The meaning and significance of price
It is not easy to define “Price” but whenever the price of a product is quoted, it is related to some assortment of goods and services. So, Price is what is charged for “Something”. That something is generally value of the product attributes or utilities value of the product or services.
Swot analysis and 4P-Analysis if Mi.
SWOT analysis is used mainly in the marketing domain for positioning of self and competetors.
and Ps of marketing here defines the principles of marketing.
shivam.sagar.nift@gmail.com
As part Global Marketing Management Module with Lecturer Mahabubur Rahman, we were tasked to develop a strategic international marketing plan for an actual firm. Our company of choice was Xiaomi, a private Chinese tech company that have taken the smartphone industry by storm in the last 5 years, becoming The world's 3rd largest smartphone distributor in 2014 and the world's most valuable tech start up.
The international marketing plan involved the development of a strategic plan for Xiaomi entering fast growing emerging market of Brazil. The global marketing plan addressed the adjustment of Xiaomi's marketing strategies to adapt to conditions on entering the Brazilian market.
Swot analysis and 4P-Analysis if Mi.
SWOT analysis is used mainly in the marketing domain for positioning of self and competetors.
and Ps of marketing here defines the principles of marketing.
shivam.sagar.nift@gmail.com
As part Global Marketing Management Module with Lecturer Mahabubur Rahman, we were tasked to develop a strategic international marketing plan for an actual firm. Our company of choice was Xiaomi, a private Chinese tech company that have taken the smartphone industry by storm in the last 5 years, becoming The world's 3rd largest smartphone distributor in 2014 and the world's most valuable tech start up.
The international marketing plan involved the development of a strategic plan for Xiaomi entering fast growing emerging market of Brazil. The global marketing plan addressed the adjustment of Xiaomi's marketing strategies to adapt to conditions on entering the Brazilian market.
Marketing plan -Xiomi New Product DevelopmentTushar Sharma
This is in conjunction with "Analysis of Consumer Preferences for New Smartphone" uploaded earlier. It showcases a detailed marketing plan for a new product in smartphone category.
Unconventional Positioning Strategies in MarketingAmir907817
Published by Amir Jabbari, the document introduces three unconventional positioning strategies in marketing which are Stealth Positioning, Breakaway Positioning, and Reverse Positioning. These unconventional positioning strategies help companies to differentiate their offering form the crowd.
Xiaomi company information, challenges faced by xiaomi in India, xiaomi expansion in India, Market share of Xiaomi in india, Case study on xiaomi, Best business practice of Xiaomi in india.
A smooth, usually inclined surface or track for sliding: a water slide. b. A playground apparatus for children to slide on, typically consisting of a smooth chute climbed onto by means of a ladder. 3.
Xiaomi - Germany market entry marketing strategy - MBA, HULT International Bu...Friedrich Arnold
The strategic opportunity for Xiaomi in the German smartphone category is to gain 5% market share by Q1 2016. This opportunity arose from Xiaomi’s critical ecosystem of competitive advantages enabling the manufacturer to create superior value to German consumers for a lower price than the current market leader, Samsung.
After evaluating the two strategic alternatives, entering or not entering the German market, I concluded to Enter the German market, invest RMB 59 MM upfront to breakeven during the 2015 Christmas sales and achieve a 5% market share by Q1 2016.
This marketing plan was part of the International Marketing course with Prof. Marco Protano at HULT International Business School.
Similar to Fundamental of Marketing management (20)
In general, leverage refers to accomplish certain things which are otherwise not possible
i.e. lifting of heavy objects with the help of lever. This concept of leverage is valid in business also.
In finance, the term ‘leverage’ is used to describe the firm’s ability to use fixed cost asset or funds to increase the return to its owners; i.e. equity share holders. In other words, the fixed cost funds i.e. debentures & preference share capital act as the fulcrum, which assist the lever i.e. the firm to lift i.e. to increase the earnings of its owner i.e. the equity shareholders.
Leverage is also the influence which an independent variable has over a dependent/related variable i.e. rainfall over production. In financial context, sales& fixed cost over profit.
