Xiaomi is a household name in the Indian smartphone market. In the space of about five years, he has gone from being a person to the market leader in terms of deliveries. However, his dream run is again thwarted by a nightmare that has haunted him for years – failing to climb the price ladder.
The last chapter of this story came with the launch of the Mi 10 in India. It was supposed to be a great day for Xiaomi. He was finally coming back to the elusive flagship space of smartphones from India, the one he abandoned a few years ago; but ended up being followed by countless comments on how the device was too expensive for the price and how no one would consider a Xiaomi premium device.
It is not the first time that Xiaomi India will have to endure this criticism. It happened with the Mi 5 in 2016 happened with the Redmi K20 series in 2019, and the Mi 10 probably won’t be the last time either. One may wonder, why is the company hesitant to leave its comfort zone when it already has a respectable lead in the budget segment, which represents 95% of the Indian smartphone market?
Adamant or arrogant? Aspiring.
The simple answer is profit. The budget segment of India is reputed to be ruthless, and Xiaomi has played a huge role in the change of scale, and therefore consumer expectations. However, the same price war also forced manufacturers to operate with low profit margins in the hope of volume sales. The real benefits almost always lie in high-end products, regardless of the brand or product category. With Xiaomi having entered the budget segment, it was now time to try to replicate the same success in other price segments.
And this concept of brands going up the price scale is not so strange. It is something that every business aims for, but very few succeed with grace. In the smartphone space, OnePlus is probably the only one that has managed to resell consumers with each new product; an attribute that most brands only dream of. While OnePlus started out as an economy brand for enthusiasts, it didn’t take them long to slowly start tiptoeing into the ultra-premium segment. It was not an easy decision to digest, as many of its early users felt betrayed, but OnePlus continued to try to redefine the value paradigm at more recent prices. For a company whose first product was priced at Rs 21K, it did an admirable job of convincing users to stick to the price of Rs 60K.
If OnePlus had given up a few years ago when the first complaints about its price emerged, we would never have seen a legitimate flagship competitor of a young brand. The constant desire to design a better product at each price level has convinced users of the value of its brand.
The worst possible time
Unfortunately, for Xiaomi, its time to re-enter the market with the Mi 10 was undoubtedly one of the most unlucky: the flagship products in 2020 were significantly more expensive overall, half the world is currently locked out , it was subject to import duties in India, and worse, its direct competitor, the OnePlus 8 series hit it out of the park with its prices.
The OnePlus 8 series is surprisingly cheaper in India, especially when we take into account the world price and the aforementioned issues. We assume this is a case where OnePlus is taking advantage of the situation and treading on the Indian market, while leaving the Western markets to take care of the profits. It would not be a surprise if he retained his leadership in the segment once again.
Going further, the lockdown also led to the unavailability of units for reviewers, leaving even fewer good things to mention in discussions around the Xiaomi Mi 10 by consumers and discouraged Mi Fans. To add to all this, the most common comment concerned the perception of their brand and how “nobody would buy a Xiaomi for 50,000 rupees …”
Simply put, for the price-sensitive Indian market, a high-end phone is also a sign of pride and ego – something that Xiaomi apparently doesn’t bring to the table. In addition, consumers also consider MIUI unsuitable for a premium product, for reasons other than system advertisements. As a consolation, Xiaomi mentioned that the Mi 10 will not display ads in the interface.
Although it is too early for us to comment on whether the Mi 10 is a good phone or not, and leaving the perception of the brand to the readers, it will really be a difficult task for Xiaomi to convince potential buyers of its value. prestige. That said, it would be foolish of us to assume that Xiaomi India had none of this planned. After all, it was the company that understood the Indian consumers and came back with products redefining the market over and over again.
Brand perception cannot be changed overnight
Hate #OnePlus as much as you want to raise prices on a year-over-year basis, but it’s still the only company that has managed to do this without a significant flak. neither grown nor thrived (Context: price # Mi10)May 9, 2020
Xiaomi India probably knew what to get into with the Mi 10. But what he also knows is that it can take years to build a brand image. He managed to break the stigma of “Chinese society”, when all the odds were against, by regularly offering good products. If he hopes to be a respectable player in the premium space, he will have to do the same – systematically show the Indian market what he is capable of.
Xiaomi would have faced the flak regardless of when it entered the Indian market. It turns out that the launch of the Mi 10 fell at a rather unfortunate time. But the Mi 10 is also a way for Xiaomi to measure the market with its first real flagship and better understand what consumers expect at this price. This feedback, combined with a constant flow of great products, is the only way to convince Indian users. For example, it is now clear that MIUI will need a facelift if it wants to appeal to more users.
It won’t be easy or fast, but it is only after a few generations that consumers will begin to associate Xiaomi with the premium segment. Building a brand’s reputation can take years, and with the Mi 10, Xiaomi is taking the first big step towards securing its place at higher prices. The Mi 10 is unlikely to be able to beat the OnePlus 8 series, but it captured everyone’s attention. The way to go is practically to repeat the process with each new generation of its flagship series, so that consumers begin to associate Xiaomi with the premium segment. This should also be followed by an increase in marketing expenses. A good product is only a small part of a successful marketing mix, with convincing prices, promotion and accessibility also playing a huge role.
The road to follow
The reason why the Xiaomi Mi 10 is so expensive in India also highlights why seemingly established companies such as HTC, Sony, Motorola and others have slowly been pushed to irrelevance. First, it is one of the only devices from Xiaomi’s house that is not made in India, subjecting it directly to an import duty of 20%. There must be sufficient demand for Xiaomi’s flagship products to consider investing in new production lines capable of handling something as high-end. It is a chicken and egg situation, where neither will happen without the other.
In addition, it will also need to be followed up by making maintenance and parts available nationwide, which again is a huge fixed cost for a product that will not move quickly. The same goes for software support. In addition, Xiaomi operates with fairly thin profit margins (~ 5%), which hinders its ability to have different prices in some regions to compensate for more competitive prices in others.
Xiaomi has never really dealt in the ultra-premium space. The Rs 20-35K segment will be reserved for affordable flagship products from Redmi and Poco, while Mi will try to make a name for itself at higher prices. Each company wants to succeed at several price levels. If Xiaomi really wants to be considered a high-end brand, the Mi 10 cannot be the last flagship to land in India. He knows how to make a great product at a reasonable price, all that remains is to focus on how to make a marketable product.