Xiaomi Enters Brazil - Final Draft

Marketing Group Assignment: Xiaomi Enters Brazil

International MBA Program, Renmin University of China

Lecturer: Dr. Jing Jiang

Due Date: 25/12/2014

“Group Six Marketing Consultants”

Anna Liu - Organizational Structure, Budget, Execution Strategy, Evaluation

Alex Fu - Products Overview, Pricing Strategy, Promotional Strategy

Cian O’Dowd - Concept Website Build, Questionnaire, Project Final Edit

Julie Fu - Introduction, Company Overview, Company Strategy

Mikheili Songulashvili - Background Analysis, Promotional Strategy, Keynote

Introduction

In this project our group will aim to use our diverse knowledge and expertise to develop a marketing

plan for the launching of a new product in a new market for a local Chinese firm. We aim to

practically apply the lessons contained within our Marketing module to develop a custom plan for

how our firm can successfully launch this product into that market using innovative and cost-effective

marketing practices. We will confront the challenges which the firm may face in entering this market

and offer advice as to how they may overcome these.

Our focus text for this assignment was Kotler and Armstrong’s Principles of Marketing1. Globally

recognized as the ‘bible’ of marketing education this textbook offers a solid introduction in the field

of Marketing. As some of our group had not studied Marketing before this easy-to-read book was a

good point of reference. We found it in particular useful when developing our Pricing and

Promotional Strategies.

When selecting a firm for this project our group agreed on three criteria; the firm needed to be local

(Chinese), it needed to be known as a firm which developed innovative products and had a track

record of using unique marketing strategies. We also agreed that it should be a sector in which all

members in the group shared a common interest, after an hour of discussion we came to only one

answer, mobile phones.

Eventually our group decided to pick Xiaomi. We did so as Xiaomi is a very local firm with its

headquarters located a stone’s throw from Renmin in Zhongguancun. Xiaomi is an incredibly young

Chinese firm that met all our criteria for a firm and has used fun, creative marketing to capture cold

hard market share. Less than five years after its creation it is now already the world’s third largest

smartphone manufacturer2.

Company Overview

Founded in 2010 “Beijing Xiaomi Technology Company Limited”, trading as “Xiaomi” is a

manufacturer of Smartphones, Smart TVs, Tablet Computers and other electronic devices. Xiaomi’s

devices use an in-house developed variant of Google’s Android operating system that Xiaomi calls

‘MIUI OS’.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1!Kotler, P. and Armstrong, G. (2012) Principles of Marketing – 14th edn. New Jersey: Pearson Prentice Hall.!2 Gibbs, S 2014, ‘China Rising: Xiaomi becomes world’s third largest smartphone manufacturer’, The Guardian, 30 October. Available at: http://www.theguardian.com/technology/2014/oct/30/china-xiaomi-third-biggest-smartphone. [28 November 2014].

In selecting Xiaomi the main disadvantage for our group was that Xiaomi is as of yet not a publicly

traded company and thus does not issue Annual Reports. The firm is privately owned by a investor

group including its CEO Lei Jun, the Singapore Government’s investment body Temasek Holdings

and Chinese venture capital fund IDG Capital3.

Xiaomi has successfully delivered its growth by focusing on Asian markets such as China, India,

Singapore and Malaysia. However Xiaomi executives have spoken openly about entering Western

markets such as the United States, Europe and South America4.

Initially our group assessed several potential markets for Xiaomi to expand into next. When exploring

other developed markets such as Europe and America our group identified a key barrier to entry for

Xiaomi could be legal action by competitors such as Apple and Samsung. Both firms in the past have

taken patent and design infringement actions in US and European courts to have products removed

from the shelves and in recent months press have pointed to similarities in Xiaomi and Apple

products. In October 2014 Jonathan Ives, Head of Design at Apple when referring to claims that

Xiaomi copies Apple designs said5 “It really is theft and its lazy. And I don’t think it’s OK at all”.

The Brazilian market is sufficiently distant to avoid Apple’s wrath and lacks the sufficient copyright

legislation to facilitate such action against Xiaomi.

Company Strategy

Since launching its first product in 2011 Xiaomi has followed a cost-differentiation strategy offering a

products with high specifications at highly competitive pricing. It has innovatively used E-Commerce

as it’s main sales medium as opposed to a traditional “bricks and mortar” retail network which would

have cost the young firm a considerably sum to develop6.

