Project Report on "Xiaomi"

ASSIGNMENT: - 02.
“IDENTIFYING PRICING AND
DISTRIBUTION MIX OF VARIOUS
PRODUCTS”.
PROJECT REPORT ON “XIAOMI”.
Name – Omkar Kodak
Section – MBA MKT -1
UID – 2019-2005-0001-0007
SUBMITTED TO: -
Dr. VINAY NANDRE

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Contents
1. COMPANY INFORMATION.................................................................................................................2
2. PRODUCTS ...........................................................................................................................................3
A. Smart Phones...................................................................................................................................4
B. Mi TV ................................................................................................................................................4
C. Band & Fitness.................................................................................................................................5
D. Audio ................................................................................................................................................5
E. Home ................................................................................................................................................5
3. PRICES OF THE PRODUCT’S OFFERED..............................................................................................6
4. COMPETITOR ANALYSIS....................................................................................................................9
A. Smart Phones...................................................................................................................................9
5. PRICING METHOD OF XIAOMI .........................................................................................................11
6. ADOPTION OF PRICE ........................................................................................................................11
7. CHANNEL LEVELS.............................................................................................................................12
A. Distribution Channel.....................................................................................................................12
B. Marketing Practices.......................................................................................................................13
C. Warehouse Locations....................................................................................................................14
D. Inventory Turnover Ratio.............................................................................................................15
E. Transportation Cost ......................................................................................................................15

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1. COMPANY INFORMATION
Xiaomi Corporation was founded in April 2010 and listed on the Main Board of the Hong Kong
Stock Exchange on July 9, 2018 (1810.HK). Xiaomi is an internet company with smartphones
and smart hardware connected by an IoT platform at its core.
With the vision of being friends with its users and being the “coolest company” in the hearts of
its users, Xiaomi is committed to continuous innovation, with an unwavering focus on quality
and efficiency. The company relentlessly builds amazing products with honest prices to let
everyone in the world enjoy a better life through innovative technology.
Xiaomi is currently the world's fourth-largest smartphone brand, and has established the world's
largest consumer IoT platform, with more than 213.2 million smart devices (excluding
smartphones and laptops) connected to its platform. Currently, Xiaomi products are present in
more than 90 countries and regions around the world and have a leading foothold in many
markets.
It is a holding company principally engaged in the research, development and sales of
smartphones, Internet of things (IoTs) and lifestyle products, the provision of Internet services,
and investment business. The Company mainly conducts its businesses through four segments.
1. The Smartphone segment is engaged in the sales of smartphones.
2. The IoT and Lifestyle product segment is engaged in the sales of other in-house products,
including smart televisions (TVs), laptops, artificial intelligence (AI) speakers and smart
routers; ecosystem products, including IoT and other smart hardware products, as well as
certain lifestyle products.
3. The Internet service segment is engaged in the provision of advertising services and
Internet value-added services.
4. The Others segment is engaged in the provision of repair services for its hardware
products. The Company distributes its products in domestic market and to overseas
markets.
The "MI" in the logo stands for “Mobile Internet”. It also has other meanings, including
"Mission Impossible", because Xiaomi faced many challenges that had seemed
impossible to defy in the early days.

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2. PRODUCTS
PRODUCT MIX OF Xiaomi
SMART
PHONES
ACCESSORIESAUDIO HOMEMi-TV BAND &
FITNESS
Redmi 8 A
K 20 pro
Note 7
K 20
Mi TV 4X
Mi band 3
Bluetooth
Headset
Mi
Security Chargers
Mi TV 4A
Mi band strap Water
purifier
Mi band 2
CasesMi TV 4C
Earphones
PurifierMi band
Wireless
Smart
bulb
USB
Powerbanks

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A. Smart Phones
 Redmi K20 Pro
 Redmi K20
 Redmi Note 9 Pro
 Redmi Note 8
 Redmi Note 7
 Redmi 8A Dual
 Redmi 8
 Redmi 8A
 Redmi Go
 Mi A3
 Redmi 6 Pro
 Mi Play
 Mi A2
B. Mi TV
 Mi TV 4X – 163.9cm (65)
 Mi TV 4X – 138.8cm (55)
 Mi TV 4X – 125.7cm (50)
 Mi TV 4A – 100cm (40)
 Mi TV 4X – 108cm (43)
 Mi LED TV 4 PRO – 138.8cm (55)
 Mi LED TV 4X PRO – 138.8cm (55)
 Mi LED TV 4A PRO – 123.2cm (49)
 Mi LED TV 4A PRO – 80cm (32)
 Mi LED TV 4C PRO – 80cm (32)
 Mi LED TV 4A PRO – 108cm (43)

