July 24, 2015 by ...
Uber, known for contentious policies and reviled by many countries, has partnered with Xiaomi who is known for contentious policies and reviled by many countries, to partner for a day. In both Singapore and Malaysia, Uber users can purchase a Xiaomi phone and have it delivered directly to their door. Let’s just hope that governments don’t intervene and that the Uber-fleet is manned by chauffeurs for whom ‘criminal record’ is not an integral part of their past.
Hopping back to the positive, the marketing ploy is brilliant. On July 27, Uber and Xiaomi will be tag-teaming customers who purchase via Uber. It’s a great idea which will drive buzz, after all, I’m blogging about it right?
Hunger marketing and flash sales
Xiaomi uses ‘hunger marketing’ to create hype and drive purchases. Essentially hunger marketing is a sales tool whereby they over-promote and under-produce products and then hold ‘flash sales’. By limiting quantities of phones being sold, Xiaomi creates pent up demand. People consider themselves lucky if they have won the right to buy a Xiaomi device.
This was crucial for Xiaomi, who for the most part is a knockoff ‘Mi-too’ player. In order to differentiate their products, Xiaomi created faux-scarcity. These events were wildly successful in both China and India. Flash sales in the PRC were good for millions of units sold. In India hundreds of thousands of handsets sold out by the time most people could click on the ‘buy now’ button.
Based on the Xiaomi craze and incredible buzz surrounding the firm, it’s valuation skyrocketed. Unfortunately for Lei Jun, good times don’t last long.
Xiaomi’s ‘patent portfolio’ is paltry. Their kit looks more like it’s been ‘copied by mi’ rather than ‘created be mi’. It’s almost as if Xiaomi doesn’t want to offend companies like Apple and Samsung by altering their design. Lei Jun and crew faithfully replicate those firms with the precision of a Swiss craftsman. An attempt at distinguishing between a real and cloned by Xiaomi iPad proves this point adequately.
Initially they crushed sales in India but poor customer service and quality issues plagued the Chinese firm. Sales are still high, but the buzz has subsided. Worse yet, hunger marketing and flash sales flopped in Brazil, with only 40,000 units being sold.
What this means is that Xiaomi has to change their approach. Hunger marketing works better in some markets than others. In Asia for example, it has more of a cultural fit than Brazil or the USA.
Xiaomi’s business model may not scale well as is. But the firm needs to increase sales to maintain their valuation. Buzz is a great way of doing this and Xiaomi does buzz very well. By partnering with Uber, Xiaomi proves that if anything, they know the power of the press and are masters of generating positive ink.