Day 48 The iPhone trade-in for Xiaomi

The iPhone trade-in for Xiaomi

Recently, the Chinese cellphone dealer Xiaomi announced a trade-in activity, which people may use their used iPhones exchange with their newest model, the Xiaomi redmi note. This decision might seems unreasonable for many of us, since it seems this trade-in will damage the Xiaomi’s brand image. Because the customers may consider it is an inferior good compare to iPhone. However, it is not the case, in order to understand why this action did not lead to a negative effect. We must probe in the features of the Xiaomi cellphone and its customer group.

The Xiaomi was developed under the environment that the mobile phone market in China was carved up by the huge international manufactures such as Apple, Motorola and Nokia. Instead of enter the market and get crushed by its competitors, Xiaomi applied the starvation marketing strategies to promote the brand. The best products are always those we cannot get our hands on. In the early stage of its marketing process, Xiaomi utilizes the power of the Internet perfectly. It hired plenty Internet hype to publish topics in the most popular forums, these articles created a bubble of demand of this new product. Therefore, these combined fake and actual review or willingness to purchase successfully attract people’s attention. The second marketing strategy Xiaomi applied is the cheap cost of its products. A relatively lower price which is less than the customer’s reservation became another attraction point for their product. Even though the price generated a negative effect on the quality image of the brand, the Internet advertisement created a robust demonstration effect on buyers. Which made the consumer judge the quality of this cellphone free from price-bias, because the community around them were talking about it. At the last stage, the Xiaomi marketing group ingeniously applied the hunger marketing strategy, and that restricted the supply of the product. As a result, the increased demand could not be met up with the limited supply. In addition, the price is remaining unchanged, hence the excess of demand transferred to the huge incentives of customers to choose Xiaomi as their cellphone.

Consequently, the trade-in activity between Xiaomi and iPhone can be considered as a rational decision. The company believes their customers still retain the strong incentive to purchase, thus the trade-in will only attract the new potential users. It is in fact, genuine, the purchaser already took the low price into their judgement of brand quality, but the Internet promotion created the idea that they are the smart customers who are using a good-quality product at a lower price. On the other hand,  people that exchange their old iPhone with the new model of Xiaomi may stick with this brand in the future, because honestly, the technology is not much different. Furthermore, the Xiaomi company could recover costs from recycling the chipset of the iPhone as well. Thereby the trade-in activity becomes a future investment on market share, which incurred minor costs.

In conclusion, this decision will help the Xiaomi expand its market, and it also creates some great advertisement for the product. The media will spread this information as news through the Internet, which has nil cost for the company.