For Xiaomi’s most popular products it chooses to sell them on selected days only in what Xiaomi

calls “Flash Sales”. This occurs due to two reasons: current global demand for Xiaomi devices means

stock shortages are constant and would make managing a constantly operating e-commerce operation

very difficult to manage. Also, by dispatching devices in bulk on particular days this enables Xiaomi

to negotiate discounts from its logistics partners and requires less staff in it’s warehouse.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!3 Wikipedia (2014), Wikipedia- Xiaomi. Available at http://en.wikipedia.org/wiki/Xiaomi [Accessed 28 November] 4 Ibid 3. 5 Kan, M 2014, ‘China’s Xiaomi defends itself from Apple copycat claims’. Macworld, 29 October. Available at http://www.macworld.co.uk/news/apple/chinas-xiaomi-defends-itself-from-apple-copycat-claims-3583101/. [28 November 2014]. 6 Xiaomi Global Site (2014), Xiaomi – About Us. Available at http://www.mi.com/en/about [Accessed 28 November]!

Background Analysis

SWOT Analysis - Strengths of Xiaomi When Entering Brazil

Emerging Market Favors Xiaomi’s Cost Model

Xiaomi usually favors entering rapidly developing emerging markets where income levels are rising

but are not yet at Western levels. Such markets find Xiaomi’s price competitive devices highly

attractive. To date Xiaomi operates in China, India and Russia, by entering Brazil it would be in all

the “BRIC” nations.

The Hugo Barra Factor

A major incentive for Xiaomi to enter the Brazilian market is that it’s highly charismatic Vice

President for Global Markets is Brazilian. Recruited from Google Hugo Barra enjoys a huge social

media following and has become the ‘face’ of Xiaomi outside of China. Having a popular local face

would be a huge advance for Xiaomi when entering the Brazilian market.

Hugo Barra pictured at a recent Xiaomi event in Beijing (Source - Xiaomi.cn)

Brazilian E-Commerce Strength

Research from Forrester Research has claimed Brazil’s e-commerce market is the largest in South

America and is three times the size of Mexico and Argentina’s e-commerce markets combined. In the

past five years it has grown 250% and this receptive e-commerce environment will support Xiaomi’s

e-commerce focused business model.

SWOT Analysis - Weaknesses of Xiaomi Entering Brazil

Brand Recognition Is Low

A major weakness of Xiaomi when entering the Brazilian market is that it’s brand is not very

recognizable in this market. While ‘Techies’ may be aware of it and be eager to purchase it’s product

the brand is not well known amongst the general public and will require sustained marketing efforts to

build.

‘Made In China’

Unfortunately for Xiaomi many customers in foreign markets still perceive ‘Made in China’ to mean

poor quality and service. Dispelling this perception will be a major challenge for Xiaomi, especially

when selling its higher tier products.

Absence of an Establish Retail and Service Network

Xiaomi’s typical business strategy and our strategy for entering Brazil favors an E-Commerce focused

model. However the absence of ‘bricks and mortar’ retail and service centers could create challenges

for Xiaomi.

SWOT Analysis - Opportunities for Xiaomi when entering Brazil

High Growth Market

Today, Brazil is home to one third of mobile phone users in Latin America and the Caribbean7. This

astounding performance is forecast to continue as the country expands it’s investment in high-speed

“4G” mobile phone signal. Euromonitor8 forecasts volume smartphone sales in Brazil to increase by

103% from 2013 to 2018.

Prepaid Customers Dominate The Brazilian Market

Local market research by Teleco has said that of those surveyed 82% of Brazilian mobile users

favored Prepay plans (without singing Contracts). In Q3 2014 76.8% of all Mobile connections in

Brazil were Pre-paid9. This requires customers to pay the full price of the device up-front and thus

favors Xiaomi’s direct to customer (B2C) e-commerce model while also giving its cheaper priced

devices a natural cost advantage.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7 Budde Communications [2014], Brazil Mobile Market Insights. Available at http://www.budde.com.au/Research/Brazil-Mobile-Market-Insights-Statistics-and-Forecasts.html [Accessed 28 November] 8 Euromonitor [2014], Mobile Phones in Brazil. Available at http://www.euromonitor.com/mobile-phones-in-brazil/report [Accessed 29 November]!!9 Teixeira, M 2014 ‘Brazil – Mobile Market’, Tech in Brazil. Available at http://techinbrazil.com/recharging-prepaid-mobile-plans-in-brazil. [Accessed 30 November]

Consumer Products Tax Reduction

In 2013, the Brazilian Government reduced the standard rate of taxation on consumer products such

as mobile phones and tablets to stimulate economic growth. This has made these products more

attainable to millions of low and middle-class customers.

SWOT Analysis - Threats for Xiaomi when entering Brazil

Threat posed by Microsoft’s Lumia Range

Microsoft (previously known as Nokia) represents a major threat to Xiaomi in the Brazilian market.

Microsoft’s ‘Lumia’ range of Windows smartphones offer strong specifications at competitive

pricing. This model is proving particularly popular in developing markets. However can count this

threat by emphasizing its use of Android that is a far more popular operating system amongst

consumers.

