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XIAOMI

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Eula Chua

on 14 May 2015

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Transcript of XIAOMI

From Made in China to Created in China
Manufacturing was the main
Apple, Samsung
Everything you can think of
Shanzhai
Late-comers
Copy of existing products
Xiaomi, Coolpad, Huawei joined
Innovation
Emerging middle-class
Higher purchasing power
High saving rate
Customer experience

Business Environment
Business Strategy
Mission
Unique and unconventional business strategy

Mission statement
:

Target market
: “Xiaomi addresses a segment that has been underserved by major brands, which craves the coolness of the latest technology at affordable prices,” Sandy Shen, an analyst with Gartner Inc.

Background
Content
Product History
Chinese Mobile Phone Industry
Price range
: from £50 to £500
Low production cost in China
Flipping of iPhone
Communities built around brands, fans of brands
Evaluation of Xiaomi’s business strategy
GROUP 3
James Robertson, Ka Yan Li, Komal Mehta,
Laura Olesk, Guillaume Trounson

The Story
Mobile Industry in China
Apple
- fans all over the world
Brand
Interface
Samsung
- leader of Android
Operation system
Specification
Brand value
Xiaomi

Price
Involvement
Xiaomi aims to ‘create remarkable hardware,
software and Internet services
for – and with
the help of – our Mi fans
’.

Building business on services
Excellent customer experience
Loyal fans priority
High quality in focus
Objectives
Fan-centric social media business model
Making customer needs priority
Customers’ feedback will be taken into account
Products modified according to customer criticism
‘Razor and Razorblade’ business model
Selling handsets at break-even prices
Long-term profit from selling accessories, online services, etc.
Also knows as 'Razor and Cartridge' model
Vision
A goal of
100 million
handsets to be sold
by 2015
To begin exporting their handsets to
Brazil,
Russia, India, Turkey and Mexico
in 2015.


Marketing Strategy

Marketing 4P’s
PRODUCT
Most smartphones in China are reverse-engineered, poorer quality versions of other smartphones, made from cheaper materials
Good quality phone at a reasonable price
Doesn’t break easily, HQ screen, sound battery life
MiUI
Customization
PRICE
Selling the handsets near break-even was not a long-term strategy
Selling online only
, reducing cost of sales and externalities from retail stores and distributors
‘Flash sales’
give consumers the opportunity to capitalize on special discounts

PROMOTION
The power of social media e.g.
Mi Forum
The sense of
family

Power of the
'word of mouth'
Creation of a
strong fan base
Lei Jun, has similar characteristics as Steve Jobs
Charismatic, energetic, confident

PLACE
Stronghold based at
HOME
97% of shipments are local
Focus on becoming
No 1 in China
Identity development
in an emerging market, before taking on developed markets
Recommendations
Expand production
To meet the demand
Convincing investors to invest in plants and machinery
To improve production capacity
Revise communications strategy
Particularly with other countries
Align with Western mobile networks
Adjust their Interface to Western requirements
Sign cross-licensing agreements
To reduce litigation risks
Increase spending on R&D and licensing
To improve their portfolio of patents
Mi 3
2013
10 mil


Mi 2
2012
15 mil


Mi 1
2011
7 mil

Mi 4
2014


Evaluation
of Current Strategy
Xiaomi has different strategic approach in order to compete with rivals.
Lack of customer groove-in/brand loyalty.
Xiaomi is more of an
experience
.
Service centres
Constant communication via social media with consumers.

Working with companies who have experience and understanding of dealing in foreign markets
Wistron Corporation
Hiring of Hugo Barra
Experience on international markets
Low costs of production
Allows Xiaomi to sell its products at a lower price
Latecomer advantages
Not internationalising from a position of weakness
Strengths:
Pro-business government
Low-cost manufacturing & design
Fast decision-making speeds
High quality


Xiaomi's advantages
over competitors
Xiaomi's smartphone sales in millions of units
”Just for Fans”

the bigger, better Apple?

Source: China IDC @ Statista.com
Thank you!
China's Smartphone Shipment
Any questions?

