The reason why Xiaomi can get such high profits at such a low price may be because of its low-cost but effective marketing strategy.
Old competitors spend a lot of money on TV advertisements and other traditional advertisements, but Xiaomi's marketing mainly focuses on social media and internet forums, where many users comment, vent their dissatisfaction and express their demands. In China, Xiaomi has been selling mobile phones through online channels for the past few years, and has achieved good growth, mainly relying on the reputation of more than 600 million netizens.
Due to frequent online interaction with users and adjustment of software and functions according to user feedback, Xiaomi has established a loyal user base. Analysts believe that this strategy not only effectively retains users, but also helps the company save a lot of marketing expenses.
The document shows that Xiaomi's sales and marketing expenses last year were 876 million yuan, accounting for about 3.2% of the total revenue. The company's sales and marketing expenses in 20 12 are 4160,000 yuan, accounting for about 3.9% of the revenue.
After seeing Xiaomi's success in marketing, many domestic mobile phone manufacturers began to pay attention to online marketing and use social media to interact with users.
This document also provides some details related to Xiaomi's income-generating channels. According to the document, although the company sells smartphone applications and other software and services, as much as 94% of its revenue last year came from mobile phone sales. Mobile games and other business income accounted for only 1%.
"Xiaomi performed very well and achieved simultaneous growth in shipments and profits." Neil Mawston, an analyst with American market research firm Strategy Analytics, said. However, analysts still believe that it is unclear whether Xiaomi can maintain its profit margin, because the China market is already very crowded and even saturated.
overseas expansion
Due to fierce domestic competition, Xiaomi began to expand overseas and sell smartphones in emerging markets such as India.
Despite the rapid growth, Xiaomi's international expansion will still face many obstacles. In mature markets such as the United States, smartphone manufacturers must obtain sufficient intellectual property rights to avoid patent litigation. Therefore, analysts believe that unless we can find a solution to expand the patent portfolio, Xiaomi will face an expansion dilemma.
According to people familiar with the matter, in order to raise overseas expansion funds, Xiaomi is currently launching a new round of equity financing, which is expected to be much higher than the previous rounds. In August of 20 13, Xiaomi announced the completion of the fourth round of financing, with a valuation of $ 10 billion, more than double the valuation of $4 billion in June of 20 12.
Xiaomi was founded on 20 10, and its founder Lei Jun is often compared with Jobs by many China media. Only one year after its birth, the company successfully created a public opinion momentum for its products and launched a social networking application called Michao, which attracted 7 million users within two months. When Xiaomi launched its first smartphone Xiaomi 1/at the end of 201,the first batch of 65,438+10,000 units were sold out in less than 3 hours.
In addition to selling smartphones, Xiaomi will also charge for some services. The company has its own app store and provides a whole set of smartphone services such as games, social networking and cloud storage. They also provide entertainment content such as movies. Xiaomi also sells accessories such as mobile phone cases and dolls through its online store.