Xiaomi’s product launch in Australia

Executive Summary

This assessment analyses the new product launch of the brand Xiaomi, while focusing on the
market in Australia. Australia shows some positive signs regarding the industry with positive
financial growth and usage increment. Xiaomi on the other hand has experienced high
development in recent years while diversifying its product range. However, some weak points
are recognised regarding the company’s marketing reach, brand perception, and customer
service.

It is identified that the need for the new product in focus i.e., Mi 11 Lite 5G arsis from the
industry development regarding the 5G technology. However, despite the technology being
expensive, Xiaomi has used its cost differentiation policy to produce this new product to cater
the middle price range customers. This goes in line with the company’s objectives which is to
provide latest technology at affordable rates to the customers.

The competitors identified for the company include Samsung and Huawei. These brands are
well established and pose a threat to the company as they have high resources and credible
R&D units.

The segmentation analysis revealed the company’s approach of targeting customers with
middle to high range budgets and focussing on the segment which prefers value for money
rather than brand-cautiousness.

The marketing mix revealed an effective mixture of strategies adopted by the company such as
cost differentiation, multiple pricing range, and extensive new product development process;
yet some weak points are recognised in terms of the company’s marketing reach.

Lastly, the recommendations include method to change brand perception, effective usage of
social media, promoting usage of green technology, and improving customer service by acting
upon the feedback of customers.
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Table Of Contents

1.0 Introduction .......................................................................................................................... 4

1.1 Background to the selected industry ................................................................................ 4

1.2 Introduction to the company ............................................................................................ 5

2.0 Analysing the Current Business of Xiaomi ......................................................................... 6

2.1 Overview of Current Business ......................................................................................... 6

2.2 SWOT Analysis ............................................................................................................... 6

3.0 Marketing Objectives ........................................................................................................... 8

3.1 Proposing the need of new product .................................................................................. 8

3.2 Short term and long-term objectives ................................................................................ 8

4.0 Competitor analysis ............................................................................................................. 9

5.0 Strategic Marketing approach ............................................................................................ 10

5.1 Segmentation, Targeting and Positioning ...................................................................... 10

6.0 Marketing Mix ................................................................................................................... 11

7.0 Recommendations .............................................................................................................. 13

8.0 Conclusion ......................................................................................................................... 13

References ................................................................................................................................ 15
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1.0 INTRODUCTION

A marketing plan is one of the most important features of a business as it outlines the marketing
strategy for a considerable period of operation (Slater et al., 2010). The purpose of the present
assessment is to write a strategic marketing plan regarding a new product launch. Marketing
plans regarding new product launches are an imperative task as they can directly reflect the
ability of a company to enforce sales (Cooper & Kleinschmidt, 2011). Therefore, the strategic
marketing plan is constructed carefully to meet the agenda. For this purpose, the company
chosen is Xiaomi, and its new product launch Mi 11 Lite 5G, which would be launched in April
2021 in Australia is under focus.

The scope of the assessment includes analysing company’s internal aspects, marketing
objectives, competitors, strategic marketing approach, marketing mix, and eventually
personalised recommendations. However, a limitation of the present assessment is that it does
not undertake enhanced external analysis in the form of PESTEL or 5 forces analysis, which
would further define the position of the company in the market and allow the identification of
relevant measures.

1.1 BACKGROUND TO THE SELECTED INDUSTRY

The industry under focus is Smartphone, while the country assessed is Australia. Firstly, it is
recognised that as of March 2021, Xiaomi reserves on 1.48% market share in Australia..

Figure 1 - Smartphone market share in Australia. Source: SC (2021)

Furthermore, according to Statista (2020), the Australian smartphone market is expected grow
until 2025, with potential users reach 21.5 million (shown in figure 2). Furthermore, as of 2018,
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the mobile telecommunications sector in Australia earned $25.2 Billion, while the value added
to the GDP by the industry was $22.9 Billion, which is a very healthy figure (Statista a, 2020).

Figure 2 - Smartphone users in Australia. Source: Statista a (2020)

Lastly, it is identified that the share of population which has mobile phone subscription is
127%, which is a promising indicator for companies such as Xiaomi indicating growth
opportunities due to high usage.