Legal Threats by Competitors

While less of risk than in North American or European Markets the threat of legal action does exist

for Xiaomi. Entering new markets intrudes on it’s competitors and may encourage rivals to take

action against Xiaomi should they feel it’s infringing on patents or designs. This month Ericsson was

granted an injunction in India against Xiaomi for alleged patent infringement10. Xiaomi was banned

from selling its devices in that market until the issue is resolved.

Products Overview

When selecting the products to market for our project we looked at Xiaomi’s existing range available

in China11. While the products were extremely impressive and offered exceptional specifications at

competitive pricing their Operating System was the main let down for foreign customers. Due to

China’s ban on Google products the Xiaomi MIUI operating system has all Google applications

removed. Outside of China tech conscious consumers view applications such as ‘Google Play Store’,

‘YouTube’, ‘Google Chrome’ and ‘Gmail’ as essential. As a result our new products for our project

are four products from the Xiaomi range with a pure variant of Google’s latest Android Lollipop

operating system installed. Each device will naturally have a Brazilian Portuguese pre-installed and

will support the Brazilian 700Mhz 4G frequency. For detailed information on each of our four

products please see “Product Overview” in the Appendix.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!10 Bhargava, Y ‘Forced to suspend sales, Xiaomi assessing legal options’ The Hindu. Available at http://www.thehindu.com/business/Industry/forced-to-suspend-sales-xiaomi-assessing-legal-options/article6689231.ece [Accessed 13 December 2014] 11 Xiaomi China (2014). Mi. Available at: http://www.mi.com/index.php [Accessed 28 November 2014]

Pricing Strategy

Pricing will play a major role in Xiaomi’s brand model in Brazil and in forming our marketing

strategy. As illustrated in the graphic below Xiaomi devices have a substantial price difference versus

rival devices of similar specification. This will enable Xiaomi to pursue a strategy of ‘Market

Penetrating Pricing’ which Kotler and Armstrong12 describe as when “…companies set a low initial

price to penetrate the market quickly and deeply – to attract a large number of buyers quickly and win

a large market share.”

Table 1 - Price Comparison of Unlocked Smartphones & Tablets in Brazil Device Type Device Name Device Cost (No Contract)*

Entry Level 4G Smartphone Xiaomi Redmi M1 BR$ 299 (USD$116)

Entry Level 4G Smartphone Apple iPhone 5C 8GB BR$ 1,499 (USD$584)

Entry Level 4G Smartphone Nokia Lumia 930 BR$ 1,049 (USD$409)

Large Screen Smartphone Xiaomi Redmi Note BR$ 369 (USD$143)

Large Screen Smartphone Apple iPhone 6S Plus BR$ 2,653 (USD$999)

Large Screen Smartphone Samsung Galaxy Note 4 BR$ 1,999 (USD$789)

High-End Smartphone Xiaomi Mi 4 BR$ 849 (USD$325)

High-End Smartphone Apple iPhone 6 BR$ 2,180 (USD$850)

High-End Smartphone HTC One M8 BR$ 1,357 (USD$529)

High-End Tablet Xiaomi MiPad BR$ 629 (USD$249)

High-End Tablet Apple iPad Mini 2 BR$ 1,399 (USD$529)

High-End Tablet Samsung Galaxy Tab S BR$ 1,152 (USD$449)

Graph Guidelines * Xiaomi prices are an estimate (Chinese retail prices plus 10%).

~ Prices shown are retail prices for devices sold unlocked (without contract) in Brazil.

Promotional Strategy

In order to ensure sufficient market penetration in such a large market our team will recommend

several mediums to market our new product range. However throughout our priority will be to

minimize cost and maximize innovation.

E-Commerce Strategy and ‘Flash Sales’

At the heart of our group’s marketing strategy is E-Commerce. E-Commerce offers a cost-effective

alternative to traditional retail networks and allows Xiaomi to sell directly to the Consumer (B2C)

without Retailers and thus substantially increase profit margins. Due to occasional shortages in

Xiaomi stock due to high global demand products will be sold on a time-limited basis via events

known as ‘Flash Sales’ – this means that particular products are only sold on a set day each week, that

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12 Ibid. 1

day does not change to enable word of mouth to promote the activity. This will create an air of

‘exclusivity’ with our products and in doing so increase customer demand. This also enables Xiaomi’s

Social Media channels to generate interest ahead of these ‘Flash Sales’.

‘MiPop’ Events

One of Xiaomi’s unique marketing tools are ‘MiPop’ events13. These events are held when Xiaomi

launches a new device or enters a new market, it enables Xiaomi to build relationships and spread

awareness of products to local mobile networks, journalists, developers and ‘loyal customers’. Key

Xiaomi staff attend these events and the public have the opportunity to try new devices and give

feedback on their experience. The addition of a pure version of Android Lollipop to our Brazilian-

variant of the Xiaomi range would likely ensure the popularity of our events with developers and

‘techies’. Our group recommends holding several of these events with Hugo Barra presenting across

several of Brazil’s largest cities. These events can be run at a relatively low cost but act as highly

targeted PR activity and attract a considerable amount of social media and press coverage.

