OPPO and VIVO are not the first handset brands to cut profit sharing. A few months ago, Apple also cut retail margins for the iPhone X in India, which industry insiders blamed on the high cost of the device. The move by OPPO and VIVO, which has triggered strong opposition from many mobile phone retailers and chain stores, will suffer the same negative impact as Apple.
外 文 标 题 : OPPO and VIVO, which each have about 70,000 retail partners in India, have suspended or reduced sales of smartphones under the OPPO and VIVO brands due to their high profit sharing ratio, new Delhi: Several mobile phone chains and retail outlets in India have halted or reduced sales of smartphones under the OPPO and VIVO brands after the profit sharing ratio was lowered. OPPO and VIVO lost about 1/7 of their retailers, and the number of cooperative retailers is likely to decrease further in the future, resulting in a decline in OPPO and VIVO’s market share.
In addition to OPPO and VIVO, there are also Xiaomi, Lenovo, Gionee, OnePlus, etc. Xiaomi’s market share in India has already approached Samsung. India’s mobile phone market is highly competitive, with OPPO and VIVO having fewer partner retailers and declining market share, creating opportunities for brands like Xiaomi.
OPPO and VIVO are suddenly cutting profit sharing because they are already under pressure to make profits, starting with copying their strategies in the domestic market.
Copy successful experience, domestic mobile phone brands come from behind
Samsung has been in the Indian market for a long time before domestic brands set foot in the country. But domestic brands such as Xiaomi, OPPO and VIVO have taken a bite out of the Indian market in just a few years, with Chinese handset makers controlling more than half of the market as of September last year, according to a Counterpoint Research report. OPPO and VIVIO together account for 17 percent of the Indian mobile phone market.
OPPO and VIVO, which are good at pushing the low-end market, began to copy the successful experience in China to the Indian market. It is understood that OPPO and VIVO invested 2.3 billion yuan in order to open channels and brand awareness, fully interpreting the “money is to do whatever you want”.
Offline promotion mainly relies on mobile phone retailers and chain stores. OPPO and VIVO give retailers higher profit sharing ratio than other brands, prompting retailers to actively sell OPPO and VIVO products. After reaching cooperation with retailers and chain stores, they will pay for the best location of display cases and rent the doors of mobile retail stores and non-related retail stores in other important locations, including Samsung retail stores. Although it may seem a bit funny, it is good for brand communication to occupy outdoor advertising space on a large scale, and OPPO and VIVO’s publicity strategy is also effective in terms of market share and sales growth rate.
In addition to outdoor advertising, mobile phone brands such as OPPO, VIVO and Gionee have also invited Indian stars to represent them, or named popular events, such as India’s national sport “cricket”. A variety of publicity channels have been combined to greatly increase the exposure of the two brands, as well as the brand visibility in the Indian market.
Brand exposure is very important, in fact, OPPO and VIVO have also captured the needs of Indian users, Indian mobile phone users value mobile phone camera function, OPPO and VIVO caters to the user preferences, the focus of publicity and mobile phone development focus on the camera function. Similar to the advertising strategy in the domestic market, OPPO and VIVO’s advertisements with outstanding camera function have been well received in the Indian market, as well as their superior appearance and quality, which have captured the hearts of many users.
There are two reasons why domestic mobile phone brands like OPPO and VIVO choose to go overseas. First, because the domestic mobile phone market is weak, there is no growth, the need to explore new incremental market. India’s mobile market is in a transition to smartphones, similar to the Chinese mobile market when smartphones first appeared many years ago. And the demographic dividend is huge (1.3 billion people), with unharvested traffic as far as the eye can see. India, which has overtaken the US to become the world’s second-largest smartphone market and the fastest-growing, is the new Canaanite.
Second, Reliance Jio’s free data and voice services, along with telecom companies, have provided differentiated data products for 4G smartphones, driving market demand for 4G smartphones and speeding up the upgrade of users. In contrast, Indian manufacturers do not have the capacity to produce 4G phones, which is a huge opportunity for Apple, Samsung, OPPO and VIVO.
In doing so, OPPO and VIVO not only edged out lower-priced local brands, but also took market share from Samsung, which has no capital advantage. As of September last year, local brands’ market share shrank from 33% to 14%, according to data.
Although the Mobile phone market in India is very similar to that in China in the past, the national conditions are different. OPPO and VIVO directly copied the domestic market strategy, which played a great role in the initial stage and captured 17% of the market share, but with the increasingly fierce competition from all sides, more brands are also eager to try. The negative effects of burning money to grab territory gradually came out.