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C. Band & Fitness
 Mi Smart Band 4
 Mi Band 3
 Mi Smart Band 3i
D. Audio
 Mi Dual Driver Earphones
 Mi Super Bass Wireless Headphones
 Mi Neckband Bluetooth Earphone
 Mi Sports Bluetooth
 Mi Earphones Basic
 Mi Outdoor Bluetooth Speaker 5W
 Mi Bluetooth Speaker Basic 2
 Mi Pocket Speaker 2
 Mi Compact Bluetooth Speaker 2
E. Home
 Mi Smart LED Desk Lamp 1S
 Mi Smart Bedside Lamp 2
 Mi Motion Advanced Bulb
 Mi Rechargeable Lamp
 Mi LED Wi-Fi Smart Bulb
 Mi Motion – Activated Night Light 2
 Mi Smart Water Purifier
 Mi Router 4C
 Mi Portable Wireless Mouse
 Mi Home Security Camera 360
 Mi Home Security Camera Basic
 Mi Air Purifier 3
 Mi Air Purifier 2S
 Mi Air Purifier 2C
 Mi Beard Trimmer

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3. PRICES OF THE PRODUCT’S OFFERED
SMART
PHONES RAM & STORAGE COLOURS Mi STORE
FLIPKART
(Discounted
Price)
VIJAY SALES
Redmi k20
PRO
6gb+128gb 8gb+256gb
Carbon black, Glacier blue,
Flame red, Pearl White
26,999 /
29,999
26,999 / NA
26,999 /
29,999
Redmi k20 6gb+64gb 6gb+128gb
Carbon black, Glacier blue,
Flame red, Pearl White
21,999 /
24,999
21,999 /
24,999
21,999 /
24,999
Redmi Note 9
Pro
4gb+64gb 6gb+128gb
Interstellar black, Glacier
white, Aurora blue
13,999 /
16,999
12,999 / NA
13,999 /
16,999
Redmi Note 8 4gb+64gb 6gb+128gb
Space black, Neptune blue,
Moonlight white
10,999 /
13.999
11,399 / NA
10,999 /
13.999
Redmi Note 8
Pro
6gb+128gb 8gb+128gb
Shadow black, Gamma
green, Halo white
16,999 /
18,999
16,790 /
18,725
16,999 /
18,999
Redmi Note 7 3gb+32gb 4gb+64gb
Sapphire blue, Onyx black,
Ruby red
9,999 / 11,999 NA / 10,799
9,999 /
11,999
Redmi Note 7
Pro
4gb+64gb 6gb+128gb
Neptune blue, Space black,
Nebula red, Moonlight white
10,999 /
13,999
10,999 /
13,999
10,999 /
13,999
Redmi 8A
Dual
2gb+32gb 3gb+32gb
Midnight grey, Sky white,
Sea blue
6,999 / 7,999 7,200 / 7,868 6,999 / 7,999
Redmi 8 4gb+64gb
Onyx black, Ruby red,
Sapphire blue
8,999 8,999 8,999
Redmi 8A 2gb+32gb 3gb+32gb
Midnight black, Ocean blue,
Sunset red
6,999 / 7,499 6,999 / 6,999 6,999 / 7,499
Redmi Go 1gb+8gb 1gb+16gb Blue, Black 4,299 / 4,999 4,499 / 4,999 4,299 / 4,999
Mi A3 4gb+64gb 6gb+128gb White, Blue
12,999 /
14,999
11,995 /
13,900
12,999 /
14,999
 This is the price comparison of Mi Smart Phones on online platform, this clearly depicts
that Mi store & Vijay Sales comparatively sell’s the product at a same price, because
Vijay Sales deals in both (online and as well as offline). Whereas, Flipkart offers some
discount on the same products.
Smart Phones & Variants

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Mi TV's Inches Mi STORE FLIPKART
VIJAY SALES
(Online / Offline)
Mi TV 4X 65 54,999 54,999 54,999
Mi TV 4X 55 34,999 34,999 34,999
Mi TV 4X 50 29,999 29,999 29,999
Mi TV 4X 43 24,999 24,999 24,999
Mi TV 4A 40 17,999 17,999 17,999
Mi LED TV 4 PRO 55 47,999 47,999 47,999
Mi LED TV 4X PRO 55 39,999 39,999 39,999
Mi LED TV 4A PRO 49 29,999 29,999 29,999
Mi LED TV 4A PRO 32 12,499 12,499 12,499
Mi LED TV 4A PRO 43 21,999 21,999 21,999
Mi LED TV 4C PRO 32 12,499 12,499 12,499
 This are the product variants in Mi tv, we can see the prices are same on all the web
portals. Hence, it predicts that if the Mi Store changes it’s price or offers any disounts on
any of the above products, the same work is carried out by Flipkart and Vijay sales so as
they also can sell the same product at same price even if the stock is not available on Mi
Store.
 Mi Band & Fitness has a limit of variants as mentioned above. The prices are the same on
other online applications.
BAND Mi Store
Mi Smart Band 4 2,299
Mi Smart Band 3i 1,299
Mi Band 3 1,599
Mi TV & Variants
Band & Variants

