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A Study On Marketing Stratergy of Xiaomi
A Study On Marketing Stratergy of Xiaomi
SEMESTER-VI
SUBMITTED BY:
DHANASHREE NIKAM
ROLL NO: 37
AKSHADA BARI
(2021-2022)
DECLARATION
This is to certify that Dhanashree Jitendra Nikam Studying in the Third Year of
Bachelors of Management Studies (BMS) program at K.M Agrawal College of Arts,
Commerce and Science, Kalyan has completed the “A study on M ar ke ti ng Str ate
gy of Xiaomi mobile and impacts on making decision towards customer satisfac ti on. ”
as a part of the curriculum requirement for Bachelor of Management Studies (BMS)
under the Guidance of Prof.Akshada Bari.
To list who all have helped me is difficult because they are so numerous and the depth
is so enormous. I would like to acknowledge the following as being idealistic channels and
fresh dimensions in the completion of this project. I take this opportunity to thank the
University of Mumbai for giving me chance to do this project. I would like to thank my
Principal, Dr. Mrs. Anita Manna for providing the necessary facilities required for
completion of this project. I take this opportunity to thank our Coordinator, Prof. Sujeet Singh
for his moral support and guidance. I would also like to express my sincere gratitude towards
my project guide Prof. Akshada Bari whose guidance and care made the project successful. I
would like to thank my College Library, for having provided various reference books and
magazines related to my project. Lastly, I would like to thank each and every person who
directly or indirectly helped me in the completion of the project especially my Parents and
Peers who supported.
Index
1 INTRODUCTION 01
2 OBJECTIVES TO STUDY 05
3 REVIEW OF LITERATURE 06
4 RESEARCH METHODOLOGY 08
5 COMPANY PROFILE 22
6 ABOUT XIAOMI 25
9 FINDINGS 59
10 CONCLUSION 60
11 BIBLOGRAPHY 61
1.INTRODUCTION
This research paper examines marketing strategy of Xiaomi mobile phone in Yangon that
impacts on making decision towards customer satisfaction. This Chapter includes research
background, statement of problem, objective of the study, research questions, hypothesis of the
study, and conceptual framework, variables of the study and definition of terms. The core of this
study is Marketing Strategy of Xiaomi Mobile Phone in Yangon that affects Customer Making
Decision towards satisfaction. Mobile phone industries have been seeing a rapid growth, has made
enormous jumps since its inception, and particularly in these 5 years that have seen mobile phones
getting smarter and more stylish than its early days when the concept of having a smartphone was
totally misunderstand by the masses. Xiaomi is a software company that is founded by 8 co-
founders in 2010. Xiaomi’s first product is MIUI, which has over 100 million user-bases to the
date of this article written (En.miui.com, 2015). Xiaomi’s priority is to distribute MIUI globally
and their involvement in hardware business in 2011 mainly is to help boost MIUI user-base. In
order to have more consumers to own their hardware, Xiaomi decided to sell their products at near-
to-cost (Bhagat, H. 2014). To Xiaomi, setting up a traditional brick and mortar store might increase
the cost of the product and in view of this Xiaomi concentrated their businesses online. Due to
Xiaomi’s product will not be available on the website at all times; Xiaomi needed a way to
communicate with its consumers. So the best way for them to communicate with consumers is
through the social media. Xiaomi’s strategy of concentrating their business through the social
media allows their brand to be known in no time (Shih, Lin, & Luarn, 2014; Stone, 2014). Chinese
electronics firm Xiaomi’s smartphones have been on sale unofficially in Myanmar for over a year,
but the company is now gearing up to officially start selling its products as user demand picks up.
Local company Strong Source Co Ltd signed an agreement with Xiaomi to retail the phone at
Myanmar authorized distributors. Xiaomi
was the world’s fifth-largest smartphone maker in 2015 Xiaomi with 70.8 million units sold,
accounting for about five percent of the global smartphone market according to (Roettgers, J.
(2015). However, some users griped about the smartphone’s inferior processor and low internet
speed (Hitesh Bhasin, (January 25, 2019) “The camera quality is great and resolution as well.
However, there is no original headset and internet speed is low. I bought the phone last month and
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now the processor does not work well. I think that will be a barrier to attract Myanmar users,” a
Xiaomi Mi 4i user, Ma Yamin, said (MOH MOH KYI, (16 JUN 2016). The brand will be available
in six models in Myanmar including the Mi 5, Red Mi 3, Red Mi Note 3 Pro, Mi 4i, Note 2 and
Red Mi 2, which will be distributed in the market with a one-year guarantee, according to Assistant
General Manager of Strong Source Ko Thet Zin. Besides that, Mi service center, Mi Corner, Mi
Home will be provide in Yangon, Mandalay, and Naypyitaw for Xiaomi official products (MI
HOME MYANMAR, 2018). Xiaomi holds a leading11percentage of penetration in the
Smartphone marketing China. The company grossed more than $5 billion in revenues during the
first half of 2014.With only 2,600 employees (as of June 2013), it has a market capitalization of
over $10 billion. Its top executives have technological backgrounds and experiences from many
other high-tech multinational companies in the west. For a short time, Xiaomi, a china mobile
company is rapidly market in the Myanmar Technology Market. Xiaomi established by CEO Lei
Jun with his seven partners in 2010. In August 2011, the smart phone was firstly introduce into the
market, and then in 2014, it became the top brand in China smartphone market. It becomes as
world biggest smartphone company, currency. Today, companies attempt to live on with the help
of customer satisfaction and more sale and profit through market researches and identification of
customers’ needs in the current world of competition. Therefore, one of the ways of achieving the
mentioned objectives is to analyze the concept of marketing mix in any kind of business (Fakhimi
Azar, Akbari Vanehabad, & Rasouli, 2011). Any sort of marketing strategy has impact on
customer satisfaction and marketing mix elements are a set of controllable marketing variables in
the hands of managers and decision-makers of the company. (Khodadad Hosseini & Rezvani,
2009). If the relationships between marketing strategy such as product, price, place, promotion and
customer satisfaction especially Xiaomi mobile in Yangon Myanmar are determined, the decision-
makers of the company will easily decide upon how to employ marketing mix elements to impacts
on the highest of making decision (Purna Satit, Rezky and Huam, 2012) about Smart phones The
term Smartphone, refers to a multimedia phone handset, which is a multifunctional electronic