A Scale is a tool or mechanism by which individuals are distinguished as to how they differ from one another on the variables of interest to our study. The scale or tool could be a gross one in the sense that it would only broadly categorize individual on certain variables, or it could be a fine-tuned tool that would differentiate individual on the variables with varying degrees of sophistication.
There are four basic type of scale:
Nominal
Ordinal
Interval
ratio
A nominal scale is one that allows the researcher to assign subjects to certain categories or group.
For example, With respect to the variable of gender, respondents can be grouped into two categories– Male and Female, These two group can be assigned code number 1 and 2.
Nominal Scales categorize individuals or objects into mutually excusive and collectively exhaustive groups.
Other Example: Blues Eyes=1, Brown eyes=2, Black eyes=3.
An ordinal scale not only categorizes the variables in such a way as to denotes differences among the various categories, it also rank-order the categories in some meaningful way. With any variables for which the categories are to be ordered according to some preference, the ordinal scale would be used. The preference would be ranked (e.g. from best to worst; first to last) and numbered 1,2 and so on.
Example:
Very satisfied
Some satisfied
Neutral
Somewhat dissatisfaction
Very dissatisfaction
An interval scale allows us to perform certain arithmetical operation on the data collected from the respondents.
Interval scale lets us measure the distance between any two points on the scale. This helps us to compute the means and the standards deviation of the responses on the variables.
In other words, the interval scale not only groups individual according to certain categories and taps the order of these groups it also measures the magnitude of the differences in the preference among the individuals.
Example: Celsius temperature is an interval variables. It is meaning ful to say that 25 degrees Celsius is hotter then 22 degrees.
COMPANY ANALYSIS: PATANJALI
In the present scenario, the market of ‘Wellness Industry’ in India is less than 2% as compared to the international market. There are untapped opportunities in the wellness industry because of which the government has given special focus on this sector in the ‘Make in India’ campaign. Active involvement from private and public players can create huge impact and buzz in the global market. The motives are the expansion and spreading the awareness and usability.
Patanjali Ayurveda is maker of ayurvedic consumer products and is one of the fastest growing consumer companies in India. The company was formed by Baba Ramdev in 1997 in collaboration with Acharya Balkrishna (scholar of Ayurveda, Sanskrit and Vedas) to manufacture ayurvedic medicines. Ramdev has focused on Yoga while Balkrishna is spreading and channelizing Ayurvedic products.
The company provides a bunch of products and services which revolves around the consumer needs. Providing them high-quality products at attractive prices is the USP. It has become a household name. The company sources raw materials directly from farmers to cut middlemen cost for increasing profits.
What is ISO 9000?
Quality is something every company strives for and is often times very difficult to achieve. Complications concerning efficiency and quality present themselves everyday in business, whether an important document cannot be found or a consumer finds a product not up to their expectations. How can a company increase the quality of its products and services?
(The answer is ISO 9000)
Work of ISO 9000.
ISO 9000 is set up as a collection of guidelines that help a company establish, maintain, and improve a quality management system. It is important to stress that ISO 9000 is not a rigid set of requirements, and that organizations have flexibility in how they implement their quality management system. This freedom allows the ISO 9000 standard to be used in a wide range of organizations, and in businesses large and small.
ISO stands for International Organizational for Standardization. It is an international body which consists of representatives from more than 90 countries. The national standards bodies of these countries are the member of this organization.
BIS(Bureau of Indian Standards) is the Indian representatives to ISO.
ISO and IEC(International Electro Technical Commission) operate jointly as a single.
These are NGO Which exist to provide common standard on international trade of goods and services.
ISO 9000 series has five international standards on quality management which are listed below:
ISO 9000
ISO 9001
ISO 9002
ISO 9003
ISO 9004
Financial statement analysis is the process of reviewing and evaluating a company's financial statements (such as the balance sheet or profit and loss statement), thereby gaining an understanding of the financial health of the company and enabling more effective decision making. Financial statements record financial data; however, this information must be evaluated through financial statement analysis to become more useful to investors, shareholders, managers and other interested parties.
