In the current economic environment, there is a strong chance that people who normally buy Samsung and Apple could be tempted by lower prices. This provides an opportunity for C-brands to continue to strengthen their position.
Future brand preference share, among current brand owners intending to purchase in six months’ time
In most markets, among consumers who have been financially impacted by COVID-19 Samsung smartphone ownership is high and iPhone over-indexes vs. those financially unaffected by the pandemic. Therefore, for both brands, the implications associated with spending less and delayed smartphone purchases are significant.
In the EU5, financially impacted iPhone and Samsung owners who plan to buy but want to spend less on their next smartphone are more likely to churn to a competitor.
For iPhone, although intended loyalty is still high at 83%, intending churners from iPhone have a greater preference for C-brands (particularly Xiaomi), followed by Samsung. For Samsung, intended loyalty is at 60%, 5 points lower than all Samsung purchase intenders. Of those intending to switch from Samsung, 17% prefer C-brands and over-index by 68 points for Xiaomi.
Xiaomi’s European launch initially focused on Spain, gaining share rapidly through superior marketing execution at the point of purchase. Consumers were responsive to Xiaomi’s compelling range of low-tier models: they were innovative and recognised as a brand that was setting new trends.
Since their emergence into Europe in 2016, Xiaomi’s clear business strategy has proven very fruitful.
A key component to this strategy involved new retail opportunities, notably Xiaomi’s ecommerce channels such as MI.com and their partnership with Amazon (accounting for 33.8% of sales in EU5 in the 12 months to Q4 2019).
Additionally, over the last two years we have seen notable investment from Xiaomi into bricks and mortar stores, which has coincided with increased sales through this channel (27% in Q4 2019 up from 22% in Q4 2018).
This two-pronged retail strategy allows them to sell directly to consumers, establishing a wider presence and significantly building up word of mouth.
In the EU5, 35% of Xiaomi purchasers stated they were influenced through hearing good opinions about the brand, along with 22% also being influenced by somebody else’s recommendation so the ‘buzz’ for Xiaomi products is massively assisted through word of mouth.
The largest sources of acquisition for Xiaomi in the EU5 were from previous Samsung and Huawei owners.