device that has features ranging from Camera, Audio-Video Playback, Web browsing to a high-
density screen display along with several other multimedia options. Smartphone provides a one
stop solution for mobile calls, email sending, and Internet access. Smart phones are based on an
Operating System, basically possessing all the major functions like that of a Computer, such as
web browsing, emailing, video and voice chatting, audio-video playback, and others. Till a few
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years ago, a Smartphone was a Personal Digital Assistant having the calling features like a mobile
phone, but lately mobile phones possess the functionality of added media players, compact digital
camera, GPS etc. 1 These days less expensive advanced mobile phones are additionally accessible
in the business sector. However, why individuals purchase extravagant smart phones? Value,
quality, brand, nation of source, marketing, deals, verbal and so on could be a few variables that a
shopper may think before purchasing a Smartphone. What amount of does a brand of cell phone
influence the purchasing choice of a customer? As there are different sorts of smart phones
accessible in business sector with fluctuating value; what is the contrast between them? What's
more, how they affect the customer purchasing choice? About Xiaomi (Mi) Xiaomi (MI) is a
Chinese multinational technology company, founded in 2009 in Dongguan, Guangdong, which
undertakes designing, developing, and manufacturing smart phones, smart phone accessories,
software, and online services. The brand utilizes Hi-Fi chips in its smart phones, it focuses on
providing a high quality audio experience for users by. Hi-Fi stands for High-Fidelity. As the first
brand in the world to introduce Hi-Fi sound quality in its smart phones with the creation of the X1,
Xiaomi (MI) has demonstrated a commitment to Hi-Fi in all subsequent generations of its phones.2
Software developed by the company includes the Xiaomi (MI) App Store, manager, and a
proprietary Android-based operating system called Fun touch OS. Xiaomi (MI) was founded in
2009 as a sub-brand of BBK Electronics. The brand entered the telecommunication and consumer
electronics industry with landline phones and wireless phones. In 2011, Xiaomi (MI) started
manufacturing and marketing its own range of smart phones. The first smart phone was released
in August 2011 and Xiaomi rapidly gained market share in China to become the country's largest
smart phone company in 2014.At the start of the second quarter of 2018, Xiaomi had attained the
fourth position in the world as the largest smart phone manufacturer, leading in both the largest
market, China, and the second-largest market, India thereby Xiaomi developed an enormous range
of consumer electronics, including a smart home (IoT) device ecosystem. With the creativity and
technology, Xiaomi (MI) keeps innovating. In 2012, Xiaomi (MI) created the X1, the first
Smartphone to incorporate a Hi-Fi chip, resulting in an unparalleled audio experience. Pioneering
this technology, it has been included in all Xiaomi (MI) smart phones ever since. From then on,
the innovation never stops. In 2012 Xiaomi (MI) released the X1, at the time the world’s thinnest
smart phone. The X1 was also the first Xiaomi (MI) phone to use a Hi-Fi chip, developed by
American semiconductor company Cirrus Logic. Xiaomi (MI) followed this up in 2013 by
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releasing the world’s first 2k-resolution screen phone, the Xplay3s. Quickly becoming a major
player in the smart phone industry, Xiaomi (MI) joined the ranks of the top 10 smart phone makers
in the first quarter of 2015 with a global market share of 2.7%. Xiaomi in India According to the
data of 2014, Xiaomi had 5.3% of the global smart phone market, ranking them third after
Samsung (23%) and Apple (12%) (Figure 2). In China, Xiaomi was ahead of Samsung and Apple
by the end of 2015, and also displayed its competitiveness against other domestic companies
including Huawei and Vivo.3 Xiaomi commenced the sale of smart phones in India in July, 2014.
By 2016, the company was successful in making India the second largest market for its smart
phones. The Indian smart phone market is expected to grow to become the second largest by 2019,
with about 225 million smart phones sold annually. The expected growth of India’s smart phone
market was considered to be low because 70% of the population used feature phones. However, by
2014 India had become an important destination for smart phone production and use based on the
availability of a low-cost smart phone that has captured 77% of the mobile phone market The
“Make in India” initiative also resounds with Xiaomi (MI)’s plan. The setup of assembly unit in
Greater Noida is the first step toward this commitment. The unit has been operational since
November, 2015 with Rs. 125 crore first-phase investment. It currently employees around 2,200
Indian employees in the factory to assist its production capacity reach one million units/month
and build a concrete foundation for Xiaomi(MI)’s sustainable development in India
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2.OBJECTIVE TO STUDY
The general objective of this study is to explore Marketing Mix Strategy of Xiaomi Mobile Phone
in MUMBAI that effects on making decision towards customer satisfaction. The specific
objectives are as follows..
1. To analyze which marketing strategies are impact on customer making decision towards Xiaomi
mobile phone in MUMBAI .
2. To study how the customers are satisfaction level of Xiaomi mobile phone in MUMBAI.
3. To determine how relationship between marketing strategy and customer making decision
related to Xiaomi mobile phone in MUMBAI.
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3. REVIEW OF LITERATURE
Xiaomi is a privately owned Chinese electronics design and manufacturing company. Founded by
Lei Jun in 2010, the company has its headquarters in Beijing and comes about the fourth on the
list of the top Smartphone makers in the world. Its consumer electronics and computer hardware
products are some the fastest moving in China. The rate at which Xiaomi is growing is alarming
to Samsung and Apple as the company has almost managed to position itself as the top
Smartphone spot in China. Hitesh Bhasin, (January 25, 2019) In this research in literature review,
researcher will describe the theoretical of marketing mix, marketing strategy of Xiaomi
mobile phone, marketing mix of Xiaomi mobile phone, good quality product of Xiaomi mobile
and low price, pricing strategy of Xiaomi mobile, Place or distribution strategy of Xiaomi
mobile, promotion strategy of Xiaomi mobile, making decision of customers, customer
satisfaction and measuring customer satisfaction of Xiaomi mobile phone and related research
theory.
