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Case Details |
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Case Code: BSTR513
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| Case Length: 16 Pages |
| Period: 1995-2017 |
| Pub Date: 2017 |
| Teaching Note: Available |
| Price:Rs.500 |
| Organization :OPPO Electronics Corp. and Vivo Communication Technology Co. Ltd. |
| Industry :Mobile Industry |
| Countries : China, India, Global |
| Themes: Business strategy |
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OPPO and Vivo-‘Offline Retail Strategy’ Pays Off |
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EXCERPTS |
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OPPO and Vivo claimed to have entered the mobile phone market with two goals in mind – to make quality products and to sell them well. When the companies entered the Chinese smartphone market in 2011, they had to contend with a sea of rivals, including market giants like Samsung Electronics Co., Ltd. (Samsung) and Apple, Inc. (Apple) . Most of the smartphone companies exhibited a strong online presence, which served as their primary sales channel. The most remarkable smartphone company at that time was Xiaomi, Inc. that went on to become famous worldwide for its online sales strategy ... |
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| Though China remained the largest market for smartphones in the world, OPPO and Vivo aimed to be major global players. One of the reasons that the company looked toward international horizons was the rising competitive pressure in the Chinese mobile phone market. Instead of developed markets such as the US and Europe, which they believed were saturated, they focused their efforts on making inroads into emerging markets.. |
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| Apart from its offline sales strategy and marketing blitzkrieg, analysts observed that OPPO and Vivo’s product strategy also had a crucial role to play in their market success. Both OPPO and Vivo bundled high-end specs into their phones that cost a fraction of their rivals’ phones with the same specs. They maintained high product quality and concentrated their efforts on developing innovations for the smartphone.... |
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| OPPO and Vivo were the top smartphone companies by shipment in China during three successive quarters of 2016. Much to the shock of market observers, the two brands managed to dislodge Huawei, Xiaomi, Apple, and Samsung from the rankings (See Exhibit III for smartphone companies market share in china by shipments), considering that the combined market share of the two brands in China was below 3% in 2012. Peter Richardson, Director of Counterpoint Technology Market Research, said, “OPPO and Vivo growth story has been impressive and it is important to note that the brands which have entered the top three spots in Chinese smartphone market have tendency to hold on to the spots for at least for some period of time. So expect OPPO and Vivo to provide tough competition to Huawei, Apple and Xiaomi in a close fight for the top three spots and consumer mindshare. .. |
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| Though BBK’s two brands OPPO and Vivo succeeded through the offline retail strategy, the company did not completely forsake the online sales channel. In reality, BBK adopted a very unique global online marketing and sales strategy for its smartphone brand – OnePlus.. |
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| In June 2016, BBK announced that it would launch a new smartphone brand called ‘imoo’, which the company claimed would be ‘education-focused’, targeting students and educators. Considering that BBK had earlier dabbled in making educational toys for children, it was confident that it would be able to create an impact on the market through its new brand. .. |
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| China with about 710 million internet users as of June 2016 was the world’s fastest-growing online market. As of September 2016, Baidu continued to dominate the Chinese search engine market with a market share of 54.3% followed by Qihoo 360 (29.24%) and Sogou 14.71%. In the third quarter ended September 2016, Baidu’s revenues were RMB18.253 billion (US$2.737 billion), a 0.7% decrease from the corresponding period in 2015. Net income was RMB 3.102 billion (US$465.2 million), a 9.2% increase compared to the corresponding period of the previous year. Revenue from online marketing services decreased by 6.7% year on year and 2.6% quarter on quarter due to a slump in the number of active online marketing customers..
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Exhibit I: Costs and Benefits Involved in Online Vs Offline Retail.
Exhibit II: Various Innovations of Vivo.
Exhibit III: Smartphone Companies Market Share in China by Shipments (in %).
Exhibit IV: Top Five Smartphone Vendors, Worldwide Shipments, Market Share, and Year-Over-Year Growth, Q4 2016 Preliminary Data (Units in Millions).
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