OPPO, VIVO are under pressure to make profits. Money can’t do what it wants
After OPPO and VIVO took part of the market share, the sequelae of burning money and grabbing land gradually showed. The two mobile phone brands have come under pressure from low margins at the low end of the market and consumers at the high end of the market. They have had to cut back on traditional advertising channels such as outdoor and TV in India in the past few months, and then cut retailers’ share of profits in exchange for higher margins. The lessons learned in China are not entirely applicable to India.
First, the Chinese and Indian markets not only differ greatly in culture, but also in per capita consumption level. India’s average national income is not high. According to IDC’s report, India’s per capita disposable income was only $1,808 in 2016, about 40% of China’s. Low per capita income means smartphones are not a necessity for The Indian public, and their consumer demand is concentrated on better value phones. The Dazeinfo report said most Indians chose phones in the $150 and $90 and below price range.
Second, OPPO and VIVO are not good at low-end market, and their products are not cost-effective. They just want to take advantage of low-end models to win the market first, and then gradually enter the high-end market. But the early stage of the brand positioning has Indian customers to OPPO and VIVO formed the stereotype, if based on this into the high-end market has the certain difficulty, high-end market not only has the fame bigger brands, such as samsung and apple and through different marketing strategy in the high-end market are now reaping the recognition of domestic brands “one plus”. In the middle and high-end market, although the profit is high, the market share is small and the competition is more difficult. OPPO and VIVO, which copy the domestic experience, do not have much advantage.
Third, sales and market share are capital piles. OPPO and VIVO take the national route in the choice of brand communication channels, but the mobile phone positioning is young people, promotion channels and target consumers are not high; India is also a city-state, multi-religious, multi-ethnic country with fragmented market and higher publicity costs compared with China, which are also reasons for profit pressure. In addition, OPPO and VIVO rely on Accessories such as screens made by Samsung, and reliance on rivals means being at the expense of rivals, which can increase handset production costs.
Fourthly, it can be seen from the retailers’ strong opposition and reluctance to sell the products of the two brands. When profits decline, the offline channels of OPPO and VIVO may not be viable. Now the Indian mobile phone market is in the rapid development stage, rashly cut the retailer’s profit, although the cost will be reduced, the profit will be increased, but the share advantage will be lost, re-opening the market undoubtedly requires more investment.
Recapture city, OPPO, VIVO must grasp the bonus period of e-commerce
As the domestic mobile phone market has become an old age, major brands are looking for countermeasures to go abroad, and Huawei is also expanding its presence in The Indian market, the competition in India, the world’s second largest smartphone market, is bound to become more intense in the future. The new tax system of GST increases the tax rate of electronic products and pulls online and offline mobile phone manufacturers to the same starting point. It is a new opportunity for brands that have obtained the qualifications of establishing retail stores and factories. The marketing strategies of OPPO and VIVO also need to make some changes.
Localization is a competitive strategy for all brands entering overseas markets, such as Gionee’s use of an Indian team. The conflict between China and India has not been resolved, and The Chinese team actually has some disadvantages in the development of the Indian market. Domestic manufacturers also try to weaken the image of Chinese brands in the local development process, and the use of the Indian team can help brands gain the trust of local consumers faster and achieve localization.
The smartphone market is not the only one gaining ground in India’s vast landscape. E-commerce is also one of India’s fastest-growing industries. E-commerce in India is booming with the help of Amazon, Tencent and other Chinese and foreign giants. Developing online business is the weight to increase the competitive advantage of the Indian market. Xiaomi, which currently has the largest share in the Indian market, and OnePlus, which has a strong foothold in the high-end market, have something in common: strong online operations.
OPPO although and VIVO has outstanding offline operation ability, but now the setback also proved that only offline ability is not enough, and millet also accumulated a lot of physical retail experience, in the case of a wreck a large number of partners on offline ability, advantage is too little, online, in the present Indian electricity bonus period is an indispensable ability.
In addition, India is also a relatively young market, and young consumers are more enthusiastic about online channels such as new media. Oneplus mobile phone mainly conducts fan marketing around new media. Add to that the fact that retailers like Amazon offer rebates, which are attractive to younger consumers, and the online channels mean reaching a wider audience.
OPPO and VIVO, though a late entrant, have quickly carved out a niche in The Indian market thanks to their offline experience and capital accumulated in the Chinese market. But replication model has both advantages and disadvantages of the Chinese market, the rapid development of India’s electricity, young consumers like the Internet, OPPO and VIVO is aimed at young consumers of mobile phone brand, in electricity dividend advantage not only depend on the offline operation skills, as well as timely change strategy, actively embracing electric company, active online, grasp the electricity dividends.
Liu Kuang, meditation on the Internet, wechat official account: Liukuang110