By Ravi Balakrishnan
Late last year, reports began to circulate about HTC and Sony exiting smartphones. Among other things, these old warhorse brands are apparently being worn down by aggressive China-based competitors, who offer a better product in a critical price segment: the sub-Rs 15,000 block. As smartphones plateau in China, India with growth at an estimated 40% year on year, is morphing into the ultimate battle ground.
Brands are using every trick in the book: fighting for in store real estate, launching online only models, offline only models and throwing cash after celebrities of both the desi and foreign variety— see Hugh Jackman’s star turn for Micromax.
And then there are players who seem more interested in setting the book of tricks ablaze. Here’s how OnePlus and Xiaomi (which claims to be growing at 45% every quarter) are fighting the big boys:
They’ve made a virtue of a necessity
Building a new mobile startup is hard. There’s inventory to be managed, supply chains to be set up, and of course retailers to be appeased. Irate mobile shop owners are known to put up notices warning customers that they buy a particular brand at their own risk, if not kept entirely happy. Being initially available only via flash sales on Flipkart (for Xiaomi) and by invitation only on Amazon (for OnePlus) helped these brands build buzz. But they also put a positive spin on having a limited number of gadgets to sell. Karan Sarin, head – marketing, OnePlus admits about the by invitation model, “It was more of a supply chain related decision.” According to him, it was an upgrade on flash sales pioneered by Xiaomi for its Mi3 phone, and piggybacked on by numerous other brands, since a sale where sites crash adds up to a bad consumer experience.
They do advertise: just not the kind that people get bored by
“Do we do marketing? Of course we do,” says Manu Jain, India head, Xiaomi India. “Do we do paid marketing? No,” he adds. The argument for both brands is remarkably similar: why pay to push your message, when there are legions of persuasive fans who do it for free? Also why use television when it’s possible to reach a relevant target audience organically via social media? According to Jain, “When you watch a TV ad and buy, you are paying not just for having seen the TV ad but also for the hundreds who watched it.” Xiaomi believes in passing those savings on to the customer which is how Jain claims it was able to offer a feature-loaded phone that would ordinarily cost upwards of Rs 35,000 at Rs 15,000. The pillars of marketing at OnePlus are community, online and experiential. Even the recent billboards, says Sarin is retail partner Amazon. com’s initiative. Anisha Motwani, marketing and digital strategist with the Max Group of companies points out, “Youngsters hardly look at ads these days. There’s no content for them on TV. These companies are doing a fabulous job of online marketing targeted at the segment they cater to.” Sarin believes, “Earlier, brands were built by size of marketing budgets or celebrity endorsements. With OnePlus we proved that wrong.”
They appreciate the value of geek cred and know how to harness it
OnePlus and Xiaomi had a common early adopter profile: young, tech savvy consumers. Sarin joyfully recounts having his brand name checked by a tech entrepreneur in an interview. With Xiaomi, customers who go the extra mile and show up for fan meets often turn out to be working in tech companies. These are people that obsess over the minutiae of spec sheets, pay close attention to (or write) reviews and who, often publicly, mock the sort of person who’d thoughtlessly splurge on an iPhone.
OnePlus began life on a forum where the company sought feedback on the sort of features that ought to make the cut. The site attracted a sizeable Indian contingent. According to Sarin, this lot forced the company’s hand leading to an earlier than anticipated India launch for OnePlus. Having landed such a fanbase, the company had to think harder to keep them engaged. One of these events was a free 3D printing workshop, allowing users to create phone holders and cases. Held in Bangalore, OnePlus’s timeline is now full of fans asking when the show will roll around to their city.
Such consumers are always looking to evangelise what they perceive to be underdog brands. A secondary set of consumers for Xiaomi are an older lot who rely on young friends or relatives for recommendations. Nifty little touches like OnePlus naming the OnePlus Two ‘the flagship killer’ helps fuel the David versus Goliath narrative.
They understand consumer experience
Phone consumers have a troubled history with updates. One of the last on Nokia’s Symbian actually disabled some of the features that the model had shipped with. But with Xiaomi, vital updates are drawn from fan suggestions. Posts that multiple people agree on or issues that crop up on its forums are given priority: for instance, clubbing messages from banks, etailers and such under Notifications leaving the main messaging segment dedicated to actual contacts. Or in India, offering a Copy OTP option for ecommerce transactions. Upgrades are cascaded across the line. Even to two and a half years old phones like the Mi3. None of this is accidental since according to Jain, “Why should we force customers to upgrade just because they want the latest OS? We will give it to them and make them advocates.” Realising Indian consumers value touch and feel, OnePlus broke its global template to have kiosks at malls. It also tied up with Ola allowing people to sample and later buy phones, with a guaranteed delivery in 15 minutes.
It’s unlikely to be entirely smooth sailing, though. Xiaomi has already started a tie up with The Mobile Store and is being sold via Airtel, though Jain asserts it will continue to be an online first brand. As Anshul Gupta, research director at Gartner observes, “The market is so huge that if someone focuses only on online they will still get sales of over a million. But in a five year horizon, unless you are present in physical stores, growth opportunity will be limited even if the online space for argument’s sake accounts for 40% to 50% of purchases.” While it’s easy to start with, Karthik J, senior market analyst, client devices, IDC India believes, as the traction gains, vendors look to offline retail. Will the disruptions that have worked for these brands in an online driven model, be malleable enough for an offline world?
Source:The Economic Times
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