Brand strategy: Xiaomi makes the right calls, Oppo and Vivo see a lull

Xiaomi grew exponentially while the other two are largely stagnated in terms of market share

Chinese brands Xiaomi and Oppo, Vivo are a study in contrast in India’s smartphone market. While one has grown exponentially in terms of market share in the past one year, the other two have largely stagnated.

From 7.4 per cent a year ago, Xiaomi today has a share of 23.5 per cent, according to IDC, competing head-on with rival and traditional leader Samsung. Oppo and Vivo, on the other hand, have remained in the 7-10 per cent bracket in the past one year, with the September 2017 quarter being the only exception when Vivo’s share touched 13 per cent.

Oppo and Vivo, promoted by the Guangdong-based BBK Electronics, were not immediately available for comment. Xiaomi’s emergence in India’s 110-million-unit smartphone market has been on the back of steady online and offline distribution, solid products and affordable price points.

Hanish Bhatia, senior analyst, Counterpoint Research, says, “Xiaomi has targeted the sweet-spot of Rs 8,000-10,000 in the domestic market. A price band, which is growing fast and one which is just right for the Indian consumer, considered value-conscious. The features they provide in this price band are also interesting, resulting in steady growth.”

Oppo and Vivo, in contrast, say experts, have focused more on the Rs 14,000 and above price point, promoting the selfie camera feature aggressively through advertising and high-profile sponsorships.

“The idea here being that selfie cameras would act as a differentiator for the two brands,” says Bhatia about Oppo and Vivo. “While the strategy did work initially, with Oppo and Vivo emerging as rising smartphone stars a year ago, the market itself has moved away from selfie cameras to other features.”

According to industry estimates, Oppo and Vivo’s sales have declined 30 per cent in a year, because of Xiaomi’s aggressive expansion in the offline retail space. Apart from appointing distributors for 11 cities, including Delhi, Chandigarh, Jaipur, Hyderabad and Bengaluru, Xiaomi has also tied up with all modern retail chains and over 600 retail partners who prominently display and sell its handsets. 

The Beijing-headquartered firm now plans to open 100 Mi Homes (exclusive Xiaomi outlets) by 2019 in India. The stores would not only help the company attract more customers, but also allow it to have better control over its inventory, display new products and plan forward for production, according to Manu Jain, vice-president and country head, Xiaomi.

Oppo, Vivo fighting back

In October, Oppo joined Xiaomi in becoming the second handset firm from China to secure a single-brand retail licence in India. Speculation is that sister brand Vivo is also eyeing a single-brand retail licence in the country. 

Implications of this, say experts, go beyond the obvious benefit of having branded stores. In Oppo’s case, it would now have greater control on distribution rather than spending heavily on incentives to trade partners, experts say. 

While most prominent smartphone brands in India pay 8-10 per cent of their selling price to retailers, Oppo and Vivo offer close to 5 per cent more to secure better display at stores, and, therefore, increase sales throughput. “Though one may gain share by offering higher trade margins and spending more on advertising and marketing, it is not sustainable in the long run. Growth has to be profitable,” a senior executive with a leading smartphone maker says.

In an earlier interaction with Business Standard, Oppo had said that it remained committed to the Indian market and that it planned to increase its exclusive showrooms, currently 200 in number, in the country. “We will continue to enhance our offline presence to connect with more and more consumers,” Oppo has said.