‘Something Wonderful’ Social Media Campaign

Another cost-effective and innovative way of marketing our new products in Brazil is social media.

Social Media is a highly effective medium of promoting products in Brazil. In 2014 remarkably Brazil

was Facebook’s second largest market with over 65 million accounts, the world’s second largest

market for Twitter (41.2 million accounts) and the world’s second largest market for YouTube by

unique visitors14. Some international companies have been successful in using Brazil’s social media

action to spread brand awareness; a noticeable success story in this was Diageo’s ‘We Are Social’

campaign for its Smirnoff Vodka brand15. Over a four-month period Smirnoff Brazil asked customers

to post on it’s Facebook page photos, videos, songs and stories which embodied the brand’s “Be

There” slogan. Over the four-month period the number of fans on Smirnoff Brazil’s Facebook page

increased by 427% to over one million making Smirnoff the third most popular brand on Facebook in

Brazil. Leslie Orsioli, Managing Director of the ‘We Are Social’ Campaign said it engaged

customers, encouraged them to engage with the brand and helped them create a bond with Smirnoff,

all this was achieved at minimal cost to the company. Our group suggests Xiaomi follows a similar

strategy surrounding it’s company motto of “Always believe that something wonderful is about to

happen”. After launching ‘Xiaomi Brazil’ Facebook, Twitter and YouTube profiles we would start a

three-month campaign to get users to share their own ‘Something Wonderful’ via photos, videos and

stories a weekly winner winning a Xiaomi smartphone and tablet. Social Media is also a highly

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!13 Xiaomi China Blog (2014). ��. Available at http://bbs.xiaomi.cn/thread-10919264-1-1.html [Accessed 28 November] 14 Holmes, R 2013 ‘The Future of Social Media? Forget about the US, Look To Brazil’. Forbes, 9 December. Available at http://www.forbes.com/sites/ciocentral/2013/09/12/the-future-of-social-media-forget-about-the-u-s-look-to-brazil/. [28 November 2014] 15 Moth, D 2013 ’10 Innovative Digital Marketing Campaigns from Diageo Brands’. E-Consultancy, 16 October. Available at https://econsultancy.com/blog/63593-10-innovative-digital-marketing-campaigns-from-diageo-brands. [28 November 2014]!

measurable marketing medium thanks to web analytics tools such as Google Analytics and Adobe

Omniture that can provide up-to the minute traffic data on these sources and enable Xiaomi to quickly

gauge the effectiveness of these strategies.

Organizational Structure

Following our policy of cost-effective marketing Xiaomi Brazil’s marketing team structure will be

based on function. Our group is confident that the aforementioned objectives can be achieved with

local team of thirteen staff. During major product launches headcount could be increased in a

temporary basis if additional promotional staff are required. Due to Xiaomi’s bulk shipping policy

linked to ‘Xiaomi Days’ and the fact that E-Commerce for Xiaomi will only operate on selected days

we do not require round the clock E-Commerce staff nor do we need several staff to handle logistics,

this will further contribute to Xiaomi’s cost-savings.

Execution Strategy

When developing our plan to enter Brazil our team concluded that there should be a focus on

minimizing cost and external activity. By keeping marketing options in-house we can minimize delay

and run operations using a small team of our own dedicated staff. Below we have put together a GTM

Timetable (Go-To-Market) based on the perception that Xiaomi wishes us to launch the website just

before Christmas.

Staff!

Team!Managers!

Senior!Management! Head!of!Marketing!(Brazil)!

Public!Relations!Manager!

PR!Rep! Brand!Ambassador!

Event!Planner!(MiPop)!

Social!Media!Manager!

Social!Media!Promoter!

Customer!Care!Rep!

Creative!Manager!

Graphics!Designer!(Print)!

EFCommerce!Manager!

Web!Developer!

Graphics!Designer!(Web)!

Table 1 – Go To Market (GTM) Timetable for Xiaomi Brazil Marketing Plan

Go To Market Timetable For Xiaomi Brazil Marketing Plan

Week One November 10th - 16th Design Planning Graphics Designers with Teams plan site/social media designs

Event Planning First MiPop Event venue booked in Sao Paulo.

