Xiaomi and OnePlus: can going viral beat billion-dollar marketing budgets?

August 18, 2014
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Hugo Barra Xiaomi -19

It’s not easy to go up against companies like Samsung and Apple in the smartphone market. Samsung spent $14 billion on marketing and ads last year. Apple has a prominent chain of retail stores and an unshakeable base of fiercely loyal fans. If companies like LG and Sony are finding it tough to wrest away market share, how are newcomers to the world stage like Xiaomi and OnePlus going to do it?

There’s no way they can go toe-to-toe on advertising spend, but there are alternative routes to success. Both companies have been aiming for an exclusive aura by limiting supply. They have also been patiently building a relationship with fans, showing a willingness to listen, and delivering what they want, although OnePlus has learned that it’s not easy to get social media competitions right.

Undercutting the competition

Before we get into the social media tactics, we can’t ignore one of the major drivers of potential success and that’s the price. Comparing specs on paper both Xiaomi and OnePlus are offering a lot more for your money than Samsung or Apple. These lower prices are partly based on the lack of traditional advertising.

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The OnePlus One sounds too good to be true, $300 for a 5.5-inch 1080p screen, 2.5GHz quad-core Snapdragon 801 processor, 3GB of RAM, and a 13MP main camera backed by a 5MP front-facing camera. To make it even more tempting for Android fans it runs CyanogenMod and offers a world of customization options. That proposition has generated an incredible buzz and lots of potential sales.

While OnePlus is still all potential (the company hasn’t released any numbers yet), Xiaomi is growing into a real player. Last quarter Xiaomi claimed the top spot in China with 14 percent of the market. Its budget Redmi series has been selling like hot cakes, and no wonder, the Redmi Note has a 5.5-inch 720p display with MediaTek’s octa-core MTK6592 processor. It comes in two flavors, a 1.4GHz and 1GB RAM model for $129 or a 1.7GHz and 2GB RAM model for $159. At the premium end of the market, phones like the Mi 4 are eye-catching, with a 5-inch 1080p display, 2.5GHz quad-core Snapdragon 801, 3GB of RAM, and 13MP and 8MP cameras for only $320.

But price alone isn’t enough to build an empire. There’s another big factor you can point to in the rise of recognition for both Xiaomi and OnePlus.

Listening to the customer

It’s depressingly common to find loyal customers of a brand shouting in the wilderness of comment sections and forums and having their heartfelt opinions ignored by their chosen corporate behemoths. An awful lot of OEMs simply do not engage directly with customers. They don’t acknowledge criticism or advice, they don’t share future plans, and they are rarely forthcoming or honest about problems.

A study on Millennials by digital agency Moosylvania revealed that 18-34 year-olds overwhelmingly dislike paid ads online and particularly on social media. They respond to digital word of mouth, positive reviews, how-to guides, and video reviews. They also do a lot of comparison research before buying and they seek authenticity. They want brands that answer questions and offer transparency.

Mi Fans

Xiaomi has been working on building a real relationship with its fans. Customer’s comments and questions are answered on social media. Feedback is acted upon. There are multiple competitions that encourage engagement and Xiaomi gives away lots of free phones. There are even Mi Fan Festivals with sales slots for phones with discounts. According to The Next Web Xiaomi sold 170,000 stuffed toy versions of its Mi Rabbit mascots at a Mi Fan Festival back in April.

Hugo Barra Xiaomi -21

This fan-centric approach has been part of Xiaomi from the beginning. The company was founded in 2009 and it developed the MIUI platform by forging strong links with the end user through social media and forums. Establishing a user feedback loop and giving people what they want is a smart move. It’s a central tenet of the agile development philosophy and Xiaomi carried it over to hardware when it decided to make a smartphone.

This isn’t just about responding to comments, Xiaomi organized its fans and invited them to participate in development, testing, and marketing for its products. The company held regular city gatherings and invited fans to talk directly to engineers. This is doubly smart because it builds a better product and it builds fierce loyalty.

xiaomi mi 4 press (5)

Ups and downs for OnePlus

A combination of amazingly low price, quality build, and the control and customizability offered by the CyanogenMod propelled the OnePlus One into the limelight. It’s tough to think of another smartphone from an unknown company that has generated anything like this level of excitement. OnePlus also saw the value in engaging potential customers and getting them involved in the design process. The company carries the motto “Never settle” and it put “Designed together with our fans” on the box.

Some of the shine rubbed off when it was revealed that Oppo owns OnePlus. The company was founded by Pete Lau, previously the VP at Oppo, but it was assumed by many that OnePlus is an entirely new and separate entity. The idea that it might be a clever strategy from Oppo’s marketing department to benefit from underdog status with OnePlus has turned some people off. The company claims it merely shares investors with Oppo and is entirely separately run.

It hasn’t all been good news for OnePlus on the marketing front either; the company has struck out twice already swinging for that elusive viral social media hit. First there was the ”Smash the Past” campaign, which was a competition offering people willing to smash up their old phones on camera a brand new OnePlus for $1. Unfortunately a few people were over-eager to smash their phones and jumped the gun before finding out the competition rules. It also created a huge backlash from critics justifiably feeling that the whole idea was environmentally irresponsible and wasteful.

ladies-first-opo

OnePlus followed that up with the cringingly misogynist “Ladies First” competition appealing to women to send photos of themselves with the OnePlus logo. It backfired spectacularly and got pulled pretty quickly. It’s back to the drawing board for the OnePlus marketing department.

Limited supply

Both Xiaomi and OnePlus have been accused of limiting supply to generate artificial product shortages and drive the hype machine. The same criticism has been leveled at Apple in the past. As you’d expect the companies deny it and claim the issue is about making sure they can deliver a product to everyone that orders. We can’t say for sure, but there’s no doubt that selling out quickly and a feel of exclusivity are powerful marketing techniques that generate more free headlines.

Ultimately, the most powerful and refreshing aspect of the approach of Xiaomi and OnePlus is the effort to engage with customers and give them what they want. We can only hope that rubs off on the industry. Few of us would complain if the big OEMs spent more time answering customers and a little less on advertising. It will be interesting to see if this approach is enough to drive further success and if that ethos will be retained if success does come.

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