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  2. 2. toolkit INDIAN CONSUMER ELECTRONICS MARKET Revenue in the Consumer Electronics market amounts to US$89.03 billion in 2021. The market is expected to grow annually by 5.76% (CAGR 2021-2026). The market's largest segment is the segment Telephony with a market volume of US$54.17 billion in 2021.
  3. 3. toolkit INDIAN CONSUMER ELECTRONICS MARKET In the Consumer Electronics market, 15.7% of total revenue will be generated through online sales in 2021 and it is expected to rise to 22.2% by 2025
  4. 4. toolkit INDIAN CONSUMER ELECTRONICS MARKET In the Consumer Electronics market, volume is expected to amount to 937.6m pcs. by 2026. The Consumer Electronics market is expected to show a volume growth of -2.7% in 2022. The average volume per person in the Consumer Electronics market is expected to amount to 0.63 pieces in 2021.
  5. 5. toolkit Major players in indian consumer electronics market ● Leading consumer electronics company with a profit of 132 cr ● Focused on products with high value ● Partnered with Amazon to sell a new series of phones ● Strong distribution network with 300+ outlets and 20000 dealers ● Market leader in the high end premium segment ● Ranked top 5 in interbrands global brands ● Have a diversified portfolio with products in all segments ● Provides products from low end to premium end ● Focused on the low end products ● Were able to acquire huge market shares in price sensitive countries India and China ● Were able leverage the benefit online distribution to provide low cost products
  6. 6. Chinese manufacturer Founded in 2010 in China Smartphone manufacturer Consumer Electronics Brand with IOT ecosystem 2018 (Initiated) 74 markets globally Caters to 300 million consumers In Just 8 years 4thLargest Smartphon e Manufacturer & Largest IOT platform 27% market share (Smartphones) Beijing MI - Mobile Internet Mission Impossible to face challenges
  7. 7. Entered 2014 - Xiaomi Xiao Small - Millet - Xiaomi name inspiration is from grain of rice in Buddhism Meaning company focused on small things before they start moving up the ladder. Established Indian factory in Noida 2015 - Indian Manufacturing helped Lower prices than imported smartphones giving Competitive Advantage over importers. “Make in India” initiative also spurred production Meaning
  8. 8. Xiaomi sold 8 million units of smart phone in Q1 2015 to Q4 2017 while Samsung sold ~ 7.1 million units in this quarter. So, Xiaomi surpassed the sales of Samsung too. PRICES 50% 43% Smartphones Redmi Note 7 series came up with quality phone at affordable price with Philosophy of Innovation for everyone. Xiaomi Online sales were saturating , growth opportunities were present in retail market. Growth of market share of Sales is expected to increase by 50% in retail sales. -Manu Kumar Jain, Global Vice president
  9. 9. From 9 months of Mi TV launch in February, 2018, 1 million units have been sold. Smart TV offline sales 38% Smart TV online sales 164% Shipment Threefold Q2 2018 Xiaomi’s Focus Focused on cultivating Loyal Fans to promote among Friends and Family
  10. 10. Adopted Disruptive innovation strategy Being smaller company with few resources challenged established brands for moving up the market continually Xiaomi targeted their ignored market segment apart from Smartphone users like those who like smart gadgets for lifestyle and utility. Met demands of consumer at reduced cost while competing with other brands Eventually moved upmarket solutions to appeal consumers in premium segment also Attracted competitors business mainstream customers Disruption Smartphone Companies market share IMPACT STRATEGY IOT devices sold
  11. 11. toolkit With its current brand image, can Xiaomi Successfully extend its offerings to additional categories in the future?
  12. 12. ● Xiaomi Invested in hundred of startups for new products at low prices. Hence they started with Investing, Partnership, Ecosystem : Being Everywhere strategy. ● Xiaomi involved in design process of entire product line up but outsourced manufacturing. ● It helped Xiaomi deliver various products at incomparably low prices in short time period. ● Xiaomi’s Open Innovation strategy aspect Taking problems outside business boundaries for finding solutions helped in establishing an ecosystem. ● With its expanding offline channel , it is helping leverage diversified product portfolio sales. Xiaomi is on the footsteps for evolving into ecosystem of connected products.