Week Two November 17th - 23rd Site Build Commences Website construction begins based on pre-agreed designs

Social Media Pages Launch Social Media Team launch pages, upload content and images

Event Planning Prepare venue layout for MiPop event, invite Press & Bloggers

Week Three November 24th - 30th Site Build Nearing Completion UI Testing, SEO Testing via Google Analytics & Adobe Omniture

Social Media Pages Launch Social Media goes live, first posts - shows product graphics

Event Planning Offer limited tickets to MiPop event for social media subscribers

Week Four December 1st - 7th Xiaomi Brazil Website Goes Live Frontend live but E-Commerce not launched

Social Media Pages Go Live Something Wonderful' Social Media Competition launches

Event Planning Final preparations ahead of MiPop event, rehearsal of activities

Week Five December 8th - 14th First Post from Hugo on Website First Post from Hugo's Blog ahead of first Flash Sale in Brazil

Social Media Promotes Hugo Post Daily countdown to pre-orders, coverage of MiPop event

Event Planning MiPop Event - Friday 14th, Hugo attends - Social Media Presence

Week Six December 15th - 21st Our First "Flash Sale" in Brazil Pre-orders taken on Monday 15th, bulk dispatches occur 17th-18th

Social Media Promotes Xiaomi Day Strong Social Media Activity - launch and dispatch days celebrated

Event Planning Next 'MiPop' event announced for Rio De Janiero & Brasilia

Budget

Through adopting an E-Commerce and Social Media focused Marketing Strategy our group is able to

deliver a project to Xiaomi that achieves sales objectives at minimal expenditure. By adopting the

‘Flash Sale’ strategy these cost-savings can also be continued in the logistics side of the business. As

Social Media activity forms the majority of our advertising activity we enable Xiaomi to avoid costly

print media and television advertising costs.

• Website Build - $2,000 USD

• Server Hosting - $5,000 USD P.A.

• MiPop Event - $30,000 USD

Forecasted Marketing Expenditure - $37,000 USD

Evaluation

Xiaomi today represents a Chinese company at the forefront of technology and innovation. It is thus

only right that they have a Marketing Strategy for entering new markets that reflects this stance. In

selecting a target market our group decided that copyright and intellectual property laws played a

major role in where Xiaomi could go and was the deciding factor in why the company could not enter

the North American or European Markets. Brazil represented a good market due to it’s ambiguity

surrounding foreign copyright protection, it’s high growth economy, recent adoption of 4G and strong

E-Commerce sector. When deciding our marketing strategy for Brazil our group felt it was essential

that we developed a strategy in line with the existing Xiaomi brand but yet was also sensititive to the

intricacies of Brazilian culture. In general we feel our strategy represents a strong entry plan for

Xiaomi highlighting its innovative culture and offers optimum customer reach at minimal cost.

Xiaomi’s existing E-Commerce-focused business strategy coupled with its bulk dispatches and

limited sales days have proven to be a highly effective model. It generates customer demand for

products and creates a perception of rarity while at the same time achieving optimal use of logistics

and staffing. We felt that continuing with the E-Commerce focused strategy was the best way forward

and offered considerable cost savings versus a traditional retail strategy. The rapid growth of E-

Commerce within Brazil suggests that our faith in E-Commerce is likely to prove successful.

Recognizing the popularity of Social Media in Brazil our plan prioritizes this area as a cost-effective

means of encouraging customer interaction and affinity with the Xiaomi brand. The outstanding

success of past Social Media-led marketing campaigns in that market gave us confidence and

precedence in which to follow16. While in its home market due to Government restrictions Xiaomi’s

activity in Facebook, YouTube, Twitter and Instagram has been low key we would recommend a

dedicated Social Media Team to target these mediums.

When looking at execution our proposed strategies could be rolled out in a very short period of time

with minimal staffing. Whilst traditional marketing mediums such as Print Advertising and Television

would require the involvement of third parties and take a longer timescale to roll out our strategies

could be launched entirely from within Xiaomi.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!16 Ibid. 13

Marketing Group Assignment: Xiaomi Enters Brazil

International MBA Program, Renmin University of China

Appendix, Bibliography and Presentation Slides

Products Overview

Product One – ‘Entry Level 4G Smartphone’ - Xiaomi Redmi M1

After our group analyzed this product we concluded that it’s competitive specs and pricing made it an

ideal choice for the Brazilian market. Adding a pure variant of Android Lollipop into the mix makes

this a high spec device at a very affordable price point. Its 4G support would make it an attractive

option for Mobile Networks to purchase as they attempt to encourage 4G adoption. Marketing for this

device would target young consumers and focus on the Red M1’s super-fast quad-core processor, 4G

support, Android Lollipop support and variety of colors.

To Market Price in Brazil – 299 Brazilian Reals (USD$116)

Product Two – ‘Phablet – Phone/Tablet Smartphone’ – Xiaomi Redmi Note

Our group concluded this would be a strong competitor in the ‘phablet’ segment of the Brazilian

market as a substantially cheaper alternative to the Apple iPhone 6 Plus and Samsung Galaxy Note 4.