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 Only Mi Super Bass Wireless Headphones is not availabe on flipkart. But if we consider
the remaining products, they are available on both the websites at a same price. So the
buyer can refer it either buying form official website or flipkart.
DEVICES Mi STORE FLIPKART
Mi Dual Driver Earphones 799 799
Mi Super Bass Wireless Headphones 1,799 NA
Mi Neckband Bluetooth Earphone 1,599 1,599
Mi Sports Bluetooth 1,299 1,299
Mi Earphones Basic 399 399
Mi Outdoor Bluetooth Speaker 5W 1,399 1,399
Mi Bluetooth Speaker Basic 2 1,799 1,799
Mi Compact Bluetooth Speaker 2 799 799
Audio Devices & Variants

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4. COMPETITOR ANALYSIS
A. Smart Phones
REDMI VIVO OPPO SAMSUNG
 K20 pro
 6gb+128gb
 26,999
 Z 1 pro
 6gb+128gb
 18,990
 F 11 pro
 6gb+128gb
 17,990
 M 30 S
 6gb+128gb
 16,856
 Note 9 pro
 4gb+64gb
 13,999
 Vivo U 10
 4gb+64gb
 8,990
 F 15
 4gb+64gb
 19,900
 Galaxy A6
 4gb+64gb
 13,500
 Note 8
 4gb+64gb
 10,999
 Vivo U 20
 4gb+64gb
 12,999
 A5s
 4gb+64gb
 11,990
 Galaxy Note 8
 4gb+64gb
 12,899
 Note 7 Pro
 4gb+64gb
 10,999
 Vivo V 15
 6gb+64gb
 17,990
 F 7
 4gb+64gb
 20,200
 M20
 4gb+64gb
 10,499
 Mi A3
 6gb+128gb
 14,999
 Vivo S1
 6gb+128gb
 15,700
 F 11 Pro
 6gb+128gb
 17,990
 M 31
 6gb+128gb
 15,999
 Mi 8A
 3gb+32gb
 7,499
 Vivo V 91
 3gb+32gb
 8,490
 A5 s
 3gb+32gb
 10,490
 Galaxy A10
 3gb+32gb
 7,990
 Mi Go
 1gb+16gb
 4,999
 Vivo Y21L
 1gb+16b
 6,999
 Neo 7
 1gb+16gb
 6,999
 A2 Core
 1gb+16gb
 5,290

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 We have more than 30 brands competing with each other. There is a massive invasion by
Chinese mobile brands in India in the last four years.
 On one side, there are brands like Sony or HTC that have quit from the Indian market on
the other side we have new brands like Realme entering the marketing in recent months.
 The mobile market is so competitive that some of the brands like Micromax, which had
over 18% share back in 2014, now have less than 5%.
 Even the market leader Samsung with a 34% market share in 2014, now has a 21% share
whereas Xiaomi has become a market leader.
 Unlike rivals, Xiaomi focused on the online market and mastered the art of selling online
whereas both Oppo and Vivo are masters of retail expansion.
 Latest phones, with great specs and rock-bottom prices, are key success factors for
Xiaomi.
 Xiaomi leads with 31.4% market share, Samsung is at No. 2 with 24.4% share, Vivo is
number 3 with 15% market share, Oppo is number 4 with 9.3% market share, and Realme
(by Oppo) is number 5 with an 4.2% share.
31.40%
24.40%
15%
9.30%
4.20%
MARKET SHARE
XIAOMI SAMSUNG VIVO OPPO REALME
Xiaomi as a Leader

