How Chinese

manufacturer Xiaomi
dominated the Indian
smartphone market?
- A Case Study
Group 11, PGPEM 1st Year 2022-24

Roll No Name Email

[email protected]
2216013 Arjun Varadraj c.in
2216030 Jay Khetan [email protected]
[email protected]
2216043 Nishat Farhat .in
[email protected]
2216056 Richa Bharti n
[email protected]
2216058 Sameer Yadav c.in
Shashikant shashikant.yadav22@iim
2216066 Yadav b.ac.in
Table of Contents

1. Introduction 2
2. Competitive Landscape – Indian smartphone market before Xiaomi 2
3. About Xiaomi 3
 Xiaomi Technology Mission Statement 4
 Xiaomi Technology Vision Statement 4
4. SWOT analysis of Xiaomi 4
5. Indian Consumer & Market Overview 5
i) Change in consumer landscape 5
ii) Technological advancements in India 6
iii) External factors propelling growth of smartphones and internet 6
6. Collaborating with stronger players to launch in the Indian market 7
7. Existing Segments of Smartphone buyer in Indian Market 9
i) Segmentation by Price points 9
ii) Segmentation by Qualitative Buyer Persona for Xiaomi Phones 10
8. Targeting 14
9. Positioning for the Brand 15
References 15
1. Introduction

The study aims to analyse the domination of Indian smartphone market by Xiaomi after its
entry, with focus on before market, mission, vision, strengths, weaknesses, opportunities,
Ambition in the Indian market, and Action Plan.

Our case study explores how a Chinese manufacturer came to the no. 1 position by breaking its
strategy and execution in the below format:

1. Its marketing strategy capturing the 5Cs format before entering the Indian market
- Competition
- Company
- Consumer
- Context
- Collaborators
2. Its ambition in the Indian market and mapping that with the Indian consumer to create
GTM model
- Segmentation
- Targeting
- Positioning

2. Competitive Landscape – Indian smartphone market before Xiaomi

Smart phones industry is nearly 20 years old. Cell phones were discovered way before, but
concept of cell phones was completely different from today's smartphones. IBM the most
renowned hardware manufactures claimed to invent first ever smart phones in 1992 named
‘Simon’ (1).

Indian smartphone journey started during 2007 and 37.8 percentage of Indian market was
captured by Nokia followed by followed by Motorola, Samsung, Sony Ericsson, and LG. (2)

Before Xiaomi entry in Indian market, many smartphones manufacture entered, and market
share of each manufacture was changing every year and Samsung was the market leader.
During 2013 many smartphones’ companies were there in India like Nokia, Sony, Samsung,
Intex, Panasonic, Spice, Karbonn, Gionee, Lava, HTC, Huawei, Blackberry, Micromax etc. These
smartphones were targeting to specific economic group. Smartphone companies which are
reliable and providing good features were charging higher prices. Companies which are
charging lower prices are not reliable and after sell service was very bad with limited-service
centres. As new technology is coming in market every single day and industry was growing
exponentially, smartphones were lacking from new features due to non-availability of software
update etc.

3. About Xiaomi

XIAOMI is a China-based investment holding company principally engaged in the research,

development and sales of smartphones, Internet of things (IoTs) and lifestyle products, the
provision of Internet services, and investment business. The Company mainly conducts its
businesses through four segments. The Smartphone segment is engaged in the sales of
smartphones. The IoT and Lifestyle product segment is engaged in the sales of other in-house
products, including smart televisions (TVs), laptops, artificial intelligence (AI) speakers and
smart routers; ecosystem products, including IoT and other smart hardware products, as well as
certain lifestyle products. The Internet service segment is engaged in the provision of
advertising services and Internet value-added services. The Others segment is engaged in the
provision of repair services for its hardware products. The Company distributes its products in
domestic market and to overseas markets. (5) The "MI" in logo stands for “Mobile Internet”. It
also has other meanings, including "Mission Impossible", because Xiaomi faced many
challenges that had seemed impossible to defy in early days. Xiaomi was founded in 2010 by
serial entrepreneur Lei Jun based on the vision “innovation for everyone”. Company’s vision
was to build high-quality products with cutting-edge technology and to make it accessible to
everyone. (6)

 Xiaomi Technology Mission Statement

“Making quality technology accessible to everyone.”