Hypothesis is a hunch the researcher or research team has. Basically a hypothesis is nothing more or less than a hunch to solve your research problem.
A good hypothesis by adding predictions on the how or why. So use sentences that include variations. If one cannot assess the predictions by observation or by experience, the hypothesis classes as not yet useful, and must wait for others who might come afterward to make possible the needed observations. For example, a new technology or theory might make the necessary experiments feasible.
The Human Resource (HR) function of organizations is changing rapidly, reacting to a changing social and organizational environment and rapidly evolving information technologies. Social and organizational changes exert pressure on HR professionals to provide expanded services, of a higher quality, faster, and seamlessly linked with other corporate functions. Information technologies (IT), which provide enabling technologies to assist HR professionals in the delivery of services, have also simultaneously increased the expectations that employees, managers, customers, suppliers, and regulators have for the HR function.
Vogel’s Approximation Method (VAM),
Step-I: Compute the penalty values for each row and each column. The penalty will be equal to the difference between the two smallest shipping costs in the row or column.
Step-II: Identify the row or column with the largest penalty. Find the first basic variable which has the smallest shipping cost in that row or column. Then assign the highest possible value to that variable, and cross-out the row or column which is exhausted.
Step-III: Compute new penalties and repeat the same procedure until all the rim requirements are satisfied.
Step 1: Compute the penalties in each row and each column .
Step 2: Identify the largest penalty and choose least cost cell to corresponding this penalty.
Step-3: Allocate the amount 5 which is minimum of corresponding row supply and column demand and then cross out column2.
Step-4: Recalculate the penalties.
Step-5: Identify the largest penalty and choose least cost cell to corresponding this penalty.
Step-6: Allocate the amount 5 which is minimum of corresponding row supply and column demand, then cross out column3.
Step-7: Finally allocate the values 0 and 15 to corresponding cells and cross out column 1\
Solution of the problem.
Now the Initial Basic Feasible Solution of the transportation problem is
X11=0, X12=5, X13=5, and X21=15 and
Total transportation cost = (0x6)+(5x7)+(5x8)+(15x15) = 0+35+40+225
= 300.
Role of Entrepreneur's in economic development and role of women entrepreneur's.Jaikumar Pandit
What is Entrepreneur??
• Entrepreneur is a person who takes initiative or one who come up with an idea that helps to create new jobs, encourage society and disperse wealth because of new products or services that are introduced into the market. This gives great impact to each and every individual as some ways or the other, we all get correlated.
For example, with the introduction of Uber rides it gave great impacts on an auto rickshaw and local buses whereas millions of people got job car driver to make that Uber ride possible.
i. It is the application of scientific methods, techniques and tools to problems involving the operations of a system so as to provide those in the control of the system with optimum solutions to the problems.
ii. Operation Research is a tool for taking decisions which searches for the optimum results in parity with the overall objectives and constraints of the organization.
iii. Operations research (OR) is an analytical method of problem-solving and decision-making that is useful in the management of organizations. In operations research, problems are broken down into basic components and then solved indefined steps by mathematical analysis.
P&G is one of the largest and amongst the fastest growing consumer goods companies in India. Established in 1964, P&G India now serves over 650 million consumers across India. Its presence pans across the Beauty & Grooming segment, the Household Care segment as well as the Health & Well Being segment, with trusted brands that are household names across India.
A.I. (artificial intelligence) platforms are popping up all the time, and many of them can and should be used to help grow your brand, increase your sales and decrease your marketing costs.In this presentation:We will review some of the best AI platforms that are available for you to use.We will interact with some of the platforms in real-time, so attendees can see how they work.We will also look at some current brands that are using AI to help them create marketing messages, saving them time and money in the process. Lastly, we will discuss the pros and cons of using AI in marketing & branding and have a lively conversation that includes comments from the audience.
Key Takeaways:
Attendees will learn about LLM platforms, like ChatGPT, and how they work, with preset examples and real time interactions with the platform. Attendees will learn about other AI platforms that are creating graphic design elements at the push of a button...pre-set examples and real-time interactions.Attendees will discuss the pros & cons of AI in marketing + branding and share their perspectives with one another. Attendees will learn about the cost savings and the time savings associated with using AI, should they choose to.