For several years, China’s mobile phone market had been subjugated by foreign companies such
as Nokia, Motorola, Apple, and Samsung. But the situation has seen a turnaround with the arrival
of smartphones. Nokia died out from the market. Motorola was sold to Google and later sold again
to Lenovo in 2014. Although Samsung still has the largest share of the Chinese market, its
performance has lagged, with its revenue as well as profit showing adverse growth. Apple is still
budding, although the pace of growth has slowed. In contrast to this is the leap of Chinese
businesses, with Xiaomi making especially impressive gains.4 Consumer Perception is defined as
perception as the process, by which information is received, selected, organized, and interpreted
by an individual.5 Perception is defined as “the process by which an individual selects, organizes,
and interprets stimuli into a meaningful and coherent picture of the world.” Consumer behavior is
“the behavior that consumer display in searching for, purchasing, using, evaluating, and disposing
of products and services that they expect will satisfy their needs”.6 Product attributes as the
characteristic or features that an object may or may not have and includes both intrinsic and
extrinsic features. Benefits are the positive outcomes that come from the attributes. People seek
products that have attributes that will solve their problems and fulfils their needs. Considering why
a consumer chooses a product based upon its attributes helps marketers to comprehend why some
consumers have preferences for certain brands.7 There are several definitions of marketing from
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many experts that had been published. Marketing is about identifying and meeting human and
social needs. One of the shortest good definitions of marketing is meeting needs profitably.
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4. RESEARCH METHODOLOGY
This chapter is to discuss the methodological approach undertaken to discover marketing mix
strategy of Xiaomi mobile phone in Yangon that affects making decision towards customer
satisfaction. The research methods must be appropriate to the objectives of the study. This research
carried out via exploratory research, which allows familiarizing with the problem or concept to be
study, followed by descriptive-causal research to determine which variable might be causing a
certain behavior. The final stage will be a conclusive research to provide information that is useful
in reaching conclusions or decision-making and customer satisfaction of Xiaomi mobile phone
with a valid research instrument. This chapter will present types of research methodology,
population and sample, demographic profile of sample, research instrument and data analysis will
be discuss.
1.Qualitative Research:
This type of research methods involves describing in details specific situation using research tools
like interviews, surveys, and Observations. Qualitative Research is primarily exploratory research.
It used to gain an understanding of underlying reasons, opinions, and motivations. It provides
insights into the problem or helps to develop ideas or hypotheses for potential quantitative research
(Creswell, 2003). Qualitative Research also used to uncover trends in thought and opinions, and
dive deeper into the problem. Qualitative data collection methods vary using unstructured or semi
structured techniques. Some common methods include focus groups (group discussions),
individual interviews, and participation/observations. The sample size is typically small, and
respondents are select to fulfill a given quota (Royall, 2000). Quantitative Research used to
quantify the problem by way of generating numerical data or data that can be transform into
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useable statistics. It used to quantify attitudes, opinions, behaviors, and other defined variables–
and generalize results from a larger sample population (Berg, & Lune, 2004). Quantitative
Research uses measurable data to formulate facts and uncover patterns in research. Quantitative
data collection methods are much more structure than data collection methods. Quantitative data
collection methods include various forms of surveys – online surveys, paper surveys, mobile
surveys and kiosk surveys, face-to-face interviews, telephone interviews, longitudinal studies,
website interceptors, online polls, and systematic observations (Richard, 2000). Quantitative
methodology is used in this study for many reasons. This type of research methods requires
quantifiable data involving numerical and statistical explanations. Quantitative Research is used
to quantify the problem by way of generating numerical data or data that can be transformed into
useable statistics. It is used to quantify attitudes, opinions, behaviors, and other defined variables–
and generalize results from a larger sample population. Quantitative Research uses measurable
data to formulate facts and uncover patterns in research. Quantitative data collection methods are
much more structured than Qualitative data collection methods. Quantitative data collection
methods include various forms of surveys – online surveys, paper surveys, mobile surveys and
kiosk surveys, face-to-face interviews, telephone interviews, longitudinal studies, website
interceptors, online polls, and systematic observations (Creswell, (2003).
A sample is the term that refers to the group surveyed anytime the survey is not administered to
all members of the population. The process of selecting a smaller group of the people that have the
same characteristics and preferences as the total group from which it is drawn called sampling
(Richard Valliant, Alan Dorfman, and Richard Royall, 2000). A famous quote: Cervantes stated
“By a small sample we may judge the whole piece.” In marketing research, the goal is to assess
target segments efficiently and effectively by designing and executing representative sample plans.
In most cases, the study objects of interest consist of a large universal. The reason, which select
the sampling technique over a census, is due to cost saving, time economy, more in-depth
information, less total error, greater practicality and greater security (Geneva, 2016).
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3.Simple Random sampling:
Researcher choose simple random sampling in the research for conceptually; simple random
sampling is the simplest of the probability sampling techniques (Richard Royall, 2000). It requires
a complete sampling frame, which may not be available or feasible to construct for large
populations. Even if a complete frame is available, more efficient approaches may be possible if
other useful information is available about the units in the population. In statistics, a simple random
sample is a group of subjects (a sample) chosen from a larger group (a population). Each subject
from the population is chosen randomly and entirely by chance, such that each subject has the
same probability of being chosen at any stage during the sampling process. This process and
technique is known as Simple Random Sampling, and should not be confused with Random
Sampling. In small populations such sampling is typically done "without replacement", i.e., one
deliberately avoids choosing any member of the population more than once. An unbiased random
selection of subjects is important so that in the long run, the sample represents the population.
However, this does not guarantee that a particular sample is a perfect representation of the
population. Simple random sampling in this study merely allows us to draw externally valid
conclusions about the entire population based on the sample. Although simple random sampling
can be conducted with replacement instead, this is less common and would normally be described
more fully as simple random sampling with replacement. Advantages using simple random
sampling in this study are that it is free of classification error, and it requires minimum advance
knowledge of the population. For it best suits situations where not much information is available
about the population and data collection can be efficiently conducted on randomly distributed
items. A simple random sample of 186 customer’s respondents was obtained from each of the four
retail Xiaomi mobile stores; sum up a total of 350 respondents data. Keeney (1992) has
emphasized that the decision making should define objectives before seeking alternatives that
permit to attain his objectives. Therefore, researcher manage to expose the relationship between
the marketing mix, 4ps with customer making decision lies in each P, it was elucidate clearly link
to satisfaction.