1.2 INTRODUCTION TO THE COMPANY

Xiaomi is a Chinese based multinational company founded in 2010. While the company
develops multiple electronic goods, the focus in the present assessment remains on its
smartphone development. Even though the company does not have official stores in each
country, it has worldwide operations. The company has around 22,000 employees and reported
a revenue of $37.63 Billion in 2020 (Xiaomi, 2021).

Figure 3 - Xiaomi logo. Source: Xiaomi (2021)

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2.0 ANALYSING THE CURRENT BUSINESS OF XIAOMI

2.1 OVERVIEW OF CURRENT BUSINESS

Ever since its formation in 2010, Xiaomi has experienced an exponential growth. A key reason
for this is their diversification of products and services which highly attractive to the users
(Garrido-Prada et al., 2019). Moreover, the company follows a cost differentiation policy,
which states that it has products which cost lower than their immediate competitors. However,
this has not been a roadblock in Xiaomi’s financial growth, as shown in figure 4, the company
has experienced high financial growth, especially in 2018.

Figure 4 - YoY revenue of Xiaomi. Source: Deloitte (2019)

The revenue growth has not halted in the year 2020, as the smartphone revenue grew 24.6%
YoY. The shipments of smartphones of the company amounted to 17.5% in 2020, which is
17.5% higher than the previous year. Therefore, it is assessed that the present situation of the
company is stable, having posted healthy profits for consecutive years.

2.2 SWOT ANALYSIS

SWOT analysis is conducted to identify the internal elements (Strengths and Weaknesses), and
the external components at play (Opportunities and Threats).

Table 1 - SWOT analysis of Xiaomi. Source: (Xiaomi, 2021; Yoloan et al. (2020)

Strengths Weaknesses
• Affordable pricing makes the brand stand • Brand perception is weak.
out.
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• High quality products attracting positive • Weak marketing structure compared to

customer/critic reviews. immediate rivals.
• Substantial profits margins signify
business sustainability.
Opportunities Threats
• Green branding can be an additional • New product sales are usually based on
breakthrough. low skimming price which may be a
• Expansion of brick-and-mortar stores. threat in the future as competitors adopt
flanking strategy.
• Customer service infrastructure is not
highly effective of the company which is
concerning.

Firstly, it is identified that the pricing strategy and the high quality of the products make the
brand stand out in the market. This is an advantage as it enables the company to attract
customers with budget issues to purchase their products. However, it can be weakness in terms
of brand perception, customers may be inclined to think the products are low in quality if the
pricing is low, as most of the smartphone brands substantially increase their prices year on,
unlike Xiaomi who gives a minimal hike or none at all. Nonetheless, the Y-o-Y profit growth
is a significant strength as it allows the company to expand and explore new markets. However,
a key weakness is identified in their marketing structure, where the presence of the company
is particularly low on traditional media (print, TV etc), while the following compared to
immediate competitors is lacking on social media.

An interesting opportunity identified for the company is green branding; this refers to the
promotion of the brand adopting environmentally friendly practices in its operations. Studies
have shown 74% millennials are willing to pay extra for sustainable practices, which justifies
this as a big opportunity (Curtin, 2018). Secondly, the company is lacking in terms of brick-
and-mortar stores as compared to its competitors; thus, using the additional resources obtained
Y-o-Y to establish these stores can be a profitable opportunity.

The first threat identified of the company, is that it focusses on skimming price policy for its
new products to enhance sales; while this has worked out for the company presently, it can be
a dangerous strategy to adopt in future. Secondly, a weak customer service infrastructure
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identified of the company can be a big threat as companies make extra effort in today’s
competitive market to win over customer trust and loyalty.

3.0 MARKETING OBJECTIVES

This section goes through the analysis of why a new product was required by the company, and
their short- and long-term marketing objectives.

3.1 PROPOSING THE NEED OF NEW PRODUCT

In today’s extremely competitive market, there is no shying away from innovation; thus,
companies are inclined to adopt newest technologies in the market to enhance their offerings.
Similarly, in the smartphone industry, 5G is the latest technology which every major company
is following suit (Kalem et al., 2021). Thus, Xiaomi has been working on producing valuable
5G enabled products for its consumers. However, due to the complexity of the technology, it
is generally expensive right now. Therefore, by using their cost differentiation strategy, Xiaomi
decided to provide a less expensive option other than their main 5G unit to customers with
middle price range. The ‘Lite’ in Mi 11 Lite 5G signifies the inferiority of the product from its
main model, yet it uses the popular sought-after feature of 5G, thus appealing to its target
market.

