to take a look at the Strengths which make Xiaomi such a powerful
player in the tech space. We’ll also look at some of the manufacturer’s Weaknesses, as well as
Opportunities and Threats for the future. Finally, make sure you also check out our PESTLE analysis of
Xiaomi.
9.2.1. Strengths
Here are a few of Xiaomi’s most notable Strengths:

• Affordable pricing
Xiaomi offers smartphones and other electronic devices at extremely competitive prices. This is
extremely important for two reasons. First off, Xiaomi’s budget-friendly pricing allows them to
compete for the more budget-friendly consumers in developed regions. Secondly, it allows them to
enter new, previously-untapped markets in which smartphones were previously too expensive. For
example, Xiaomi is able to sell millions of devices in the Asian market, especially in China and India,
which would be impossible as a luxury brand such as Apple or Samsung.

• High quality products
Despite their affordable prices, Xiaomi has a reputation for building high-quality products. Consumers
and tech critics alike are consistently impressed by how much bang you can get for your buck with their
smartphones. In part, this is thanks to the powerful specifications of the individual components which
Xiaomi use in their devices. What’s more, Xiaomi devices are well put-together at the assembly level.
• Substantial profit margins
Most amazing of all, Xiaomi is able to offer quality products at affordable prices, and still make plenty
of profit for themselves. Quite consistently, Xiaomi has posted profits amounting to hundreds of
millions of dollars. Xiaomi can thank low manufacturing costs for their high-profit margins. These low
manufacturing costs are likely due to the low cost of labor in China, as well as the significant economy
of scale which arises when manufacturing so many devices.
9.2.2. Weaknesses
Admittedly, Xiaomi does have one particular Weakness holding them back:
• Weak brand perception
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Xiaomi is a Chinese electronics brand. Unfortunately, Chinese products are viewed as inferior in some
parts of the world — especially the United States. This means that Xiaomi has had a hard time
penetrating these prejudiced markets. Furthermore, Xiaomi has a relatively weak brand perception
overall. It’s viewed primarily as a budget option by consumers around the world, and not as a leader in
build quality and performance. This perception leads Xiaomi devices to be dismissed by many
consumers despite their budgetary constraints.
9.2.3. Opportunities
Here are Xiaomi’s most notable Opportunities:

• New geographic markets
The global GDP is rising, and, as a result, consumers have more and more money to spend on
electronics. As a result, the smartphone and electronics market is growing organically. This is
especially true for some geographic regions, where previously devices were too expensive to even
consider. Xiaomi has a fantastic opportunity to capture these emerging markets, such as Africa or India,
thanks to their great prices. This is a particularly powerful opportunity for Xiaomi, since it only involves
competing against other budget-conscious manufacturers, such as Huawei, but not luxury brands like
Apple.
• Brick and mortar stores
Unlike Samsung or Apple, Xiaomi has made little effort to grow its brand with the use of brick and
mortar stores. While Xiaomi does have a few “Mi Stores” located around the world, they could
certainly invest in some more. These brick and mortar stores would not only improve Xiaomi’s offline
sales channels, but they would also improve the company’s perception as a luxury or high-quality brand.
It’s worth mentioning that much of Xiaomi’s sales are currently accounted for with eCommerce.
• Green branding
On the topic of branding, Xiaomi has another opportunity for growth. By pitching themselves as a
“green brand” — i.e. an environmentally-friendly brand — Xiaomi may be able to set themselves apart
from the crowd. There’s a growing environmental consciousness, especially in more developed
countries, and Xiaomi may be able to profit from this while saving the planet! Naturally, this would be a
two-step process. First, Xiaomi would need to ensure their manufacturing processes are as green as
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possible — by reducing and managing waste products and pollutants. Secondly, Xiaomi would need to
go about promoting this message with some clever marketing tactics.
9.2.4. Threats
Like every company, Xiaomi faces some Threats:

• High competition
The smartphone and electronics industries have a reputation for being cutthroat competitive. Most
players in these markets are well-established brands with plenty of capital to support them. This means
they are capable of large marketing campaigns, long legal battles, and plenty of investment into new
technology. Xiaomi is a relatively new electronics manufacturer, so they’ll need to be extra careful
they’re not pushed out of the market. It wouldn’t take a lot for a premium manufacturer such as Apple
to offer a more budget-friendly device, and that could have devastating consequences. Xiaomi should
definitely keep their guard up.
• Poor customer service infrastructure
Xiaomi has seen extremely quick growth over recent years, selling many millions of smartphones.
However, there have been reports that Xiaomi lacks the customer service infrastructure to adequately
serve all of their recently-acquired customers. If there were to be a model-wide issue with one of
Xiaomi’s products, they may find themselves with more support tickets than they can manage, and
plenty of unhappy customers.
9.2.5. SWOT Analysis of Xiaomi: Final Thoughts
Overall, Xiaomi is in a pretty good place. Offering extremely high-quality products and great prices —
and making a profit while doing so — is a solid foundation for any business. Unfortunately, Xiaomi has
a relatively weak brand. However, this presents new areas for Xiaomi to work on, such as green
branding or brick and mortar stores. Also in terms of Opportunities, Xiaomi might be able to capture
many of the emerging smartphone markets in less developed areas, such as Africa. As always, Xiaomi
needs to be careful with their competition, and should probably invest some more money into customer
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service to avoid a PR disaster.
Strengths:
• Efficient leadership by Lei Jun
• Impressive growth rate
• Cost advantage
• Brand value estimated at USD 100 billion
Weaknesses:
• Low profit margin
• Lowder smartphone capabilities and functionalities compared to major competitors
such as Apple and Samsung
• Competitive advantage difficult to sustain
• Lack of experience in global market
Opporunities:
• Increasing presence in cloud segment
• Formation of strategic collabrations
• Focusing on marketing strategy
• Achieving in disruptive innivation in the industry as a result of research and
development.
•
Threats:
• Market saturation in smartphone industry
• Increase in cost of resources
• Issues with product functionality
• Emergence of CSR- related scandals
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Chapter No. 10 Pestel Analysis
10.1 Political Factor

10.2 Economic Factor
10.3 Social Factor
10.5 Environmental Fcator
10.6 Legal Factor
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10. PESTEL ANALYSIS
PESTEL is a strategic analytical tool and acroynm stands for political, economic, social, technological,
environmental and legal factors. Xiaomi PESTEL analysis involves the analysis of potential impact of
these external factors on the profitability and long-term growth prospects of mobile internet company.
10.1 Political Factors
There is a wide range of political factors that can be affect the internet technology company. These
include government stability, bureaucacy,corruption, freedom of press and others. On one hand Xiaomi
has benefited from political factors in china in general and protectionism policy in chinese government
in particular. The government of china protects the local technology company such as Tencent, Baidu
and Xiaomi by imposing barriers to operatre in the country to their international rivals such as
Facebook,Twitter,Snapchat, YouTube and Google.
The head of Xiaomi along with the heads of Tencent and Baidu adive the government on international
business policies. This grants technology companies enviable opportunities to influence local political
factors that affect their businesses to a certain extent. Xiaomi has even set up its Communist Party
Committee in 2015 as a display of its support for the ruling governmnet.
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On the other hand, the political factor benefit Xiaomi in its home market in china, the company is
usually negatively affected from political factors outside of china. For example, the Twainese
government has investigated Xiaomi on a cyber security threat in 2014 causing certain damage tro the
brand image of the company. There is popular concern is the investigation was politically motivated
because “China and Taiwan has been historical foes sinc edefeated Nationalists fled to the island after
losing a civil war to China ’s Communisits in 1949. ”
10.2 Economic Factors
Economic factors affecting the internet technology company are diverse. These include macro-
economics climate in the countrty, inflation and interest rates, taxation, currency exchange rate, etc.
Moreover, the cost of labour and unemployement rate can be mentioned as examples for economic
factors that has direct implications on businesses.
For examples, average of cost labour for factory workers in China has reached USD 3,60 an hour in
2017, an increase of 64% compared to 2011. Such an economic tendency has direct implications on
Xioami competitive advantage taking in to account of cost leadership business startegy pursued by the
company.
10.3 Social Fcators
The financail performamce of Xiaomi is subject to number of social factors such as demographic
changes, changes in family values, changes in the level of education of customers and others.
Moreover, changes in consumer attitudes and opinions towards smartphones, media perception of the
brand and health and welfare of the target customer segment can also affect Xiaomi.
Demographic aspect of China, home market for Xiaomi can be specified as a major social factor
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affecting the sales of the mobile internet company. Specifically, China’s population is more than 1.4
billion people, which is roughly 18.50% population of the world. As discussed above, China
government practices protectionism policy, granting competitive advantage to local tech companies
including Xioami. Accordingly, large number of China’s population is an important social factor for
Xiaomi, contributing the volume of its sales.
Moreover, a range of social tendencies such as increasing popularity of social networking sites and
increasing integration of internet into a wide range of personal and professional aspects of life can be
mentioned as important social factors that benefit of Xiaomi.
Generally, prominent technological factors that impact Xiaomi include industry specific technological
innovations and breakthroughs and decreasing lifecycle of technology. Moreover, changes in energy
consumption practices, shifts in manufacturing maturity and capacity can be also mentioned as
technological factors that affect Xiaomi.
Being an internet technology company, it is important for Xiaomi to deal with vhannges in technological
factors in a proactive manner vai making investments in research and development. However, this can
be difficult in practice taking into account the fact that Xiaomi pursues cost leadership business strategy
and attempts to save costs wherever it can. In other words, substanial investments in R&D to deal with
technological factors contradict Xiaomi business strategy.
10.5 Environmental Factors
The performance of Xiaomi can be indirectly impacted by the set of ecological factors such as global
warming, air pollution, thickening of ozone layer and others. Moreover, the impact of environmental
factors on Xiaomi performance can be direct as well in cases of environmental diasters such as
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earthquakes, flooding,torandos,etc.
Similarly, air pollution is a serious environmental factor that can affect Xiaomi decreased employee
performance. It has been estimated that employee productivity across 190 Chinese cities would rise by
about 4 per cent per year if the amount of fine-particle pollution in the air was cut to fall within World
Health Organization standards.
Any corporation size of Xiaomi is expected by stakeholders in general, general public and non-
government organization in particular to behave in a socially responisble manner and illustrate
commitment in dealing with a wide range of environmental issues. Neglecting these expectation may
result in damage to the brand image via negative online and offline press coverage.
10.6 Legal Factors
Xiaomi is directly impacted by a set of legal factors such as trade regulations, anti-trust rules and
regulations, data protection regulations and others.Additionally, there is a wide range of rules and
regulations relating to employee health and safety, consumer protection laws, employement laws and
competitive rules and regulations that need to be adhered fully adhered by Xiaomi. Changes in these
rules and regulations are most likely to impact Xiaomi performance in direct and indirect manner and in
ways that are difficult to predict.
Moreover, legislators andd regulators may make legal and regulatory changes, or interpret and apply
existing laws and policies, in ways that make Xiaomi products and services less useful to its users,
required the company to incur substanial costs, expose it to unanticipated civil or criminal liabilty, or
cause it to change its business practices.
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Chapter No.11 Marketing Strategy
11.1 The Scarcity Marketing