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5. PRICING METHOD OF XIAOMI
 Value based Pricing - is the pricing method adopted by Xiaomi as it is all about setting
the price that represents the value which the customers receives from the products and
services offered by Xiaomi.
 So, the main aspect of Xiaomi is to sell the products at the price the product is produced
without making any profit.
 Accordingly, with the help of this method and strategy Xiaomi has enabled the brand to
penetrate into a global market and have a substantial market share.
 As we know India is price conscious country so the customers mostly prefer buying low
end products as per their budget. Understanding the root cause of price conscious money
market Xiaomi adopted this method to be dominant market leader in the Mobile Market.
 So basically, this pricing method helps the consumer to get a higher satisfaction and to
grant a better access to the superior technology at a lower price.
6. ADOPTION OF PRICE
How did Xiaomi adopt the price? How was is it beneficial to both the customers and to
the company? Here are some of the reasons which helped Xiaomi to implement on their
products.
 The smartphone in India has been one of the most competitive markets in the
country. Both local and international brands fight hard to make their position in
India as it is a very profit-making industry and with the number of potential
buyers India has, no company wants to ignore this market.
 Firstly, when Xiaomi entered the Indian mobile market the market was dominated
by Samsung where in the prices of these phones were pretty high and only the
potential buyers were able to purchase those mobile phones as the demand for
android mobiles was emerging in the flowing trend. So Xiaomi first understood
the Customer Demand entered the Indian market and with low price mobile
phones which were in competition with the market leader.

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 Later on fighting in the mobile market, people thought that Chinese brands are
cheap and of low quality. But Xiaomi kept on innovating their design, software
and reliability of their mobile phones. As it created an image in the minds of the
people by offering High Quality products at affordable prices.
 Lastly they started producing such high quality products which was so important
for the Indian buyers as they understood that the buyers love to save their money.
7. CHANNEL LEVELS
As per the data stated by NDTV Gadgets for the year 2018, it clearly shows that 64% of the sales
were through online channel.
Also, when Xiaomi entered the mobile industry, to maintain the expenses they simply removed
the major intermediaries in their distribution channel. But as the graph scaled up they slowly
came with manufacturing plants in India and now they have a strong distribution channel across
the country preferably both online & offline.
A. Distribution Channel
MANUFACTURER REGIONAL OFFICE DISTRIBUTOR RETAILER E-COMMERCE END-CUSTOMER
As more than 50%
of the products are
sold through this
channel.

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B. Marketing Practices
 Providing Franchise to the Stockist’s, Retailers & Business Investors.
 At present, Xiaomi has over 50 Mi Home stores and 500 Mi Stores. It also has more than
4,000 preferred partner stores across 50-plus markets.
 Xiaomi has mastered the art of flash sales for selling its newly launched smartphones
through the help of E-Commerce.
 A flash sale is when an online store offers substantial discounts or promotions for a very
short period of time. The main goals of a flash sale strategy are to get online shoppers to
impulse buy, to increase short-term sales, or to sell your surplus stock.
 The strategy helps the company build hype around the product as well as sell devices
even when it has lower stocks.
 As far as the results are concern word-of-mouth is also a practice followed by the market
leader with the help of their buyers and their experience for the products. It is proved to
be more affective and helpful in influencing consumer behavior and decision.
 Social media campaigns and digital promotions have also been an effective practice for
the company.

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C. Warehouse Locations
 Xiaomi has 2 warehouses in Bangalore.
 Xiaomi also has 2 warehouses in Delhi – NCR
 Also, 1 warehouse in Mumbai.
 Being a Market leader it also has 26 small warehouses across the country.

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D. Inventory Turnover Ratio
 Inventory turnover indicates how many times a company sells and replaces its stock of
goods during a particular period.
 Formula for calculating Inventory Turnover = Cost of Goods Sold / Total Inventories.
 Xiaomi as of now, have not shared the annual report for the FY 2019. But as per the data
provided by gurufocus.com it shows the CGS and Inventory for Q2 (June 2019).
 Xiaomi's Cost of Goods Sold for the 3 months ended in June 2019 was $6,479 million
& Total Inventories for the quarter that ended in June 2019 was $4,075 million.
 Inventory Turnover for the quarter that ended in June 2019 was 1.59.
E. Transportation Cost
 This the estimated Transportation Cost Calculated for the Shipment of Products from
Manufacturing Plant to the below mentioned categories are as follows: -
 Transportation Cost is Subject to additional fees such as duties, taxes etc.
Origin
City
Destination
City
Units Price Total Price
Truck
load
type
Accessorial
Charges
Transportation
Cost
Transportation
Cost per unit
Mumbai Pune 350 15000/- 52,50,000/- 20 ft.
Residential
Pickup,
Residential
Delivery,
Hazardous
Shipment
10,055.30/- 28.72/-
Mumbai Pune 500 18000/- 90,00,000/- 40 ft. 15,768/- 31.53/-
Mumbai Pune 650 13500/- 87,75,000/- 53 ft. 18,235/-
28.05/-
This is a special vehicle
which is not available
on regular basis in the
market.
 Note: - The above chart is prepared in excel.

Project Report on "Xiaomi"

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