Our marketing would target 18-35 year old consumers and would focus on cost, the phone’s fast

eight-core processor, 4G support and impressive 13-megapixel camera.


Product Three – ‘High-End Smartphone’ – Xiaomi Mi4

This device again offers superior specifications and high-quality construction at an affordable price.

Our group would focus marketing for this product on cost as it has a highly competitive spec which

could rival the likes of iPhone 6 and Samsung Galaxy S5 and yet is also less than half the retail price

of those devices. The target audience for this device would be middle-aged professionals aged 25-50.


Product Four – ‘Tablet Device’ – Xiaomi MiPad

To capitalize on the growing Tablet Computer market our group selected the Xiaomi Mi-Pad to also

enter the Brazilian market. The MiPad offers a near identical specification to the Apple iPad Mini but

costs USD$200 less. Coupled with our additional of Android Lollipop we are confident this would be

a very strong seller in the Brazilian market. At an attractive price point we would target a broad range

of customers with this device and our marketing activity would focus on price, the availability of

colors and the addition of Android Lollipop.


Questionnaire

Our team conducted a survey to determine insights into the young Brazilian consumer today.

Unfortunately due to our current location our survey was restricted in scale and was conducted with

ten young Brazilians living in Europe.

Sample Questionnaire As E-Mailed To Participants

Thank you for participating in our survey regarding Xiaomi selling products in Brazil. For Question

Six please rate your answer according to the scale of one to five. One being “Highly Unlikely” to Five

being “Highly Likely”.

• Question One - Have you heard of the brand Xiaomi before?

• Question Two – If you answered ‘Yes’ to Question One, given what you know about Xiaomi already

would you buy a Xiaomi device?

• Question Three – If you were to use three words in English to describe Xiaomi what would they be?

• Question Four – After looking at Table One concerning the price differences between Xiaomi and

other manufacturers in Brazil would you be more inclined to buy Xiaomi.

• Question Five – Would you prefer to buy your next phone online on in-store?

• Question Six – After viewing our website would you be interested in purchasing Xiaomi?

The results of the Questionnaire were quite insightful, unfortunately only five out of our ten

participants had heard of Xiaomi before but four out of those five said they would consider buying

such a product. The two key terms that arose from Question Three were “Chinese” and “Android”

thus our decision to adopt a new pure Android variant for Brazil is likely a wise decision. Question

Four received an emphatic response from those surveyed with ten out of then saying they would be

more inclined to purchase Xiaomi after looking at our price comparison table, this result guided us to

make price a key focus in our marketing. Question Five gave us faith in the Xiaomi strategy with only

one person saying they’d rather purchase in-store than online, yet another example of the success of

E-Commerce in Brazilian society today. Finally, in Question Six, four out of our ten participants said

they would be “Highly Interested” in purchasing Xiaomi after looking at our website while three out

of the ten said they would be “Interested” in purchasing Xiaomi after looking at our site.

Bibliography

Textbooks

• Kotler, P. and Armstrong, G. (2012) Principles of Marketing – 14th edn. New Jersey: Pearson Prentice

Hall

Online Articles

• Gibbs, S 2014, ‘China Rising: Xiaomi becomes world’s third largest smartphone manufacturer’, The

Guardian, 30 October. Available at: http://www.theguardian.com/technology/2014/oct/30/china-

xiaomi-third-biggest-smartphone. [28 November 2014].

• Wikipedia (2014), Wikipedia- Xiaomi. Available at http://en.wikipedia.org/wiki/Xiaomi [Accessed 28

November]

• Bhargava, Y ‘Forced to suspend sales, Xiaomi assessing legal options’ The Hindu. Available at

http://www.thehindu.com/business/Industry/forced-to-suspend-sales-xiaomi-assessing-legal-

options/article6689231.ece. [Accessed 13 December 2014]

• Kan, M 2014, ‘China’s Xiaomi defends itself from Apple copycat claims’. Macworld, 29 October.

Available at http://www.macworld.co.uk/news/apple/chinas-xiaomi-defends-itself-from-apple-copycat-

claims-3583101/. [28 November 2014].