  13. 13. Xiaomi brand recognition is growing among consumers as a reliable brand from Mi TV’s high current demand. Expansion of specialized manufacturing facility in India with increased demand of television and disrupted the Smart TV market by making them affordable. High profit margins though it was stagnant in 2017-18 due to offline outlets presence initiation. Introduction of premium products such as POCO series with high-price snapdragon range shifting the brand perception to quality products also. Offered smart devices - refrigerators ,air purifiers, smart watches connected to Smartphone Time for Xiaomi to have competitive advantage with introduction of smart devices. XIAOMI Now an independent brand
  14. 14. With its current brand image on ATL channel, it has growth opportunities BTL channel like competitors - Exhibitions, road shows , live product demonstration in shopping complexes, digital homes, experiential AV zones for selling audio devices Evolving brand image can be leveraged by branding as Green organization by producing sustainably and promoting the same message. This will help to set it apart from competitors. Growing environmental conscious segments will get attracted to Xiaomi. WIth increased focused on premiumization of Smartphones, Xiaomi looks forward to premium smart product categories in lifestyle, Audio, Surveillance and smart devices category for sustainability in long run.
  15. 15. toolkit Can Xiaomi repeat the success of becoming a smartphone leader in India in other electronics categories by continuing to use an online distribution strategy and its “marketing without advertising” approach?
  16. 16. toolkit Online business strategy Sold through all major ecommerce sites like flipkart and Amazon along with their own company site direct-to-consumer method also allows Xiaomi to increase profits by avoiding the fees that come with having retailers sell its products in-store Xiaomi has created a business model around selling the majority of its products online through a method called “Flash Sales”
  17. 17. Entered India which is Price sensitive market with Low price Smartphones Due to localized production in India within months in 2015 Targeted D2C channel like Flipkart for selling with launch of Mi 3 handset which increased market base Ideology of marketing without advertising Mi Online community Mi Fan Forums Social media presence ACTIVE PARTICIPATION MARKETING WITHOUT ADVERTISING Through Xiaomi’s “Honest Pricing”, it made people understand Quality products can be available for not lot of money
  18. 18. toolkit Can Xiaomi repeat the success of becoming a leader in India in other electronics categories by continuing to use an online distribution strategy and its “marketing without advertising” approach? Currently, Yes!! In future ‘Offline + Online’ Poor infrastructure of customer service High competition in electronics market with each having wide capital base Competition sphere has increased due to diversification of product portfolio Xiaomi can take leverage of existing offline retail outlets for expanding electronics segment with experience stores of smart devices. Xiaomi should continue expanding its exclusive store count from 3000 currently to at least 6000+ in the next two years
  19. 19. toolkit With its current brand positioning in the price-sensitive segment, will Xiaomi be able to sustain itself in the electronics market in the long run?
  20. 20. Brand Positioning: A brand that is ‘close to people’, strives to enable everyone through innovation in the world to enjoy high-quality products at relatively low price tag. Current Situation Brand Positioning Consistency Brand Positioning Performance Brand Positioning Relevance ● Xiaomi BP plan inline with actual BP in consumers’ mind ● Brings validity that can help innovate ● Consistency brought loyalty of customers ● Consumers are willing to buy Xiaomi products repeatedly ● Consumers recommend their good user experience with others ● Correlation between Consistency and Performance ● brand product repurchase intention, recommendation intention etc.