References
References
Barton, D. (2013).
Mapping China’s middle class
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BBC News. (2014).
China’s Xiaomi becomes most valuable tech start-up
. Available at: http://www.bbc.co.uk/news/business-30629883, (Accessed: 4 April 2015).
Bloomberg Business. (2014).
China’s Xiaomi Plans to Give IPhone Cool at Half Price
. Available at: http://www.bloomberg.com/news/articles/2014-04-08/china-s-xiaomi-plans-to-give-the-world-iphone-cool-at-half-price, (Accessed: 03 April 2015).
Chamon, M., Liu, K. and Prasad, E. (2011).
The puzzle of China’s rising household saving rate
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The Evolution of China’s Mobile Phone Industry and Good-enough Innovation.
Available at: http://www.cier.edu.tw/public/Data/2013-1.pdf, (Accessed: 12 April 2015).
Chew, K. (2014).
Here’s The Secret Behind Xiaomi’s Disruptive Success.
Available at: http://www.businessinsider.sg/heres-secret-behind-xiaomis-disruptive-success/#.VSPp4kJBtUS, (Accessed: 3 April 2015).
CNBC. (2015).
Apple's success in China can teach US firms a lot.
Available at: http://www.cnbc.com/id/102380371/, (Accessed: 11 April 2015).
CNBC. (2015).
Huawei tries to take a bite out of ’China’s Apple’.
Available at: http://www.cnbc.com/id/102372093, (Accessed: 4 April 2015).
Eva Dou (2015). ’5 Things Xiaomi Does to Cultivate Fans’, Wall Street Journal Blogs, 6 April. Available at: http://blogs.wsj.com/briefly/2015/04/06/5-things-xiaomi-does-to-cultivate-fans/ (Accessed: 08 April 2015).
Flannery, R. (2015).
China’s smartphone sensation Xiaomi says sales tripled in ’14: Eyes more int’l growth.
Available at: http://www.forbes.com/sites/russellflannery/2015/01/03/chinas-smartphone-sensation-xiaomi-says-sales-doubled-in-14-eyes-more-intl-growth/, (Accessed: 5 April 2014).