11.2 7Ps of Marketing
11.3 Segmentation,Targeting&Positioning
11.4 The Blue Ocean Strategy
11.5 Marketing Communication Mix
11.5.1 Print & Media Advertising
11.5.2 Sales Promotions
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11.5.3 Events & Experiences
11.5.4 Public Relations
11.5.5 Direct Marketing
11.5.6 Personal Selling
11.MARKETING STRATEGY
Xiaomi marketing strategy has been traditonally minimalistic due to the cost leadership business
strategy oursued by the company. Accordingly, the mobile internet company is engaged in social media
marketing, saving on advertising costs and passing this cost advantage to customer, in the forms of
products with low price tags.
However, “Oppo and Vivo have grown in China by using the exact tactics that Xiaomi once avoided.
Both companies spend heavily on offline advertisements and celebrity endrosements, plastering
billboards on subways and bus stops across China’s second and third-tier cities. ” This has caused a shift
in Xiaomi marketing strategy and starting from lately the internet technology company has started to
use traditional marketing communication channels as well. Moreovevr, Xiaomi marketing strategy now
a days also includes product placement and Xiaomi holograms in fiction triller Anon (2018) can be
mentioned as an example.
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As a privately owned company, Xiaomi does not disclose its annual marketing budget. Xiaomi 7ps of
marketing focuses on price element of the marketing mix to the greater extent compared to other
elements. Accordingly, the brand’s target customer segment represents price-consious consumers who
want to own the latest smartphones with advanced functions and capabilities for affordable cost.
Hunger marketing strategy is the one one of the integral components of Xiaomi marketing strategy. The
electronics and software company appeals to emotional needs of their target customer segment by
selling only limited amount of products for a limited duration of time. In other words, the company
creates the shortage of supply in purpose, creating a buzz in the market and evoking desire in customers
to own a MI brand smartphone.
11.1. The Scarcity Marketing
Many detractors of the brand accused the company of practicing “scarcity marketing” in order to
increase the buzz around its brand and copy Apple’s “aura of exclusivity” around its own products. The
Chinese start-up is indeed famous for what is called “flash sales” (i.e.: creating buzz by limiting the
availability of the items sold). Most of the smartphones go on sale on the prepaid market and about 70%
of all phones are sold online in batches (Singh, 2013). Xiaomi would thereby create the illusion that its
products are so popular that demand is too high to perfectly meet the offer. Indeed, this “hunger
marketing” is based on the fact that the more difficult it is to acquire an item, the higher the demand
will become. However, Xiaomi repeatedly said that scarcity marketing was not part of the strategy but
only a consequence of its limited capacity. Indeed, in spite of its phenomenal success, Xiaomi remains
a start-up with a limited capacity of production. Therefore, only a certain amount of items can be
produced at a time (Rowan, 2016). Furthermore, producing and selling its products in limited amounts
not only allows the company to reduce the risks and costs associated with bigger inventory
(Kan, 2014) but it also goes hand in hand with a strategy based on direct customer feedback as any
valuable change can be operated directly on the next batch of production (Girotra and Netessine, 2014).
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However true these reasons may be, keeping the production quotas just short of demand is bound to
create a sense of urgency around the Mi devices and it is plain that such a scarcity strategy, intentionally
applied or not, undeniably serves the interests of the company as all the more often every new product
launch is accompanied with a sold-out notice in no time, an event so rare56 in the industry that it always
makes it to the headlines, creating such a buzz that the company invariably ends up with free marketing
around its brand (Lee, 2012; Miller, 2015).
However, a business strategy only based on the marketing hype created by its innovative approach is
not sustainable on the long run.
11.2. 7ps of Marketing
Xiaomi marketing mix (Xiaomi 7ps of marketing) comprises elements of the marketing mix that
consists of product, place, price, promotion, process, people and physical evidence.
Product
Physical
Place
Evidence
Marketing
People
Strategy Price
Process Promotion
• Product
Xiaomi mainly focuses on hardware, software and internet services. The company’s product range
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is vast and includes laptops, mobile phones, tablets, smart TVs, power banks, smart watches, etc.
Xiaomi also manufacturers and drones, sells water purifiers, vaccum cleaners and even rice cookers.
Xiaomi products such as cellphones, TVs, TV boxes, and speakers have received more than 145
industrial design awards altogether. Continuous expansion of ecosystem of products and services is
placed, at the core of company’s business strategy.
• Place
Xioami is headquartered in Beijing, China and has offices in Asia-Pacific,India and Brazil. The
mobile internet company is established its presence in 70 countries and regions and it is among the
top 5 in 16 markets. These markets include Turkey, Malaysia, Mexico, Thaliand, Philippines,
Russia, Singapore, Indonesia, Brazil, India and Vietnam.
The mobile internet company opened its first offline retail store in February 2016 and by the end of
2017 had more than 155 stores. In march 2017, the company established a new sales channel called
Xiaomi kiosks to reach districts without an Mi home stores and towns and villages with limited e-
commerce access.
• Price
Xiaomi procing strategy can be described as economy pricing. Accordingly, the internet technology
company sets its prices low, keeping marketing and promotional costs to a minimum. Flash sales are
integtral component of Xiaomi pricing strategy. The electronics and software company uses the
flash sales to announce the sale of its smartphones at a greatly reduced price. Xiaomi flash sales last
only for a short duration of time. For example, in india “a flash sale for the Redmi IS model in
september 2014, around 40,000 pieces were sold out in just 4.2 seconds. ”
• Promotion
Traditionally,Xiaomi focused on social media and word-of-mouth marketing as only channels to

communicate its marketing message to the target customer segment. However, due to increasing
competition from local rivals such as Oppo and Vivo, the company had to start using traditional
print and media advertsing platforms as well.
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Today, Xiaomi uses a range of elements of the marketing communication mix such as print and
media advertising, sales promotions, events and experiences, publuc relations and direct marketing
in an integrated manner in order to communicate the marketing message to the representatives of the
target customer segment.
• Process
The range of processes critical to Xiaomi’s success employment recruitment and selection,
marketing research, new product research and development, sales, product return, customer service
processes and others. Xiaomi attempts to gain efficiency in relation to each of these processes.
• People
The internet technology company has about 18,000 employees. A substanial part of Xiaomi
employees were initially fans of the brand and were later employed by the company. Xiaomi
employees are known to work extremely long hours of 12 hours and even longer.
• Physical Evidence
Physical evidence refers to items related to the recognition of the brands with Xiaomi
portfolio.Xiaomi logo consisting of modified version of letters “MI” in white colour and yellow
background is a major component of physical evidence of the brand. The “MI” in logo stands for
“Mobile Internet.” A white mascot with red scarf and a hat with red star is another respresentation
of Xiaomi of physical evidence.
11.3. Segmentation, Targetting & Poistioning
Xiaomi segmentation, targeting and positioning is needed to identify the target customer segment for the
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company amd to develop products and services that are attractive to the segment.
Segmentation invol;ves divding population into groups according to certain characteristics, whereas
targeting implies choosing specific groups identified as aresult of segmentation to sell products.
Postioning refers to the selection of the marketing mix the most suitable for the traget customer
segment.Xiaomi uses mono-segment and imitative types of positioning.
The internet technology company uses mono-segement poistioning, appealing to the needs of a single
customer segment. Specifically, Xiaomi targets a custyomer segment that want to use smartphones and
other technology products, but have limited budget to make such a purchase.
Xiaomi also uses imitative type of positioning by closely imitating the products of market leaders such
as Apple and Samsung. The electronics and software company has even earned the nickname “Apple of
the East” due to its close imitation of Apple products and Apple product presentation.
The following table illustrates Xiaomi segmentation, targeting and positioning
Type of segmentation Segmentation criteria Xiaomi target customer segment

Geographic Region 70 countries and regions globally
Density Urban and rural
Demographic Age 18-65
Gender Males&Females
Life-cycle stages Bachelor Stage young, single people not living at home
Newly Married Couples young, no children
Full Nest I youngest chilld under six
Full Nest II youngest chilld under six or over
Full Nest III older married couples with dependant children
Empty Nest I older married couples, no children living with
them
Empty Nest II older married couples,retired,no children
living at home
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Solitary Survivor I in labour force
Solitary Survivor II in retired
Occupation Students,employees, professionals
Behavioural Degree of loyalty ‘Hard core loyals’ ‘Soft core loyals’ ‘Switchers’
Benefit sought Cost attractiveness
Personality Easygoing, determined and ambitious personality types
User status Non-users, potential users, first time users
and regular users
Psychographic Social class Lower class,working class and middle class
Lifestyle Struggler, Mainstreamer, Aspirer, Explorer
11.4. The Blue Ocean Strategy
According to Michael Porter (1998), there are two main means for a company to achieve a competitive
advantage against its rivals: it should either produce a similar product at a lower cost (i.e.: the company
has a cost advantage; its total costs throughout its value chain are lower than the total costs of rival
companies) or a better product sold with a price premium (i.e.: the company has a differentiation
advantage). Kim and Mauborgne (2004) however showed that there is a third way besides these two
strategies: creating an uncontested market space, known as the blue ocean strategy (BOS). The BOS
rejects the main tenet of strategy as it has been developed during the past decades: in order to create a
competitive advantage, trade-off between value and cost is not a necessary condition. Indeed, according
to the authors, creating greater value at a lesser cost can provide a company with a greater competitive
advantage against its rivals in the industry. In order to do so, the company should create for itself an
uncontested market space in which competition is made irrelevant and demand is created rather than
fought for.
According to Kim and Mauborgne (2004):
“Blue ocean is created in the region where a company's actions favorably affect both its cost
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structure and its value proposition to buyers. Cost savings are made from eliminating and
reducing the factors an industry competes on. Buyer value is lifted by raising and creating
elements the industry has never offered. Over time, costs are reduced further as scale
economies kick in, due to the high sales volumes that superior value generates.”
While Apple, Samsung and other big players earn a profit through selling phones and other electronic
devices with a margin, Xiaomi decided to adopt another and far more innovative approach in order to
avoid competing on dimensions that are largely part of the red ocean.
We stressed earlier that Xiaomi aims at providing everyone with the best innovation at a moderate
price. The devices designed by the Chinese start-up are in every way as good as Apple’s and Samsung’s
but, unlike the American and South Korean giants, they are sold for less than half the price. Therefore,
the main competitive advantage of Xiaomi lies in value as well as in price. If its value proposition were
only based on price (i.e.: if Xiaomi was offering half the quality of the incumbents for half the price),
the start-up would not possess any competitive edge in the industry. This being said, can we argue that
the value proposition of Xiaomi is based on product innovation? Does the company offer a better
product (i.e.: increased value in comparison with therivals) at a lesser price? According to John Ross
(2015), senior fellow at the Renmin University of China, the innovation approach led by Xiaomi is
based on cost and not yet on product: Xiaomi does not yet offer a superior product than Apple and
Samsung but as good a product for half the price. Many detractors pointed at the exaggerated
similarities between Xiaomi’s and Apple’s devices launches and features, even criticizing the
way Lei Jun was dressed during the special launching events, seeing in every clothe and gesture a mere
imitation of late Steve Jobs. However, we should see in these similarities a very well thought-out
branding strategy: Xiaomi can allow itself to give a similar image to Apple’s because it stands as the
Chinese company providing products of outstanding quality while keeping prices down (Ross, 2015).
In this sense, the branding strategy aims at reshaping the image associated with the “Made in China”
products and the idea that low price is tantamount to low quality.
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11.5. Marketing Communication Mix
Xiaomi marketing communication mix explain the extend of usage of individual elements of marketing
communication channels by the mobile internet company. Generally, elements of marketing
communication mix consists of print and media advertisng, sales promotion,events and experiences,
public relations, direct marketing and prersonal selling.
11.5.1. Print and Media Advertising
“Xiaomi once touted its of avoidance of advertising as one of the keys to its early success-saving money
on commericals helped keep the overall price of the phones lower. Instead. It relied on its upper
executives and its “fans” to spread the word and attract new customersthrough social media .”
However, due to increasing the competition from its local rivals Oppo and Vivo, the mobile
internet company had no choice but to engage in certain forms of traditional advertising such as
posters and newspaper advertising.
Nevertheless, viral marketing remains as the most important form of marketing for a Xioami. The
internet technology company also uses celebrity endrosement from the likes of top Hong Kong actor-
singer, Tony Leung, a 54-year-old best-known to English-speaking audiences for movies like “In the
moood for love” and “lust,caution.”
11.5.2. Sales Promotion
Xiaomi uses the following sales promotion techniques:
• Flash sales. Flash sales refers to the sales of products and services online at heavily
discounted price for a short period of time.Xiaomi users flash sales extensively, especially
in india.
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• Customer loyalty scheme. Reward Mi is a customer loyalty program that rewards
loyal customers with exclusive benefits such as priority passes a.k.a F-codes and
discount coupons which can be redeemed on selected products across Mi store.
• Seasonal sales promotion. The electronics and software company announces sales promotion
on notable occasions as Christmas day and anniversaries of notable days for the company.
• Point of sale materials. The company uses point of sale materials such as posters and
display stands at its stores.
11.5.3. Events & Experiences
Xiaomi organizes Mi Fan Festivals regularly. Each festival involves flash sales, jaw-dropping deals,
bundles and freebies,etc. Moreover, the mobile internet company hosts special events for the launch
of its new products. Special events hosted by the company in relation to the launch of any product
can be mentione dto illustrate this point.
Xiaomi CEO Lei Jun takes on stage and presents new product personally during special events in the
same way.as late Apple co-founder and CEO Steve Jobs used to be present. Therefore, Lei Jun earned
the nickname ‘China’s Steve Jobs’ along the way.
Xiaomi events and experiences are aimed at the increasing level of brand awareness among the public
in general and the target customer segment in particular. Moreover, Xiaomi attempts to communicate
the brand value offer to the target customer segment in indirect manner via such events.
11.5.4. Public Relations
Public relations can be defined as a “discipline which looks after reputation, with the aim of earning
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understanding and support and influencing opinion and behaviour. It is a planned and sustained effort
to establish and maintain goodwill and mutual understanding between an organisation and its publics.”
Xiaomi runs its public relations and practices via online press releases, annual reports, speech and
seminar.
11.5.5. Direct Marketing
Direct marketing can be defined as “as a marketing startegy to build stronger, more personal
relationships between the buyer and selected customers directly.” In other words, in direct marketing
there are no intermediaries between the buyer and the seller in terms of promotion and distribution,
Xiaomi is not known to engage in direct marketing up to date.
11.5.6. Personal Selling
Personal selling is ‘person-to-person communication with a prospective customer in order to develop
a relationship, identify customer needs, match goods/services with those needs, communicate benefits
to customers, and gain commitment to purchase goods/services that satisfy customer needs.’
Xiaomi does engage personal selling in the limited scope in company-operated offline stores.
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Chapter No .12 Xiaomi And The Community Of Fans
12.XIAOMI AND THE COMMUNITY OF FANS

