Yu Yun 1155081003
Market segmentation
is an important part of marketing. Dividing the customers into different
segment helps the company to figure out target customers’ potential needs and
to strengthen the selling point of the product. Generally, market segmentation
could be defined by customers’ geographic trait, demographic trait,
psychographic trait and behavioral trait.
It’s important for
a company to target at a specific segmentation at the beginning of the business,
especially for a technology company. The aim of segmentation is to better
understand the market and the target customers, which help to develop the
unique selling points of one’s own products. Only if the company can create differentiate
value for customers can it survive in the fierce competition.
Xiaomi, as a new
force in smartphone market, benefits a lot from its special market segmentation.
When Xiaomi launched its first smartphone Xiaomi 1 in 2011, the smartphone
market was in the hands of Nokia, Samsung and Apple. In 2014, Xiaomi sold over
60.8 million smartphones in total, which made it the world’s 6th
smartphone vendors in just 3 years after its birth. To great extent, Xiaomi’s success
could be attributed to its strategy of segmenting at smartphone enthusiasts.
By segmenting at smartphone
enthusiasts, Xiaomi is defining its target customers by their psychographic
features. Typically, smartphone enthusiasts care a lot about the operating
experience，special
function and cost-effectiveness of a smartphone. However, mainstream smartphone
producers mainly focused on the development of high-end smartphones and seldom
paid attention to the cost-effectiveness of the phones. It disappointed some smartphone
enthusiasts a lot because not everyone had the ability to afford expensive
smartphones and they did want to experience the charm of technology. And then
Xiaomi was born under this condition. It targeted directly at this group of
people and tried its best to understand their needs.
Xiaomi knew that smartphone
enthusiasts would study and test the hardware, system and function of a
smartphone, and then share their result or other information with each other in
the community or social media. So Xiaomi designed its product and planed its
marketing strategy based on the value that these enthusiasts shared and their
attitudes towards technology as well as their mode of communication.
Looking forward to
let everyone enjoy the fun of technology, Xiaomi declared that the design
concept of its smartphone was born for
enthusiasm. It produced the first dual-core smartphone in China, which runs
really fast and can standby for a long time. It also designed its own operating
system MIUI and enabled users to switch between MIUI and Android system freely.
Most importantly, with all these similar technologies, Xiaomi 1 sold at a
relatively low price (1499 yuan) than other high end smartphones, which made it
affordable to most of its target customers.
And then, Xiaomi
adopted hungry marketing strategy to attract as much attention from smartphone enthusiasts
as possible. It only offered certain amounts of cellphones at specific point of
day and the limited amounts of phones would be sold out in a short time. It
created an illusion that the Xiaomi 1 was always in short demand. Those who had
the chance to buy a Xiaomi 1 would happily test it and share their report on
the Internet. Whether it was a good comment or a bad one, it helped to maintain
the discussion about this out-of-stock cost-effective smartphone, and made
other smartphone enthusiasts that could not buy it in the last buying period more
eager to own one.
In conclusion,
Xiaomi’s market segmentation strategy was really successful in its initial
stage and helped the company accumulate its early capital and reputation.
Nowadays, Xiaomi is expanding its business and launching more and more products
other than smartphones. However, its market segmentation and corresponding
marketing strategy is still useful to many startups.
Reference:
Xiaomi Smartphone
Xiaomi’s segmentation
and its market positioning
Thanks for your sharing. It’s interesting to know about Xiaomi’s design concept, which is targeting at the smartphone enthusiasts by adopting the psychographic segmentation. Though, I am quite curious about Xiaomi segmentation strategies across the global market. In Hong Kong, people may consider the position of Xiaomi smartphone as low-end in the smartphone industry in regards to the pricing. And I consider Xiaomi as demographic segmentation according to the consumption affordance and income level of the users in Hong Kong. Xiaomi differentiates itself from other dominating brands, i.e. Apple and Samsung, by offering lower price. So, I am thinking if it’s possible to position a brand or product through different segmentation strategies in different background/ settings.
ReplyDeleteAnd I have gone through some research after reading your passage, knowing that hungry marketing is intended to make demand an “illusion: for the purpose of high prices and profits. May I know aside from getting more attention from the public after announcing the short demand of smartphone, was Xiaomi able to increase the price and generate higher profits?
Looking forward to your reply.
Good job. I have so much fun reading it:)
Hi Deborah~Sorry for replying late. Thank you so much for reading~
DeleteYou mention that people in Hong Kong may consider the position of Xiaomi smartphone as low-end in regards to its price. Actually, many people in mainland also have the same idea now. However, before the emergence of Xiaomi, traditional low-end mobile phones usually only offer some basic hardware or function to consumers. Xiaomi was the first one in China to offer relatively high-end configuration with a relatively low price. Some producers even criticize that Xiaomi was the one that triggered vicious completion of smartphone industry in China. I’m not a smartphone enthusiast so I don’t really know a lot about smartphone’s configuration and enthusiasts’ feelings. But when Xiaomi 1 was launched in 2011, its Qualcomm MSM8260 dual-core CPU, Adreno 220 graphics chip, 1GB memory and 4GB body storage with the price of 1999 yuan really made some enthusiast crazy. Maybe that's a little hard for both of us to understand that. o(*≧▽≦)ツ
As for Xiaomi’s hungry marketing, once the company announced its price of a new smartphone, it was set no matter how many people waiting to buy it. So I think that the higher profit might be gained mainly through the quantity of sales, but not from a higher price. Some people used to question that whether Xiaomi was playing a show by always being out of stocks on its official website but increasing price on other distribution channels. However，there was no evidence for that and some scalpers claimed that they bought their Xiaomi phones using some software that placed orders automatically on official websites.
Hope I have solved some of your questions. Thanks again for reading and commenting.
Yu Yun
Wonderful article. Thanks for sharing.
ReplyDelete