Meizu needs to change its marketing model before it can imitate Xiaomi

Xiaomi's phenomenal growth over the past few years has slapped many people in the face. Huang Zhang, who is arrogant and proud, has now begun to "imitate" a brand that he once looked down upon. However, just like other people's attitude towards Xiaomi, which has gone through three stages of looking down on it, not understanding it, and not seeing it clearly, Meizu has made significant changes this year. It may not be so easy for Meizu to immediately transform into an industry upstart by learning the Xiaomi model.

I believe many bigwigs are thinking, can the Xiaomi model be easily copied? If the Xiaomi model has no barriers and is easy to copy, why hasn't there been a decent "imitator" by the end of 2014? The top few domestic market share companies are all large companies with deep accumulation, but Xiaomi is the only one that started from scratch, without any hardware manufacturing background or experience. It is really special.

Closely related to this question, the first Xiaomi was born, can the second one be born? Meizu's innate ability is similar to Xiaomi's. They are also good at branding and marketing on the Internet, but they are also weak in technology accumulation and patent reserves. Meizu is now "obviously" imitating the Xiaomi model. Is it possible for it to achieve the same level as Xiaomi today?

To imitate Xiaomi, we must first understand where the company's competitiveness comes from.

Xiaomi's development over the past few years has been accompanied by doubts, pessimism, and even public ridicule, but the company has grown tenaciously amid the criticism. Lei Jun said, "Iron facts prove that Xiaomi has risen," and this is by no means empty talk. Some time ago, the Wall Street Journal published a very accurate report on Xiaomi's performance, the data came from the financial statements that the investment institutions saw in person during the financing negotiations:

Xiaomi's net profit in 2013 was RMB 3.46 billion (US$566 million), an increase of 84% compared to RMB 1.9 billion in 2012; its revenue also doubled from 2012 to RMB 27 billion. Another report also estimated that Xiaomi's net profit growth rate in 2014 would be 75%.

The WSJ article specifically mentioned that Xiaomi's mobile phone hardware sales, which were previously considered "not very profitable", contributed the vast majority of Xiaomi's revenue, reaching 94%. A careful calculation shows that Xiaomi had a profit margin of more than 12% in 2013, compared to Lenovo's revenue of $20.87 billion and net profit of $476 million in the first half of 2014, with a profit margin of only 2.2%. The net profit margin of 12% vs. 2.2% may be the reason that supports Xiaomi's valuation of $40 billion.

Why is it that when international giants such as BlackBerry, Sony, and HTC are struggling to maintain a balance between income and expenditure, Xiaomi has achieved such outstanding sales and profit margins? WSJ's view is very unique and true, because the marketing cost of Xiaomi mobile phones is much lower than that of its competitors.

Let's take Lenovo as an example. The interim report for the 2013/14 fiscal year (the first six months ending September 30) shows that Lenovo spent $913 million on marketing and distribution alone. Xiaomi's sales and marketing expenses for the entire 2013 were only RMB 876 million. It is very intuitive that Xiaomi's profit margin comes from lowering costs. Specifically, the saved marketing costs are converted into real profits.

Xiaomi phones can be sold at such low prices and still maintain a good profit margin, which is indeed the result of Xiaomi's innovative marketing model. This so-called "innovative marketing model" not only repeatedly creates phenomenal marketing events on the Internet and makes a well-known mobile phone brand online, but more importantly, it does not develop offline physical channels and cuts off the profit link of the middlemen.

In addition, Xiaomi's online promotion highlights "coverage", and user stickiness comes from products and secondary word-of-mouth communication based on excellent products. In contrast, Meizu's online promotion highlights the loyalty/stickiness of fans, which comes from more literary and thorough brainwashing. It has never been able to radiate from the core circle of enthusiasts to ordinary people, and its volume has always remained stable at a certain stage. In addition, Meizu also needs to reduce marketing costs and change its marketing model. It must gradually cut off hundreds of offline physical stores across the country, or let them transform their functions. This requires great courage.

In summary, the first difficulty for Meizu to imitate Xiaomi and reform itself is to change its marketing model. There are also two other problems, namely, product development and supply chain, which will be continued in another article.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.