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Sample Size:
Osahon, Kingsley. (2016) formula in this research, researcher used the to calculate the sample size
for this study: n=N/ (1+N (e2) Where n represents the sample size, Population size is represented
capital N and e2 Represent the level of precision (± 5%, or at the 95 % confidence level). The
sample size, calculates method for this research as: N = 350/ (1+350 (0.05²)), Therefore n = 186.7.
Therefore, the researchers take 186 respondents as sample size for this study.
Demography is the quantitative study of populations. Demographic data, in their simplest form,
refer to six interacting dimensions: - Births, deaths, migration (and resulting population growth),
Age, sex, income, educational level, occupation, spatial distribution and resulting population
structure (Bureau Haub, 2009).Customer from MUMBAI who used Xiaomi mobile were asked to
rate the level of agreements based on a five point of the Likert rating scale with providing the
various statements that impact of making decision that could be relationship between products,
price, place and promotion and their making decision towards satisfaction to buy Xiaomi mobile.
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FIVE-YEAR FINANCIAL SUMMARY:
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MANAGEMENT DISCUSSION AND ANALYSIS
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Revenue:
Revenue increased by 19.4% to RMB245.9 billion for the Reporting Period, compared to
RMB205.8 billion for the year
ended December 31, 2019. The following table sets forth our revenue by line of business for the
Reporting Period and
the year ended December 31, 2019:
Smartphone:
Revenue from our smartphones segment increased by 24.6% from RMB122.1 billion for the year
ended December 31, 2019 to RMB152.2 billion for the Reporting Period, driven by growth in both
sales volume and ASP. We sold 146.4 million smartphone units for the Reporting Period, an
increase of 17.5% from 124.6 million units for the year ended December 31, 2019. The ASP of
our smartphones increased by 6.1% from RMB979.9 per unit for the year ended December 31,
2019 to RMB1,039.8 per unit for the Reporting Period. The increase in ASP was primarily due to
the increase in sales of our 5G and mid- to high-end smartphone. In 2020, we sold approximately
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10 million premium smartphones globally with retail prices at or above RMB3,000 in mainland
China and EUR300, or equivalent, in overseas markets.
Revenue from our IoT and lifestyle products segment increased by 8.6% from RMB62.1 billion
for the year ended December 31, 2019 to RMB67.4 billion for the Reporting Period, primarily due
to the strong growth in demand of certain IoT products, such as robot vacuum cleaners, routers
and TWS earbuds. Revenue from smart TVs and laptops decreased by 7.0% from RMB24.2 billion
for the year ended December 31, 2019 to RMB22.5 billion for the Reporting Period, mainly due
to lower sales activities caused by supply constraints.
Internet services:
Revenue from our internet services segment increased by 19.7% from RMB19.8 billion for the
year ended December 31, 2019 to RMB23.8 billion for the Reporting Period, mainly due to the
increase in the revenue from advertising and gaming businesses. Our MIUI MAU increased by
28.0% from 309.6 million in December 2019 to 396.3 million in December 2020.
Others:
Other revenue increased by 38.3% from RMB1,814.2 million for the year ended December 31,
2019 to RMB2,508.9 million for the Reporting Period, primarily due to the increase in revenue
from the installation services provided for certain IoT products.
Cost of Sales:
Our cost of sales increased by 18.0% from RMB177.3 billion for the year ended December 31,
2019 to RMB209.1 billion for the Reporting Period. The following table sets forth our cost of sales
by line of business for the Reporting Period and the year ended December 31, 2019:
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Smartphones:
Cost of sales related to our smartphones segment increased by 22.6% from RMB113.3 billion for
the year ended December 31, 2019 to RMB139.0 billion for the Reporting Period, mainly due to
the increased sales of our
smartphones.
As a result of the foregoing, our gross profit increased by 28.7% from RMB28.6 billion for the
year ended December 31, 2019 to RMB36.8 billion for the Reporting Period. The gross profit
margin from our smartphones segment increased from 7.2% for the year ended December 31, 2019
to 8.7% for the Reporting Period. In 2020, we launched several popular models such as Mi 10
series, Redmi 9 series and Redmi Note 9 series which were highly regarded in the market for their
outstanding performance. The gross profit margin from our smartphones segment increased in
2020, mainly due to the improvement of product mix and improved operating efficiencies for
certain smartphone models. The gross profit margin from our IoT and lifestyle products segment
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increased from 11.2% for the year ended December 31, 2019 to 12.8% for the Reporting Period,
mainly due to the strong growth in our certain IoT products with higher gross profit margin. The
gross profit margin from our internet services segment was 61.6% for the Reporting Period,
compared with 64.7% for the year ended December 31, 2019, mainly due to the decline of gross
profit margin from our fintech business. In 2020, gross profit margin of our fintech business
declined due to the increased provision for loss allowance during the pandemic. As a result of the
foregoing, our gross margin increased from 13.9% for the year ended December 31, 2019 to 14.9%
for the Reporting Period.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
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SDGs Xiaomi's 2020 Actions
Users
User Ex perience
Over 3.200 Mi Homes and reta il stores in mainland China
656 in -store service centers nationwide
1,553 stores nationwide to provide door-to-door repair services
Introduced "1 -hour quick repair"' and "2-hour response"
services Trained and cert if ied all after -sales specialists
Held more than 200 online and 100 offline t rainings during the year. wit h
more than 10.000 participants
Privacy Protection
Introduced Xiaomi's Privacy Brand
•
I Obtained IS027001 Information Security Management System Certification
I
M i Fa n Culture
Revamped Mi Community. with over 120 million cumula tive users and over 20
million mont hly active users
Established product proposal and feed ba ck channels and received over 40
million user responses
Undertook more t han 100 internal testing projects. attracting more than 4
million users
Held 12 "internal Roast" and 45 'Weibo M I U I Leader Online" activities
Launched a series of global Mi Fan activities such as "Mi Fan Story... "Mi
Renovation ... "Mi Explorers" and "ShotByMi Photo Contest"
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5. COMPANY PROFILE
Xiaomi managed to take the electronics and mobile world by storm in 2014. Their flagship
device, Mi4 was one of the best-selling phones in history and paved the path for mid-level
mobile phones and their market base.