“The existence of united groups of online consumers that are active creators of the brand implies
that power is shifting away from marketers and flowing to consumers” (Kozinets, 1999). Far from
being afraid of the phenomenon, Xiaomi decided to fully integrate it into its business model in order
to shape a brand created for and by consumers themselves, which again proves that Xiaomi’s
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management has fully understood the new branding paradiagram. Even though losing
ownership of one’s brand has stood as a main source of fear for management teams, Christodoulides
(2008) stresses that this fear does not have a solid ground but rather stands as an obstacle to take full
advantage of the opportunities offered by the digital age. Indeed, according to him, “brand managers
must start feeling comfortable about losing control and ownership of their brands. It is not by chance
that brands such as YouTube and Wikipedia, whose content is predominantly user-generated, are now
part of the top global brands. Communities and social networks claim ownership of brands and
influence not only individual brand choice but also company decisions.” “This is an age of
co-creation where value is created in a dialectical process. Branding is no longer an egotistical exercise
that marketers consider among themselves and then unilaterally impose upon consumers, and
consumers are no longer passive recipients of messages but equal partners in mutual value-building
relationships with brands and joint creators of brand meaning.”
In order to survive and thrive, a business should always deliver on its promise as well demonstrate
genuine concern for its customers. In order to deliver on the promise, the company should understand
the needs of the customers in order to meet them quickly and properly. This is even more crucial in the
social media era since customers are not passive recipients anymore but rather play a significant role in
co-designing and co-creating the brand. Demonstrating interest and concern should go hand in hand
with designing a means of communication that allows direct communication with the brand’s fans
(Lin et al., 2014). Concern for the fans should be demonstrated throughout the buying process,
beforehand as well as once the purchasing cycle is closed, from the product design stage to the sales
transaction as well as after-sales (i.e.: delivery, installation, training, maintenance, warranty, and
repurchase. Xiaomi started by targeting a niche whose needs it perfectly met, so much so that the
company now owns a customer base so strong and loyal that it does not need to search for strategies to
attract new customers or raise awareness among potential new users: this job is done by the fans who
willingly advertise its devices on social media. Hence the company manages to grow and leave the
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niche segment through the sole word-of-mouth of its fans. Xiaomi also perfectly tailored its vocabulary
to befriend its customers and make them understand that it sees them as more than consumers but as the
core element of its business. As such, the Chinese company proved again its thorough understanding of
what consumers need and want in today’s world. It did away with “the language of ‘command and
control’” and “[adapted its vocabulary] to the age of co-creation”. Through this customer-centric
strategy, Xiaomi has fostered user pride and reaps off all the benefits associated with it (Dong and
Zhang, 2016). Furthermore, Xiaomi is the only entity managing the whole customer experience and its
larger relationship with fans, from after sales to feedback since it sells directly to them online or through
its Mi Home stores, which enables the company to strengthen the bonds created with the fans and to
bridge the gap that usually exists between the brand and its consumers. This larger communication
strategy based on nurturing the love of fans for the brand’s products eventually results in a stronger
loyalty towards the brand as the story is actually told by consumers themselves. By doing so,
the Chinese start-up manages to do away with traditional marketing strategies only developed to and
aimed at selling products and perfectly understands what it means to do business in the digital age:
building a real connection and creating stronger engagement based on continuous interaction and
dialogue with fans who will be so loyal to the brand that they will become advocates for its products
and services through genuine word-of-mouth.
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Chapter No.13 The Communication Strategy
13.1. Social Media
13.2. The Mascot
13. THE COMMUNICATION STRATEGY
13.1. Social Media
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In order to communicate with the fans, Xiaomi concentrates on social networking sites, mostly
on Weibo (in China) and Facebook (on global markets), platforms on which the company announces
the new product launches and sales dates (Khai Lun and Yazdanifard, 2014). Xiaomi has
incorporated social media in its strategy in different ways:
• Weibo and Facebook: since Xiaomi was established in 2011, Lei Jun, current CEO, has
always made good use of Weibo and Facebook in order to communicate with the company’s latest
news to the fans. Furthermore, he will respond daily to the fans’ questions related to the company,
its products and new features. This direct and effective interaction with the CEO of the brand allows
the fans to feel respected, which, in turn, will fuel their willingness to contribute to the
firm’s development;
• Lei Jun is not the only one among the company’s executives to directly interact with the fans.
Indeed, this way of communication is now entrenched in the company’s brand identity and most of
the top management have grown accustomed to using different social networking platforms to keep
direct contact with the fan base (Lin et al., 2014).
13.2. The Mascot
Besides the private events where fans will meet up with the top management team, Xiaomi also
designed its own mascot, called MiTu. The mascot rapidly became a main tool of communication for
the brand. Indeed, MiTu will play the role of the customer’s friend on social networking platforms
where it will be asking questions that, for the most part, are related to the fans’ daily lives
(e.g.: “How has been your work day going on?”). Fans will be very likely to comment and respond
to the questions. These answers will thereupon appear on the fans’ friends’ feed, which is bound
to increase the visibility and awareness of the brand among non-users (Lin et al., 2014).
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Chapter No. 14 The Miui Operating System
14. THE MIUI OPERATING SYSTEM
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According to Gorshow et al. (2014), one of the main areas that offers a high potential of
differentiation for smartphone companies lies in the development of a specific operating system
(OS). The main OS on the market today are the iOS developed by Apple and Android by Google that
is used, among others, by incumbents Huawei, Samsung and Sony. Xiaomi, however, followed the
steps of Apple and developed its own OS, MIUI. MIUI is an Android-based user interface that
offers optimization and customization features aimed at making up for the deficiencies associated
with the original Android OS. The MIUI users can, among others, customize the theme of
their smartphone, the voice volume control, camera parameters settings, and address book
layout. Allowing the users to customize the OS as they please is a strategy that Xiaomi devised in
order to get the users so thrilled about the product that they will freely discuss the topic on social
media, thereby fueling word-of-mouth and publicity around the brand (Lin et al., 2014). While the
iOS and Android OS are characterized by a cycle of update of half a year, MIUI is updated once a
week (i.e.every friday), each update being driven by the feedback of the Mi fans.
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Chapter No. 15 Market Matrix Analysis
15.1 Michael Porters 5 Forces

15.1.1 Bargaining Power of Buyers
15.1.2 Bargaining Power of Suppliers
15.1.3 Threat of Substitute
15.1.4 Threat of New Entrants
15.1.5 Rivarly Among Existing Firms
15.2 BCG Matrix Analysis
15.2.1 Xiaomi Stars
15.2.2 Xiaomi Cash Cows
15.2.3 Xiaomi Question Marks
15.2.4 Xiaomi Dogs
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15. MARKETING MATRIX ANALYSIS
15. 1 Xiaomi Porters Five Forces
Porter’s Five Forces is an analytical framework developed by Michael Porter in 1979. The framework
consists of five individual forces that shape overall extent of competition in industry.
Bargaining
Threat of
power of
substitutes
suppliers
Bargaining Threat of new