3.2 SHORT TERM AND LONG-TERM OBJECTIVES

The short term and long-term objectives of the company are shown in table 2.

Table 2 - Objectives of the company. Source: Xiaomi (2021)

Short term The short-term objective of the company is to offer affordable smart
devices to its customers, so that the people can enjoy the benefits of
technology at a low price. Therefore, it is assessed that the company
want to pursue its cost differentiation policy in the near future.
Long term The long-term objective of the brand is to consistently enhancing and
refining products to create the best user experience possible. This
statement reflects that the company aims to be as innovative as
possible while focussing on customer satisfaction; this is an
imperative strategy, given the identified weakness of lacking in
customer service.
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4.0 COMPETITOR ANALYSIS

For the competitor analysis, two brand are taken into account, Samsung, and Huawei.

Table 3 - Competitor analysis. Source: (Shamout & Elayan, 2020; Kim & Chao, 2018)

Samsung Huawei
- Samsung, a South-Korean - Huawei was founded by Ren Zhengfei in
Conglomerate, was founded by Lee 1987 and has products and services
Byung-Chul in 1938 and has been among across the world with over 194,000
the pioneers in electronic devices. employees. The company ranks 49 on the
Moreover, in the early 2000s Samsung 2020 Fortune Global 500 list and has
entered the smartphone world and over 3 billion customers taking up 9.27%
gradually made their mark in it. Samsung of the market share.
has a huge customer base, as of mid-2020 - When it comes to strengths, Huawei’s
Samsung claimed 26.2% of the global strongest suit is their competitive pricing.
smartphone market with 992.4 million This has been the main factor behind the
smartphone users (active). fast growth of the brand across more than
- There are multiple reasons behind why 170 countries. Furthermore, what makes
Samsung has been so successful over the their brand even stronger is that the
years and is still going strong. One of the quality of the products is very impressive
company’s many strengths is that they too.
have always invested and focused - However, their weaknesses make it
heavily on research and development and difficult for the company to keep up with
produced a wide and diverse product the fast-paced industry. Even though they
portfolio through which they have gotten have a strong presence in some countries,
access to a much wider market. the brand lacks strong marketing which
- However, they are lacking fresh new makes it fall behind and less popular in
ideas due to their hereditary leadership as relation to its competitors. Secondly, the
it has been under the founding family’s brand lacks capital which restricts their
leadership for the past 3 generations. research and development and
Another weakness being that they have marketing.
had product failures multiple times and - Huawei’s target market is more focused
had to pull products back from the market towards individuals that want good
after launching them. features in a phone but within a
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- Samsung’s target audience are people reasonable, even cheaper rate as

that follow latest technology, between compared to other options in the market.
the ages 15 – 45. Moving on to prices, The brand’s price range starts from
Samsung’s phones range from as low as around 100 USD and goes up to
approximately 150 USD to as high as approximately 1100 USD.
2000 USD.

5.0 STRATEGIC MARKETING APPROACH

In this section, the company’s marketing approach regarding segments, target market, and
market position is assessed.

5.1 SEGMENTATION, TARGETING AND POSITIONING

Table 4 - Segmentation analysis.

Segmentation Bases Targeted Customers

Regional Australia
Geographic
Density Suburban and Urban
Age 18-55
Gender Both males and females
Social Status Middle class to upper class
Size of family Individuals, couples, and
Demographic
extended families
Income High to medium income
Livelihood Professionals, bachelors, or
married couples
Lifestyle Explorers, aspirers, and
Psychographic mainstreamer
Characteristics Easy going
Attitude Ambitious, or determined.
Behavioural Benefits Value for mony
Persistence Regular visitors
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Firstly, the market targeted are people aged from 18 to 55, as the age distribution in figure 5
states regarding Australia, most of the population lies under that category. Further, the density
of area must be urban or suburban as its easier to access especially for a foreign company. Even
though the company has no preference regarding gender, livelihood, or size of the family, it
targets people who belong to the middle or upper social class as they have the necessary funds
to purchase their offerings.

Figure 5 – Australia’s age distribution. Source: (Statista b, 2020)

Furthermore, the company targets people who are easy going rather than the ones who are
brand cautious, this strategy helps the company attract individuals who seek high quality
products for a relatively lower price. Thus, the benefits offered by the company revolves around
the statement of ‘value for money’. Lastly, the company, wants its customers to be regular, that
may be one of the reasons that the new product prices are given minimal hike to maintain the
existing customers, apart from attracting new ones.

