Ever wondered why Smartphone Companies split into Sub-brands? Well, here's the reason
We remember back in 2013 when Oppo unveiled the Oneplus as it's sub-brand, Or when the eastern mobile phone giant Huawei launched its Honor sub-brand. Fast forward to 2019 and we see the popular line of Xiaomi called Redmi, head off on its own to the unknown city. Which was quite saddening because Redmi was one of Xiaomi's best-selling lines. It even seems Vivo has recently joined the gang and just yesterday unveiled its sub-brand called "iQoo".
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| IQoo's First Post on Weibo |
Fact: If you're an English speaker and you're trying to pronounce ''IQoo'' Know that even Chinese people are bemused by this...We think its pronounced ''Eye-Q''
One might begin to wonder why these Companies chose to spread out by dividing their base strength and financial might. Sun Tzu said and I quote "Form a single united body, if the enemy's army is split up into fractions''And worse off it seems Chinese brands are the ones adopting this strategy to invade new markets and fight off competition. But maybe there's a reason, a really good reason why this business template is being adopted today. In Today's article, we will also discuss umbrella corporations, like transsion holdings and BBK electronics.
1.0: Brief history of sub-branding:
1.1: Oneplus:
The popular smartphone manufacturer, Oneplus was released on the 16th of December, 2013 by Former Oppo vice president Pete lau. Though at first he denied that the Oneplus was a subsidiary owned by Oppo, Subsequent Chinese government documents actually showed that It was actually a wholly-owned subsidiary of Oppo. According to Pete he said Oppo was just a major stake holder. So as Oppo itself is owned but the Chinese Multinational company called BBK Electronics, Oneplus could be said to be a sub brand of BBK itself.
1.2: Honor:
Another notable case was when Huawei released the Honor brand in 2013. Although the idea was put forward in 2011, it was founded by Ren Zhengfei in 2013.Its first flagship phone for Europe was the Honor 6. About 20 million Honor phones were sold within the first six months of 2015, equal to the number sold in all of 2014.By June 2015, the brand had expanded into 74 countries, including European nations, India, and Japan. Honor's dual brand strategy helped it tap from the rich resources, Talented manpower and technological advancement of Huawei to set up High quality smart phones at unbeatable prices.
1.3: Transsion Holdings:
Transsion Holdings, is a shenzen based smartphone producer with a notable presence in Africa and India. It's well known for its brands, Tecno, Infinix, Itel and Spice, and it's accessories department called oriamo.
1.4 Pocophone:
The Pocophone by Xiaomi, was launched on the 22nd of August, in New Delhi India. Released by Xiaomi to foster Flagship specifications and effectively trickle them down to the Mid-range category, where it stays. All while providing a good pricing system. The Pocophone F1, was arguably one of the biggest smartphone releases of 2018. Since it was announced in August 2018, it instantly became Xiaomi's bestseller with 900,000 units sold until 1st of January 2019. It was the top rated smartphone of Q3 2018 in India.
2.0 Why do Smartphone Companies form Sub-brands?:
Less we digress, There are quite a few reasons the leading smartphone companies split into independent brands. They include:
2.1: To Present you with sense of choice:
Sometimes, these brands can confuse the average consumer into thinking he has a free decision especially when there's no pre-information about the background of these brands.
You might be like "I don't like tecno", "I dislike Vivo but I Prefer Oneplus" The truth is you're just buying from the same people.
2.1: To create a sense of market dominance:
One might just think the high prized target markets like India and China might be too competitive for a new company to even get a foothold there. I mean just looking at the number of producers there might just make a prospective developer shiver with fear. There might be enough brands struggling already but more of your affiliated brands might be better in bringing out the chunk of profit. Think of it when 3 armies attack one in a decisive battle.
