After breaking into China’s smartphone market, where it becomes a leading brand, Xiaomi sees sales stagnate and then decline as the disruption strategy that empowered its rise loses momentum. As competitors counter every move, targeting its core consumer segment, the company urgently needs to reignite growth and develop a sustainable competitive advantage. The case describes the changing market landscape, Xiaomi’s product portfolio, distribution systems, partnerships, brand management, promotion and pricing. The question is whether to remain focused on smartphones—on which Xiaomi’s reputation has been built—or transform into an IoT ‘ecosystem’ encompassing a wider range of product categories. The challenge is to understand the respective pros and cons and formulate a detailed implementation plan for the chosen strategy.
The case can be used in a variety of contexts, including MBA, EMBA, MS, executive education and undergraduate courses. The topic is suitable for courses on marketing, strategy, branding, entrepreneurship, organizational transformation, ecosystems, IoT (Internet of Things), and emerging markets. The aim is to understand how a firm is able to disrupt an established consumer goods market, achieve continuous growth, and develop a sustainable competitive advantage. The case illustrates the advantages and pitfalls of pursuing a pure online strategy in serving a large emerging market. It highlights the forces driving market evolution in the technology sector and the strategies that enable a firm to thrive (e.g., leveraging network effects conferred by IoT devices in an ‘ecosystem’). It takes students through the process by which a single-category brand evolves into a multi-category brand, the associated benefits and challenges (e.g., positioning, brand architecture), and how to create, grow and manage a brand ‘ecosystem’.
- Emerging Market