Xiaomi Electric Vehicle
Market-entry Strategy
2022 Oliver Wyman Case Competition | Team BSO
Executive Summary
Industry Insight
• Business Model Analysis
Strategy Design
Market Analysis
• Market Overview
1
Distinct business models for
OEMs in China
Trend of China's entry-level
passenger car market
1
2
Unique advantages, drawbacks,
and future trend of OEMs
• Customer Analysis
• Offline strategy
1
Designs and reasons for
choosing direct-sales model.
• Online strategy
1
Stick to direct-sales model
2
Optimize after-sales service
system
• Xiaomi Competitiveness
Analysis
3
Build up publicity channels that
the youth loves
• Competitor Analysis
• Long-term retention strategy
1
1
Target customers and their
preference
Analysis of main competitors
and product definitions
1
Decentralization, community
building, Mi home ecological
construction and User orientation
For our client, Xiaomi is a comparable company that has successful experience.
An emerging
auto manufacturer
Target at
young customers
Similar
target customers
High leverage
and low liquidity
Large capital
with low
leverage
Less technical
reverse
Abundant
technical reverse
Low visibility
Client
Smaller scope of
business
A more
homogeneous
product mix
Focusing on
entry-level vehicles
Famous leader
Global business
giant Top 500
Have a complete
ecological chain
Facing
fierce competition
Leader of
Cost-effective sales
model
Agenda
Industry Insight
Business Models
Business Model Analysis
Market Analysis
Market Overview
Customer Analysis
Xiaomi Competitiveness Analysis
Competitor Analysis
Strategy Design
offline strategy
online strategy
long-term retention strategy
In China and globally, there are mainly three distinct business models for OEMs.
Cooperate with corporations without
their own factories
· Provide assembly and processing
Dealership
Processing
Provide custom made
automotive parts and systems
for cooperated corporations
Direct Sales
Engineering & Development
Cooperate with brands
Provide systems or automotive
part
Produce assembled vehicles
OEM enter the market
Direct Sales
2
Purchase raw materials
Develop and manufacture
Purchase raw materials and
automotive parts, obtain design
and chips from cooperators and
assemble vehicles
Skateboard
No partnership
Or Cooperate with assembly
company which can provide upper
part of the vehicle
Purchase upper parts and enter the
market with own brand
Sell skateboard to corporations
Purchase automotive parts and
raw materials to develop a
skateboard
For each type of OEM,
OEM, there
there are
areunique
uniqueadvantages,
advantages,drawbacks,
drawbacks,and
andfuture
futuretrend.
trend.
Future trend for OEMs
Pros and Cons of different types of OEMs
• Applied with cuttingedge technology
• Monopolize
technology
• High requirements
for market size and
technology
Processing
• High Flexibility
• Good cost control
• Have little autonomy
• Can be easily replaced
• Can not guarantee the
quality
Skateboard
• With diverse car
models
• Can change upper
parts easily
• Strong autonomy
Engineering &
Development
•
•
•
•
•
• Have extremely high
requirement for
technology
•
Expand engineering system
development, and concept
car development
Upgrade and refine in
production and processing
Transform and establish a
brand to enter the market
Be eliminated
Look for cooperative
enterprises to provide
upper body and logo
design
Establish brand to enter
the market
Agenda
Industry Insight
Business Models
Business Model Analysis
Market Analysis
Market Overview
Customer Analysis
Xiaomi Competitiveness Analysis
Competitor Analysis
Strategy Design
offline strategy
online strategy
long-term retention strategy
China's entry-level passenger car market is dominated by new energy vehicles.
Trend1: The production and sales of new energy vehicles have
experienced explosive growth in the past three years
Trend2: China's automotive market has entered the stock game, the
market share of fuel vehicles is shrinking rapidly.
Comparison
New-energy
Fuel
Higher level of intelligence
Mature technical system and developed infrastructure
Stronger policy support and tax advantages
The carbon neutrality agreement limits the growth for fuel vehicles
Lower cost in short-distance travel
Demonstrate excellent stability and endurance over long distances
Expending market brings considerable development prospects
Shrinking market has intensified the internal competition among fuel car
companies
Source: China Automotive Industry Association, 2021
Target customers of entry-level vehicles are young and well-paid who prioritize brand
and driving experience as their key purchasing criteria
Target Customer Analysis
Behavioral
Psychological
Demographic
Gender
Age
Income
City
Typical customers
Female
<20
Male
21-25
<5k
5k-10k
Tier 1
26-30
10k-20k
Tier 2
>20k
Katherine
Shanghai
≤Tier 3
Strong Interest in New Products
Aware of the cutting-edge products
and willing to try new things.
Strong Fashion Sense
Pay attention to what is in vogue
and keep up with the trend.
Increasing Care for Technology
Ethusiastic about smart products with
the newest technologies.
Value in Personal Perferences
Willing to spend more for the products
they like.