Financial curveballs sent many American families reeling in 2023. Household budgets were squeezed by rising interest rates, surging prices on everyday goods, and a stagnating housing market. Consumers were feeling strapped. That sentiment, however, appears to be waning. The question is, to what extent?
To take the pulse of consumers’ feelings about their financial well-being ahead of a highly anticipated election, ThinkNow conducted a nationally representative quantitative survey. The survey highlights consumers’ hopes and anxieties as we move into 2024. Let's unpack the key findings to gain insights about where we stand.
When most people in the industry talk about online or digital reputation management, what they're really saying is Google search and PPC. And it's usually reactive, left dealing with the aftermath of negative information published somewhere online. That's outdated. It leaves executives, organizations and other high-profile individuals at a high risk of a digital reputation attack that spans channels and tactics. But the tools needed to safeguard against an attack are more cybersecurity-oriented than most marketing and communications professionals can manage. Business leaders Leaders grasp the importance; 83% of executives place reputation in their top five areas of risk, yet only 23% are confident in their ability to address it. To succeed in 2024 and beyond, you need to turn online reputation on its axis and think like an attacker.
Key Takeaways:
- New framework for examining and safeguarding an online reputation
- Tools and techniques to keep you a step ahead
- Practical examples that demonstrate when to act, how to act and how to recover
5 big bets to drive growth in 2024 without one additional marketing dollar AND how to adapt to the biggest shifting eCommerce trend- AI.
1) Romance Your Customers - Retention
2) ‘Alternative’ Lead Gen - Advocacy
3) The Beautiful Basics - Conversion Rate Optimization
4) Land that Bottom Line - Profitability
5) Roll the Dice - New Business Models
In this presentation, Danny Leibrandt explains the impact of AI on SEO and what Google has been doing about it. Learn how to take your SEO game to the next level and win over Google with his new strategy anyone can use. Get actionable steps to rank your name, your business, and your clients on Google - the right way.
Key Takeaways:
1. Real content is king
2. Find ways to show EEAT
3. Repurpose across all platforms
Search Engine Marketing - Competitor and Keyword researchETMARK ACADEMY
Over 2 Trillion searches are made per day in Google search, which means there are more than 2 Trillion visits happening across the websites of the world wide web.
People search various questions, phrases or words. But some words and phrases are searched
more often than others.
For example, the words, ‘running shoes’ are searched more often than ‘best road running
shoes for men’
These words or phrases which people use to search on Google are called Keywords.
Some keywords are searched more often than others. Number of times a keyword is searched
for in a month is called keyword volume.
Some keywords have more relevant results than others. For the phrase “running shoes” we
get more than 80M relevant results, whereas for “best road running shoes for men” we get
only 8.
The former keyword ‘running shoes’ has way more competition from popular websites to
new and small blogs, whereas the latter keyword doesn’t have that much competition. This
search competition for a keyword is called search difficulty of a keyword or keyword
difficulty.
In other words, if the keyword difficulty is ‘low’ or ‘easy’, there won’t be any competition
and if you target such keywords on your site, you can easily rank on the front page of Google.
Some keywords are searched for, just to know or to learn some information about something,
that’s their search intention. For example, “What shoe size should I choose?” or “How to pick
the right shoe size?”
These keywords which are searched just to know about stuff are called informational
keywords. Typically people who are searching this type of keywords are top of a Conversion
funnel.
Conversion funnel is the journey that search visitors go through on their way to an email
subscription or a premium subscription to the services you offer or a purchase of products
you sell or recommend using your referral link.
For some buyers, research is the most important part when they have to buy a product.
Depending on that, their journey either widens or narrows down. These types of buyers are
Researchers and they spend more time with informational keywords.
Conversion is the action you want from your search visitors. Number of conversions that you
get for every 100 search visitors is called Conversion rate.
People who are at different stages of a conversion funnel use different types of keywords.
Videos are more engaging, more memorable, and more popular than any other type of content out there. That’s why it’s estimated that 82% of consumer traffic will come from videos by 2025.