• Teixeira, M 2014 ‘Brazil – Mobile Market’, Tech in Brazil. Available at

http://techinbrazil.com/recharging-prepaid-mobile-plans-in-brazil. [Accessed 30 November]

• Holmes, R 2013 ‘The Future of Social Media? Forget about the US, Look To Brazil’. Forbes, 9

December. Available at http://www.forbes.com/sites/ciocentral/2013/09/12/the-future-of-social-media-

forget-about-the-u-s-look-to-brazil/. [28 November 2014]

• Moth, D 2013 ’10 Innovative Digital Marketing Campaigns from Diageo Brands’. E-Consultancy, 16

October. Available at https://econsultancy.com/blog/63593-10-innovative-digital-marketing-

campaigns-from-diageo-brands. [28 November 2014]

Research Documents

• Budde Communications [2014], Brazil Mobile Market Insights. Available at

http://www.budde.com.au/Research/Brazil-Mobile-Market-Insights-Statistics-and-Forecasts.html

[Accessed 28 November]

• Euromonitor [2014], Mobile Phones in Brazil. Available at http://www.euromonitor.com/mobile-

phones-in-brazil/report [Accessed 29 November]

Company Publications

• Xiaomi Global Site (2014), Xiaomi – About Us. Available at http://www.mi.com/en/about [Accessed

28 November]

• Xiaomi China Blog (2014). ��. Available at http://bbs.xiaomi.cn/thread-10919264-1-1.html

[Accessed 28 November]

? C AB AA?D . A C ? BD C CB

Meet Our Team

Project Brief

“Complete a marketing plan for a hypothetical product that your group creates for a selected company.”

Choosing Xiaomi

• Company should be Chinese ✓ (It is!)

• Company should be local ✓ (It’s based in Haidian!)

• Company should be involved in a sector of common interest ✓ (Everyone loves Mobile Phones!)

• Xiaomi is one of China’s most innovative and fastest-growing companies!

Company Overview

• Founded in 2010 in Beijing

• Owned by CEO Lei Jun, IDG Capital and Temasek Holdings

• Manufacturer of Smartphones, Tablets & Other Technology Products and Accessories

• Allegations of copying Apple’s designs - “It really is theft and it’s lazy” - Jonathan Ives, Apple

Company Overview

• Has successfully deployed it’s ‘MIUI OS’ operating system - a Chinese variant of Android without Google functionality

• Within four years has gone from producing it’s first device to being the World’s third largest Smartphone brand

• VP of Global Business - Hugo Barra, Former Head of Android at Google

Meet Xiaomi Company Strategy

• E-Commerce Rather Than Retail

• Design Focused On Ease of Build

• Bulk Price Negotiations with Manufacturers

• Advertise Via Social Media Only - No TV/Print

• “Flash Sales”

Background Analysis

Strengths

• Emerging Markets Favour Xiaomi’s Cost Model

• The Hugo Barra Factor (He’s Brazilian!)

• Brazilian E-Commerce Strength

Background Analysis

Weaknesses

• Brand Recognition is low

• ‘Made in China’

• Absence of an Established Retail Network

Background Analysis

Opportunities

• High Growth Market

• Prepaid Customers Dominate Brazilian Market

• Consumer Products Tax Reduction

Background AnalysisThreats

• Microsoft Lumia Threat

• Growth of Chinese Rivals (Huawei, ZTE etc.)

• Threat of Legal Action by Apple, Samsung, HTC

• India Injunction by Ericsson

• Similar action in Brazil unlikely to succeed

Product OverviewKey Changes with new Brazilian variants

• Replace Chinese ‘MIUI OS’ with Android Lollipop (Most recent version of Google’s OS) - A new strategy for Xiaomi

• Add Portuguese language functionality for Brazilian market

• Update antenna specifications to support Brazilian 4G frequency (700Mhz)

• Change charger type to support Brazilian power supply

Xiaomi Redmi M1

Specifications • Entry-Level Xiaomi Phone • Now with Android Lollipop • Quad-core Processor • 8GB Internal Storage

Target Market • Targeted at 18-25 year old

Brazilian consumers • Low to Medium Income

Xiaomi Redmi Note

Specifications • 5.5” ‘Phablet’ Device • Now with Android Lollipop • Quad-core Processor • 8GB Internal Storage

Target Market • Targeted at 18-25 year old Brazilian

consumers • Heavy internet users attracted to the

larger screen for browsing experience

• Low to Medium Income

Xiaomi MiPad

Specifications • 7.9” Tablet Computer • Now with Android Lollipop • Nvidia Tekra K1 Processor • 16GB Internal Storage


Brazilian consumers • Low to Medium Income

Xiaomi Mi4

Specifications • Premium-Level Device • Now with Android Lollipop • High Build Quality • 16GB Internal Storage • 13MP Camera (with 8MP front)


Brazilian consumers • Medium to High Income

Pricing StrategyTable 1 - Price Comparison of Unlocked Smartphones & Tablets in Brazil

Device Type Device Name Device Cost (No Contract)*Entry Level 4G Smartphone Xiaomi Redmi M1 BR299 (USD$116)Entry Level 4G Smartphone Apple iPhone 5C 8GB BR1,499 (USD$584)Entry Level 4G Smartphone Nokia Lumia 930 BR1,049 (USD$409)Large Screen Smartphone Xiaomi Redmi Note BR369 (USD$143)Large Screen Smartphone Apple iPhone 6S Plus BR2,653 (USD$999)Large Screen Smartphone Samsung Galaxy Note 4 BR1,999 (USD$789)