  21. 21. ● Internet forum to get feedback from customers at beginning stage development ● Packaging innovation, For Example: 60% decrease in plastic usage for Mi 10T and Mi 10T Pro series packaging ● During 2020, the Xiaomi MIUI Earthquake Alert device detected 29 earthquakes above magnitude 4.0 using low cost detection ● replicated innovation strategy of essential smart products to occupy 'entry' positions, such as smartphones and televisions for home screens ● IOT devices cost reduction by outsourcing ● Mi Retail Academy : hands-on training to gain existing retailers What has been done right recently to strengthen the Brand sustainability? Process Innovation Product Innovation ● “Mi home” app on the smartphone controls 85% of the smart home products Products Xiaomi Price Range Samsung Oneplus Vivo Mobile Phones 6,999/- to 36,999/- 4,999/- to 1,73,999/- 24,999/- to 59,999/- 6,540/- to 79,990/- TV 14,999/- to 1,27,999/- 18,000/- to 14,99,990/- 16,999/- to 84,999/- NA Smart Watches 3,999/- to 9,999/- 7,999/- to 39,999/- 14,000/- NA ● Devices upto 84% screen to body ratio yet tougher and waterproof
  22. 22. Vestibulum congue Vestibulum congue Vestibulum congue Vestibulum congue Vestibulum congue Consumer Product Smart Hardware Smartphone surroundings products Smart Phone Vestibulum congue Vestibulum congue Vestibulum congue Vestibulum congue Vestibulum congue Vestibulum congue Vestibulum congue Vestibulum congue non-Mijia and non-eco-chain product Smart Eco-chain product ( non-mijia) Product in Mijia Brand Xiaomi Brand Product Structure of Eco-Chain Products in 2013 Brands & Eco-chain products in 2017 Shift of Product Ecosystem in Xiaomi
  23. 23. Innovation Community Innovative Product Innovation Subject Innovative Platform Innovative Characteristic Research Community MIUI Enthusiasts and Xiaomi MIUI forum Iterative Innovative Development Community Xiaomi phone Common users and Xiaomi Social network Social Innovation Application Community Eco-chain products Eco-chain companies and Xiaomi Platform of ‘investment & hatching’ Joint Innovation The Community driver for Innovation in Xiaomi
  24. 24. Sustainability Challenges to Xiaomi Products Price Range Air Purifier 2,199/- to 9,999/- Water Purifier 999/- to 10,999/- Audio Devices 379/- to 4,999/- Products Price Range Smart IOT ( Mop, bulbs 599/- to 19,999/- Security Cameras, Routers 14,999/- to 1,27,999/- Shoes, backpacks 1,999/- to 3,999/- Product Innovation width ● A good part of new buyers see few Chinese brands in one basket ● Lack of Patent Reserves and Standard Essential Patent (SEP) with ~7100 patents compared to Huawei with ~77000 patents hindering process and product innovation aspirations ● Xiaomi Brand awareness limited to mobile phones but not IOT devices ● Quality Problems and After-Sales Service Problems, In Xiaomi phone forums have up to 6,000 kinds of problems of Xiaomi phone ● Major problems include paint loss, short standby time and pictures quality affecting credibility of brand ● Lesser Overseas strategy for various models
  25. 25. Process Innovation Product Innovation Delivery method ● Expand from E–commerce to Retail ● Proximity of service centres near new buyers ● Upgrade Xiaomi hotline service for <2 min avg waiting time ● Upskill service centre employees to communicate in local language ● Rigorous R&D for long term market share ● Strong augmented MI UI for in-house low cost refurbishment ● A blazing speed, and numerous extra features is the key to differentiating from chinese counterparts ● Extensive IOT features to create ecosystem for most device solutions for MI users ● Leverage User’s high affordability of internet in devices 14.6 GB per month avg consumption by Indians - 2nd highest Innovation Recommendation for Sustainability to remain cost Leader in Higher price segment
  26. 26. toolkit What challenges will Xiaomi face as it pursues disruption in the television and electronics market in India?
  27. 27. Challenges for Xiaomi Taxation costs: Huge taxes levied on import of electronic components like chipsets & sensors by Government of India for television sets Lack of home grown manufacturing plants for sensors & chipsets: Additional operating costs for setting up manufacturing plants in the country Inadequate After-sales Service: Hotline mostly engaged in addition to the inefficient online and MIUI community customer service
  28. 28. Intensified Market Competition Market Share in Q3 of 2021: Xiaomi: 22% Samsung: 19% Competition sphere has increased due to diversification of product portfolio High competition in electronics market with each having wide capital base
  29. 29. Challenges for Xiaomi Souring of Indo-China Relationship: Xiaomi, being essentially a Chinese manufacturer, has failed to shed its Chinese stigma, especially after the IT department has permanently banned the usage of 59 Chinese apps in India. Lack of Patent Reserves and Standard Essential Patent (SEP): 2014: Ericsson sued Xiaomi in the Delhi High Court, claiming its phones infringed on Ericsson's wireless technology 2020: Philips alleged that several Xiaomi smartphones made use of its patented Universal Mobile Telecommunications Service (UMTS) enhancement technologies including HSPA, HSPA+ and LTE.
