15 JUL. 2016
A Battle in the Red Ocean: The Positioning Strategies of Chinese Smartphone Brands
Huawei: Brand Differentiation through Premium Business Positioning
In the past year, Huawei has achieved a year-on-year market share increase of 47.6%, reaching the number one seat at 16.2%. As a company specializing in communication technology, Huawei has established powerful brand knowledge and esteem both inside and outside of China. It has also successfully extended its outstanding brand equity to its smartphone products to create the one and only China-based high-end mobile phone brand. Huawei identifies a key segment of people working in business as its main target consumer group, emphasizing performance, durability and the quality of its hardware. Meanwhile, when choosing brand ambassadors, Huawei has spared no cost, signing international stars such as Lionel Messi, Henry Cavill and Scarlett Johansson to further stress its high-end and international image.
With a “devoted” brand culture, Huawei has successfully extended its brand equity from the B2B sector to B2C. With its solid technological expertise, continuous commitment in R&D as well as an attitude that constantly seeks for perfection, Huawei has obtained the recognition and respect of the Chinese consumers and has maintained steady growth in the global market.
OPPO & vivo: Young and fashionable sister brands
OPPO and vivo are two independent mobile phone brands which are both founded by BBK’s top management team. From the statistics referenced earlier, we can see that the two brands are developing at a particularly fast pace, with their market shares increasing by 173.1% and 121.7%, respectively versus the previous year. Compared with Huawei and Xiaomi, OPPO and Vivo identify themselves as young and fashionable mid-end brands and focus on their products' design, as well as features such as music and photography. They choose young and glamourous pop idols as spokesmen, and sponsor reality programs to appeal to their young target audiences.
The thriving success of OPPO and vivo and their ability to establish a distinctive brand identity has a lot to do with their precise and consistent brand positioning. It is key to note that throughout the years OPPO and vivo have committed to a consistent communication strategy to convey this brand positioning. This is especially commendable in a market that is easily swayed by fads and hypes.
How Did “ZCL” Become Obsolete?
Once upon a time, ZTE, Huawei, Coolpad and Lenovo – dubbed “ZHCL” – were recognized as the face of China’s smartphone industry. However, under the rapid change of the industry and market, all of them besides Huawei have lost their lead. This is in part because they haven’t identified a unique differentiating positioning, and instead merely focused on price skimming – an inherently unsustainable market strategy. A low price point does not even appeal to the Chinese consumer anymore as they become increasingly sophisticated.
Take Coolpad for example. The Chinese mobile phone brand lacks innovation and differentiation. Throughout the years, its strategy to open up the market has been focused on a low price and wide product variety. With other more distinctive brands such as Xiaomi, Meizu and OnePlus releasing high quality products that are priced competitively, and more sophisticated customers placing more importance on technology, brand value and culture, brands like Coolpad will have a hard time finding their footing in the market.
Coolpad Fengshang Max
In 2016, Coolpad announced that it would reduce its portfolio by 30% and start to reposition to the mid to high-end market. However, without identifying its own differentiated positioning, it will be difficult for Coolpad to find its place in among the “New four” who have cultivated an increasingly strong level of brand equity.
Brand to Watch: OnePlus
Founded in 2013, OnePlus was created by a former senior executive of OPPO. In April 2014, the first OnePlus flagship was sold out on the first day. The positive market feedback had a lot to do with the brand’s clearly defined positioning. With the tagline is “Never Settle”, OnePlus places great emphasis on producing high-quality products with unique design and excellent engineering, while keeping the price in a competitive range. On the other hand, OnePlus not only encourages users to install third party ROMs, but also develops its own H2OS operating system. Despite the fact that custom OS’s are not rare in the Chinese smartphone industry, OnePlus has taken the extra step to create a unique UX that is not conformed to the vanilla Android framework. This undoubtedly demonstrated OnePlus’s strong commitment to innovation and differentiation.
More interestingly, OnePlus has been targeting global markets since the very beginning, and has now successfully made its way to many main markets in the world such as the US, the UK, France and India. Its next goal is to reach South Korea to directly challenge Samsung and LG. How will OnePlus will balance its global and domestic strategies in the coming years?
As we can see, with rise of domestic consumption, the popularization of smartphones, and the sophistication of people’s consumption priorities, the role of branding is increasingly significant in China. This is all the more true in the case of the smartphones industry, where the products themselves can be highly similar; thus a precise and differentiated positioning is key. At this time, Chinese consumers' brand loyalty remains fairly low and the choices are abundant. For industry leaders, how to continuously boost brand esteem and knowledge in order to cultivate a loyal consumer base and maintain leadership is the main
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