Xiaomi cause harm for self. In order

 Xiaomiis one of China’s largest technology companies established in 2010 withheadquarters in Beijing. The company has been operating about 7 years andmanaged to become a leading company especially in smartphone technology.Founder and CEO of Xiaomi, Lei Jun along with the team has successfullyreleased it’sfirst smartphone in 2011 and expanded it’s market share in China. With it’s success in it’s own country (China). Xiaomiexpand the market share to other countries such as Indonesia, Singapore, India,and the others. Byusing innovative business strategy, Xiaomi successfully competes with other bigvendors.

One of the business strategy used by Xiaomi is cost leadership(generic strategy of Porter). Where this business strategy is tomake a products relative same like the others competitors while the products isbeing sale more cheaper and affordable rather than the others.Thismakes Xiaomi become a company that offers high / same quality products with lowprices and affordable for the people. Xiaomi market target in Indonesia is themiddle class people who desperately want high quality goods with small budget.

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But to implement this costleadership strategy is not easy, as explained by CEO Xiaomi himself that: “The final price of a product isdetermined by aspects of raw material prices and production costs, research anddevelopment costs, marketing and promotion costs, sales costs and distributionchannels, as well as profit margins.”  Xiaomi achievea cheap price and not up to 1.5 times the price of production by cutting anumber of aspects. Two of them are in terms of marketing and profit taken forthe company (this information is quoted from Kompas.com). A company must haveelements that certainly support the suppression of production costs, otherwisethis strategy will not work and may cause harm for self.Inorder for the cost leadership to runs well, Xiaomi must have a large marketshare, access to suppliers (can be raw materials, and others), and betterorganizational relationships.

Things that Xiaomi must do to support costleadership and improve their brand awareness is to use online marketingstrategies through social media or e-commerce. This strategy certainly does notrequire much cost and can reach the community. Xiaomi does not use the systemof advertising massively/traditional, the reseller or open the store offline ona regular basis too. Xiaomi just provides shipping costs only (when purchasingonline) and provide a store that is only a service center or place where topick the product that’s purchased online by the people. This is in line withthe words of Director of Product Management and Marketing Xiaomi Global,Donovan Sung: “We will not waste money on advertising, it’s not ourstyle.”(quoted from Kompas.com). Because by doing such an ads system will only increase the costof production that can affect the price of the products offered.

Inaddition, Xiaomi also utilize their community incorporated in MI-fans toindirectly promote and introduce their products to the public or commonly knownas the strategy of word of mouth marketing. In increasing it’s sales, Xiaomi also implementshunger marketing strategy, which is limited product sales with limited quantity also in limited time, like flashsalewhich they often do by using slogan “Opportunity does not come 2 times.”This will certainly be attractivess and increase the curiosity of consumersabout Xiaomi products. The production of products is also done with a largevolume so it can reduce production costs. Xiaomi is currently one of thesmartphones that liked by the public.

In addition to it’s cheap and affordable price range,Xiaomi also always produce innovative smartphones such as Apple smatphone.Therefore, Xiaomi is also called as the apple of bamboo curtain country. Thisbecomes one of the great customers attractivity about Xiaomi.Tooffering a variety of modern innovations, Xiaomi also provides features thatpamper consumers with theuser interface, the MIUI which can be customized mathcing theusers desires, and there’s also weekly update for the system provided by Xiaomiit self. Innovationcreated by Xiaomi also surely based on the wishes and experiences of it’s users in all aspects. In linewith the remarks from CEO Xiaomi at the interview session held in Indonesialate 2017 yesterday say :”Xiaomi and I have a major principle, that is to make friends withcustomers. So, we must get confidence to be an old friend. “(quoted fromDetik.

com). Thisstatement provesthat consumer satisfaction are number one priority in running it’s business. Implementation of cost leadership alsobrings profit that of course not only comes from the sale of smartphones withlow prices. Xiaomi sells its product just to cover it’s production costs and the profit from it’s content sales. This is seen fromthe following quote :”Xiaomi’s business model is very innovative. Simply, we do not seek profitfrom the sale of hardware, because it is always sold at a capital price. Thenthe profit from where? Yes, from the system and services provided. Globally,Xiaomi revenues account for 70 percent of smartphones, 20 percent IoT, and therest of the internet / online business.

” by CEO Xiaomi (quote taken from Indopost.co).Atthe beginning of it’sdevelopment,even Xiaomi can defeat Samsung in the sales of the most smartphone in the Chinese market (basedon information on Kompas.

com). But along with the increasingly fiercecompetition and the presence of other vendors such as Oppo usingmore marketingstrategies that are more attractive to consumers. By disseminating theirsmartphone sales through offline stores, distributors and advertisements thatdistract consumers from Xiaomi (especially in 2015-2016).

Because of thisproblem, Xiaomi subsequently replaced or refined their strategy by extendingsales through several distributors, building offline stores (MI store), servicecenter, providing convenience with customer service on Xiaomi official websiteand others. The purpose of doing this is to attractconsumers with offline method so they can see Xiaomi products directly in thestore, make them more satisfied by seeing the products that the want and alsothey can purchase it with no time, and of course this way is more easier. Whydoing this? Because Xiaomi struggled to keep their innovation in smartphonewith dynamic desires of market and costumers.Withcost leadership and other strategies, Xiaomi succeeded in becoming the largestsmartphone company or vendor in India to beat Samsung by a slight margin ofonly about 0.5% to 1% (based on information from IDC).

With it’s success in India, Xiaomi began tomake Indonesia as their core market. This is evident from Xiaomi’s investmentand research center development plan (R / D) as stated in the following quote:”In Indonesia, we have just built a local assembly plant that will allowus to start assembling in Indonesia and of course with the price which isinteresting. In addition, theassembly of various models for all users.” by Donovan, Director of Product Management andMarketing Xiaomi Global, Donovan Sung (quoted from Kompas.com).

In addition,Xiaomi is in the process of setting up an official MI store in several regionsin Indonesia, by the end of 2017 Xiaomi has opened one of their MI stores inSummarecon Mall Bekasi (West Java) which was also attended by founder & CEOXiaomi, Lei jun. Here are a few statements from Lei jun: ” The inauguration of Authorized MiStore also shows Xiaomi’s efforts to bring their products closer to usersthroughout Indonesia.” (Information from Kompas.com).

Xiaomi alsocommitted to provide the best service. No less than 42 service centers Xiaomiseller has now spread across 34 cities in Indonesia. In addition Xiaomi also docooperation with Nokia in terms of patents. Xiaomi is currently ranked 5th inthe Indonesian smartphone market.   Reference / Resource :http://tekno.kompas.comhttps://id.wikipedia.orghttps://bincangandroid.blogspot.co.idhttps://www.detekno.comhttp://tekno.kompas.comhttps://indopost.cohttps://inet.detik.comhttps://www.cnnindonesia.com 

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