power of buyers entrants
Rivalry
among
existing firms
15.1.1. Bargaining power of buyers
The bargaining power of the buyer is very high due to the stiff competition in China’s smart phone
market. With the all major players including competing in the Chinese smartphone market, the
smartphone market of China is so saturated that buyers have got lots of choice both from the low end
and high end of the market which has resulted in sluggish growth in the Chinese smartphone market.
While Xiaomi has managed to increase sales in 2018 because of its affordable prices putting it ahead of
Apple which is now in fifth, its focus on low end low margin phones means its profits are extremely
lower than Apple which still controls 80% of the premium end of the smartphone market in China
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(Dunn 2017).
15.1.2. Bargaining power of suppliers
The bargaining power of Xiaomi’s suppliers is high due to the technical nature of the components that
go into smartphone making. The company has created partnerships with suppliers like Qualcomm
which has given further credibility to its supply chain guaranteeing a continued supply of high quality
products but this only makes such suppliers powerful (Elementum News 2018).
15.1.3. Threat of substitutes
Substitutes are referred to as products that offer similar benefits to the industry’s product. In this case,
threats of substitutes can include landlines, satellite phones, pay phones and fax machines which are of
late considered old fashioned in comparison to smart phones. The threat of substitutes for smart phones
is very low which is an advantage for companies like Xiaomi as more people are relying on smart
phones abandoning the use of old technology.
15.1.4. Threat of new entrants
In China’s smartphone industry, barriers to entry are very high considering the fact that there are
already established companies ahead of Xiaomi including, Huawei BBK (which offers the Oppo and
Vivo brands) as well as Apple and Samsung (Dunn 2017) and all have high economies of scale and
production which makes it very expensive for new entrants to compete unless highly capitalized. It is
not a surprise that as a start-up company growing at a high rate, Xiaomi couldn’t scale up its production
capacity to meet the demand of its smartphone devices which contributed to pushing it from first to fifth
position in China’s smartphone industry makers (Kline 2017).The investments required for a start-up
are very expensive not forgetting the fact that incumbents have gained experience with time and already
know how to operate efficiently which gives them an added advantage.
15.1.5. Rivalry among existing firms
China’s smartphone market is highly concentrated among the top five companies; Huawei, Oppo &
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Vivo, Xiaomi, Apple and Samsung dominating the market and accounting for at least three in every
four handsets sold in China (Tao 2017). Huawei commands 19.4% market share, Oppo 18.8%, Vivo
16.4%, Xiaomi 13.7% , Apple 7.7% with the rest sharing 24% of the market as of 2017 (Tao 2017).
This has resulted in very high competition giving buyers more power to choose among the different
offers, resulting in sluggish growth of the smartphone market in China.
However, Xiaomi has a competitive advantage against some of these competitors due to its leadership
position in key markets such as India where it commands approximately 31% of the Indian market
share, making it number one seller which has helped boost its profit margins (Khan 2018).
15.2. Xiaomi BCG/growth share Matrix Analysis 2018
15.2.1. Xiaomi Stars
Xiaomi wearables such as fitness trackers and smart watches are the company’s major stars with a
market share of 17.7% globally, making them the number one global seller ahead of Apple and Fit Bits
as of 2017. The wearable business is growing at a high rate with an increase in market shares from 15%
in 2016 to 17.1%, while the shipping volume also grew from 3million units to 3.7 units (Bindi 2017).
Xiaomi should thus invest more in this segment in order to grow further market shares so that when the
market growth rate declines, wearables can become cash cows.
Xiaomi’s life style business has also turned out to be a star generating revenue of 23.5 billion Yuan
contributing 20.5% of the company’s income (Choudhury 2018; Prashant 2018).
The Internet service business from apps and games has also been growing at a very high rate even if it’s
consuming a lot of Xiaomi’s revenue. With approximately 190 million users on its operating system for
smartphones and tablets, the business’s income has grown by 51.4% from 2016 to 9.9 billion in 2017
(Choudhury 2018). As of 2017, the internet service business contributes 8.6% to the company’s income
(Prashant 2018).
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15.2.2. Xiaomi Cash cows
Xiaomi’s cash cow is the smartphone segment which has been growing at a high rate contributing the
highest income to the company. This segment has grown its global market share to 8.2% as of 2018 and
has been ranked number four globally while its shipment units have grown by 86.4% year on year to
27.6 million( Pan Daily 2018) contributing 70.3% to the company’s income (Prashant 2018). Xiaomi’s
total revenue from smartphones grew more than 65% in 2017 to 80.56billion Yuan (Choudhury 2018).
The segment has grown its market shares in India to 31% making it the best seller in India, beating
Samsung to be number one (Khan 2018). With the global smartphone demand on a slowdown, Xiaomi
should invest in premium smartphone segments especially its premium Mi Note series which can
become a cash cow as well as other question marks such as smart shoes that can be future stars.
15.2.3. Xiaomi Question Marks (Problem children)
Smart shoes: Launched in March 2017 in partnership with Li Ning, Xiaomi’s smart shoes are growing
at a high rate mostly due to the growing market in India and China. Even if this segment’s market
shares are very low, with more investments smart shoes business has the potential to become the
company’s next star mostly due to the market that is forecast to grow further due to people’s need of
internet connected products( WNKY 2018).
15.2.4. Xiaomi Dogs
Xiaomi has invested in a lot of peripheral products that have nothing to do with its core products-
smartphones. The company has invested in segments such as air purifiers, power banks, and drones as
well as hover boards. So far, Xiaomi’s power banks have proved to be the company’s dog product
segment despite lots of investment from the company.
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Chapter No. 16 Value Chain Analysis
16.1 Xiaomi Primary Activities

16.1.1 Xiaomi Inbound Logistics
16.1.2 Xiaomi Operations
16.1.3 Xiaomi Outbound Logistics
16.1.4 Xiaomi Marketing & Sales
16.1.5 Xiaomi Services
16.2 Xiaomi Support Activities
16.2.1 Xiaomi Infrastructure
16.2.2 Xiaomi Human Resource Management
16.2.3 Xiaomi Technology Development
16.2.4 Xiaomi Procurement
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16. VALUE CHAIN ANALYSIS
Xiaomi value chain analysis is an analytical framework that assits in identifying business activities that
can create value and competitive advantage in the mobile internet company. Figure below illustrates the
essence of Xiaomi value chain analysis.
16.1. Primary Activities
16.1.1.Xiaomi Inbound Logistics
Xiaomi inbound logistics involves the delivery and storage activities of raw materials by the mobile
internet company. Strategic relationshipswith Taiwan-based manufacturers of various components is
one of the main sources of the value for Xaiomi inbound logistics. Specifically, Xiaomi partners
Inventec and Hon Hai for assembly, Wintek and TPK for screen technology and unicorn for PCB
(printed circuit boards.)
Moreover, Taiwan Semiconductor Manufacturing Corporation (TSMC) is the main process supplier of
the comnpany. Xiaomi also procures various electronic components from nearby country. For example,
MOS and batteries aree mainly imported from Thailand.

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16.1.2. Xiaomi Operations
Operations activities within Xiaomi value chain analysis refer to the processes of transforming
raw materials in to ready products. The mobile internet company has established its presence in 70
countries and regions and it is among the top 5 in 16 markets. Xaiomi manufacturers locally more than
75% of smartphones it sells in India.
Location of manufacturing units in China and India is one of the main sources of value in Xiaomi
operations. This is because the costs of human resources in these developing countries are cheap. Along
\with promixity of manufacturing units to the sources of raw materials, cost-effective human resources
play an instrumental role in sustaining cost advantage competition edge of the business. Moreover,
Xiaomi sophisticates its manufacturing processes in a systematic manner using advanced technologies
and benefiting from technological innovations.
16.1.3. Xiaomi Outbound Logistics
Initally,Xiaomi outbound logistics practices were limited to the shipment of the products directly to
end-users via couriers. At the stage the company was using only online sales channels in order to save
costs and maintain its cost leadership position in the global market place. However, due to increasing
demand for Xiaomi products and intensifying competition in the market, the electronics and software
company had to open company-operated stores as well. Xiaomi opened his offline retail store in
Feburary 2016 and by the end 2017 had more than 155 stores.
Known as Mi home stores, company-operated stores are places where customers can see and use
Xiaomi smartphones water purifiers, portable air purifiers, laptops, rice cooker, robot vacuum cleaners,
Ninebot hoverboards and a wide range of other products.
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In March 2017, the company established a new sales channel called Xiamox kiosks to reach districts
without Mi Home Stores and towns with likmited e-commerce access . In March 2018 ,the
company opened its 25 th Mi Home and the first Mi Home Experience store in Chennai, India.
Xiaomi has plans to open 2000 stores around the world by 2020.
Increasing numbers of sales channels and expanding geographical scope is expected to complicate
Xiaomi outbound logistics in the foreseeable future. This can create certain challenges for the
business.Having been founded only in 2010, Xiaomi does not have many years of exprerience
in operating in the global maketplace. Its major competitors such as Apple and Samsung, on the
contrary, have decades of experience in the global marketplace and accordingly, they are
more experienced in global supply chain management and addressing the issues of cross-
cultural difference .
16.1.4 Xiaomi Marketing and Sales
Xiaomi marketing and sales practices are based on its cost leadership business strategy. As
discussed above the mobile internet company was intially selling its products using only online
sales channels and later adapted traditional offline sales channels as well. The company uses
hunger marketing strategy and flash sales frequently, making only limited numbers of products
available online for a short duration of time.
Xiaomi has set a Guinness World Record for selling the most number of phones ever in single day
- 2.12 million units. In India , “to increase its offline sales, Xiaomi is opening direct stores called
Mi Home, and partnering with big retail chains like Croma, Univercell, Poorvika, and Sangeetha.”
16.1.5. Xiaomi service
Xiaomi post-sale service was often critcized as poor. This problem was rooted on company’s cost
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leadership business strategy, because the mobile internet company was looking for opportunities to
save cost everywhere including in customer services and sales services.
However, due to intensifying in home market and abroad, Xiaomi had no choice but to pay attention to
customer service aspects of the business. For examples, nowadays in india “ 95 percent of all repair
jobs aurthorized services centers are processed within a day, with 86 percent processesd within
four hours of customers handing over the device of the service centre.”
16.2. Xiaomi Support Activities
16.2.1. Xiaomi Infrastruture
Xiaomi infrastructure includes its wide range of support systems and functions such as finance, planning,
quality control and general senior management. Moreover, Xaiomi infrastructure relates physical nad
organizational structures and facilitates that company uses to achieve its primary objective of profit
maximization. Despite its large size with presence in 70 countries employeing more than 18,000 people,
Xiaomi’s ability ro maintain its relatively flat organizational structure can be lsited as one of the main
sources of value related to its infrastructure.
16.2.2. Xiaomi Human Resource Mangement
Xiaomi official website claims the following:
“Xioami is focused on being the most user-centric mobile internet company, and we aim to constantly
exceed expectations through innovations in software, hardware and services. Many of our employees
were initially fans of Mi products, before they decided to join us. ”
Our team is not only passionate about technology, but also rentlessly pursues prefection to break tradition
and push boundaries, all just to ensure our products remain unique and offer an unparallel user
experience. Xiaomi is headquartered in Beijing, China and has offices in Asia-Pacific, India and Brazil.
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As of May 2018, the internet technology company has about 18,000 employees.
16.2.3. Xiaomi Technology Development
Technology Development is rightly understood by Xiaomi as one of critical success factors to survive
in the contemporary in market place. Xioami is expected to recruit 1000 techincal experts in 2018 and
some of them would be deployed to the Shenzhen R&D centre which it hoped to build into one of its
strongest R&D centre, second only to the Beijing Headquarters.
So far Xiaomi has “applied for morethan 24,000 patents globally with 5920 of them granted, among
which half are global patents.” It can be argued that the choice of cost leadership business strategy has
certain negative implications on technology development potential of the business. Specifically, due to its
adherence to cost leadership business strategy. Xiaomi operates on razor-thin profit margin and as such ,
the company may not be able to commit to sustanial investments research and development.
16.2.4. Xiaomi Procurement
Procurement activity within Xiaomi chain of support operations relates to the ways resources are
acquired for
the business. Due to the size and scope of Xiaomi business operations, the company runs complex
procurement activities in the global scale, aiming to adhere to fair business practices. Major sources of
value for Xiaomi in procurement includes cost savings due to promixity of suppliers to manufacturing
locations. Moreover, the company achieves considerable savings on procurement costs due to high
volume of its orders.
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Chapter No. 17 Mckisneys 7s Model
17.1 Hard Elements