And with videos evolving from landscape to portrait and experts promoting shorter clips, one thing remains constant – our brains LOVE videos.
So is there science behind what makes people absolutely irresistible on camera?
The answer: definitely yes.
In this jam-packed session with Stephanie Garcia, you’ll get your hands on a steal-worthy guide that uncovers the art and science to being irresistible on camera. From body language to words that convert, she’ll show you how to captivate on command so that viewers are excited and ready to take action.
Digital Commerce Lecture for Advanced Digital & Social Media Strategy at UCLA...Valters Lauzums
E-commerce in 2024 is characterized by a dynamic blend of opportunities and significant challenges. Supply chain disruptions and inventory shortages are critical issues, leading to increased shipping delays and rising costs, which impact timely delivery and squeeze profit margins. Efficient logistics management is essential, yet it is often hampered by these external factors. Payment processing, while needing to ensure security and user convenience, grapples with preventing fraud and integrating diverse payment methods, adding another layer of complexity. Furthermore, fulfillment operations require a streamlined approach to handle volume spikes and maintain accuracy in order picking, packing, and shipping, all while meeting customers' heightened expectations for faster delivery times.
Amid these operational challenges, customer data has emerged as an important strategy. By focusing on personalization and enhancing customer experience from historical behavior, businesses can deliver improved website and brand experienced, better product recommendations, optimal promotions, and content to meet individual preferences. Better data analytics can also help in effectively creating marketing campaigns, improving customer retention, and driving product development and inventory management.
Innovative formats such as social commerce and live shopping are beginning to impact the digital commerce landscape, offering new ways to engage with customers and drive sales, and may provide opportunity for brands that have been priced out or seen a downturn with post-pandemic shopping behavior. Social commerce integrates shopping experiences directly into social media platforms, tapping into the massive user bases of these networks to increase reach and engagement. Live shopping, on the other hand, combines entertainment and real-time interaction, providing a dynamic platform for showcasing products and encouraging immediate purchases. These innovations not only enhance customer engagement but also provide valuable data for businesses to refine their strategies and deliver superior shopping experiences.
The e-commerce sector is evolving rapidly, and businesses that effectively manage operational challenges and implement innovative strategies are best positioned for long-term success.
Most small businesses struggle to see marketing results. In this session, we will eliminate any confusion about what to do next, solving your marketing problems so your business can thrive. You’ll learn how to create a foundational marketing OS (operating system) based on neuroscience and backed by real-world results. You’ll be taught how to develop deep customer connections, and how to have your CRM dynamically segment and sell at any stage in the customer’s journey. By the end of the session, you’ll remove confusion and chaos and replace it with clarity and confidence for long-term marketing success.
Key Takeaways:
• Uncover the power of a foundational marketing system that dynamically communicates with prospects and customers on autopilot.
• Harness neuroscience and Tribal Alignment to transform your communication strategies, turning potential clients into fans and those fans into loyal customers.
• Discover the art of automated segmentation, pinpointing your most lucrative customers and identifying the optimal moments for successful conversions.
• Streamline your business with a content production plan that eliminates guesswork, wasted time, and money.
Core Web Vitals SEO Workshop - improve your performance [pdf]Peter Mead
Core Web Vitals to improve your website performance for better SEO results with CWV.
CWV Topics include:
- Understanding the latest Core Web Vitals including the significance of LCP, INP and CLS + their impact on SEO
- Optimisation techniques from our experts on how to improve your CWV on platforms like WordPress and WP Engine
- The impact of user experience and SEO
For too many years marketing and sales have operated in silos...while in some forward thinking companies, the two organizations work together to drive new opportunity development and revenue. This session will explore the lessons learned in that beautiful dance that can occur when marketing and sales work together...to drive new opportunity development, account expansion and customer satisfaction.
No, this is not a conversation about MQLs and SQLs. Instead we will focus on a framework that allows the two organizations to drive company success together.
