Xiaomi Product Strategy

Product – its not another knock-off

Competing only on price is not what XiaoMi has chosen as their main strategy. Their phones are cheaper than Apple’s and Samsung’s but not the cheapest ones in the market. There are cheaper smartphones that flood China, however all of them have a major flaw – poor quality. These devices are generally reverse-engineered versions of Samsung models built from sub standard materials.

Coming up with a good quality phone at lower price range was the main strategy that put Xiaomi leading the charts. The phone has a strong case, high quality screen and a reasonable battery. It doesn’t break easily, unlike cheaper ones that start having issues after just a few months of use.

By building it’s own Android-based OS called

Xiaomi priced their best selling handset well below their competitors. They then restricted their sales to one online sales partner, India’s largest online store, Flipkart. Citing cautiousness as the reason, Xiaomi then held 3 weekly flash sales (so far) starting 22nd July, 2013 with quantities of 10000, 10000 & 15000 units respectively. For each flash sale the buyers had to register afresh. Every Mi3 flash sale got talked about for the duration of the week across print & online media. This is way more press coverage than any other handset launch in India.

Hunger Marketing strategy:

“Hunger marketing”, is a kind of marketing strategy where the provider deliberately restricts the supply of product to achieve the phenomenon of excess demand. This strategy has been applied in many promotion campaigns, especially smart phones in recent years.

Benefit for Flipkart:

Flipkart couldn’t have been more happier to get this kind of traffic to it’s online store. During two of the flash sales, the Flipkart website crashed soon after Xiaomi’s Mi3 went on sale! Some frustrated buyers who do not get hands on Xiaomi did go in for substitute products too.

Benefit for

In response to fan comments, Xiaomi Corporation quickly acknowledges feedback with gratitude; this creates strong interaction and long lasting relationship with its fans.

Global strategy:

Xiaomi is now embarking on international expansion, targeting mainly emerging markets like India, Russia and Latin American countries. It has appointed Hugo Barra, a former Google executive, as its vice president in charge of international expansion. Given its product, pricing and promotion strategy, Xiaomi has a very good chance of succeeding in big emerging markets like India and Brazil where much of the growth in smartphones is taking place.

The company is positioning itself as the product of choice for those who cannot afford Apple due to its high price – an ideal strategy for low-income emerging markets. In countries like India where internet penetration is still low, Xiaomi may have to use other channels other than direct ones which could push its costs up even