In depth analysis of the effects that product positioning has on a firm has led me to stumbling upon an interesting story; one which provides a clear example of the concepts of segmentation, points of parity and points of difference that a firm utilized to their advantage over smartphone power Apple. Xiaomi is a Chinese company that sells smartphones that are creating complications for many of their competitors due to their business model strategy. They are essentially the iPhone of China. Instead of providing their product to customers through retail stores or other types of network operators, they sell their phone to the consumer directly online. This creates a massive cut in their expenses. Furthermore, the way they make their profits is not through the direct sale of the phone, rather through the products and services they provide through their online network that is accessed exclusively through the phone (The Economist, 2013). Therefore, it is apparent that Xiaomi has effectively found a proper segmentation strategy by realizing the consumers need for smartphones in china and implementing a strategy to sell their product there. Secondly, the Chinese company have revealed to the public that they have points of parity with their competitor apple by creating a similar, sleek, user-friendly device that has similar features of the iPhones operating system; in some cases, they have actually been accused of physically copying the iPhone itself (The Economist, 2013). However, another effective strategy that Xiaomi has executed is the points of difference from the iPhone that they have presented to the consumer. For instance, as stated by the author of the article on The Economist, “Another big difference is [Xiaomi’s] openness to user feedback. Apple takes an almost Stalinist approach to its handsets, limiting user customisation in favour of a “we know best” design philosophy. Xiaomi is more guided by its users, releasing a new version of its MIUI software (based on Google’s Android operating system) every week in response to their suggestions” (The Economist, 2013). By this point, it is clear that the Chinese smartphone company has effectively established a correct business plan in their segment, and have been successful at it in the meantime. For example, According to Rajeev Chand of Rutberg, an investment bank, Xiaomi is now one of the 15 most heavily venture-backed mobile start-ups ever (The Economist, 2013). Ultimately, a strong implementation of points of parity and difference, along with an effective segmentation strategy are evidently keys to success for new firms.
Works Cited:
“Smartphones in China: Taking a Bite Out of Apple.” The Economist. The Economist Newspaper, 14 Sept. 2013. Web. 1 Oct. 2013. <http://www.economist.com/node/21586344>.
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