17.2 Soft Elements
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17. MCKINSEY 7-S FRAMEWORK
Before pursuing any of these objectives, marketing executives must assess organizational effectiveness.
According to the McKinsey 7-S model, there are seven internal criteria that must be aligned if an
organisation is going to meet its objectives. Peters and Waterman developed this framework to help
executives improve corporate performance, assess the potential for future changes, and determine the
best way to implement a new strategy. The McKinsey 7-S model classifies the seven internal criteria as
hard elements and soft elements. Hard elements are those that are easy to define, such as organisational
charts. Soft elements are often intangible, making them difficult to assess. Peters and Watermen define
strategy, structure, and systems as hard elements and staff, style, skills, and shared values as soft
elements.
Xiaomi McKinsey 7S model stresses the presence of strong links between elements that a way change
in one elment because change in others. As it is illustrated in given figure below, shared values are
poistioned at the core of Xiaomi McKinsey 7S model, since shared values guide employee behaviour
implications in their performance.
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17.1. Hard Elements
• Strategy
Xiaomi business strategy is based on cost leadership. Company’s business startegy also integrates
gathering and utilising a large fan base and aggresively increasing the ecosystem of products and
services. Moreover, Xiaomi position itself as an internet and software company rather than a
hardware company. Accordingly, the sales of hardware are preceived as a means to deliver
software and services in the long term prespective.
• Structure
Xiaomi has a matrix organizational structure. The electronics and software company has various
business units that are managed independently. Xiaomi organizational structure can also be also
classified as flat. Despite its large size employing more than 18000 people in 70 countries, the
compamy has only a few layers of management.
• Systems
Xiaomi’s business depends on a wide range of systems such as employee recruitment and
selection system, team development and orientation system and transaction processing system.
Moreover, there are crictically important systems for the company such as customer
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relationship management system, business intelligence system and knowledge management
system.
• Skills
The range of skill and competencies required to be successful at Xiaomi is vast and include
interpersonal skills, leadership skills, teamwork, ability to work under pressure and ability to
embrace change. Moreover, Xiaomi aims to recruit candidates to advanced communication
skills, customer orenitation, creativity, analytical thinking and forward thinking skills. Conceptual
thinking, stratgeic thinking and techincal expertise also belongb to the list of skills needed to be
succesful at Xiaomi.
17.2. Soft Elements

• Staff
Xiaomi has about 18,000 employees. Xiaomi offical website claims the following:
“Xiaomi is focused on being the most-centric mobile internet company, and we aim to constantly
exceed expectations through innovations in software and hardware services. Many of our
employees were initially fans of MI products, before they decided to join us.
Our team is not only passionate about technology, but also relentlessly purses perfection to break
tradition and push boundaries, all just to ensure that our products remian unique and offer
unparalleled user experience. Xiaomi is headquartered in Beijing, china and has offices in Asia-
Pacific, India and Brazil”.
• Style
Xiaomi founder and CEO Lei efficitively exercises visionary and inspirational leadership styles.
Lei Jun’s vision based on the belief that “ high-quality technology doesn’t need need to cost a
fortune” and he effectively communicates the vision to internal and external stakeholders. The use
of inspirational leadership style plays an instrumental role in terms of increasing the
numbers of Xiaomi fans with positive implications on the bottom line for the business.
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• Shared Values
According to Xiaomi, the company cherishes the following values:
“As a team, we share the same relentless pursuit of perfection, constantly refining and enhancing
our products to create the best user experience possible. We are also fearless in testing new ideas
and pushing our own boundaries. Our dedication and belief in innovation, together with the
support of MI fans, are the driving forces behind our unique MI products.
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Chapter No.18 Action & Control
18.1 Performance Measurement
18. ACTION AND CONTROL
Reviewing the company’s marketing mix brings up several issues for Xiaomi executives to address.
Because Indian consumers prefer products that simplify tasks and make it easy to save time and effort,
Xiaomi should make consumers aware of the productivity applications available on its cell phones and
tablets. Xiaomi also needs to use caution when creating packaging for products sold on the Indian
market. Because men have a great deal of buying power, the package designers should use masculine
colours and symbols to attract the greatest number of new customers to the brand. Finally, executives
must decide if they want to focus on the urban Indian market or the rural Indian market. If they
determine the urban Indian market is the most promising, logistics issues are likely to stem from the
traffic congestion on urban roadways.
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18.1. Performance Measurement
Xiaomi executives must measure marketing performance to ensure they are meeting their objectives.
Hollensen describes several methods of objective measurement. Sales by market segments, sales
growth rates, market share, and return on investment are some of the measures of performance related to
the product aspect of the marketing mix. In this case, it makes the most sense to measure performance
according to market share. The initial objective was to increase indian market share by twenty percent
within three years. If executives determine that market share has increased by twenty percent or more,
they have met their objective. Price changes relative to sales volume and price relative to competitor are
two measures of performance related to the pricing aspect of the marketing mix. Xiaomi should use
price relative to competitor as a measure of success because the company’s competitive strategy is based
on pricing. Using Hollensen’s framework, marketing executives typically measure the performance of
the distribution and communication aspects of the marketing mix. Sales by channel type, sales relative to
market channel, and percentage of stores carrying the product are all viable ways of measuring
performance related to distribution-related objectives. Determining cost per contact, sales per sales call,
new accounts per time period, and lost accounts per time period are all acceptable methods of measuring
performance related to communication-related objectives. These measurement methods are not
applicable here because Xiaomi did not set any objectives related to distribution or communication.
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Chapter No. 19 Corporate Ecosystem
19. CORPORATE ECOSYSTEM
Xiaomi ecosystem is vast and comprises 55 companies including 29 companies that have been
incubated from the beginning by Xiaomi. The company sells a wide range of products from
smartphones to kettles and gloves. Moreover, ever-expanding corporate ecosystem has been placed
at the core of Xiaomi business strategy.
Usually, producing a wide range of products and services threats to compromise the focus on core
products and services. Howerver, Xiaomi claims to have addressed this threat in a proactive manner.
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Specifically, according its official website, while the company focuses on its core products-
smartphones, smart TVs and smart routers. Xiaomi invests in a companies that produce other types of
products without being involved in operation management.
Smartphones are placed at the core of the Xiaomi ecosystem. Moreover, smartphones are used to
facilitate the sales and use of many other products and services. Xiaomi smart devices include Mi Water
Purifier, Mi Air Purifier, Mi Induction Heating Rice Cookers and other products.
All smart devices are connected to Xiaomi IoT platform and can be managed though Xiaomi
smartphone. In 2013, the electronics and software company announced its plans to invest in 100
hardware startups. The company also sells a range of “non-smart” products, like towels, and suitcases.
Increasing numbers of startups are currently joining Xiaomi ecosystem to gain support to grow rapidly.
Xiaomi has experienced technial staffs, engineers and product managers, who can play an instrumental
role in fuelling the growth of small-sized companies.
At the same time, joining Xioami ecosystem also has some drawbacks. Specifically, start-ups need to
operate with low profit margin according to Xiaomi business strategy. Moreover, over dependence on
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Xiaomi for branding and distribution can be mentioned as another drawback of belonging to Xiaomi
ecosystem.
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Chapter No. 20 Corporate Social Responsibility
20.1 CSR Programs & Initiatives

20.2 CSR Criticisim
20. CORPORATE SOCIAL RESPONSIBILITY
20.1. CSR Programs and Intiatives
Xiaomi does not publish annual CSR report. It has been noted that despite its branding effort to
resemble that minimalist style of Apple, Xiaomi does not show similar commitment in environmental
responsibility. However, the mobile internet company may start publishing CSR reports after initial
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public offering (IPO) of its stocks that is expected to take place in the foreseable future.
Official Xiaomi website declares company’s pledge “to reduce the use of hazardous substances in
products.” However the website does not disclose any data at all regarding emissions or any other
environmental imfact of Xiaomi products and services.
According to German Federal Office for Radition Protection Xiaomi smartphone Mi A1 has “Specific
Absorbtion Rate ” of 1,75 watts per kilogram, which is the highest level of radition of smartphones
worldwide.
In general, there is a lack of information related to Xiaomi CSR programs and initiatives, as it is
illustrated in the table given below.
CSR aspect of the business Xiaomi performance

Supporting Local Communities No information available
Educating and Empowering Workers No information available
Labour and Human Rights No information available
Employee Health and Safety No information available
Gender Equality and Minorities It has been noted that Xiaomi uses “yanzhi,” or physical
apperance metric when hiring, leading to discrimination
during employee recruitment and selection process.
Enegry Consumption No information available
Water Consumption No information available
Waste Reduction and recycling MI INDIA maintains PRODUCT TAKE-BACK &
RECYCLING PROGRAM. Xiaomi authorised e-waste
recycler can collect e-waste from customer’s location or
customers also can drop e-waste at any of company’s
service centers.
Carbon Emissions No information available
Sustainable Sourcing No information available
Other CSR Initiatives and Chairtable No information available
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Donations
20.2. CSR Criticism
Xiaomi has faced criticisms on the grounds of false advertising, very long working hours, user privacy
concerns and others. In 2014, The Taiwanese branch of Xiaomi Inc. was fined NTSUD6,00,000
(USUSD19,884) by Taiwan’s Fair Trade Commission (FTC) for false advertising in which the company
ballooned the sales figures for its Redmi phones, a violation of fair trade act.
Xiaomi has been also criticized for making its employees work for very long hours. In 2015 Xiaomi
then Vice President of International, Hugo Bara stated that; “Our company working hours are from 9:30
in the morning to 9:30 in th evening, and that’s just the regular working hours, plus one hour for lunch.
But show up in our office at 11pm and you’ll see that 80% of the people are still around often because
they’re working something that they feel is so important that they need to spend extra time on it.”
Xiaomi has beeen also criticized for privacy concerns. “Discovered by India-based security from eScan
Antivirus, one of the vulnerability centers around the Mi Mover app, which lets you transfer settings
and other data from an Android device to a Xiaomi phone. The app overrides Android sandbox
protection, however, when that transfer takes place between to Xiaomi device, since system data like
and confidenstial information like payment information get moved over.
To protect that information from being transferred willy-nilly, you must provide a password before
using the Mi Mover app. What the research found was that the app did not ask for any password, be it
a fingerprint or a pattern lock, When transferring between Mi Max 2 and Redmi 4A, both of which are
Xiaomi devices.
This becomes a serious if someone gains access to your unlocked Xiaomi device, since they can clone
your system and app data without to much hassels. Also without Android’s built in sandbox protection,
there is no fallback protectation from the system itself.”
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Aparts from incidents mentioned above, Xiaomi had to deal with a number of other CSR-related issuee
during the past years.
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Chapter No. 21 Case Study: PurePlay,
The Unsustainable Business model
21.1 The Brick & Click New Rule