The company was founded by eight partners in the year 2010 and was funded by a Singapore
based investment group called Temasek Holdings and Chinese venture capitalists called IDG
Capital along with Qiming Venture Partners. They were one of the first companies that were
endorsed by core mobile companies, Qualcomm. Xiaomi continues to use their processors
for their devices even today.
One of the first devices that came out of Xiaomi was Mi2. This was the first device that
featured the revolutionary and famous Qualcomm Snapdragon chip. The device sold close to
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10 million units within the first 11 months of its inception, thus allowing Xiaomi to gain a
foothold in markets such as Australia, United States, Europe and New Zealand.
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. Degree of rivalry and competitive landscape
The Chinese mobile phones market is dominated by a small number of large-sized companies,
such as Apple, Huawei, BKK and Xiaomi. Rivalry is expected to increase due to the limited
number of competitors and the high penetration of mobile phone devices, which intensifies R&D
expenses and price competition. The introduction of smartphones has added another competitive
dimension, with Apple and those using the Android operating system (including HTC, LG,
Samsung and Sony) establishing themselves as major players. While Apple operates independently
of many players in the market by virtue of its closed iOS ecosystem – which itself serves as a
means of differentiation and appeal, especially amongst its large and loyal customer base – the
open Android platform is much more fragmented and competitive. In the Android sector, budget
devices sit alongside high-end, flagship smartphones from the major manufacturers, varying in
form, screen size, build quality, processing power and, most importantly, price. As far as Windows'
mobile operating system is concerned, Microsoft has a competitive disadvantage due to its low
acceptance by consumers. Particularly, the majority of mobile applications are available only in
iOS or Android operating systems, which makes consumers less inclined towards a Microsoft
mobile purchase. However, as the market progresses, the differentiation that premium devices hold
over their budget competitors will diminish. Huawei, known for providing cheap smartphones,
which provide excellent value for money, now also produces some of the most premium devices
in the market. This has helped enhance the firm's reputation amongst consumers.
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6. ABOUT XIAOMI
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Xiaomi has been a listed entity on the Hong Kong Stock Exchange since 2018 and has various
subsidiaries under its name. It was also the youngest company to get featured in the list of Fortune
Global 500 in 2019.
Now that you know about Xiaomi, let us now go through its target market in the coming section.
Xiaomi’s market positioning is aimed at bridging the gap between the mass market and the high-
end segment of the market. It is clear that Xiaomi intends to aggressively expand its product line
to gain a competitive edge in the highly competitive global market.
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Target Audience of Xiaomi
Smart Phones
Smart Watches
Other Offerings
Over the years, it has enhanced its product portfolio and now offers a wide range in not just the
smartphone category but also in various other categories.
Now that you have an idea of what Xiaomi offers and who it targets, let us now understand more about
Xiaomi by going through its marketing mix.
Marketing mix model is a practical way of conceptualizing how you should approach marketing
in a business. The framework of this model is based on the parameter of 4Ps: Product, Price, Place
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and Promotion. This framework helps in understanding what a business is offering and how it is
offering to its target audience and target market.
So let us know go the first 4Ps in the comings section concerning Xiaomi’s offerings.
Xiaomi entered the Indian market through aggressive pricing and impressive product offerings but
has now found its niche in the sub-continent being first amongst the many to sell smartphones that
are feature-packed and priced at the level of entry-level smartphones.
This has led to a lucrative segment of the low-cost smartphone segment having a mass appeal due
to Xiaomi’s high offerings at affordable prices.
And now that the company has expanded into other markets, from smartphones to TVs, it’s clear
that it has no intention of slowing down its revolution toward dominating the Indian markets.
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Other offerings of Xiaomi
Xiaomi’s product strategy is a core part of its business model. It develops smartphones and related
products that are consistently at the top of the market and then uses its massive fan base and
innovative marketing techniques to sell those phones.
The core business model of the brand is built on expanding its product offerings through
aggressive price reduction. This pricing strategy is aimed at gradually gaining a foothold in the
market by providing low-cost alternatives to more expensive products without compromising on
quality or features.
As of 2020, the price of Xiaomi’s smartphone range from as low as ₹5,000 to as high as
₹200,000. This affordable pricing strategy has been a crucial pivot for the company, making
them India’s no.1 smartphone brand.
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Place and Distribution Strategy of Xiaomi:
Xiaomi is now present in over 100 countries with an affordable range of smartphones, smart TVs,
laptops, wearable and gaming devices. With a global footprint, great product quality at competitive
prices, the company is expanding its reach to various new markets every year.
Most of the sales are done online rather than offline which has also proved to be beneficial for the
manufacturer and as well as the consumers. However, it has shifted its primary focus towards
expanding into offline markets as well.
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With substantial investments in product and technology developments, Xiaomi aims to establish
its presence in the lucrative international markets through heavy expansions and gaining market
share through aggressive pricing tactics and marketing strategies.
In its starting years, Xiaomi relied very little on marketing. But now, it has shifted to a more active
approach in promotional activities as it focusing on key regions like the US and Europe, India as
well as China itself.
Xiaomi’s promotion strategy changed dramatically around 2016. The company realized that it
needed to expand beyond just selling its products and started focusing specifically on India and
China — two countries with large populations but limited disposable income.
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Its recent marketing moves come after years of gradually gaining prominence in the mobile
phone market through its low-cost phones.
Selling smartphones at affordable prices has helped Xiaomi gain a significant following
in countries like China and India previously and now it hopes to expand its influence across the
globe through expanded distribution and better marketing tactics.
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Now that you are familiar with how Xiaomi has framed upon the marketing mix model, let us now
go through its marketing strategies in the following sections.