 Xiaomi Technology Vision Statement

“Constantly refining and enhancing our products to create the best user experience
possible.”

4. SWOT analysis of Xiaomi

Strengths Weakness
 Existing Manufacturing
 Chinese Brand Image
capabilities
 No offline presence
 No understanding of Indian
consumer
 Successful legacy of products
 Affordable Products
 Tech forward
 Youth centric brand
Opportunities Threats
  Growing purchasing power of  Had to compete with established
populace brands
 Increasing internet penetration  Uncertain foreign policy
in tier 2 and 3 markets

5. Indian Consumer & Market Overview

In the early 2010s, mobile phone was one of the fastest growing markets in India. Indian
Smartphone market was rapidly evolving, powered by subsequential technological
advancements, both in terms of hardware capabilities and software to support them, and the
desire of consumers to be able to afford feature-rich phones within their budget. This growing
need was largely driven by the factors discussed below:
i) Change in consumer landscape
o Increase in middle-incomed urban population: According to U.N. World
Urbanization prospects 2018 report, 34% of India’s population lives in urban
areas. It shows an increase of 3% urban population since the 2011 census.
o Growing urban income: According to the Ministry of Statistics and Programme
Implementation (MOSPI), the per capita income grew by 4.6% in 2013-14 to Rs
68,572, and 6.2% to Rs 72,805 in 2014-15. During the same time frame, per
capita income for urban population rose to more than 8%.
o Growing Educated youth preferring smartphones: The shopping trend of this
growing educated youth has shown a preference for smartphones that are
available at reasonable prices. According to the IMF, India’s population mostly
comprises of young people, with 41% of people in the age group of 25–40.
o Content Creation & Consumption – With the boom of social media platforms,
such as WhatsApp, Instagram, Facebook & Twitter, more users, especially the
younger segment, were coming online, wanting to join the bandwagon to gain
more social value. Creating content and sharing it became the new trend. This
led to more content consumption per capita than ever before.
 o High trial rate: As more Indian consumers wanted to get access to smartphones
with premium-like features, they were ready to experiment with a relatively
newer brand of phone that hasn’t established a strong brand value yet, as long
as the phone provides a superior experience in terms of technology, for ex high
resolution cameras, fingerprint enabled, and design, in terms of look and feel.

ii) Technological advancements in India

o Hardware capabilities – Fast-performing smartphones with multiple multimedia

and storage capabilities were developed and launched in quick succession int the
market by all the smartphone players.
o Data Availability - Introduction of 4G in 2012-13 enabled existing mobile
consumers to tap into the world of internet and data transfer bandwidth
increased upto 100MB/s over 4G network.
o Improvement in software capabilities – Android was leading the market as the
most used OS due to its flexibility, customizability along with security. Along with
it came the plethora of apps that could enable users to get multiple tasks done
on their fingertips.
o Internet & Ecommerce – More than ever users were getting their hands-on with
internet for the first time. E-commerce sites started getting more traction due to
their easy accessibility and door-to-door delivery & free-return policies. This, in
turn, encouraged more e-commerce companies to launch their online products
and tap into this completely new and largely untapped channel of marketing.
iii) External factors propelling growth of smartphones and internet
o Cheaper Data - Data was becoming cheaper with multiple network carriers
providing cheaper data packs. Jio launched in 2016, bringing access to affordable
internet to rural population of India, that later proved to be a major disruptor in
the entire Tech industry.
o Govt Policies - The relaxation in FDI norms has had a positive impact on the
smartphone industry.
 o Reduced Cost of Production – Each newer version of a smartphone would have
1.5-2x more no. of chips than its predecessors, however, the cost of
manufacturing the same no. of transistors was reducing year-on-year.
o Emerging Market - India, world’s second largest market after China, is seen as an
emerging market in global context when it comes to electronic and consumer
goods. Smartphone sales in India jump over 200% in Q1 2014, indicating the shift
of consumers to affordable yet feature-loaded smartphones.

All the above developments created a market gap that Xiaomi leveraged to democratize
technology offering the best of technical features at an affordable price.