Florin, T. (2014).
Xiaomi Mi4 now available to buy (online in China).
Available at: http://www.phonearena.com/news/Xiaomi-Mi4-now-available-to-buy-only-in-China_id58715, (Accessed: 5 April 2014).
Follow Me. (2014).
Xiaomi: business growth story.
Available at: https://follovvme.com/interesting/12/, (Accessed: 5 April 2014).
Garside, J. (2014) ’Xiaomi to export cheap smartphone to emerging markets’,
The Guardian
, 23 April [Online]. Available at: http://www.theguardian.com/technology/2014/apr/23/xiaomi-export-cheap-smartphones-emerging-markets (Accessed: 4 April 2015).
Gibbs, S. (2014). ‘China rising: Xiaomi becomes world’s third biggest smartphone manufacturer’,
The Guardian
, 30 October [Online]. Available at: http://www.theguardian.com/technology/2014/oct/30/china-xiaomi-third-biggest-smartphone (Accessed: 5 April 2014).
GSM Arena. (2014).
Xiaomi breaks new sales records in China and India.
Available at: http://www.gsmarena.com/xiaomi_breaks_new_sales_records_in_china_and_india-news-9180.php, (Accessed: 5 April 2014).
Horváth-Papp, M. (2015).
Xiaomi: business strategy in global context.
Available at: http://www.chinaroom.eu/news/xiaomi-business-strategy-global-context, (Accessed: 04 April 2015).
IDC. (2015). ‘The China Smartphone Market Picks Up Slightly in 2014Q4’,
IDC
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Available at: http://www.idc.com/getdoc.jsp?containerId=prHK25437515, (Accessed: 10 April 2015).
Kharpal, A. (2014).
What’s behind rapid rise of ‘China’s Apple’ Xiaomi?
Available at: http://www.cnbc.com/id/102288465, (Accessed: 2 April 2015).
Kim, E. And Rosoff, M. (2015).
THE $10 BILLION CLUB: Meet the 9 most valuable startups in the world.
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Kovach, S. (2015).
How Samsung won and then lost the smartphone war?
Available at: http://uk.businessinsider.com/samsung-rise-and-fall-2015-2#ixzz3XLEBaer9, (Accessed: 11 April 2015).
Xiaomi's Background
Mobile Phone Industry in China
Business Strategy
Marketing Mix
Evaluation of Current Strategy
Recommendations for Strategy
“At first, their questions were, ‘How do you think we should go about expanding internationally?’ And that evolved into, ‘Maybe you should come help us.’”
Hugo Barra, the Vice President of Xiaomi Global
Business models adopted
Marketing 4P’s
Marketing 4P’s
Marketing 4P’s
Xiaomi's Market Shares in Comparison to other Brands
Competitiveness to Success
A Chinese electronics company
Most known for it’s smartphones
Founded in
2010
by
Lei Jun
Along with 8 other founders
The
third world’s largest
smartphone distributor
World's most valuable technology start-up company
Uses social media to promote products
Weibo
and
WeChat
Expanded into other countries
Such as
India
and
Singapore
References
Lawler, R. (2013).
Xiaomi unveils new Android-powered 5-inch MI3, 47-inch smart TV in China.
Available at: http://www.engadget.com/2013/09/05/xiaomi-miphone-3-xiaomi-tv-china-android/, (Accessed: 12 April 2015).
Millward, S. (2013).
Xiaomi opens biggest ever service center in Beijing, looks like a store.
Available at: https://www.techinasia.com/xiaomi-store-beijing-opening-soon/, (Accessed: 12 April 2015).
Nivedit Majumdar (2014). ’Understanding Xiaomi’s Marketing Strategy’,
Linked In,
5 August. Available at: https://www.linkedin.com/pulse/20140805193030-253576490-understanding-xiaomi-s-marketing-strategy (Accessed: 27 March 2015).
Nunes, P. and Downes, L. (2014) ‘Big Bang Disruption: How China’s Xiaomi Manages Catastrophic successs’,
Forbes
, 4 April [Online]. Available at: http://www.forbes.com/sites/bigbangdisruption/2014/04/03/big-bang-disruption-how-chinas-xiaomi-manages-catastrophic-success/2/ (Accessed: 2 April 2015).
Passary, A. ( 2014).
Taiwan investigates Xiaomi for cyber security threats.
Available at: http://www.techtimes.com/articles/16359/20140924/taiwan-investigates-xiaomi-for-cyber-security-threats-bans-messaging-app-line.htm, (Accessed: 4 April 2015).
Paczkowski, J. (2013).
Meet Xiaomi, the Biggest Smartphone Company You’ve Never Heard Of.
Available at: http://allthingsd.com/20130415/meet-xiaomi-the-biggest-smartphone-company-youve-never-heard-of/, (Accessed: 27 March 2015).
Rosu, G. (2014).
Xiaomi Mi 3 has sold out in under 90 seconds.
Available at: http://www.eteknix.com/xiaomi-mi3-sold-90-seconds/, (Accessed: 5 April 2014).
Sabrina, (2013).
The Secrets of Xiaomi’s marketing success in China.
Available at: http://www.chinainternetwatch.com/4850/xiaomi-marketing-success/, (Accessed: 5 April 2014).
Sagar, P. R. (2014) ‘Chinese Smartphones a Security Threat’,
The Sunday Standard
, 19 October [Online]. Available at: http://www.newindianexpress.com/thesundaystandard/Chinese-Smartphones-a-Security-Threat-says-IAF/2014/10/19/article2484248.ece (Accessed: 4 April 2015).
Shapiro C., Varian H. (1999). The art of standard wars.
California Management Review
, 41, 2, pp. 8-32.
Shih, C.-C., Lin, T. M. Y. and Luarn, P. (2014). ’Fan-centric social media: The Xiaomi phenomena in China’,
Business Horizons,
57(3), pp. 349 – 358,
Elsevier ScienceDirect Complete
[Online]. Available at: http://www.sciencedirect.com/science/article/pii/S0007681313002140 (Accessed: 20 March 2015).