From the very beginning, Xiaomi has attempted to save its costs by reducing marketing spends.
From having almost zero budget for advertising to building a strong fan base, Xiaomi has
succeeded in making its marketing extremely unique and personal.
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With rising competition in the market as well as changing customer behaviors, the company has
started focusing on its marketing efforts by increasing its marketing spends year on year.
With that being said, let us go through some of the common as well as unique marketing measures
used by Xiaomi to maintains its relevance in the market.
SWOT analysis as shown in Figure 5: The SWOT Analysis Tool, is a detailed structured planning method
that explains the internal strength (S), weaknesses (W), and the external opportunities
(O) and threats (T) of a particular organization. This tool helps a company achieve the
organizational objectives.
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Strengths
Xiaomi has an advantage in smartphones. The first is the quality of the mobile phone, which has
reached the high level of international manufacturers, for example, mobile phone manufacturers as
Motorola and Samsung (Chen et al. 2019). The size of the Xiaomi mobile phone is very in line with
Chinese preference, for example, the screen size is 4 inches, such a size can improve the user
experience. Moreover, the design of MIUI is in line with the habits of most Chinese users. The
Xiaomi mobile phone uses a large battery of 1930 mah, which exceeds the battery capacity of
mainstream smartphones by nearly 30%, and the Xiaomi mobile phone can support up to 450
hours of network standby and 15 hours of continuous talk (Russell, 2017). "No matter
how to grab the handpiece, it will not affect the signal of the Xiaomi mobile phone", forms a
powerful advantage of the Xiaomi mobile phone. The choice of Xiaomi's sales method is
online sales. This can save costs, and online shopping is a fashionable way of
consumption. The online booking method creates afeeling: scarcity. If you refer to the
mobile phone sales at the same price, Xiaomi'sbooking is very hot. Xiaomi announced
that it currently only supports online purchases on Xiaomi. It supports online payment and
cash on delivery. Cash on delivery is currently only supported by cash payment. In the
future, Xiaomi will open a POS card swipe service. In addition, for online payment
methods, if the order amount is greater than US$28, shipping will be waived. The core of
personal brand implantation is to use Lei Jun as the product spokesperson for Xiaomi
mobile phones. As a successful internet person and angel investor, Lei Jun'sstruggle
history, professional experience and success stories have a great appeal to the younger
generation, so his personal charm and influence have strengthened the Xiaomi mobile
phone
brand (Xiao et al. 2017).
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Weakness
There is no front in Xiaomi phones. This is a shortcoming that Xiaomi phones cannot avoid and
cannot make up for by post-optimization. The times are evolving, and technology is improving
(Xiao et al. 2017). The front camera naturally has its value. For example, the latest version of
mobile phone QQ supports video calls with PCs. From this point of view, the front camera is still
very important. The screen of Xiaomi's mobile phone is a little warped; after using it for a long
time, the mobile phone will lose paint; the gap of the back cover of the mobile phone is not closed
tightly; the mobile phone body shakes and there is a noise; when buying, there are no headphones
in the original accessories (Russell, 2017). In the Xiaomi Forum, there were also many problems
found, including the slow delivery speed of logistics, the paint falling off, the camera unable to
take pictures, frequent crashes, the inability to turn on the phone, and the serious sound of broken
calls. Because Xiaomi started late, just over a year after its establishment, when smartphones such
as HTC, Samsung, and iPhone occupy most of the market share, Xiaomi ’s mobile phone is
obviously insufficient in market share and market share, and the word of mouth has not been
established in the public ’s mind (Chen et al. 2019). In addition, Xiaomi’s mobile phones
frequently leak light, paint, frequent crashes, broken calls, and incomplete after-sales services.
Therefore, these problems are a challenge to Xiaomi's reputation. Xiaomi mobile phone currently
announced three major after-sales channels: telephone customer service, micro-blog service and
online customer service. However, telephone customer service is generally recognized as almost
impossible to enter, and messages to the microblogging
service and online customer service are almost dead, and users who encounter mobile phone
problems face nowhere to complain (Chen et al. 2019). The customer service staffs of Xiaomi also
said that under normal circumstances, returns and exchanges only take 3 to 5 working days, but
they need to go through "application for replacement, cross-region mobile phone express, mobile
phone engineer detection, and re-delivery of mobile phones (Russell, 2017). Such steps may take
at least 6 - 8 working days. This also makes it difficult for the Xiaomi mobile phone to complete
the repair within five days. Complete the repair within five days.
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Opportunities
Modern smartphones are gradually becoming more intelligent and multifunctional. Therefore, the
market demand and requirements for smart phones will be higher (Retnowulan, 2017). There are
only 78 companies doing RMCPU in China, and the price will fall linearly, which promotes the
computing power and cost optimization of the entire smartphone. This is a very big driving force
for the entire mobile phone industry. The Xiaomi mobile phone cooperated with China Unicom in
the early stage of its release in 2011. After launching the China Unicom contract machine, in 2012,
the Xiaomi mobile phone turned to China Telecom to jointly launch the CDMA version of the
Xiaomi mobile phone. In addition, Xiaomi will surely gain many benefits in its cooperation with
China Unicom and China Telecom (Kline, 2017). Whether it is dealing with the interests of
telecommunications providers or developing value-added package services with China Telecom
and China Unicom, these strategies have promoted the promotion of Xiaomi mobile phones. The
combination with the telecommunications provider is the highlight of Xiaomi's technology strategy
(Sitompul, 2019). China's 5G market ushered in a new pattern. Xiaomi’s entry into the 5G
smartphone market is toleverage on this extremely advantageous factor. There is currently no
mobile phone brand in China that rivals large foreign companies. The development of Xiaomi
represents the future of national enterprises. China has the world's largest mobile market with
unlimited potential. In the short term, there are no opponents with the same configuration and the
same price. The price of the Xiaomi mobile phone is lower with the same configuration. In the
mobile phone industry of the buyer's market today, low prices mean more sales, which also means
an increase in market share (Kline, 2017).
Threats
The big question is how to make Xiaomi stand out in the fierce smart phone competitive market.