6. Collaborating with stronger players to launch in the Indian market

i) Manufacturing

When Xiaomi launched in India, then set up 3 manufacturing plants in collaboration with
manufacturing partners like Foxconn and Flex. This move not only helps them with
Make in India proposition but substantially helps them cut costs in manufacturing and
make higher margins. Majority of the components such as PCBA (mother-board), sub-
board, camera module, battery, back panel, USB cable, chargers, boxes and many more
components are locally sourced or locally manufactured in India. Xiaomi’s manufacturer
partners for these include Sunny India, NVT, Salcomp, LY Tech, Sunvoda and others.

Xiaomi in 2021 further ramped up manufacturing by tying up with DBG for smartphone
manufacturing in Haryana.

ii) Xiaomi association with Flipkart

When Xiaomi launched in India, their sales were exclusively through online retailer
Flipkart. Because of the gap in the tech spec and pricing segment, not many options
offline and exclusivity with online retailer, Flipkart gave birth to the flash sale model in
the Indian smartphone ecosystem. Those who were interested had to register first for
the flash sale and during the specific date and time of sale limited units were made
available. The first batch was sold out within 39 minutes on 22 July 2014, the second in
5 seconds on 29 July 2014. The sale was proceeded on pre-registration mode where
more than 150 000 buyers booked for the 5 August 2014 sale. This got sold off in less
than 2 seconds. Looking at the success of this launch, Xiaomi leveraged this partnership
to continue to sell exclusively through Flipkart while saving a lot by not opening into
offline retail. This also helped them to continue to capture the Indian market for their
already low margin smartphones.

Also, Xiaomi was a Chinese manufacturer who did not understand the Indian consumer.
Flipkart was already a prominent e-commerce platform in the Indian ecosystem.
Smartphone being Flipkart’s major revenue driving segment, was a motivating factor for
Flipkart to leverage its understanding and data of the Indian consumer to help Xiaomi in
identifying the right audience and communicating to them in the Indian context.
 7. Existing Segments of Smartphone buyer in Indian Market

India had 1.2 billion mobile subscribers in 2021, of which about 750 million are smartphone
users. It is poised to be the second-largest smartphone manufacturer in the next five years. The
growth is likely to be propelled by the rural sector at a compound annual growth rate (CAGR) of
6 per cent, compared with the urban sector growing at a CAGR of 2.5 per cent from 2021 to
2026 (Source – IDC 2019 report).

i) Segmentation by Price points

The Indian smart phone market can be segmented into the following price points:

S.No. Segment Price Range

1 Ultra-low end Under 10K
2 Low End 10-15K
3 Mid-range 15-20K
4 Mid Premium 20-40K
5 Premium 40-55K
6 Super Premium Above 55k
Source - IDC

Xioami launched in India in July 2015 with its first device Mi3 and was later bifurcated into 2
brands under it – The budget friendly Redmi series for entry level and mid-range devices and
the premium Xiaomi series. Later a gaming series line and sub-brand was created under Xiaomi
for dedicated gamers in 2018.

S.No
. Phone Range Price Range Brand
1 Redmi number series Under 10k Redmi
2 Redmi note series 10-15k Redmi
3 Note Pro series 15-20k Redmi
4 Redmi K series 20k - 30k Redmi
 5 Xioami number series, Black Shark number series 30k-60k Xiaomi
6 Xioami number pro series, Black Shark Pro series 60k+ Xiaomi

While the price segments give us an idea of how the smart phone market is organized without
understanding the triggers and barriers of the smartphone consumer, their need states and
how they use their phone, the segmentation exercise is futile.

ii) Segmentation by Qualitative Buyer Persona for Xiaomi Phones

From our survey results, we could identify the following buyers' personas for Xiaomi’s Line
filling:

Who is He?

- Humble and grounded.

- Values and respects tradition
- Has high sense of responsibility
- Diligent and dedicated towards work and family
- Conservative in their approach. Goes with tried and tested. Seeks predictability and
assurance
- Having lived a major part of his life in the pre digital age - he is unable to keep up
with the fast-evolving world of technology – which makes him feel handicapped
- Relatively newer to the online eco system – mostly purchase low ASP products
online – kitchen items & apparels
 - Heavy consumers of traditional media - newspaper & radio

Primary needs from Phone

Business calls, Listening to music, Watching videos and Clicking Pics

Features interested in
Discount on MRP, Wide Screen, Bank offers, Warranty, Exchange offers Demo view

Who is He?

