Xiaomi Corporation was founded in April 2010. They use the “Smartphone + AIoT” strategy to support their main products smartphones, hardware, and other lifestyle products. Xiaomi’s unique fan-based marketing helps them to create a new e-commerce strategy called blue ocean business strategy.
“Smartphone + AIoT” strategy
Xiaomi uses IoT platform at the core to connect their smartphones and smart hardware. To create the commercial value, Xiaomi sell their phones and devices with affordable prices firstly. It is a good way to build a big marketplace for other connected products such as digital services and lifestyle products. Xiaomi notices its future in the IoT and organize an ecosystem of innovation around it.
As of June 30, 2019, the number of connected IoT devices (excluding smartphones and laptops) on the Xiaomi loT platform was approximately 196 million units. The number of users who have five or more devices connected to Xiaomi’s IoT platform (excluding smartphones and laptops) increased to approximately 3 million, representing a year-over-year increase of 78.7%.
Xiaomi is committed to enhancing its AIot platform. On the one hand, it would provide enough investment to develop the open AloT platform to attract more third parties to participate in. On the other hand, the research and development department would build a comprehensive IoT ecosystem to strengthen the smart devices’ connection and user experiences.
Same as other internet companies, Xiaomi cannot provide all these various services. Therefore, it creates an ecosystem of third parties, which utilize Xiaomi’s brand, the marketplace, and venture capital. It has sold more than 800 different smart devices from 400 partners.
In Xiaomi’s third-party ecosystem, they build the creative collaboration with other brand manufacturers and consumers. Unlike other internet companies, Suppliers and customers could create new products with Xiaomi which is the biggest difference with other companies. For suppliers, Xiaomi would organize regular meetings to communicate with current operating conditions. For users, Xiaomi has an open attitude to learn suggestions through their fan club. This new model is called the business community’s ecological chain, which could let customers and related business partners to create products together.
Blue-ocean business strategy
Online fan-based marketing is a new blue-ocean business strategy in digital business. The method is connecting the internet and marketing mix of 4Ps and proposing the fifth component pride. Xiaomi utilizes its fan club called ‘Mi-Fans’ and an online platform creates its 4Ps+1 paradigm.
1. Product
One significant feature of Xiaomi’s product pays attention to user experience. Therefore, it creates a sociable internet environment which could help them to collect feedback to upgrade product instantly. In return, Xiaomi provides product updates weekly on the internet. Due to the cooperation between consumers and Xiaomi, their new products could catch the latest trend and promote customer-endorsed product development, it could improve establishing long-term business relationships between users.
2. Price
Xiaomi focuses on providing good quality products at a reasonable price. Although the performance of the smartphone is compatible with other competitors such as Samsung and Apple, their price only takes up one-third to one-half.
Xiaomi relies on cheaper online marketing. It would decrease from the mid-level operating costs such as employee expenses, shop rents and distributors’ and retailers’ commissions.
3. Place
The Internet provides a digital market without boundaries for consumers all over the world, where Xiaomi uses this environment to improve buyers’ involvement and build customer loyalty. By using the blue ocean strategy, Xiaomi’s engineers could communicate with their customers openly and collect feedback for products instantly.
4. Promotion
Compared with traditional marketing practices, Xiaomi has its unique online sales.
Products are launched with limited quantity within the limited time, this swift sale would boost customers’ desire and urgency to purchase what they like and then share their experience and recommend others via social media.
Meanwhile, by using online platforms such as Wei-Bo and We-Chat, Xiaomi could handle complaints, feedbacks, comments, and requests instantly. It would improve consumer engagement and enhance the relationships between Xiaomi.
Due to the good operation of social media, Xiaomi has cultivated a large number of customer base, who refer to themselves as ‘Mi-Fans’. With Xiaomi’s support, more than 600 million Mi-Fans share their user experiences.
5. Pride
Through blue ocean strategy, Mi-Fans and Xiaomi help each other in such a harmonious circle.
Xiaomi values its user bonding and community connection. Besides, it would help engineers to do product updates and improvements. It cultivates the ‘Mi-Fan family’ atmosphere by celebrating and creating the ‘Mi-Fan Festival’ for special buying events. These fans are proud to be who they are and of what they carry (Xiaomi smartphone), thanks to their strong sense of ‘belonging’ to Xiaomi.
As a Chinese disruptive innovative company, Xiaomi expands its product portfolio and improve user experience. It establishes a strong fan culture to boost their sales. Currently, Xiaomi is the world’s fourth-largest smartphone brand and has established the world’s largest consumer IoT platform.
References
Kuo, H. C., Luarn, P., & Chen, I. J. (2017). Value co-creation of Xiaomi in China. International Journal of Business and Economic Sciences Applied Research (IJBESAR), 11(1).
Lee, Y. (2017). Blue Ocean Strategy in Online Marketing. BizStrategy, 33–38. https://doi.org/10.5176/2251-1970_BizStrategy17.10
XIAOMI CORPORATION. (2019). 2019 INTERIM REPORT. Retrieved from http://i01.appmifile.com/webfile/globalweb/company/ir/announcement_us/2019IR_e.pdf
Yuan, X., & Li, X. (2019). The combination of different open innovations: a longitudinal case study. Chinese Management Studies.
Zhang, X., & Lu, W. (2019, November). Present Situation of Fans Economic Operation in China and the Example Analysis. In 2019 International Conference on Machine Learning, Big Data and Business Intelligence (MLBDBI) (pp. 261-265). IEEE.
Qimeng Zhao's Blog 
Your Blog focuses on how Xiaomi’s new digital business model is fan-based online marketing and a new blue ocean business strategy. But according to the 2019 annual report, Xiaomi is losing the loyalty of Mi-fans. First, at the launch of the Mi 10, Xiaomi broke its cheap brand name by raising prices across the board. Second, Xiaomi’s “play monkey” behaviour has been a flashpoint for fans. Loyal Mi-fans will never be able to buy a Xiaomi phone because it has been out of stock. When Xiaomi phones are available, it’s months away. Other brands have launched better phones than Xiaomi. Xiaomi’s parts suppliers do not fall under the jurisdiction of Xiaomi. To have a say, Xiaomi is necessary to persuade the suppliers with enough orders and money. But the lasting light profit sign of millet, its capital chain is fragile. The most important expectation of fans for Xiaomi is the cost performance. When the Xiaomi price rises and loses the cost performance, it is also the time for fans to lose quickly. As a result, Xiaomi now has to change its fan-based blue ocean business strategy. It remains to be seen whether Xiaomi will develop a new digital business model to meet its demands in the future.
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