Xiaomi India to spend Rs 1,000 crore on marketing this festive season: Anuj Sharma

New Delhi: Xiaomi India is poised to spend more than a “thousand crore” just on marketing activities surrounding the festive season, said Anuj Sharma, CMO of Xiaomi India.

The brand has announced its extensive consumer electronics lineup and plans to double its device shipments to India, touching 700 million units in the next ten years.

Even after selling more than 35 crore devices in the last decade, Anuj Sharma, CMO of Xiaomi India, still feels that “Xiaomi is just starting out.”

Xiaomi’s tenure in India has been full of twists and turns. In April 2022, the Indian government seized assets worth approximately $725 million from Xiaomi India, accusing the company of violating foreign exchange laws by making illegal remittances abroad.

Despite the past few years being rocky, the brand has regained the top spot in the smartphone market with a market share of 19.3% (news reports). The customer retention rate for the brand has been nearly 63%, indicating that a significant portion of Xiaomi users are likely to choose Xiaomi again when they decide to upgrade or change their phones.

Amidst rising doubts about the quality of Chinese smartphones, Xiaomi’s growth in the Indian market has brought envy among other players such as Samsung and Apple. 

Spilling the beans on how Xiaomi speaks straight into the ears of the Indian user, Sharma said, “At first glance, most people are in disbelief when they see our products as we design them in ways that they exceed expectations, creating a sense of disbelief and almost a magical feeling.

To add, unlike other brands, we don’t see our consumers as cults or followers of the brand. Some of our users are genuinely interested in cutting-edge technology, which has also led to the formation of fan clubs across various cities, where members share the same belief system as the company. At the core of Xiaomi’s philosophy is the belief in ‘innovation for everyone’ at a price point that is comfortable for all.”

A brand constantly being yelled at for gatekeeping technology is Apple. Be it the Cinematic mode or the LiDAR scanner only available on ‘pro’ models, Apple has a history of keeping vital technological innovations away from the masses by pricing them higher.

Apple’s decision to price its products at a premium makes it less appealing to technology enthusiasts looking forward to experimenting with it. Xiaomi hits the ball out of the park in this segment by pricing its product across multiple price points. 

In the words of Sharma, “We innovate for diverse sections of society, ensuring no technology is kept away from anyone, so more people and tech-enthusiasts get to enjoy its benefits and results. From 2014 to 2017, we focused our marketing efforts on creating an educated and well-aware market. 

We told people why a particular feature matters more than others and now some of these users have become technology fans, turning our marketing efforts into a two-way system where the users believe in the products that we put out and give us a constant feedback loop across multiple price points.”

Going back to customer retention, it is important to note that Apple has a customer retention rate of 90%, making it comparable to cults. How does Apple do it? By simultaneously connecting and isolating users in the Apple ecosystem, the brand employs entry barriers for devices from other brands to interact with the Apple ecosystem, making it significantly harder for an Apple user to switch devices.

In a race to build an ecosystem, Xiaomi is competing with the likes of Apple and Samsung with its ‘smartphone x car x home’ philosophy. Yes, you heard it right, the brand has added an electric vehicle to its ecosystem.

In other words, “If your AC’s temperature at home was set at 22, then by the time you get to your car, the car will pick up the temperature from your AC and set the vehicle’s temperature to 22 as well.”

Defining how Xiaomi’s ecosystem helps it in customer retention, Sharma said, “Our ecosystem philosophy is not to hold people in. Many of our products work seamlessly with other brands. We offer interplay between devices without limiting the user's choices.”

Great innovation may turn out to be futile if not paired with the right marketing mix. Sharing his thoughts on the brand’s marketing mix, Sharma said, “About 50-60% of our marketing spends is still on top-funnel activities. However, as the festive season progresses, performance marketing will start stepping up as well. This year, we have also made significant spends on outdoor, from airports to premium sites across the country for our flagship devices.

The premium segment we are getting into is a new war zone for the brand. People know us for the mid-rangers but by bringing in the Xiaomi series, we want to reach out to a set of customers who are willing to spend upwards of Rs 70,000 on a smartphone. When it comes to marketing premium devices, we spend almost 50% of the allotted budget on above-the-line launches on TV and outdoor advertising.”

When Sharma said “Xiaomi is just starting out,” he also mentioned how the brand’s intention of “going big” in India involves a special focus on the festive season, especially Diwali.

To capitalise on this demand, brands often launch a series of new products to tap into different pockets of the country. Xiaomi is no different when it comes to the festive season, as the brand plans to focus on home electronics this festive season, trying to establish its ground in the world of LG and Samsung.

From the horse’s lips himself, Sharma said, “With the festive season approaching, we’re also focusing on home electronics. We plan to launch new TVs, and just a few weeks ago, Xiaomi introduced a series of QLED TVs in partnership with Amazon, featuring Fire TV.”

Success in the Indian market does not come without its challenges. Providing an insight into the challenges hindering the growth of the brand in India, Sharma said, “Currently, there are around 650 million smartphone users in the country. Annually, 150 to 160 million smartphones are sold, indicating a four-year upgrade cycle. As consumers return to upgrade after four years, their expectations for higher quality and better features, such as camera performance and battery life are extremely high. 

Starting in 2025, the first wave of long-term users who bought during COVID-19 will begin upgrading; therefore, our marketing efforts need to be sharply focused on users looking forward to upgrading next year.”  

One key area for improvement in the Indian market over the next three years that Xiaomi is eyeing is internet penetration in homes. As Sharma perceives it, “Currently, only 10-12% out of 290 million households in India have an internet connection. This needs to grow significantly for other devices to gain traction. With the advent of 5G, there’s a huge opportunity to capitalise on this market in India.”

Wrapping it up, Sharma spoke about where he sees the brand in the next ten years, “We want to push the boundaries of technology while keeping in mind price sensibilities. The second aspect we haven’t been able to capitalise on is our home automation ecosystem due to the lack of internet access in the country. However, with 5G coming in and sufficient 5G equipment penetration, I think that can improve. In the first 10 years, we shipped 35 crore products. How do we double it in the next 10 years? That is the main objective."