- He is youthful, contemporary, updated

- He likes to be in sync with trends
- Shrewd in his choices – he is not a blind believer in “Expensive is superior” and instead
looks for the best value from the available set of options
- He wants to access the latest advances/ developments, but he carefully weighs his
options Heavy consumer of both traditional & digital media
- He is proficient with technology and believes that technology has made the modern
world more streamlined, efficient and accessible

Primary needs from Phone

Online Shopping, Banking payments, Accessing mails, Watching content

Features interested in

Latest OS, RAM Capacity, Processor, Battery Life, Trusted Brand

Who is HE?

- Very evolved and somewhat individualistic in nature

- He is curious and looks for solutions.
- He likes structure and order. He is not very driven by glitz and glamour
- He seeks performance & efficiency
- He wants to constantly enhance his skills & knowledge He’s a technophile – his world
revolves around tech & an early adopter of latest innovations in the so fast paced world
of consumer electronics
- He understands the deeper functions and quirks of such devices

Primary needs from Phone

Online Shopping, Banking payments, Accessing mails, Playing Games

Features interested in

Latest OS, Free from lag, Processor, Fast Charging, Premium & Trusted Brand
Who is HE?

- Success & achievement oriented

- They display a sense of refinement
- They are knowledgeable & discerning
- They seek to be ahead of others
- They are well aware of latest advances in technology. Own latest smart devices (Smart
TVs, Smart Watches, Smart Appliances & Security Systems)
 - Heavy online shoppers – they prefer Amazon – and purchase a variety of categories like
Groceries, Furniture & Décor, Household items, Kitchen & Dining items and Fashion

Primary needs from Phone

Business Calls & professional Apps, Making videos, Reading news, publication etc

Features interested in
Premium Brand, Sound quality, Camera, Aesthetics, Post purchase benefits

8. Targeting

i) Price segment wise targeting

When Xiaomi launched in India they started with the price of 8999 in the Lowest price
bracket in 2014. Over the years they have occupied the mid premium segment with
launches in the 10-15k and 15-30k segment. In 2019, they started focusing on the
premium segment as well above 30k+ with bifurcation of their brand into Redmi and
Xiaomi line up.

ii) Qualitative cohort wise targeting

 The Redmi line up under 10k is a perfect match for the Savdhan Sharmaji
where the specs are basic and the focus is on value while catering to the
basic usage of consuming content through bigger screen size and battery.
 Redmi catered to the Smart shopper with their tech forward products, spec
upgrades and value. They occupied the entire 10-20k segment with multiple
launches and constant upgrades from their previous offering
 For the Tech enthusiast Xiomi focused on their mid premium ren age of
products the note number series, Black shark subbrand primarily for the
gaming enthusiasts and their note pro series
 While Xiaomi is trying to build affinity for the Elite with their higher end
products, they are facing very tough competition from the likes of Apple, One
Plus and Samsung that carry the premium brand association for the longest.
9. Positioning for the Brand

For the Indian Smart Phone consumer, Xiaomi is the only brand among all the Smartphone
manufacturers that brings you Flagship value-based products because it provides the most
tech-forward features within your budget.

Since the belly of the smartphone market is the mid premium segment sitting in the 15-25k that
has been Xiaomi’s main focus since launch. However, with an established successful brand the
move towards premium pricing is seen.

References

1. The History and Evolution of Smartphones - TechDim

2. 2007 was a blockbuster year for mobile phones | Computerworld
3. Xiaomi Leads India's Smartphone Market With 26% Share for January-March Quarter in
2021: Report (badabusiness.com)
4. DNA Special: How many people in India still use landline phones? (dnaindia.com)
5. Equities Quote (hkex.com.hk)
6. About Xiaomi - Mi India
7. Xiaomi Technology Mission, Vision & Values | Comparably
8. Over 44 million smartphones shipped in 2013 in India – IDC (fonearena.com)