2.2: To satisfy target markets and specific needs:
This is a really good reason sub brands are important. They can really help when there's need to perfect a specific role or provide important wants that consumers prefer, while at lower prices than other competitors. For example the Honor sub-brand and even the Blackshark mostly focuses on Gamers, It uses Huawei's chipset and tries to position it's phones in an attractive light. Oppo on the other hand is known for its Awesome Camera, hence it's branded as a camera phone. The Oneplus main selling point might it's Software, Called Oxygen OS that is said to be more smoother than Stock Android.Vivo's new IQoo is said to be targeted at gamers also.
Fact: The popular quote ''Never settle'' actually originated from the oneplus original launch. Since it was known for having flagship specs at a lower price, Pete said the User would ''Never settle'' for the inferior products other companies sold.
2.3: To aid research and development:
Diversity in equipment production can lead to opportunities and advancement of current technology. Like in BBK's case, Oppo can develop a better Camera algorithm and pass it on to Vivo and the Oneplus. Oneplus might make steady advancements in their software and have other brands implement it.
2.4: To create a loyal fan base:
The more fans the better, as a main driving point in business ethics is to try to keep consumers that are willing to keep buying your products and upgrading to the latest line you have to offer. The Oneplus is a really good example as well as the Realme brand in India. Although the Pocophone equally has a rising number of loyalists and cabal members...lol.Such consumers are invaluable hence why OEMs adopt different strategies such as flash sales, extra curricular activities, Launch invites and also trying to associate popular figures like celebrities to their products so that their fans can rate them more.
2.5: To fight the Competition more effectively:
We'll start with an example, In India Xiaomi launches it's smart phones, which is normally a threat to Oppo as they've been there for some time. Naturally Oppo can't take on Xiaomi head on. Because Xiaomi's aggressive pricing would put a strain on Oppo. Oppo might need to overhaul it's brand which it can't, then they release the Realme brand to target the sub 150$ or 10000 rs market. Xiaomi on the other hand releases the Poco to target the sub 20000 rs or 300$ market and the redmi to directly take on the Realme. They do this while trying to adequately differentiate between the main brand and trying to establish a foothold with unbeatable prices.
2.6: To solve the problem of logistics and online/offline retail:
Offline marketing strategies utilize offline media channels to create awareness of a company's products and services. These campaigns can include radio and print advertising – including billboards, signs and television advertiaments.
While Online marketing is the process to catch the attention of potential customers for business through particular banner, articles, video, images, flash animation etc. Marketing activities or information are planned as an elegant tempt to the visitors in which particular website of business wants to attract.
Oppo on its own relies on the sales of its offline market. To do this it has to maintain a good relationship with its retailers which involves giving them more money. To avoid running at a loss Oppo has to price it's smart phones higher to make ends.
Xiaomi on the other hand employs an effective online system where it controls the free flow and cost incurred in the offline market.
When offline, The Realme is based in India, so Oppo kind of hopes this would reconcile the aggressive pricing the redmi tends to employ since it isn't based in India..... Yet.
3.0 Notable brands in the past that failed to make a mark:
Yes, Chinese OEMs are not the first to employ this Type of business strategy in the past. There are some notable Local producers that couldn't keep up with dual-branding:
3.1: Micromax: Yu
YU Televentures was an Indian consumer electronics brand that was created on 18 December 2014 as a joint venture between Cyanogen Inc and Micromax Informatics Limited
Although micro wants to revive this sub brand the brand had a premature e-commerce space as well as other problems.
3.2: Lava: Xolo
XOLO was an Indian mobile device brand based out of Noida, India. XOLO was also the first Indian manufacturer to partner with AMD to launch the XOLO Win tablet. Just like Yu, Xolo probably didn't have the financial strength to keep up with the brand.
3.3: Lenovo: Motorola
Acquired from Google for about 2.9 billion dollars in 2014, Lenovo actually said they would drop their own mobile line in favour of Motorola. Well, we all know that worked out.
Although still present in India and other neighbouring countries, Motorola has not been a worthy competitor as it was in the past.
So that wraps up the reason for dual branding in the smartphone race. But do you really think that Sub brands are the spear heads needed for market dominance? Please drop a comment below.
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