Jason
Beijing
Martin
Hangzhou
Gender: Female
Age: 30
Income: 20k/month
Motivation: Commute
“I would value
the design more
because I
only drive for
short distance.
Gender: Male
Age: 24
Income: 8k/month
Motivation: Mobility
“It would be very
convenient if my
car could be connected to my
mobile phone.”
Gender: Male
Age: 28
Income: 25k/month
Motivation: Mobility
“I am interested
in technology
and would like to
try electronic
vehicles ”
• Frequently use Internet and stay active on social media.
• Habitually obtain information on social media before purchasing
products.
• Spend much on better sensory experience
• Spend much on the brand values conveyed by the automakers.
Key Purchasing Criteria (KPC)
• Driving Experience: Evaluated by technologies applied and
consumer comments on its daily-use experience.
• Brand: Evaluated by brand awareness
Xiaomi's advantage in building cars down the road lies in its already mature operating
internet model and strong supply chain management capabilities.
Strength
Weakness
• A strong ecology builds a solid foundation to
build cars
Xiaomi AIOT device connections (million) and growth rate
Number of AIOT
connections
(million units)
AIOT connection
growth rate
Percentage of users
with more than 5
pieces of equipment
Xiaomi MIUI monthly active user size and growth rate
Global MIUI
monthly active
users (billion)
YoY growth (%)
Year-on-year growth (%)
Share of MIUI users in
mainland China
• Resources and channel
accumulation ensure
growth
•
Supply Chain
Management
Capabilities
Strong Brand Effect
Xiaomi is a famous brand
already have its fan
base so the promtional
cost could reduce
significantly.
Xiaomi Home shops
Xiaomi Auto could reuse
Xiaomi's unique online
and offline sales
channels.
•
Lack of complete vehicle platform
manufacturing capability
solution：Acquisition of existing
mature automobile production plants.
There is a wealth of vehicle
manufacturing resources available for
acquisition in China.
Lack of accumulation of self-driving
related automotive technology.
solution：M&A + self-research.
example: Xiaomi have acquired
DeepMotion, a company in the field of
autonomous driving technology, and
invested in more than 20 companies in
autonomous driving algorithms and
solutions for vehicles, as well as
sensor and computing platform
companies.
Our client faces direct competition from BYD, Li Auto and X Peng, and should improve
branding and driving experience.
BYD, Li Auto and X Peng are major competitors
Major brands’ Competition Landscape in China EV&PHEV Market
600000
Average price per piece(￥)
Major Competitors
Our competitors excel in branding and driving experience
KPC Performance Comparison
Brand
Driving Experience
Generic Competitors
NIO
TESLA
indirect Competitors
￥35,0000
~76% of vehicle
consumers heard of
NIO
“I enjoyed the cost-effective
performance but sometimes it
fails to meet my expectation ”
As a late-entrant, Li
Auto has small
reputation
“The Li Auto one makes my
Li Auto
X Peng
50000
BYD
GAC Aion
Low
8%
family happier”
# Proportion of EV
SGMW Roewe
market
High
Major Competitors: Focus on mid-end vehicles and perfect user experience
Generic Competitors： Position high-end market and high brand premium
~67% of vehicle
consumers heard of
Swarovski
“It gives me a smart mobility
solution”
Indirect Competitors: Auto OEMs Sub-brand, cost-effective
6
Agenda
Industry Insight
Business Models
Business Model Analysis
Market Analysis
Market Overview
Customer Analysis
Xiaomi Competitiveness Analysis
Competitor Analysis
Strategy Design
offline strategy
online strategy
long-term retention strategy
In order to enter the EV market, it is necessary to focus on both the channel side and the
product side.
Strategy Implementation
STEP ONE
Channel
side
Go-to-market
strategy
Product
side
STEP TWO
• Open 30-40 Mi Car home concept
stores in tier1&2 city
• Renovate the existed Mi home 1.0-2.0
flagship stores in tier3&4 city
Offline
channels
• Integrate sales resources of Mi
home3.0-4.0 flagship store and launch
auto sales business
Online
channels
• Mijia app and Xiaomi mall website will be the major online
sales and service platforms
Pricing
Strategy
• The price of the car for our client should be around 150K to 200K
Customization
Strategy
Product
Experience
3
• Improve supply elasticity and meet diversified demands
through customization.
• Produce mid-end vehicles based on good consumer experience
Direct marketing is recommended and our client should Make full use of the advantages
of existing offline channels
Select the direct mode
Direct mode
Direct Store building
STEP ONE
(in tier 1 & new tier 1 cities)
STEP TWO
(in tier 1&2&3&4 cities)
• Improve the user experience and
understand consumer demand better
• Favors brand premium
• Optimize after-sales service
• Develop user consumption habits
• Integrate sales resources of Mi home3.0-4.0
flagship store and launch auto sales business
• Tier 1&2 city: Open 30-40 Mi Car home
concept stores
• Concentrate on tier 1 & new tier 1 cities, build
up reputation by ultimate user experience
• Tier 3&4 city： Renovate the existed Mi home
1.0-2.0 flagship stores
l Make full use of the advantages of
existing offline channels and form
core users
l Tap the potential of the sinking
market. Consolidate and expand core
users
Online strategy should focus on vehicle direct sales, building after-sales service network and
effective publicity channels
Direct selling Strategy
Build up online auto sales channel based on Mijia app and website
•
Online sales save agency fees and reduce publicity costs.