The session includes a brief history of the evolution of search before diving into the roles technology, content, and links play in developing a powerful SEO strategy in a world of Generative AI and social search. Discover how to optimize for TikTok searches, Google's Gemini, and Search Generative Experience while developing a powerful arsenal of tools and templates to help maximize the effectiveness of your SEO initiatives.
Key Takeaways:
Understand how search engines work
Be able to find out where your users search
Know what is required for each discipline of SEO
Feel confident creating an SEO Plan
Confidently measure SEO performance
The What, Why & How of 3D and AR in Digital CommercePushON Ltd
Vladimir Mulhem has over 20 years of experience in commercialising cutting edge creative technology across construction, marketing and retail.
Previously the founder and Tech and Innovation Director of Creative Content Works working with the likes of Next, John Lewis and JD Sport, he now helps retailers, brands and agencies solve challenges of applying the emerging technologies 3D, AR, VR and Gen AI to real-world problems.
In this webinar, Vladimir will be covering the following topics:
Applications of 3D and AR in Digital Commerce,
Benefits of 3D and AR,
Tools to create, manage and publish 3D and AR in Digital Commerce.
Monthly Social Media News Update May 2024Andy Lambert
TL;DR. These are the three themes that stood out to us over the course of last month.
1️⃣ Social media is becoming increasingly significant for brand discovery. Marketers are now understanding the impact of social and budgets are shifting accordingly.
2️⃣ Instagram’s new algorithm and latest guidance will help us maintain organic growth. Instagram continues to evolve, but Reels remains the most crucial tool for growth.
3️⃣ Collaboration will help us unlock growth. Who we work with will define how fast we grow. Meta continues to evolve their Creator Marketplace and now TikTok are beginning to push ‘collabs’ more too.
SEO as the Backbone of Digital MarketingFelipe Bazon
In this talk Felipe Bazon will share how him and his team at Hedgehog Digital share our journey of making C-Levels alike, specially CMOS realize that SEO is the backbone of digital marketing by showing how SEO can contribute to brand awareness, reputation and authority and above all how to use SEO to create more robust global marketing strategies.
1. Pricing Decision on Xiaomi
Marketing management
Institute of business management and research,
IPS Academy, Indore
Submitted By
Jai Kumar Pandit
Rohan Gupta
MBA “A” 2nd Sem
2. Content
Introduction
The meaning and significance of price
Pricing Objective
Concept of cost and pricing
The GPMT strategy in pricing
The Pricing strategy employed by Xiaomi
On the Chinese market and being called the 'Apple of China'
In Pricing decision in India
3. ACKNOWLEDGEMENT
We would like to express our special thanks of gratitude to our teacher
Ms. Nidhi Jhawar Ma’am, who gave us the golden opportunity to do this
wonderful Assignment of Fundamental of Marketing Management on
“Pricing decision On Xiaomi”, who also helped us in completing our
project. We came to know about so many new things we are really
thankful to them. Secondly we would also like to thank our friends who
helped us a lot infinalizing this Assignment within the limited time frame.
4. Introduction
In all business and in some non-business transaction, the product or
services offered to the users have some value for which a price is charges for the
product. Theprice will depend upon the type of productorservices offered and may
have different terminology like bus fare, air fare, tuition fees for schools and
colleges, admission fees services charges, rent, subscription, entry fee, consultancy
fees or simply Maximum Retail Price.
Price is the only element in all business transaction which creates sales revenue and
the sales revenue will determine profit or loss of any business transaction.
The meaning and significance of price
It is not easy to define “Price” but whenever the price of a
product is quoted, it is related to some assortment of goods and services. So, Price
is what is charged for“Something”. That something is generally value of the product
attributes or utilities value of the product or services.
Pricing Objective
According To J.W. Kelvini’s work, “Pricing for Results”, he has identified
short- term and long- term pricing Objective, operational pricing objectives
distinguished between short term tactical objectives and those in the long run
Short Term Pricing Objective Could be:
1. Meeting existing competition.
2. Discouraging new competition.
3. Securing key customer accounts
4. Recovering cash rapidly.
5. 5. Attracting new customer’s distributors and agents.
