Economics of OnePlus
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Case Code: ECON060 Case Length: 9 Pages Period: 2014-2016 Pub Date: 2017 Teaching Note: Available |
Price: Rs.400 Organization : OnePlus Industry : Smartphone Countries : China Themes: Business Economics |
Abstract Case Intro 1 Excerpts
Abstract
This case is about the pricing strategy of OnePlus, a Shenzen-based technology startup that made a mark globally in very little time with its high-end devices, killer price tags, and by-invite exclusivity. OnePlus positioned itself between low-cost smartphone companies like Xiaomi and high-end makers like Apple and Samsung and significantly undercut the latter on price, despite closely matching them on features. The business model of OnePlus was built around razor-thin margins and giving as much value back to its users as it could in the form of lower prices. The company sold its phones at cost through an invite-only system which allowed it to gauge and fulfill demand accurately and avoid the risk of keeping unsold inventory. OnePlus shunned conventional marketing, sold devices exclusively online, maintained razor-thin margins, and had a limited product portfolio. Going forward, the challenge before its founders, Pete Lau and Carl Pei, was to sustain lower prices and turn profitable as the company increased in scale.
Issues
The case is structured to achieve the following teaching objectives:
- Understand the pricing strategy of OnePlus
- Understand price competition in the global smartphone sector
- Understand the factors that influence the pricing decisions in the smartphone industry
- Analyze the nature of the global smartphone market and discuss the strategic implications of the economics associated with it
- Explore strategies that the company might adopt to sustain itself in these markets
Contents
Keywords
OnePlus, Global Smartphone market, Economics, Pricing Strategy, Business Model, Razor thin margins, Pricing decisions, Invite-only model
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