Strategies for Entering New Markets: Lessons from Xiaomi’s Entry in India

In today’s world of interconnectedness and globalization, companies are competing with each other to enter into new markets. Foreign companies clamouring to enter new markets is not a new phenomenon. However, this new wave of globalization which started in the late 20th Century is different as it is ruled by technology-driven products like mobiles and computers. Asia and Africa have emerged as hotspots with Europe saturated. India being one of the biggest consumers of lifestyle and tech products in Asia, it seems lucrative to enter and build market share here. A Case Study by Kumar, Ayedee & Gupta (2020) highlights the entry of Xiaomi, a leading Chinese mobile company, into Indian market. While it definitely has insights for businesses on how to enter and sustain a business in India, it also has deeper lessons for Indian entrepreneurs who are vying to penetrate and tap new markets.

1.       Understand the culture of the market

Understanding the cultural underpinnings of the potential market is very important. A cultural understanding reveals the purchasing behaviour of the market. Indian market is a youth-oriented market with a massive population in the 24-35-year bracket. This age group has a sizable chunk of income at its disposal. Cell phone makers are eyeing this segment to sell their products. Similarly, evaluate the culture and demographics of the market you want to enter, perform market research and analysis on the factors that play a vital role in purchase decisions and offer a product that fits the requirements

2.       Unique Service-Based Business Model

Following a triathlon model, Xiaomi has been able to offer an ‘integration between software, internet services and hardware’. The company depends on its software services and content such as apps. Despite not having any physical stores, Xiaomi is the number one mobile seller especially in its category of budget smartphone targeted towards the upwardly mobile middle class. Their unique service-based model has forced many mobile companies to change their business model and adapt a similar business model as that of Xiaomi. It’s all about finding the sweet spot of technical and business feasibility

3.       Unconventional Marketing Strategy

Xiaomi adopted a ‘divergent marketing strategy’ which was a redux of the old word of the mouth. But this time around they used social media sites like Facebook, Twitter, etc. With influencers taking the world and their ‘followers’ by the storm this strategy has paid off well to the company which has seen high volume of sales in a short span of time. Also, the team worked hard on an approach of honest advertising, promising and delivering exactly what was said – a smartphone with high tech features in a budget range that’s affordable to most.

Getting the 4 Ps of Marketing right:

Xiaomi got the product, price, promotion, and place right. These are the basics to nail marketing of products. The company was a  trendsetter in the budget phone segment and forced global companies to think harder and faster to capture the attention of a rapidly growing and upwardly mobile section of the population. True to its meaning (In Chinese Xiaomi means millet) the phone has become a household name in the middle class segment especially in tier 2 and tier 3 cities. Their unique success story should be a lesson for companies especially in the developing economies.

About the Research

Anuj Kumar, Nishu Ayedee & Nimit Gupta (2020). Xiaomi’s Journey in India: A Roller Coaster Ride. International Journal of Management (IJM), 11(3).