Xiaomi is a relatively young Chinese startup company that specializes in highly cost-effective consumer electronics. In 2014, the company entered a rapidly growing fitness wearables market by introducing Mi Band. In one year, the company managed to become the second-biggest seller of fitness trackers, with almost 25% of global sales (Gibbs 2015).
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The following paper explores the marketing concepts applicable to the company’s practices. By studying marketing management orientations, branding specifics, and pricing strategies, as well as a consumer decision-making process, we expect to identify the causes of success and formulate a series of recommendations for sustaining it.
Discussion and Application of Theory
The marketing concept of fitness wearables is a personal portable device that conducts several biometric measurements to enhance and promote health awareness and wellness. Production orientation is fairly limited in the wearables market since the production of a device of acceptable quality restricts the choice of manufacturing options and minimizes the impact of economies of scale (Armstrong et al. 2014). A product orientation is prominent within the segment since satisfying the customers’ expectations depends to a large degree on the functional qualities of the products and characteristics such as battery life and technological superiority. Sales orientation plays a minor role since it must rely on aggressive sales techniques which do not align well with either the technical sophistication of the product or its relatively high price. Market orientation, on the other hand, is evident throughout the segment, as many of the adjustments in the product appeal to customers want rather than the actual gaps in the functions of the device. Most notably, societal marketing orientation is a crucial component since the devices are health- and wellness-related and promote responsibility and motivation to some degree.
Marketing research is important for the organization for several reasons. First, the market is currently saturated with strong competitors, making a clear understanding of goals a priority. Second, technology is developing rapidly enough to quickly leave behind the companies which fail to introduce innovation. Finally, the product is highly customer-oriented and exists within a highly flexible market, making it subject to frequent changes in customer behavior.
The core concept of the product is a device that is capable of reading several physiological metrics, logging them to an app, and producing data on activities and a range of useful recommendations.
Xiaomi brand has risen to prominence before the emergence of the fitness wearables market and is currently associated with a high degree of cost-efficiency compared to more recognizable competitors such as Samsung, Nike, and Apple.
Xiaomi’s NPD process is determined largely by the specialization of the company. Unlike its more established competitors, Xiaomi is an innovation- and technology-oriented startup which makes use of a collaborative economy. Thus, NPD features parallel design, with ongoing research, testing, and sales (Armstrong et al. 2014). This allows for a more reactive and flexible pace.
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Judging by the estimates, the wearables market is currently in the active growth phase of the product life cycle, with a 200% increase in sales over a quarter of a year and a projected worth of $25 billion by 2019 (Wilson 2016). The fitness trackers and smartwatches are expected to remain the leading product categories.
Xiaomi gains competitive advantage by offering its product for as low as $15, which remains in the lowest tier of high-profile brands (Nguyen 2015).
Consumer Decision-Making Process
Need recognition occurs as a result of a combination of actual and perceived needs. On the one hand, many individuals require additional motivation to engage in sports activities, and some have health concerns that make tracking of biometric readings highly desirable. Also, at least some professional athletes benefit from precise tracking and logging capabilities of the device. This need is further enhanced by the stance of health organizations concerned with global obesity ratings. The perceived need is formed by the desire to attain a certain status pertinent to athletic individuals and manifest the engagement in a healthy lifestyle.
Information search in the case of Xiaomi occurs primarily online, which is expected because the product is clearly oriented at tech-savvy individuals and is sold predominantly through online retailers. The consumer decision is driven by the availability of functions, compatibility with a wide range of mobile devices, the functionality of the supporting app, technical specifications, appearance, and, to a lesser degree, brand recognition. Xiaomi’s marketing strategies commonly include context advertisement and organization of fan-oriented events which eventually trigger word-of-mouth referrals (Nguyen 2015).
The most viable alternatives to Xiaomi that may be considered by the customers are major brands such as Apple, Samsung, and Nike. The latter may become an alternative for the consumers who are attracted to the recognizable athletic brand (e.g. promotion-based advantage). The former two are more attractive for the technology-savvy customers loyal to their brands of choice, as well as those who find it convenient to shop at the brick-and-mortar stores (a combination of promotion and place). Other devices are similar to Xiaomi in brand positioning but are considerably less attractive in terms of price.
For Xiaomi products, the likelihood of purchase is largely determined by a favorable combination of price and quality associated with the brand, product’s longevity, product return policy, and, to a lesser degree, flexibility of use. In the case of Mi Band, the defining factors are the impressive battery life, waterproof characteristics, and affordable price.
The post-purchase decision phase is very important for the product since it operates in conjunction with other products such as smartphones and dedicated software. Aside from the customer service, continuous use of the product ensures a firmer association with a healthy lifestyle (hence the prominent appearance). More importantly, the post-purchase behavior is expected to produce relevant tracking results that can be used not only as feedback for parallel NPD process but also aggregated for big data analysis of consumer behavior patterns, which opens up unprecedented opportunities for direct marketing approach. Therefore, prolonged use of fitness wearables suggests the importance of the post-purchase phase.
Conclusions and Recommendations
Fitness trackers currently comprise a major share of the personal wearables market, closely followed by smartwatches. The predicted steady growth of the market coupled with a recent trend of decreasing the average price of the devices suggests a highly favorable position for Xiaomi’s products. More importantly, the likely rise in the value of the aggregated clusters of data provides additional revenue opportunities for its highly affordable devices. It is therefore recommended to focus on the development of software, compatibility, and other technical specifications that would increase the longevity of the product and, by extension, extend the amount of collected data per purchase.
Armstrong, G, Adam, S, Denize, S & Kotler, P. 2014. Principles of marketing, Pearson, London.
Gibbs, S 2015, ‘Xiaomi now world’s second-biggest wearables maker’, The Guardian, Web.
Nguyen, M 2015, Xiaomi – the young hero of wearables, Web.
Wilson, S 2016, Wearables market to be worth $25 billion by 2019, Web.