If you are a smartphone enthusiast, you might have noticed major brands launching sub-brands for reasons out of consumers’ understanding. It is quite surprising to see how already successful brands like Xiaomi, Oppo, and Huawei have launched different brands under their banner. One major reason for this is competition but what are the other major reasons that lead companies to taking this decision is something we will analyze today.
Let us look back at the smartphone market of China in 2011. It was majorly an offline market dominated by Oppo and Huawei. They were the major smartphone sellers, however, in came Xiaomi with a totally different business model. Xiaomi decided to sell phones online and online only, cutting out all the traders and the costs that came with them. This allowed Xiaomi to launch phones with better specifications at a much lower price than Oppo and Huawei.
Xiaomi’s rise was meteoric and the other two brands couldn’t stand the competition. The growth numbers were outlandish while Oppo and Huawei were fighting for existence in the Chinese market. Xiaomi’s online model was easy and hence Oppo and Huawei decided to adopt it. This gave birth to OnePlus and Honor, sub-brands of Oppo and Huawei respectively. They did exactly the same with different names.
OnePlus and Honor ran havoc in the online market. Although all the new features first came to the phones in the offline market and were tried and tested there before launching it for the online market. Fun fact, dash charging was introduced in the Oppo phones two years before OnePlus got it. Similar things happen with Honor and Huawei as well. This destabilized Xiaomi’s market, in fact, from their stunning sells in previous years, they were facing sudden depths because of OnePlus and Honor.
Now, Xiaomi had to sweat a bit to win back the market they had lost. What Xiaomi did was exactly the same as what Oppo and Huawei did but in the opposite direction. Xiaomi decided to enter the offline market but instead of going with a different brand name, they went in with the same brand name. The major challenge was the pricing. They had to maintain their aggressive prices in order to conquer the market which they did.
However, Xiaomi could achieve that only because they have multiple businesses. Xiaomi does not only sell phones but other things as well. They have their own white goods and mobile internet businesses in China and this allows them to cut back on the prices of their smartphones.
Xiaomi launched Redmi in India in the INR10000-20000 price range. This market is the largest market in India and Nokia, Huawei, Oppo and even Samsung compete in that price range. However, none of them could sustain Xiaomi’s Redmi phones. The pricing was aggressive, the quality was good and the specs sheet was brilliant. This helped them win against every competitor and they became the number one smartphone selling brand in India. And the likes of Oppo, which were winning before had to settle for losses in the Indian market.
That said, Oppo was not going to hang back. They sent their best men to tackle the situation and launched their F series phones which failed in a way. But OnePlus was winning the battles they weren’t supposed to. OnePlus had gained some serious fan base not only in India but all around the world. They have now the second highest brand loyalty after Apple, which is an achievement in itself. That said, Oppo decided to use OnePlus to fight Xiaomi and launched OnePlus X in that competitive market. However, it was not well received by the fans.
Now, OnePlus has gradually increased their prices from INR18000 to INR27000 to now INR40000 over the years. They are now the company all the flagship enthusiast look forward to. OnePlus no more cares about the ten to twenty thousand market. This gave Xiaomi the opportunity to cement its position. Sensing this, they launched Poco. A sub-brand that will kind of emulate and fight OnePlus at the same time. They have almost the same features, same specifications but at a price, OnePlus used to offer when they first came in. Xiaomi is now looking to fight OnePlus with Poco phones with the same strategy that has made them into a company that it is today.
– Unmesh Phule