Regardless of the design of the Xiaomi mobile phone or the MIUI system, the independent property
rights barriers are not very high. Xiaomi's hardware applications are interconnected (Kline,
2017). In addition to Qualcomm, other partners of Xiaomi's mobile phones are also top- level
suppliers of meta-components, including Sharp, Samsung, TPK, Wintek and Desai. Lei Jun's mobile
Internet layout of "terminal + content + service" has also taken shape. With the support of
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the top suppliers, Xiaomi, a domestically produced mobile phone, has also shown a weakness that
its independent property right barriers are not high, which undoubtedly poses a major threat to the
future development of Xiaomi phones. The research and development of Xiaomi mobile phone
products adopts the mode of user participation. Of course, this can also be understood as a hype.
It is a low-cost and efficient hype marketing, but this is indeed a new product form. After the
release, Xiaomi will face the crisis whether it will disappear quickly. Secondly, "Mihei" (as
opposed to "Rice Noodle", a group that specifically questioned Xiaomi) tried to use and fabricate
various negative news to destroy the image of Xiaomi's mobile phone (Sitompul, 2019). In
addition, due to the defects of Xiaomi's mobile phone and the question of users' after-sales service,
the media and the general public are actively discussing the Xiaomi mobile phone, and public
opinion has exerted great pressure on the future development of Xiaomi mobile phone. High-end
brands of mobile phones have seized the domestic mobile phone market through price reduction
measures. Although they cannot sell at a low profit like Xiaomi in the short term, in the near
future,
Xiaomi's cost-effectiveness will continue
to weaken.
Apple and Xiaomi use both direct and indirect distribution channels to effectively reach its
customers in the consumer, small and mid-sized business, and education, enterprise, and
government markets. In most of its major markets, the company sells its products and resells third-
party products directly to consumers and small-and mid-sized businesses through its retail and
online stores and direct salesforce. The company’s retail stores are typically located in high traffic
locations in shopping malls and urban shopping districts. By operating its own stores and locating
them in desirable high-traffic locations, the company is better positioned to ensure improved
customer buying experience and attract new customers. The stores are designed to simplify and
enhance the presentation and marketing of the company’s products and related solutions. BBK
Electronics offers its mobile phones through numerous different subsidiaries and brands giving the
firm a diversified mobile phone business model. This means that if one of the brands suffers, the
company can rely on its other brands to sustain its performance in the mobile phone market.
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Revenue of Xiaomi Ltd
Our analysis in Figure 3 indicates that the Xiaomi’s business has maintained a safe level of current
assets to meet its obligations, with the current ratio at 1.6x currently and a return to equity of about
12.5%. For Tech companies, this ratio is within a sensible range since there is an enough cash
cushion without leaving too much capital idle or in low-earning investments (Gartner.com, 2018).
With a debt-to-equity ratio of 15%, Xiaomi's debt level may be prudent. This range is considered
safe, as Xiaomi is not taking on too much debt obligation, which can be restrictive and risky for
equity-holders (Gartner.com, 2018). Risk around debt is very low for Xiaomi, and the company
has the ability and headroom to increase debt if needed going forward. Low debt indicates room
for improvement as its cash flow covers less than a quarter of its borrowings, which means its
operating efficiency could be better. However, the company exhibits an ability to meet its near
term obligations, which is not a surprise for a large-cap.
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.Financial Ratio analysis of Xiaomi
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Strategy implementation:
The main purpose of constructing the ecosystem of the entire industrial chain is to fully
control the information flow, capital flow and logistics between the management of the
entire industry, grassroots and customers (Fortunato et al. 2019). Xiaomi needs to continue
to expand production and market share. When Xiaomi controls the ecosystem of the entire
industry, the manufacturing of accessories for Xiaomi mobile phones can achieve
economies of scale, thereby reducing costs.
The specific method of constructing a successful network platform is to create a platform through a
high market share, so that a virtuous circle can be formed. Take Amazon as an example: its core
commodities are advanced terminals and excellent content, the first is to sell electronic reading as
a low price device, through the Kindle terminal to sell more e-books, and then profit from the sale
of e-books, and users can get more content at a cheaper price (Fortunato et al. 2019). Similarly,
Xiaomi can use this form to form a virtuous circle. First, Xiaomi can gain a place in the market
based on the characteristics of low prices and high-quality products. At the same time, the Xiaomi
team develops various software and services when the market holds. After the rate reaches a
certain level, Xiaomi can create a network platform belonging to Xiaomi, learn the platform
operation mode of the app store, and encourage the majority of software developers to continue to
develop excellent software to obtain benefits. With availability of such services, Xiaomi mobile
phones will become more competitive, and then further attract developers to develop software, and
finally form commercial barriers.
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Cost leadership strategy
Regarding product development costs, Xiaomi needs to strengthen MIUI system development and
accelerate cooperation with related manufacturers. The advantages of the MIUI system and the
cooperation of the manufacturers have created huge advantages (Leavy, 2016). The development
of the core device of the MIUI system has not only created a basis for cooperation between
enterprises, but also reduced the research and development costs of Xiaomi Company and to
achieve differentiation of its products. Xiaomi should actively carry out marketing cooperation
with third parties to improve the credibility of Xiaomi products. Reduce sales costs through Weibo
marketing and website marketing (Xie et al. 2016). At present, Xiaomi's aggressive marketing and
after-sales service strategies have brought some negative effects to Xiaomi. Xiaomi product
logistics is a logistics company contacted by Xiaomi. On the basis of ensuring product quality, it
should try to reduce logistics costs, create lower logistics transportation, reduce logistics costs, and
achieve cost leadership (Song et al. 2019). In the case where the core part is almost the same as
competing products, Xiaomi can create different brand images to obtain the advantages of brand
differentiation (Xie et al. 2016). This can make Xiaomi's service and user experience a unique
competitive advantage. Eventually, Xiaomi will have more
fans and users (Rawal et al. 2017).