6. Using spare capacity
7. Trimming off overall demand.
Long Term Pricing Objective could be:
1. Profit or Contribution sales; return on assets
2. Stabilizing price and margin relationship
3. Retaining target market share
4. Strategic pricing in different markets
5. Keeping competition out of key markets
6. To discourage new entrant.
Concept of cost and pricing
Selling price = Fixed cost + Variable cost + Mark-up or profit
Selling price = Total cost + mark-up or profit
Selling Price – Total cost = mark-up or Profit
Selling price – (Fixed cost + Variable cost) = Profit
(Selling Price – Variable costs) – Fixed cost = profit
Contribution – fixed cost = Profit
1. Average total cost (ATC):
This is basically total cost per unit arrived at by dividing total cost
by the number unit sold.
6. 2. Marginal cost (MC):
This indicates change in total cost resulting from producing an
additional unit.
3. Average Revenue (AR):
This represents average revenue perunit sold calculated by dividing
total revenue by the amount of revenue sold
4. Marginal Revenue (MR):
This represents average revenue per unit sold calculated by dividing
total revenue by the number of revenue sold.
5. Price Elasticity of Demand:
This is a measure of responsiveness of the quantity sold to price
changes. Demand is elastic when total revenue increase in response to reduction in
price, demand is inelastic when total revenue decreasein responseto pricereduction.
The GPMT strategy in pricing
GPMT or Gross Profit Margin Target is what the companies usually look at when
trying to set prices. In simple terms, it is the gross profit margin that they need to
pay back their expenses and generate positive net income and cash flow.
Mathematically, GPMT = (Price of the product - Cost of the goods and services being sold) /
Price of the product
7. In a typical manufacturer-distributor-retailer model, the manufacturer aims for a
GPMT of 50%, that is it wants to sell the product at twice the cost price. The
latter two look at a GPM of 10-15% and 30-50% respectively
The Pricing strategy employed by Xiaomi
To start off with, Xiaomi sells its products online only, through ecommerce. This
ensures that it doesn'thave to worry about the costs ofwarehousing and distribution.
"We are an e-commerce company. We live on the internet. We are selling
exclusively through e-commerce. And the price there can be much lower, because
the price on e-commerce is essentially fulfillment and shipping cost," explains Hugo
Barra, VP Global, Xiaomi while exclusively speaking with YourStory.
Xiaomi also shuns traditional models of advertising and depends solely on Social
Media marketing and word-of-mouth.
We don't invest in traditional marketing. We live on the social media which is a lot
less expensive to us.
Apart from this, Xiaomi cuts cost at every stage. It sources components itself and
deals with these sellers with a different strategy. Xiaomi also bets on 'Moore's
Law'. Unlike other bigger players who discontinue their models after 6-8 months in
the market, Xiaomi sells it products forupto 18-20 months after launch. This means
that, in accordance with Moore, the price of the individual components go down
while the price of the phone remains constant throughout.
8. But the most important thing to note is that Xiaomi is a 'mobile internet
company'. It is looking to make money, not on its hardware, but by selling apps,
games and special Android themes and Internet services on top of its custom MIUI
- a pricing strategy very well-adopted by the e-commerce behemoth Amazon.
In the past too, many Chinese handset players have entered the market with low-
priced phones. But with low prices, tagged along the low quality as well, giving the
Chinese market a bad name. Xiaomi and Barra set the tone right by bringing high-
end quality at affordable prices.
On the Chinese market and being called the 'Apple of China'
Xiaomi has been time and again called the 'Apple of China'.The fact that Lei Jun
launches the phone in typical Steve Jobs-esque manner and attire doesn't help
their cause. But ask anyone from the Xiaomi team on their comparison with Apple
and they will start off with their admiration for the Cupertino-based phone maker.
"Apple is one ofthe mostextraordinary companies that the world has ever seen, and
will continue to be for a long time. On that account one would say that being
compared to Apple is a great thing," Barra starts off.
Barra goes on to differentiate Xiaomi, though.
The reality is that we are a lot more and a different kind ofcompany. You could
say that Xiaomi is like bits and pieces of Google, and Apple, and Amazon. We
have the Software engineering horsepowerofa Google, the designambitions of
an Apple and the e-commerce platform and customer service focus of an
Amazon.