21.2 Xiaomi’s Pure Play
21. CASE STUDY: PURE PLAY, THE UNSUSTAINABLE BUSINESS MODEL
21.1. The Brick-and-Click New Rule
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Considering all the differences between markets, the main question that comes to mind would be
whether it is feasible to build a top brand in the digital age without using traditional retail or spending
on any form of marketing communications (e.g.: celebrity endorsement, billboards, social media
advertising), hoping that the consumers’ word-of-mouth would manage to do the trick on its own.
Recent statistics on pure-play e-commerce tend to show that e-retailers need to embrace the “brick-and-
click” approach if they intend to grow a viable business on the long run. As early as 2003, McKinsey
conducted a study of the 100 largest North American direct retailers. The results showed that retailers
with offline and online stores would capture no less than 52 % of the Internet sales while the retailers
only active on the cloud would barely garner 31 % (Saxena, 2011).
21.2.Xiaomi and Pure Play
Xiaomi was the first Chinese company to sell its smartphones online, which, at the time, was regarded,
by consumers themselves, as a disruptive strategy that had never been implemented before.This novelty
intrigued many users and media channels, which helped raise awareness among the Chinese audience.
Since then, other Chinese smartphone manufacturers (i.e.: Oppo) followed the same path, which implies
that Xiaomi does no longer possess a competitive advantage in creating hype around flash sales through
online channels. Online channels were favored as they enabled the company to keep costs down.
However, the company slowly adapted its strategy to meet the need for offline channels, even in
Mainland China where its e-sales model had been a success. Mi Homes were first created. These stores
were designed as “experience stores” that would allow customers to interact with the products before
being invited to purchase them online. However, the huge success of the Mi Homes led Lei Jun to
announce in late 2015 that they would be converted into real retail stores. Xiaomi’s ambition was to
combine “the efficiency of e-commerce with the service and user experience of offline retail”. By late
2016, Xiaomi had opened 54 Mi Home stores in Mainland China (MIUI Forum, 2017). However,
Xiaomi does not wish to become a mere retailer of electronic items but rather aspires to lead the market
of interconnected devices in the Internet industry as evidenced through its business model that is based
on online connectivity. Therefore, it is plain that offline channels or ordinary marketing tools would
undoubtedly play a marginal role in the strategy of the start-up. Evidence of this fact lies in a smart
strategic move operated in SouthEast Asia. In July 2015, Xiaomi proved once again that it had no
intention to follow the traditional track but was set to entirely transform the way people consume
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technology as it teamed up with American start-up Uber to deliver its smartphones on demand in
Singapore and Malaysia. Ordering a phone becomes as simple as ordering a ride and payment is
instantly activated via the credit card linked to the Uber account of the costumer (Olson, 2015).
Pure play might not be viable on the long run. However, Xiaomi seems to be ready to entirely reshape
the e-business environment.
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Chapter No. 22 Xiaomi On International Markets
22.1 Internationalization: Globalization VS Localization
22.2 The Drivers of Internationalization
22.3 The Four Entry Modes
22.3.1 Export Modes
22.3.2 Contractual Modes
22.3.3 Investment Entry Modes
22.4 Xiaomi’s Expansion
22.4.1 Overview: Xiaomi’s Overseas Experience
22.4.2 The Drawbacks to the International Expansion
22.5 Xiaomi in India : A Success Story
22.5.1 Overview
22.5.2 Localization : Production
22.5.3 Manufacturing Power: India VS China
22.5.4 Localization : Marketing
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22. XIAOMI ON INTERNATIONAL MARKETS
22. 1. Internationalization: Globalization vs. Localization
“Once a company decides to go international, one of the most important strategic decisions to be made
is to what extent a global or cross-culturally integrated marketing strategy in the foreign markets must
be followed.” Standardization or globalization imply that the company implements the same marketing
strategy across borders, which usually goes together with economies of scale and sizable savings in
communication and manufacturing costs. Furthermore, a global strategy allows the company to preserve
a consistent brand image in every country. On the other hand, localization implies the adaptation of
certain dimensions of the marketing mix to the local audiences’ characteristics. Whatever global
strategy is chosen, the marketer will usually have to adapt elements of the marketing mix since people
all over the world share different cultures, beliefs, experiences, values as well as attitudes, needs and
consumption behaviors (De Pelsmacker et al., 2013).
22.2. The Drivers of Internationalization
Due to globalization, business competition has never been fiercer in history. For both manufacturing
and services companies, internationalization, or the expansion of business activities on foreign markets,
is often a matter of survival rather than a mere international vision to embrace. Devising an appropriate
international strategy is all the more important that expanding overseas will allow the company to
sustain its activities on the long run. Choosing the wrong entry mode would hence also hamper the
companies’ thriving and could, in some instances, have a damaging impact on the company’s future
(Gunnarsson, 2011). Consequently, international expansion will always come hand in hand with a
certain risk involvement whatever the amount of allocated resources and level of commitment.
Different factors may lead a firm to seek international expansion (e.g.: cheaper labor, availability of
production raw materials, market share growth, risk limitation by diversifying the locations,
technological advancements, transport and storage costs, new targeted segments and the ease to sell
goods for which the markets are similar) (Porter, 2004; Uche Ofili, 2016). These factors will differ
depending on the organization and the industry it evolves in. However, four factors are usually
regarded as the main drivers of internationalization:

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• The market: A company will seek to expand its business activities to meet common needs on
foreign markets. This will often be the case of companies that meet global needs and can
therefore reach out to global customers. This driver is all the more important that certain
• branding strategies are transferrable across borders;
• The cost: In order to benefit from economies of scale, certain companies will seek international
expansion and thereby increase the quantity of goods produced;
• Government policies: Countries with government policies favorable to international firms
(e.g.: countries with limited corruption and favorable taxation and intellectual property rights
policies) are more likely to attract foreign direct investment;
• Competition: Companies will seek international expansion in order to respond to competitors’
pressure. Indeed, on markets that have become ever more globalized, the competition analysis
cannot be limited to a market or a single industry but rather should take into consideration
overseas competitors’ performance as well as threat of substitutes (Yip, 2003; Uche Ofili,
2016).
Even though a firm will see all these or part of these drivers in one specific targeted market, it should
take other elements into consideration in order to understand how and to what extent its branding and
larger marketing strategy should be adapted. Indeed, it is still crucial to understand how cultural
differences as well as social, political and economic issues will impact the firm’s performance abroad
using strategic tools such as the PESTEL analysis94. (Khan, 2005; Uche Ofili, 2016).
22.3. THE FOUR ENTRY MODES
An entry mode is defined as “an institutional arrangement that makes possible the entry of a company's
products, technology, human skills, management or other resources into a foreign country”.
Root (1994) classifies entry modes into three main categories:
22.3.1.Export Modes
Exporting (directly or indirectly, through an agent or a distributor) is traditionally regarded as the
easiest and quickest mode of international expansion. It can serve as the first stage of the
internationalization process in a specific country (Bradley, 2005). This entry method is usually preferred
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by firms not willing to commit a significant level of resources and investment into the targeted market
even though it comes at the expense of considerable profit return and control over the distribution firm,
which would stand as the two main disadvantages of this strategy (Chung and Enderwick, 2001).
• Direct Exporting
The exporting company directly sells its goods to an importer located in the targeted country. This entry
mode entirely relies on the importing company and does not require any specific knowledge about the
foreign market on the part of the exporting company. However, the exporting company still has partial
or full control over the foreign market plan through direct distribution or direct branch subsidiary. The
importer has to keep in direct contact with the firm in order to provide valuable feedback about the
exporting results (Root, 1994).
• Indirect Exporting
The exporting firm will hire a firm already established in the targeted country to handle the whole
exporting process. Even though the exporting firm has no control over the latter in terms of the strategy
adopted, it enables it to gain better understanding of a potentially interesting market (Root, 1994;
Gunnarsson, 2001).
22.3.2. Contractual Modes
The contractual entry methods consist of a series of arrangements made between the internationalizing
firm and domestic companies already active on the targeted market. Through contractual modes, the
company will license several of its intangible assets (Root, 1994; Bradley, 2005). According to Albaum
and Duerr (2008), contractual modes are strategic alliances that will allow the firm to enhance its
positioning on the foreign market.
• Licensing
The company provides the licensee firms with technical support (e.g.: operations expertise, brand name,
manufacturing know-how, patents) in exchange of a fee or royalty. The main advantages of this entry
mode are the low investment cost and the good market knowledge obtained through the licensee (Root,
1994; Bradley, 2005).
• Franchising
Franchising is a form of licensing by which the licensing company provides licenses instead of technical
support (Bradley, 2005).
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• Contract Manufacturing
A combination of licensing and investment, contract manufacturing means that the internationalizing
firm seals an agreement with a company on the targeted market to assemble and manufacture its
products while retaining full control over the marketing and distribution strategies (Root, 1994).
22.3.3.Investment Entry Modes
The internationalizing company decides to invest a large chunk of resources into forming a
new/acquiring an existing entity into the targeted market or teams up with a local partner company to
do so.
• Sole Venture
The expanding firm opens a fully owned subsidiary in the targeted country. This entry mode requires
a significantly high investment, which goes hand in hand with higher risk/profit potential. This entry
mode allows the company to retain full control over the overall strategy. The organizational capacity
remains in the hands of the company’s management while it will usually need to acquire distribution
facilities in the targeted market (Agarwal and Ramaswami, 1991; Buckley, 2002).
• Joint Venture
The internationalizing firm seals an agreement with a local company by which they create a new entity.
“In general the ownership is shared by the participants with more or less equal equity distribution and
without absolute dominance by one party”. This entry mode has several advantages, among which its
limited cost in comparison with an acquisition (the risk is only proportionate to the extent of the equity
participation), the minimum risk of partnering with a local company and the greater profit potential. The
downsides would be the potential differences between the two managing firms as well as the obligation
to share profit (Agarwal and Ramaswami, 1991; Albaum and Duerr, 2008).
22.4. Xiaomi's Expansion
22.4.1. Overview: Xiaomi’s Overseas Experience