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Differentiation strategy
In terms of marketing, compared to the common marketing methods used by general mobile phone
manufacturers such as TV promotion and outdoor advertising, Xiaomi mobile phones can target
mobile phone enthusiasts and then comprehensively adopt multiple marketing methods (Fortunato
et al. 2019). Xiaomi Technology can promote Xiaomi mobile phones through new Internet
information dissemination channels such as Weibo and forums, and allow these customers to
participate in the development of Xiaomi mobile phones, which can provide many pertinent
opinions for the development of Xiaomi mobile phones. The most important point in the personnel
differentiation strategy is that Xiaomi Technology is established by excellent software engineers
from well-known IT companies at home and abroad, such as Microsoft, Google, Motorola, etc.,
and has obvious technical advantages.
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Value chain
The value chain at an organizational level is the combination of various activities, which results in
the business profits or margins as shown in Figure 4 of Porter’s Value Chain Model. It is the
combination of vertical and horizontal components. Vertical components is also termed as
‘primary activities’ inclusive of supply chain management, Operations, Sales and Marketing works
towards the promotional aspects and selling the product to the customer by creating wide range
business value; Services are the all types of activities performed effectively to deliver the product
after customer buys a product (Sun et al. 2018). The horizontal components are called as support
activities inclusive of Infrastructure which are the combination of basic functions needed for an
organization such as finance, risk and compliance, legal, quality assurance and control, PMO or
strategic management, human resource management and so on (Sun et al. 2018). Technology
relates to the types of software, hardware, machineries, systems, technical knowledge acquired and
used to generate results from the internal resources (inputs); Human Resource Management
includes recruitment and hiring, Talent Development and Trainings, Performance Management,
Compensation and Employee Benefits, Health Benefits etc.; and Procurement is responsible for
acquiring services or goods from the external vendors or sources.
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Porter’s Value Chain Model
(2019)
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7. AFTER SALES SERVICE AND FUTURE PROSPECTS
Offering advanced technology products and positioning itself on the technology platform will not
help a company sell its products if it fails to give proper after-sales-service. With a focus on
strengthening the satisfaction level of the consumer, Xiaomi technology (Shenzhen) Co. Ltd. has
launched its 3S — Speed, Smile and Sure — campaign. As part of this customer service program,
the company is working on a two-pronged strategy. This involves: one, improving the service
infrastructure by setting up customer service plazas
in key metro locations; and two, improving the skill levels of technicians by setting up a
training school with a technical evaluation system for after sales service engineers.Till now, most
of the players in the sector have been professing that it's the relationship with
the customer that matters. However, with the competition increasing, customer satisfaction is fast
becoming a core issue,'' an industry analyst pointed out.
Promotion
Offering advanced technology products and positioning itself on the technology platform will not
help a company sell its products if it fails to communicate properly with the potential customers.
To raise brand awareness and create strong, favorable and unique brand associations, Xiaomi
adopted various marketing strategies like celebrity endorsements, corporate advertisements,
highlighting its technological superior goods and many promotional schemes.
Advertising
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market.Their main advertising channels include 'media' such as newspapers (local, national,
free,trade), magazines and journals, television (local and national) cinema, outdoors advertising
(such as posters, bus sides). The initial advertisements communicated presence of Xiaomi in
worldwide markets and its dominance in those markets. To increase its brand awareness, Xiaomi
went in for celebrity endorsements. Initially, the company signed Hindi film actor, Amitabh
Bacchan to endorse its brand. But now on a large scale level, particularly worldwide level, Robert
Downey Jr, has been the brand ambassador with the reveal of Xiaomi 7 series.
Sales Promotion
Along with advertisements, Xiaomi also focuses on promotional schemes to increase its sales. In
October 2013, Xiaomi launched its highly successful promotional scheme, the ladies first
campaign. This offer instantly boosted the sales of the company. The campaign was launched on a
worldwide level. Under this scheme, female fans were asked to share pictures of themselves
with the Xiaomi logo emblazoned on either a piece of paper they’re holding or that’s
drawn/painted on their hand/face/wherever. Submissions would be judged by the Xiaomi staff
members, and the 50 most well-liked women would receive an invitation to spend $300-$350
on the company’s Xiaomi One smartphone and a company T-shirt.
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8. DATA ANALYSIS AND INTERPRETATION
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9.FINDINGS
This research paper describes the analysis of data and report the results of researcher has found.
The responses were calculating by Statistical Package for Social Sciences (SPSS) software, in line
with gender, age, occupation, income, education level and marketing mix strategy of product,
price, place and promotion related to Xiaomi mobile phone in mumbai. The researcher uses
descriptive statistical tests to analysis frequency of demographics and the frequency analysis
determined by distribution of the respondents of target population in in mumbai. Second, the
researcher analyzes the frequency of independent variable hypotheses of 4Ps marketing mix such
as product, price, place or distribution, promotion and dependent variable of their respondent’s
data. Thirdly, the researcher describes the correlation statistical test to study Mean and Std.
Deviation marketing mix strategy of Xiaomi mobile phone towards making decision and customer
satisfaction. Finally, the researcher mentions both descriptive statistic and correlation to analyze
the Mean and Standard Deviation of how making decision to purchasing Xiaomi mobile phone of
customers satisfaction.
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10. CONCLUSION
The rapid development and success of Xiaomi Technology has attracted everyone's attention.
Xiaomi mobile’s phone is a smartphone manufacturer that entered the mobile phone market in
2011 (Safiya and Shylesh, 2019). In just three years, it has increased its sales from 500 million
Yuan to 30 billion Yuan. In the first half of 2014, Xiaomi sold 26.11 million mobile phones, a year
on-year increase of 271%, and completed 60 million sales throughout the year. There are important
reasons for the success of Xiaomi: Xiaomi has relied on the innovation of various modes
implemented by Internet thinking. Lei Jun, chairman of Xiaomi Technology, admitted frankly, as a
smartphone manufacturing company, the Internet is the wing of Xiaomi. The Internet is a way of
thinking and a way of thinking about the future (Rawal et al.2017)
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11. BIBLIOGRAPHY
INTERNET:
WWW.GOOGLE.COM
WWW.BUSINESS-STANDARD.COM WWW.WIKIPEDIA.COM
II NEWSPAPERS:
BUSINESS STANDARD
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