6.0 MARKETING MIX

Table 5 - 4 P's marketing mix. Source: (Xiaomi, 2021; Bhasin, 2019; Yan, 2020; Isa et al., 2020)

Product Regarding the smartphones, the company does not have a single range, rather
it has multiple series such as Redmi, while the products are launched in
categories with different pricing; different priced products have different
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features. Higher price products, contain additional features, which is an ethical

practice as the customers should get what they pay for.
Product Development Process
As identified from the trend, Xiaomi works on developing new products each
year for each of its series. Every new product is bound to have extra or
additional features than the previous model. Firstly, in the process the idea is
generated, this is where the R&D department of the company plays a major
role. Secondly, screening takes place where the product idea is refined. The
next step is idea evaluation, where the concept is tested and its impact on the
market is analysed. Next part is the development of the product, where the
materials are gathered, and developed knowledge is applied to form the
finished product. Lastly, the product is evaluated, and any faults are solved.
Price As discussed in the section above, Xiaomi follows a cost differentiation policy
where it offer high quality products in a low range. Thus, the strategy adopted
is sell low today, and gain later. A lot of earning is based on the company’s
services within the product such as cloud services. Furthermore, new products
of the company are generally placed in the market at a low price to attract
customers. Even the 5G enabled products of the company are less expensive
than that of its competitors.
Promotion The company does not focus on traditional media usage for its promotional
purposes, rather it emphasizes on online marketing through social media and
micro-blogging websites. Furthermore, the company uses flash sale strategy to
influence impulse buying for the customers. Furthermore, Xiaomi partners
with brands from other industries to promote its products such as Uber and
some e-commerce companies. Moreover, on social media the viral content
strategy is used by the company which creates a hype for the products. Even
though these are effective marketing strategies, the company still seems to lack
in terms of reach as compared to companies such as Samsung.
Place The company operates both online and offline stores apart from having retail
stores sell its products. The presence of flagship stores is low, yet there are
certain number of service centres. Through the placement strategy, the
emphasis of the company is on Urban and Suburban areas only.
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7.0 RECOMMENDATIONS

The first recommendation for the company is to change its brand perception with the market
segment which is brand cautious. To achieve that some new products of certain series can be
produced in line with the technology and prices of other top brands. This is observed in the
case of another smartphone brand called One plus; the brand is known to produce high quality
products with features similar to top brands, while the pricing is also high of the company
unlike Xiaomi. Therefore, to utilise the segment which can afford expensive products, the
company must look to produce similar products as other top brands on a flanking strategy.

Another recommendation for the company is to maintain its strategy of not adopting traditional
media as it can be expensive, rather the company should look to expand its reach through
multiple social media channels by efficiently using data analytics. For this purpose, some new
staff may be required to hire which can add to the costs, yet the recommendation would provide
long term benefits as social media expansion is not going to slow down any time soon (Yu &
Yuan, 2019).

Another recommendation for the company is to promote its usage of green technology to
produce new smartphones (Song & Wang, 2018). In recent decades, sentiments have risen
against companies not following environmentally sustainable practices; thus, this could be an
opportunity for the company to exploit the aspect and enhance sales and customer loyalty.

Lastly, the recommendation for the company is to enhance its customer services as it is a key
trait in today’s business. A valuable method to improve customer service is taking frequent
feedback from the customers and acting upon it regularly.

8.0 CONCLUSION

Xiaomi is recognised as a rising brand with effective strategies in place. The brand focusses on
a cost differentiation policy where it offers high quality products at lower prices than the
competitors. However, some negative elements associate with the brand are identified in terms
of its customer service, and brand perception. Nonetheless, due to its increasing resources, the
company has an opportunity of growth especially in the Australian market which shows
promising trends regarding smartphone usage. 5G is a popular technology to adopt in the
industry; thus, the company has developed products using the technology while still using its
cost differentiation strategy. The competitors assessed for the company include Samsung and
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Huawei who pose a threat to the company through intensive R&D measures and product
diversification. The segments the company focusses on is young to middle age, having traits
of easy going and exploring while seeking value for money. Marketing mix has revealed
effective strategies in place, yet some weak points are identified regarding the marketing
element which is addressed in the recommendations section.
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