Xiaomi G1 – College Essay Example

around offering high-performance products at a reasonable cost to customers. The company aims to enhance the value of their products while minimizing customer expenses. Jun Lei, the CEO of Xiaomi, emphasizes the importance of quality in smartphones. Xiaomi differentiates itself in the Chinese phone market through features such as the unique MIUI system, large screens, and powerful CPUs. These advantages contribute to Xiaomi's relatively high value in the market. Xiaomi has established partnerships with over 100 trusted suppliers, including Toshiba, Samsung, and LG, to provide spare parts and accessories for their products. Additionally, recognizing that many local smartphones in China use the Android system, Xiaomi strategically positioned themselves as medium-high priced smartphones and exclusively adopted an online selling strategy to reduce customers' time costs.

The External Value Chain is an essential component.

Xiaomi has a distinct approach to building customer relationships by bridging the gap between the company and its customers. According to an interview with Bin Lin, CEO of Xiaomi, their aim is to minimize this distance. To achieve this, the management team acts as customer service representatives and actively participates in conversations with users, valuing their feedback. Additionally, all Xiaomi employees utilize Weibo, a renowned Chinese social media platform, to engage with internet users. This innovative strategy nurtures a strong bond between Xiaomi users and the brand.

Xiaomi differentiates itself from other companies in terms of its marketing and sales strategy, focusing on innovative business models, particularly in the selling of products. The internet has revolutionized product distribution, with e-business playing a crucial role. Xiaomi's unique approach involves exclusively selling their M1 smartphone online, while competitors primarily rely on retail stores.

By doing so, Xiaomi is able to significantly reduce distribution costs, resulting in a competitive price of only ?1999 for the M1. However, cost savings are not the only reason behind their online sales strategy. Xiaomi also implements limited-time panic selling events online by offering a restricted number of phones each week. This tactic creates a sense of scarcity and increases demand among users. The success of this approach is evident as Xiaomi managed to sell an impressive 3.52 million units of the M1.

Xiaomi utilizes a marketing strategy that combines online selling with online promotion, opting not to invest in advertisements. Instead, they rely on alternative methods to increase visibility. According to Sina Finance, there were 600 million users on Sina Weibo by June 2013. Xiaomi capitalized on the internet's potential for product promotion and prioritized creating high-quality products. They relied on customer word-of-mouth rather than conventional advertising techniques. Despite encountering both positive and negative user feedback, their determination remained unwavering.

Xiaomi CEO emphasizes the crucial role of the system in smart phones, stressing the need for fast updates in the mobile phone industry. Jun Lei reveals that they allocate two days every week to scale, develop, and test their own system, ensuring weekly updates.

The blue ocean strategy, as outlined by W. Chan Kim and Renee Mauborgne in their book 'Blue Ocean Strategy', suggests that organizations should focus on creating new demand in uncontested market spaces, or "Blue Oceans", instead of directly competing with other suppliers in established industries. This strategy involves creating uncontested market space, rendering competition irrelevant, generating and capturing new demand, breaking the value/cost trade-off, and aligning

the company's activities to achieve differentiation and low cost (W. Chan Kim and Renee Mauborgne 81).

According to a 2011 report by Gartner, smart phones accounted for 31% of global cell phone sales and were the preferred option in China's smart phone market. ZOL, a reputable business and IT website in China, conducted a study on the purchasing preferences of smart phone users during that year. The study found that these users consider factors such as price, configuration, quality, and operating system when selecting their phones. Compared to regular cell phone users, they show greater levels of discernment and knowledge.