  30. 30. Challenges in Premium Segment • Venturing into new markets: Failure to make a mark in the flagship segment because of the brand’s perception of cost-centric smartphone manufacturer • Robust hardware but inconsistent MIUI software: Scaling issues in notifications in MI 11 Ultra priced at Rs.69,999 • Lagged updates and support for premium flagship phones Product Price Mi Mix 11x Rs.29,999 Mi Mix 11x Pro Rs.39,999 Mi Mix 11x Ultra Rs.69,999 Apple 4-5 Years Samsung 3 Years Xiaomi 2 Years
  31. 31. Recommendations ❑ Localize Xiaomi’s core competencies in India by creating an Indian customized version of operating system ❑ More emphasis on technological innovation and increase investment in research and development ❑ Solve patent issues by focusing more on independent innovation ❑ Set up direct phone hotline services, customer sales service points, Xiaomi Home in Tier 1 and 2 cities to improve after-sales service. ❑ Corporate with local retail outlets in small cities to service rural customers ❑ Focus on staff training and set up a range of KPIs to ensure quality of service ❑ Create a robust ecosystem of interconnected devices to captivate the consumers from switching to other competitors ❑ Ramp up its portfolio in Smart Home-Tech appliances before its competitors can level up
  32. 32. toolkit Being positioned in the price-sensitive segment, will Xiaomi be able to make up-market product line extensions in the future?
  33. 33. toolkit Workshop # 1 Current Product line extensions Workshop # 2 Smartphones Redmi ● entry-level Redmi ● mid-range Redmi Note ● the high-end Redmi K Poco: Higher-priced Snapdragon product range (now an independent brand) MI : Mid range and upwards ● Smart TVs ● Laptops ● TV and Phone Accessories ● Power Banks ● Audio : Earphones, and Speakers ● Smart Wearables ● Backpacks and Shoes ● Home: Security cameras, smart sensors, smart bulbs, WIFI Routers and smart air and water purifiers Power Packed products
  34. 34. toolkit Xiaomi’s Blended Business Model Configured investments to incentivize innovation and build trust. Focus on ROI more than margins Multiple hardware and software ventures connected to Xiaomi’s platform Actively enforces consistent branding and quality standards across its entire product portfolio IOT SmartPhones Stepwise expansion and Integration with IoT-connected consumer electronics Direct Online sales (Flash sales) and 3000+ MI stores Unique User Experience, Rich Technology, Latest Features Loyal Consumers Fans: Effectively used social media, Mi online community, and various Mi fan forums Honest Pricing Robust Risk Management System
  35. 35. Road Ahead : Up-Market Product line extensions Challenges ➢ Existing Consumer mindset of affordable and Price-sensitive Brand ➢ Strong Competition from Apple, OnePlus and Samsung in the Smartphone segment ➢ Strong Competition from Sony, Samsung, and LG in TV and other electronics ➢ Lack of unique premium product features ➢ Xiaomi saturated the online segment with 50% Market share ➢ Only 18-20% share in the offline Opportunities ➢ Rising interest of Indian Middle class segment in premium electronics ➢ The demand for electronic products will rise to US$ 400 billion by 2025 from US $ 33 billion in FY20 ➢ Biggest Internet of Things platform in the world and a powerful blended business model ➢ Room to grow in retail with just a 20 percent share in 2019 ➢ Availability of financial programmes like EMIs and increasing penetration of e-commerce hiked growth ➢ Nearly 2.5 times cheaper than the most expensive smart TV in play(Samsung)
  36. 36. Road Ahead : Up-Market Product line extensions Steps Taken ➢ Frequency of Product launch into premium has increased from 1 product a year to 5 ( Mi 11 Ultra, Redmi K) ➢ Building two-way complementarity between core and partner businesses ➢ Replacing the popular Mi moniker with Xiaomi ➢ Xiaomi to invest Rs 100 crore in expanding its offline retail presence for deeper reach in tier-2 and tier-3 cities, towns and rural India over the next two years. ➢ Aiming to double its exclusive store count from 3000 currently to 6000+ ➢ 3000 exclusive Mi stores, 75 Mi Homes and 10,000 retail points in its offline network Recommendations ➢ Utilising the Unified Xiaomi for Up-market product extension ➢ Creating strong research & development for unconventional high end features ➢ Word of Mouth promotional strategy with the help of massive loyal fan base ➢ Three factors to focus for premium range ❏ Great specs and premium design ❏ Cutting-edge technology ❏ Consumer experience that is free of ads and recommendations ➢ Not sticking to just one formula or dated tech ➢ Maintain a 50:50 ratio of sales across offline and online retail channels
  37. 37. toolkit “Being a leading technology brand with a strong presence across the globe, our aim is to have a unified presence. With the new logo shift, we envision bridging the perception gap between our brand and products.” - Jaskaran Singh Kapany, CMO, Xiaomi India Thank You!