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So far, Xiaomi has mostly concentrated its international expansion to Southeast Asian markets and, to
a lesser extent, Latin America. Considering the characteristics of its strategy that were detailed in the
first part of this dissertation (i.e.: the e-sales model, the limited production capacity, the absence of
marketing and advertising budget and the limitation of flagship stores), it will not come as a surprise to
the reader that many experts questioned Xiaomi’s capabilities to prosper on foreign markets where the
dynamics and norms are very different from those found in Mainland China. As stressed in the previous
part of this paper, Xiaomi has understood the need for adaptation in order to succeed on international
markets and has consented changes in its core strategy. Xiaomi managed, for instance, to well foray into
the Hong Kong and Taiwan markets (Dhillon and Ghupta, 2014). Its quick foray on these markets
proves that the Chinese company can succeed on well-developed markets where carrier subsidies play
a significant role in making the consumers less price-sensitive.
22.4.2.The Drawbacks To The International Expansion
Even though Xiaomi has proven its willigness to adapt to foreign markets, there are still core elements
that would need to be fixed in order for the company to thrive overseas.
• Manufacturing Capacity
Like a sizable majority of its competitors, Xiaomi does not manufacture its own devices but relies
on contracted manufacturers (e.g.: FIH Mobile Ltd., Foxconn and Inventec Corp) to produce them.
Even though relying on manufacturing experts enabled Xiaomi to concentrate its efforts on
software development (Hyun, 2016), this might stand as a drawback to its international ambitions
since the firm depends on its contracted manufacturers’ investment in plant and machinery to scale
up the production and match international demand. Meeting the demands of international audiences
would thus require improved production capacity (Ghupta &Dhillon, 2014).
• Legal Issues
If Xiaomi is to enter mature markets such as those of North America and Europe where laws and
regulations related to intellectual property rights are stricter, it will first have to comply with the
legal requirements related to licensing fees and, most importantly, patents. Indeed, the Chinese
company will have to adapt to the cutting-edge 4G technologies, which are associated with
111 | P a g e
particularly expensive patents (Dhillon and Ghupta, 2014). Furthermore, dealing with those issues
would necessitate hiring a competent litigation team able to handle the threat of lawsuits on
Western markets. In order to solve this issue, the Chinese company already took bold steps. Indeed,
in 2016, Xiaomi sealed a deal to buy no less than 1,500 patents from American giant Microsoft. Even
though no financial terms were revealed, the deal included Xiaomi’s incorporation of Microsoft’s
main software programs on the phones (i.e.: Office and Skype) (Clover, 2016).
22.5. XIAOMI IN INDIA: A SUCCESS STORY
22.5.1. Overview
Some products, such as high-tech products, tend to be sold to similar audiences across borders as
they usually address universal needs. However, the marketer will usually have to adapt certain
dimensions of the marketing mix (De Pelsmacker et al., 2013). As such, in the case of Xiaomi,
the targeting and positioning are not the dimensions that should be adapted. The sales model and
communication dimensions are the factors to be addressed, especially on markets characterized
by low Internet penetration. And the company did address them in order to succeed in India. In
2014, Xiaomi entered the Indian market as it soon realized that India, the largest low-cost
smartphone market in Asia after China, was crucial if it were to achieve its global ambitions.
And its analysis has proven right. Indeed, by 2016, the country had become its second largest
source of revenues after Mainland China. India was bound to play a significant role in making
Xiaomi a global player. Indeed, while the smartphone penetration rate was set at 53.3% in
China in 2016 (Statista, 2017b), there was much room for growth in India since the rate was set at
only 29.8% in the same year (Statista, 2017c). Furthermore, in spite of the tremendous economic
boom that India witnessed in the past years (i.e.: the GDP grew by 7.62% in 2016, Statista, 2017d),
the population still enjoys lower per capita income, which was bound to make the price-conscious
Indian customer a perfect target for the Mi phones. Penetrating the Indian market has granted
Xiaomi sustained revenue growth and enabled the brand to benefit from scale economies because
of an increased volume of production, which was crucial to maintain its undeniable cost advantage
(Gupta and Wang, 2015). India also served as a test ground for Xiaomi to determine how it had to
adapt its business model for larger markets, keeping in mind the differences in e-commerce
penetration and Internet literacy. Furthermore, India, the biggest English-speaking market in Asia,
also stood as the perfect choice to drive Xiaomi’s international expansion overseas (Gupta and
Wang, 2015).
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22.5.2. Localization: Production
When it first entered India in 2014, Xiaomi was exporting Chinese-made devices. However, it soon
shifted from this production paradigm to the establishment of manufacturing facilities in the country in
order to produce devices specifically designed for the Indian market. This strategy was adopted in order
to comply with the Indian government’s “Made in India” policy. Released in May 2014, this initiative
is meant at pursuing the development of a domestic economy and reducing the country’s dependency
on products imported from China. Furthermore, the Chinese start-up also built a research and
development center in the country with the cooperation of Foxconn, the world’s largest manufacturer
of electronic devices (Hyun, 2016). Complying with this policy through the establishment of domestic
production facilities enabled Xiaomi to further reduce its manufacturing costs (notably because of the
use of local raw material) and thereby secure its price competitiveness. By 2016, 75% of the Mi phones
sold in India were locally produced while Xiaomi announced plans to establish two additional factories
in the country and invest in more R&D and data centers.
22.5.3.Manufacturing Power: India vs. China
Complying with the Indian government’s policy inevitably enables Xiaomi to take full advantage of
the labor potential of India. A labor force that has become ever more expensive over the past few years
(i.e.: the wages in manufacturing reached a record high in 2015 with CNY 55324.00 /year) coupled
with increased energy bills and the inflation of raw materials prices are enough to understand the
eroding competitiveness of China as the major manufacturing center of the world. On the other hand,
India, with its raw materials and a relatively inexpensive active population aged 15-65 has remained a
major manufacturing location so far, characteristics that also enable Xiaomi to maintain its price
competitiveness on foreign markets (Hyun, 2016).
22.5.4.Localization: Marketing
Xiaomi only relied on online channels to market its products in China. However, the Internet
penetration rate in India, set at 26% of the population in 2015 (ITU, 2015), was too low to allow
the company to only rely on online means to gain market share in the country. When it entered
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India in 2014, Xiaomi did not change its strategy but rather partnered with Flipkart, India’s leading
e-commerce platform, to grant customers easy access to its phones. It further on cooperated with
Amazon, Snapdeal, and Paytm to increase the number of online distribution channels (Hyun,
2016). In 2015, however, Xiaomi announced a plan to increase offline marketing in India as the
company was facing slow market growth and intense competition. The Mi phones were then made
available in mobile brick-and-mortar stores. Indeed, Xiaomi sealed a deal with the Indian supply
company, The Mobile Shop, that was responsible for distributing the Mi phones in its 800 stores.
Another partnership was also signed with Airtel, the largest mobile carrier in India, which was to
sell the Mi phones in the Airtel stores in six main cities. Xiaomi had to adapt to the customers’
habits and needs. The offline strategy in the country made more sense as the Indian consumers,
more confortable with cash transactions, were buying their phones from offline stores. Another
major change in the company’s marketing in India was noticed in its investing in traditional
advertising. Indeed, in 2015, Xiaomi advertised the brand in six major Indian newspapers. Since a
sizable portion of the devices was sold offline, viral marketing was hardly achievable. In order to
localize its marketing approach, the Chinese company also opened over 100 customer centers to be
found in 56 cities of the country (Hyun, 2016). Furthermore, coupling offline with online marketing
has also allowed the company to increase the visibility and awareness of the brand among the
Indian population. Finally, on May 11th 2017, Xiaomi announced via the MIUI forum (MIUI
Forum, 2017b) the upcoming opening of the first MI Home, the first offline store to be fully
dedicated to selling Xiaomi’s products, in Bangalore, India, on May 20th. Manu Kumar Jain,
Xiaomi India Managing Director, announced the opening via Twitter.
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Chapter No. 23 Data Analysis & Interpretation
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Q1. What is gender ?
SEXUAL CATEGORY
Female Male
49%
51%
Analysis:
Percentage of male & female in each ethnic group. Many scholars and policymakers have noted that the
females includes housewifes, students are preferred MI brand more than male.
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Interpretation:
Figure:- 23.1 Represents Distribution of Gender of the Respondents.
Q2. What is your age group?
PEER GROUP
Below 20 20-40 40-50 50 & Above
1%
5%
34%
60%
Analysis:
A risk prediction score that include these factors was able to predict a group with these percentages and
their percentage information is generated by 2020.
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Interpretation:
Figure:- 23.2 Represents Distribution of Age of the Respondents.
Q3. What is your qualification?
MODIFICATION
U.G P.G Professional
32%
37%
31%
Analysis :
The above pie diagram describe that the using of MI mobile phones calculation is 36.5% are undergraduates
and post graduates ratio include 31.5% and professional list is 32%.
Interpretation:
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Figure:- 23.3 Represents Distribution of Qualification Respondents.
Q4. How much do you have experience?
KNOWLEDGE
0-2 less than 5 years more than 5 years none
6%
18%
52%
24%
Analysis:
MI mobile phones are highly competitive on spaces for the cheap price and now its calculated that 54.4 %
are experience counted of 0-2 years and 24.3% less than 5 years people’s and more than 5 years experience
is calculated 19.4% and only 0.6% are calculated on none of the list.
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Interpretation:
Figure:- 23.4 Represents Distribution of Experience of the Respondents.
Q5. Which brand do you choose?
BRAND SELECTION
Nokia Samsung LG
25%
28%
47%
Analysis:
How, then, do consumers choose? The answer seems to be what the brand name mean to them in this
project report I have dicussed the brand value, brand image, product value and the target market. Nokia
brand are choosen by 27.7%, Samsung brand are choosen by 46.8% and 25.5% are choosen by LG.
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Interpretation:
Figure:- 23.5 Represents Distribution of Brand Selection of the Respondents.
Q6. How many mobile phones do you own?
NUMBER OF MOBILE PHONES

1 2 3
14%
54%
32%
Analysis:
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In 2020, the numbers of smart phone users in the world is 3.5 billion and in my book case the users are
53.4% are using 1 mobile phone and 31.5% are using 2 mobile phones and the 3 mobile phones users are
14.1%.
Interpretation:
Figure:- 23.6 Represents Distribution of Mobile Phones of the Respondents.
Q7. Since how long have you been using your mobile phone?
USES OF MOBILE PHONES

less than 6 months less than a year more than a year
28%
41%
31%
Analysis:
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I still have my MI phone but calculation says that less than 6 months using mobile phone is 28.6% and less
than a year is 29.6% and more than a year calculation is 37.8% . I am using daily for internet, videos and
messages, in the past I used it for listening music.
Interpretation:
Figure:- 23.7 Represents Distribution of Uses of Mobile Phones of the Respondents.
Q8. Rank the brand according to your preference in case you are purchasing a new
mobile phone?
ROW THE BRANDS, ACCORDING YOUR

LIKING
nokia samsung sony
15%
26%
59%
Analysis:
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Smartphones have become the most important gadget to own these days the rank of brands according to
my preference is 15% of nokia brand and the rank of samsung brand is 59% and last sony brand is 26%.The
mobile phones in india pack hardware that give entry level laptops to run for their money and good
recession.
Interpretation:
Figure:- 23.8 Represents Distribution of Row The Brands of the Respondents
Q9. Which promotion offers attract you the most ?
ENCOURAGEMENT OFFERS
free gifts price offer discount replacement policy
1%
19%
44%
36%
Analysis:
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The mobile phone users want offers to attraction and more of the people want free gifts that percentage
include is 19% and price offer attracts people is 36% and discount offers related people are 44% and the
replacement policy include 0.1% .
Interpretation:
Figure:- 23.9 Represents Distribution of Encouragement Offers of the Respondents.
Q10. Which of these following factors affect your purchase ?
PRETEND ELEMENTS
advertisement suggestions from friends and relatives
brand ambassadors attractive display
19%
23%
22%
36%
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Analysis:
Advertisement is the most important factor to purchase the mobile phone advertisement affects the
purchase decision of people is 23% and the suggestions from friends and relatives includes 36% and brand
ambassadors is also most affective factor to the people is 21% and the display of the product is much more
important factor and that is 20%.
Interpretation:
Figure:- 23.10 Represents Distribution of Pretend Elements of the Respondents.
Q11. Does the features of the product influence on your purchase decision?
CHARACTERISTICS EFFECT
yes no may be
16%
11%
73%
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Analysis:
73% product influence the people’s purchase decision we are giving advise from friends and relatives about
the product that 11% it does not influence the people’s purchase decision and 16% may br influence he
people’s purchase decision.
Interpretation:
Figure:- 23.11 Represents Distribution of Characteristics Effect of the Respondents.
Q12. Which media of advertisement influence your purchase?
ANNOUNCEMENT EFFECT
newspaper television magazines internet
10%
24%
56%
10%
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Analysis:
There are many modes of advertisement which influence people’s purchase decision such as newspaper
10%, television 24%, magazines 10%, & internet 56%. Now a days social media plays a very important
role to purchase any of the product.
Interpretation:
Figure:- 23.12 Represents Distribution of Announcement Effect of the Respondents.
Q13. How frequently do you purchase mobile phone ?
REGULARLY BUY
once in a 6 months once in a year twice a year 4-5 years
8%
13%
27%
52%
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Analysis:
The frequently of purchase of mobile phones is depend on brands but the data analysis says that the 13%
of frequency people change their mobile phone in once in a six months, and yearly includes 52% and the
twice in a year ratio includes 27% lastly the less percentage gives 8% to the 4-5 years.
Interpretation:
Figure:- 23.13 Represents Distribution of Regularly Buyers of the Respondents.
Q14. If your preferred brand is not available for purchase than what will you do?
FAVOUR BRAND NOT OBTAINABLE