Build an online platform to display 3D models of the whole series
of vehicles.
Relying on APP and other online direct selling channels, building
brand communities, and concentrating user groups.
After-sales Service Strategy
•
•
Xiaopeng Vehicle has tried
producing after-sales services
such as battery insurance on
Taobao stores.
Online sales of spare parts
(Light curtain, Quick charge
interface, head display, etc.) is
also a way to improve aftersales efficiency.
Customers apply for after-sales service on the online platform
Reached a cooperative agreement with giant automobile maintenance, outsourcing aftersales service, thus broadening the network.
Users go to the designated partner for maintenance, and the vehicles that need to be
returned to the factory will be transferred by the partner
After the after-sales service, users will evaluate the service online.
Dynamically adjust the list of after-sales service suppliers according to users’ evaluation
Mijia app and Xiaomi mall website will be the major online
sales and service platforms
1 Launch electric vehicle sales business on Mijia app
•
Make full use of the user stock advantage of the Mijia app and bring
the automobile business into the Xiaomi product ecosystem .
2 Develop online auto sales business on the website
•
Update the Xiaomi mall website. Set up the 3D display function and
online automobile sales business .
3 Convert public traffic into private traffic
•
Convert public traffic into private traffic through marketing promotion
on different social platforms
On the product side, the focus is on pricing strategy, product experience and customization
Pricing Strategy
Product Experience Strategy
Design
Target: Produce mid-end vehicles based on good consumer experience
•
•
•
Cooperate with leading technology suppliers (such as Huawei), applied
autonomous driving technology, etc.
Develop independent technology to improve the degree of intelligence
and integration.
Pay attention to details, especially optimize car audio, intelligent voice
interaction and other areas of interest for young people
Customization Strategy
•
•
•
•
Design
Design
Based on recent sales data, the market shows a “two-tiered” trend.
The low-end market focuses on the cost effective performance, while
the high-end market focuses on the ultimate user experience.
Opportunities occur in mid-end, where the main market price is
around 100k to 200k.
Manufacturers between 100K-150K are widely using the model of
small profits and quick turnover, and have rich technical reserves to
reduce costs.
Therefore, it is wise to choose the market between 150K and 200K.
The advantages include expanding profit margin, reducing the
intensity of competition, and seizing the market in advance
Target: Improve supply elasticity and meet diversified demands through
customization.
Source: https://www.maiche.com/ner/, March, 2022
Latest customer insights and stronger design capability
1
Short term strategy of Xiaomi should be focusing on increasing Mi Car’s reputation and
expanding the target consumer groups.
Celebrity Endorsements
Mi Car can use energetic and sporty
celebrity advertisement to strengthen
its image as a car for the young
Criteria：
Multi-channel Social Platforms
Social platforms Chinese young people frequently use
Example：
Online Advertising
（In-site ad & open-up ad）
· No more than 30
years old
· Fans are basically
young people
· No controversial
affairs
· Good Reputation
· Sporty & Energetic
Offline Advertising
Mi Car can utilize its
existing billboard
advertisement and
banners especially in
subway stations and
bus stations.
Create topics
spark discussions
In-site advertisements
· Cooperate with famous
automotive field influencers
· Invite vloggers to test drive
and experience the
customized service of Mi Car
· Give Publicity to Mi Car
through Lei Jun (Xiaomi’s CEO)
& Xiaomi’s official accounts
on social platforms
· Create trending hashtags
related to Mi Car
Open-up advertisements
· Spark discussions about Mi Car on
apps that provide information for
potential car buyers
· Grab users’ attention with popup advertisements
Customers can buy Mi Car on Xiaomi‘s official website and connect it
with other Xiaomi products through Mijia App.
2
1
In the long run, our marketing strategy is to enhance user stickiness through user
operation.
Decentralization
user
executives
enterprise
Car enthusiasts
Community building
• Create an auto service and
communication platform
Discussion
• The platform contained
enterprises, executives, users and
car enthusiasts
sharing
• Respond to the real needs of
users in a timely manner
• Connect people, products,
services, information and even
lifestyles through communities
live broadcast
• Innovate the communication
mode between users and
manufacturers
car club
User orientation
Mi home ecological construction
• Build a Mi home product
ecosystem
• Through the Internet of Things
(IoT) technology, realize the
integration experience of cars,
mobile phones, smart homes
and software system.
• Build a social and sharing
community
potential users
core users
ordinary
users
• Build a goodreputation by
optimizing user experience
• The influence of core users
spreads to ordinary users, and
potential users
THANK YOU
2022 Oliver Wyman Case Competition | Team BSO