High-End Smartphone Xiaomi Mi 4 BR849 (USD$325)High-End Smartphone Apple iPhone 6 BR2,180 (USD$850)High-End Smartphone HTC One M8 BR1,357 (USD$529)

High-End Tablet Xiaomi MiPad BR629 (USD$249)High-End Tablet Apple iPad Mini 2 BR1,399 (USD$529)High-End Tablet Samsung Galaxy Tab S BR1,152 (USD$449)

*Xiaomi prices are an estimate (Chinese retail prices plus 20%).~ Prices listed are for devices sold unlocked (without contract) in Brazil.

Promotional StrategyE-Commerce Strategy

• Business to Consumer (B2C)

• No Retail Network (No Retail Costs)

• Don’t sell to Retailers or Mobile Networks

Flash Sales Strategy

• Lower Logistics Cost

• Sense of Exclusivity

“Flash Sale” Explained


“MiPop” Events

• Reach Out To Press, Corporate, Techies

• Generate PR in Traditional Media

• Create Brand Loyalty


Using Social Media Instead Of Traditional Media

• Diageo’s ‘Smirnoff’ Vodka brand in Brazil

• “We Are Social” Social Media Campaign

• 427% Increase in Facebook Fans in just four months - Over 1m - 3rd FB brand in Brazil

Smirnoff Brazil “We Are Social” Promotional Strategy

“Your Something Wonderful” Campaign

• Using Xiaomi’s motto “Always believe something wonderful is about to happen”

• Daily Give Aways - Media - Share “Your Something Wonderful” - Daily/Weekly Prizes

• Let Our Customers Advertise For Us.

Organisational Structure

• Lean with Minimal Cost

• Function-based

Execution Strategy• No Traditional Marketing

• E-Commerce/Social - Short Development Time Go#To#Market#Timetable#For#Xiaomi#Brazil#Marke3ng#Plan

Week$One November$10th$1$16th Design$Planning Graphics$Designers$with$Teams$plan$site/social$media$designs

Event$Planning First$MiPop$Event$venue$booked$in$Sao$Paulo.

Week$Two November$17th$1$23rd Site$Build$Commences Website$construcLon$begins$based$on$pre1agreed$designs

Social$Media$Pages$Launch Social$Media$Team$launch$pages,$upload$content$and$images

Event$Planning Prepare$venue$layout$for$MiPop$event,$invite$Press$&$Bloggers

Week$Three November$24th$1$30th$ Site$Build$Nearing$CompleLon UI$TesLng,$SEO$TesLng

Social$Media$Pages$Launch Social$Media$goes$live,$first$posts$1$shows$product$graphics

Event$Planning Offer$limited$Lckets$to$MiPop$event$for$social$media$subscribers

Week$Four December$1st$1$7th Xiaomi$Brazil$Website$Goes$Live Frontend$live$but$E1Commerce$not$launched

Social$Media$Pages$Go$Live Something$Wonderful'$Social$Media$CompeLLon$launches

Event$Planning Final$preparaLons$ahead$of$MiPop$event,$rehearsal$of$acLviLes

Week$Five December$8th$1$14th First$Post$from$Hugo$on$Website First$Post$from$Hugo's$Blog$ahead$of$first$Flash$Sale$in$Brazil

Social$Media$Promotes$Hugo$Post Daily$countdown$to$pre1orders,$coverage$of$MiPop$event

Event$Planning MiPop$Event$1$Friday$14th,$Hugo$a\ends$1$Social$Media$Presence

Week$Six December$15th$1$21st Our$First$“Flash$Sale"$in$Brazil Pre1orders$taken$on$Monday$15th,$bulk$dispatches$occur$17th118th

Social$Media$Promotes$Xiaomi$Day Strong$Social$Media$AcLvity$1$launch$and$dispatch$days$celebrated

Event$Planning Next$'MiPop'$event$announced$for$Rio$De$Janiero$&$Brasilia

Budget• Highly cost-effective marketing model

• Far cheaper than Traditional Marketing strategy

Plan Budget (Estimated)

• Website Build - $2,000 USD

• Server Hosting - $5,000 USD P.A.

• MiPop Sao Paulo Event - $30,000 USD

• “Something Wonderful” Prizes - $3,000 USD

• Total Plan Cost - In the region of $40,000 USD

Summary• Our Product is innovative, attractive and has fit.

• High-growth market with infinite potential.

• Our Plan focuses on the non-traditional reflecting our young brand. In using Social Media our customers advertise for us!

• This Plan can be implemented in just six weeks at a cost which is a fraction of alternative strategies.

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Xiaomi Enters Brazil - Final Draft

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