9. Barra believes that the smartphone industry from China has already left a significant
legacy over the last couple of years. Talking about products from China, Barra
mentions Oppo, OnePlusOne and Huawei who have come out with world-class
products.
"Looking at these products no one can say that they are less interesting or less
appealing than products coming out of Korea, Japan or the US," he summarizes.
'Apple of China' or not, one thing is for sure that Xiaomi has made significant
strides into whichevermarket it has entered, in a relatively short period of just
four years.
In Pricing decision in India
The Chinese phone maker, Xiaomi, entered the Indian market in August last year,
and sold over 1 million phones by December. The company has even managed to
surpass Samsung in China and is now the world's third largest phone maker.
The Mi phones are put up for sale in a unique flash sale. By putting up a limited
number of devices and making it a first-cum-first-serve basis, the company has
cleared heaps of devices from its inventory without spending much on advertising
and solely relying on social networks to convey its messages.
Now, Xioami devices are priced typically under Rs 15,000. It's only the new Mi
Notethat can be called slightly expensive with a roughly Rs 23,000 price tag and
the Pro version for over 30k, which still makes them worth the money with specs
almost at par with the high-end premium phones from Apple and Samsung. The Mi
Note is being stacked against the Galaxy Note 4 and iPhone 6 Plus that cost over
two times the price comparatively. The Mi 3 with mid-range specs was sold at
10. approximately Rs 13,000 and the Xiaomi Note 4G costs slightly above Rs 10,000.
If you look at the specs of these devices and the price tags they carry, Xiaomi's
pricing is quite aggressive and helped them make a mark in the Asian market.
Hugo Barra, who is the face of Xiaomi in India, told Techcrunchabout how they
manage such low prices. The big factor, he points out, is the "the combination of a
small portfolio and longer average selling time per device." Moreover, it still
continues to sell older devices in spite of the new product launches.
Most of Xiaomi products stay on shelf for almost 18 to 24 months, and during this
time, it goes through two to three price cuts. Forinstance, the Redmi1s was launched
in September 2013 and continues to sell, while the Redmi 2 was launched only
recently.
And it is this longer run that allows the company to secure better component deals
with suppliers. “The reason we do these price cuts is because we’ve managed to
negotiate component cost decreases [with our suppliers] over time, which ends up
leaving us with a bigger margin than we’d like to have, so we do a price cut,” Barra
told Techcrunch. As a majority of the components in its devices are still the same,
they continue to get discounts. It's the small product family that helps achieve this.
However, it's notjust the price cuts that help in the runway. Showing its commitment
for the productforsucha long spanof time, it has to release timely software updates,
spare parts and other services that will be required by the consumers.
Some other factors contributing the cost structure are online-only marketing and a
location closer to manufacturing plants in China. However, lately it has started its
first trial-run to sell devices with partnership with telecom operators. In India, the
company has steamed up with Airtel to sell the Mi devices and has gone beyond the
usual online selling process.
11. In India, wherein most people are on pre-paid tariffs, such partnerships are very
difficult, he added. However, the company is looking at every possible way to
increase its footprint here. When Xiaomi entered the Indian market in August, Barra
had told us, “India as a market has a lot of potential for smartphones, but it will
probably take a couple of years for it to reach this potential. It’s like quarter of a size
of China’s smartphone market or maybe even a fifth, so obviously there’s a long
way to go.”
Xiaomi Redmi Model name Price of phone
Xiaomi Redmi Note 5 Pro ₹13,999
Xiaomi Redmi 5A ₹5,999
Xiaomi Redmi Note 5 ₹9,999
Xiaomi Mi A1 ₹13,999
Xiaomi Redmi 5A 32GB ₹6,999
Xiaomi Redmi 5 ₹7,998
Xiaomi Redmi Note 5 Pro 6GB RAM ₹16,999
Xiaomi Redmi Note 5 64GB ₹11,999
Xiaomi Redmi Y1 ₹8,999
Xiaomi Redmi 4 ₹9,486