Source: Chen, S. H & Wen, P. C. (2013). The Evolution of China’s Mobile Phone Industry and Good-enough Innovation.
References
Siegel+Gale. (2014).
2014 The Era of Modern Chinese Brand Experience.
Available at: http://www.siegelgale.com/download/6af83ffb697114cdb68078f8998be2e4/SG-CN-White-Paper-11Feb2014.pdf, (Accessed: 03 April 2015).
Stone, B. (2014).
Xiaomi’s phones have conquered China. Now its aiming for the rest of the world.
Available at: http://www.bloomberg.com/bw/articles/2014-06-04/chinas-xiaomi-the-worlds-fastest-growing-phone-maker#p5, (Accessed: 5 April 2015).
Swisher, K. (2013).
Exclusive: Hugo Barra Talks About His Future at Xiaomi and Why He Really Left Google.
Available at: http://allthingsd.com/20130912/exclusive-hugo-barra-talks-about-his-future-at-xiaomi-and-why-he-left-google/, (Accessed: 2 April 2015).
Taipei Times
(2014). Xiaomi faces challenge over patents, 25 December [Online]. Available at: http://www.taipeitimes.com/News/biz/archives/2014/12/25/2003607515 (Accessed: 4 April 2015).
Tian, M. (2015).
The Xiaomi Business Model: Built to Last?.
Available at: http://knowledge.ckgsb.edu.cn/2015/03/18/china-business-strategy/the-xiaomi-business-model-built-to-last/, (Accessed: 3 April 2015).
Val Kaplan (2014). ‘7 Lessons of XioMi’s Marketing Success Story in China’,
Chinamarketing
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The Wall Street Journal
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Xiaomi. (2014).
About Xiaomi
. Available at: http://www.mi.com/en/about/, (Accessed: 20 March 2015).


Reference for pictures
Xiaomi Mi1 S. No date. [Image online]. Available at: http://www.gsmarena.com/xiaomi_mi_1s-4929.php, (Accessed 10 April 2015).
Xiaomi Mi2 Specifications. No date. [Image online]. Available at: http://android-emotions.com/xiaomi-mi-2-specifications/, (Accessed 10 April 2015).
Xiaomi Mi3. No date. [Image online]. Available at: http://www.gsmarena.com/xiaomi_mi_3-5678.php, (Accessed 10 April 2015).
Xiaomi Mi4. No date. [Image online]. Available at: http://www.gsmarena.com/xiaomi_mi_4-6518.php, (Accessed 10 April 2015).
Xiaomi, 2013.
100% Committed to the Community.
[Image online]. Available at: http://miuiandroid.com/2013/09/23/official-statement-concerning-xiaomi-eu-and-shop/, (Accessed: 4 April 2015).
Lei Jun. No date. [Image online]. Available at: https://www.scmp.com/sites/default/files/2015/04/09/68418ffbjw1eqyefogjmtj216822oqkx.jpg, (Accessed: 4 April 2015).
Xiaomi’s Vision. 2014. [Image online]. Available at: https://www.facebook.com/xiaomichina/photos/pb.250677251634542.-2207520000.1428940569./780849965283932/?type=3&theater, (Accessed: 4 April 2015).
Hugo Barra. 2013. [Image online]. Available at: http://static4.businessinsider.com/image/52d024ddeab8ea4879f52b4c-1014-550/hugobarra04.jpg, (Accessed: 3 April 2015).
Xiaomi’s Service Centre. No date. [Image online]. Available at: https://www-techinasia.netdna-ssl.com/wp-content/uploads/2013/09/Xiaomi-gets-into-retail-will-open-a-Beijing-store-soon-01.jpg?1cb6c9, (Accessed: 3 April 2015).
Xiaomi is the 3rd Largest Smartphone Vendor in the World!. 2014. [Image online]. Available at: https://www.facebook.com/xiaomichina/photos/pb.250677251634542.-2207520000.1428940569./786212344747694/?type=3&theater, (Accessed: 4 April 2015).
Huawei
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