The Most Preferred Smartphone Brand in India: The Meteoric Rise of Xiaomi

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You may be wondering what a Chinese startup has got to do with the most preferred smartphone brand in India! The journey of Chinese smartphone manufacturer Xiaomi has been roller coaster ride. Ever since entering the smartphone manufacturing business in 2011, Xiaomi has registered incredible growth but lately have also experienced their fair share of downs. During its initial years, Xiaomi grew by leaps and bounds and became the third largest smartphone maker in the world in 2014, and the largest smartphone vendor in its native China. Xiaomi also joined the likes of Uber in the list of the world’s most valuable technology startups. Over the past few years, however, Xiaomi’s fairy-tale ran into a few bumps. By the end of 2016, Xiaomi had fallen from first to fifth place in China. They were also displaced from the top 5 global smartphone vendor list by new entrants Vivo.

Despite these hiccups, Xiaomi is still on the ascendancy, with their growth being fueled by one massive emerging market – India.

Most Preferred Smartphone Brand

Amid reports of stagnating growth and the company undergoing a transition, a new report by Strategy Analytics has some good news for Xiaomi. The report puts Xiaomi’s share of installed base Android users in the Indian smartphone market at 16%. This is only 2% behind the market leader Samsung at 18%. In an emerging market like India, where smartphone penetration is still low and the potential for growth is extremely high, Xiaomi’s position is an enviable one. In fact, Statista forecasts smartphone penetration in India to grow from 29.8% in 2016 to 39% in 2019, and Xiaomi look set to take advantage of the inflow of new smartphone users.

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However, this is not even the most critical feature of this report. Strategy Analytics also reports that 26% of users see Xiaomi as most preferred smartphone brand for their next purchase; the most of any company in India. This is more than double that of second placed Samsung at 12%. In contrast, Indian smartphone manufacturer Micromax, which has 9% share is only preferred by 2% of users for their next smartphone. This indicates extremely high levels of consumer satisfactions and brand awareness Xiaomi has created in India. This can possibly translate to even better future sales and growth for Xiaomi in the country.

Deconstructing The Reasons For Xiaomi’s Success In India

Traditionally, India has been a banana peel for many multi-national companies who come looking to do business here. A lot of global marketing principle simply do not work in India. More often than not, to achieve success in India, corporations have to adapt to the “Indian way”, which is exactly what Xiaomi have done to grab the title of most preferred smartphone brand in India. Just a few of the key reasons attributed to Xiaomi’s success in India are:-

  • Smart Pricing – Xiaomi has targeted the highly lucrative low and mid-range smartphone markets in India, which account for 71% of quarterly shipment. By selling their smartphones at razor thin profit margins, Xiaomi have managed to undercut their competitors in pricing and gained a leg up on them
  • High-End Hardware – Despite offering some of the most competitive pricing, Xiaomi have kitted up their phone with some of the best hardware specifications on offer. By offering flagship-level hardware at a much cheaper price, Xiaomi has got an edge over its competitors.
  • Catering To Indian Demands – Many globally valued features such as camera quality, screen resolution etc are not that important to Indian buyers who prefer processor performance and network speed features. With the launch of fast 4G services by many telecom providers in India over the past year, Xiaomi catered to the demand for 4G enabled handsets for Indian users.
  • Innovative Marketing – Unlike many other companies, Xiaomi does not spend a lot of money on traditional advertising. Instead, they have opted for more innovative techniques and employed the use of social media to build brand awareness. This has paid off big time for them, as evidenced by the numbers in the report.
  • Local Manufacturing – Xiaomi started a manufacturing unit in Andhra Pradesh in 2015 in partnership with Foxconn. By moving their manufacturing operations locally, Xiaomi has been able to take advantage of friendly tax concessions and avoid import tariffs. There also plans for two more manufacturing units in India in the near future.
  • Online and Offline Distribution Channels – Xiaomi tied up with popular Indian e-retailers for their products. This way they eliminated the middle man to maximise profitability. Parallelly, Xiaomi is also pushing its own store to sell its products online at very competitive price. For extensive offline distribution, Xiaomi also tied up with Just Buy Live and Innocomm.
  • Unique Software Offerings – Xiaomi has not limited themselves to manufacturing smartphones alone, and offer their own operating system with more features. In fact, Xiaomi originally started out as a software/OS maker and this experience has come in handy for them.

Takeaways

  • Xiaomi is experiencing stagnation and slowing growth globally, but continue to capture the Indian market.
  • Xiaomi is betting big on India, with expected growth in India to drive their overall revenue to $14.5 billion in 2017.
  • They have cultivated immense consumer satisfaction and brand awareness in India. 26% of users now prefer Xiaomi for their next smartphone purchase.
  • Based on current market share and consumer satisfaction levels, we may see Xiaomi overtake Samsung as the top dog in India in the near future.

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