postpone your purchase switch over the brand go to the showroom of your brand
37% 38%
25%
Analysis:
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Preference brand is most important of purchase influence that is very high and it is also divided in to the
number of customers preference that includes postpone their purcahse is 38%, many of the customers may
over switch the other brand is 25% and that customers who’s preference is very important that will go to
showroom and purchase of their brand is 37%.
Interpretation:
Figure:- 23.14 Represents Distribution of Favour Brand Not Obtainable of the Respondents.
Q15. If another brand of the same product appear in the market will you prefer to
stop buying the brand and buy the new brand?
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SHIFT TO OTHER BRAND
no , not at all no, I shall not I may consider can't say
18%
37%
33%
12%
Analysis:
Not at all include 37% those customers who are not prefere another brand that include 12% & I may
consider include 33% & 18% include can’t say
Interpretation:
Figure:- 23.15 Represents Distribution of Shift To Other Brand of the Respondents.
Q16. How much importance do you give the following factors. When you purchase a
mobile?
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Main elements influence to purchase mobile
phone
120%
100%
80%
60%
40%
20%
0%
price brand colour shape design quality features user friendly
very important important normal least important none
Analysis:
The research report says that factors to purchase a mobile phone are divided into : very important,
important, normal, least important and none. As shown in the above figure proves that the first factor very
important is given to the quality & features. Secondly, its given the very important factor is to the price &
friendly. The second factor is important which is to be given to users & shape of the mobile phone. The
third factor is normal which is specified to the shape & colour. And the fourth factor is least important is
located to the price & friendly. The last factor is none of the other factors which is specified to the user &
friendly. Reponses proves that as per the people’s concern very importance is given to features & quality
to purchase a mobile phones rather than other following factors.
Interpretation:
Figure:- 23.16 Represents Distribution of Main elements influence to purchase mobile phone
of the Respondents.
Q17. How satisfied are you with the following factors in your preferred mobile?
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Pleased elements favour your mobile phone
120%
100%
80%
60%
40%
20%
0%
price brand colour shape design quality features user friendly
very satisfied satisfied normal least satisfied can't say
Analysis:
The research report says that factors in your preferred mobile phone are divided into : very satisfied,
satisfied, normal, least satisfied and can’t say. As shown in the above figure proves that the first factor very
satisfied is given to the colour & features. Secondly, its given the very satisfied factor is to the price &
design. The second factor is satisfied which is to be given to users & brand of the mobile phone. The third
factor is normal which is specified to the shape & users. And the fourth factor is least satisfied is located
to the shape & friendly. The last factor is can’t say of the other factors which is specified to the quality &
shape. Reponses proves that as per the people’s concern very satisfied is given to price, colour, shape &
design to their preferred mobile phones rather than other following factors.
Interpretation:
Figure:- 23.17 Represents Distribution of Pleased elements favour your mobile phone
of the Respondents.
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Chapter No. 22 Conculsion & Recommendations
22.1 Conclusions
22.2 Recommendations
22.3 Biblography / Webliography
134 | P a g e
22.1. CONCLUSION
When I first started investigating Xiaomi’s business model, I had never envisaged how many
valuable business insights my research would leave me with. I had long ago realized that the digital
age had dramatically impacted the marketing tools and forever transformed the branding strategies
and brand-customers’ relationships. However, never had I come across a brand whose business
model was entirely built on these changing dimensions of the custmer’s experience. By involving
the consumers into the development of the company’s products, Xiaomi has made the contribution
of its fans its essential foundation and, because of the crucial role they play in the success of the
brand, Xiaomi is compelled to always increase their satisfaction in order to survive and thrive, a
strategy that should ultimately lead to increasing the consumer’s engagement and facilitate its
monetization. As such, the brand and the fans’ contribution are so dramatically intertwined that
trying to distinguish one from the other would stain Xiaomi’ identity. Furthermore, in limiting its
advertising investments and relying on e-WOM, the company has proven that the Internet has
empowered consumers to the extent that sales can be driven by their sole contribution on social
media. Lastly, with a business model aimed at building a new Internet ecosystem that should
ultimatimally bring innovation to everyone and facilitate the development of a connected lifestyle,
the company has found a unique differentiation factor that enables it to evolve in a blue ocean,
away from Apple, Samsung and all other big players of the industry. Sadly enough, this essential
dimension remains seldom noticed and all the less appreciated since the company does not
sufficiently invest in communicating on this core differentiation factor that was only disclosed to a
few tech-savvy geeks. The many arguments that were put forward in the present paper do tend to
stress the urgent need to change this part of the operational marketing in order to increase the
appeal of the brand to a larger international audience. In order to reach its objectives in terms of
market share, efficiency and revenues, Xiaomi chose the sole venture entry mode while it adapted
some aspects of its marketing to the Indian audience. This went hand in hand with an obvious
change in strategy. Complying with the “Made in India” policy also enabled the company to set up
a more efficient supply chain and to better develop its logistics for international expansion (Hyun,
2016). Interestingly enough, India is not a mere exportation center for the scompany but has rather
become a main headquarter to serve its expansion ambitions since the Chinese start-up has set up an
R&D center in the country together with a manufacturing facility and a data center aimed at
monitoring its English-speaking markets on the longer run. Furthermore, in order to expand its
135 | P a g e
portfolio of companies on overseas markets, Xiaomi has invested in local tech companies, notably
Flipkart, an Indian e-commerce platform, and Hungama, India’s first digital content company
(Gupta and Wang, 2015; Hyun, 2016). Xiaomi has thereby abided by its core strategy on some
dimensions (i.e.: investing in digital companies to expand its portfolio of companies) and adapted
the necessary dimensions to succeed on the targeted market: Xiaomi embraced a local vision in its
global ambitions.
22.2. RECOMMENDATIONS
On the basis of discussions and analysis above, the following recommendations can be formulated
to Xiaomi in order to address the current challenges faced by the business and increased its long-term
prospects:
1. The internet technology company is trying to be everything for all in inexpensive product
segment selling a vast range of products from smartphones to rice cookers to umbrellas. While
expansion of Xiaomi ecosystem can benefit the sales of all products and services belonging to
ecosystem, this strategy can also compromise the focus for the company. Therefore, Xiaomi
senior management is recommended to limit the range of products and services that enter into
its ecosystem.
2. Xiaomi is rightly preceiving the immense potential of Internet of Things (IoT) and committing
to investments in this direction. At the same time, it is important for the electronics and
ssoftware company to strengthen its position in cloud segment, currently dominated by
Microsoft, so that Xiaomi can succeed with its IoT ambitions. Accordingly, Xiaomi is
recommended to invest in cloud segment by attracting highly competent specialists.
3. Xiaomi is recommended to form strategic alliances with companies operating in ecommerce, IT

and affiliated industries. Efficient implementation of this strategy can paly an instrumental role in
reducing marketing and operational costs in various manners. Moreover, formation of
4. strategic alliances is also important for Xiaomi in terms of addressing its weakness associated
with a lack of experience in international marketplace.
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5. Xiaomi has become one of the most valuable startup from valued currently at US 50 Billion
Dollars. It made huge success in the smartphone selling business by implementing mix market
strategies which have proven highly successful in the global as well as domestic markets.
6. Xiaomi has marketed itself in the lower and mid-tier of the market and has not established or
tried to establish itself only a premium product manufacturer which has become one of its biggest
strength.
7. The strategy of creating the buzz of a company which has also been adopted by top tier brands
like Apple and Samsung has been successfully created by Xiaomi and has beaten Apple and
Samsung on the price fronts.
8. Adopting guerilla marketing as a way of reducing costs along with use of word of mouth
publicity and building strong consumer bond has helped Xiaomi to come this far.
9. The study has helped to understand how well planned and perfectly executing marketing strategy
of Xiaomi has helped it come this far and helped it over take international and critically
acclaimed brands. There is a huge opportunity for Xiaomi that lies ahead.
22.3. BIBLOGRAPHY
22.3.1. Books:
• Marketing Management Series - Philip Kotler

• Strategic Marketing Management – Nikisha Prakash Kukreja
• Principles of Mafrketing – Philip Kotler
22.3.2. Websites:
• https://research-methodology.net/xiaomi-inc-report/
• https://www.quora.com/What-is-themarketing-strategy-behind-Xiaomi-mobiles
• https://www.techinasia.com/10-strategiesXiaomi-secret-sauce
• https://www.techinasia.com/10-strategiesXiaomi-secret-sauce
137 | P a g e
• https://www.mobilescout.com/android/news/n91369/
• https://www.marketing91.com/marketing-mix-xiaomi
• heartofcodes.com/marketing-strategy-of-xiaomi
• https://research-methodology.net/xiaomi-marketing-strategy-hunger-marketing-in-
action
138 | P a g e

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“A PROJECT REPORT ON XIAOMI”

University of Mumbai for partial completion of the degree of

Bachelor of Management Studies (Marketing)

Under the Faculty of Commerce

BHAVNA NANIKRAM AHUJA

T.Y.B.M.S Semester-VI Roll No. 81

Academic Year 2019-2020

Under the guidance of

Dr. Nikisha Kukreja

R.D. & S.H. NATIONAL

Barrister Hotchand Gopal Das Advani Marg

Opp. Linking Road,Bandra (W)

precious time from a busy and hectic schedule.

I am thankful to Mrs NEHA JAGITANI, Principal, of R.D.S.H. NATIONAL College.

helping hand for conceiving higher education.

I, MS. BHAVNA NANIKRAM AHUJA the student of BMS (Marketing) Semester VI

(2019-2020) hereby declare that I have completed the project on “A PROJECT

This information submitted is true and original to the best of my knowledge

(Signature of the student)

This is to certify that BHAVNA NANIKRAM AHUJA of BMS ( Marketing)

Semester VI (2019-2020) has successfully completed the project on “A PROJECT

Date :- 10TH MARCH,2020.

NIKISHA KUKREJA Mrs. NEHA JAGITANI

( Course Coordinator ) (Principal)

NIKISHA KUKREJA ________________

Date :-10TH MARCH, 2020.

I,the undersigned, Mrs. NIKISHA KUKREJA have guided BHAVNA NANIKRAM

in the Fortune Global 500 list in foreseeable future.

core of Xiaomi business strategy.

development and diversification in an intergrated manner.

functionalities compared to major competitiorsand difficulties of sustaining competetive advantage.

Sr.No. CONTENTS Page

15.1.5 Rivarly Among Existing Firms

21.1 The Brick & Click New Rule

Chapter No .1 Introduction of Xiaomi

1.1 Xiaomi : An Internet Company Info

1.1.1 The Birth of the Company

1.1.2The Fans by the Fans

which is the most popular device Xiaomi ever made.

the facts speak:

and LG at fourth and fifth place respectively. (currently 6 years operate)

according to an IDC report.

quality technology phone with low cost.

1.1. Xiaomi: An Internet Company Info

1.1.1. The Birth of the Company

1.1.2.Xiaomi: an Internet Company for the Fans by the Fans

• Sample Size : 206

2.1.1 Method Of Research

from the respondents by interviewing them.

The selected sample is 100.

a. Methods of Sampling Random

universe has as an equal chance of known opportunity of being selected.

• Characteristics of a good questionnaire

➢ Should be concerned with specific and relevant topic

➢ The questionnaire is easy to construct. Distribution is easy and inexpensive.

2.1.2. Data Collection

the methods of data collection.

The main data collection methods are

literacy rates are high and respondents are co- operative.

co-operation, but can be backed up by a legal requirement and direct measurements.

information which an organization usually keeps collection in its working.

have to depend on external sources.

questionnaire by directly meeting the customers.