Xiaomi’s flash sales on Flipkart: “Hunger marketing” or “fooling people”?

I haven’t seen many brands using “hunger marketing” to its best, except Apple, where people madly jostle to buy the product; when supplies kept artificially short to surge demand. It can boomerang when the shortfall is deliberately created for longer period of time.

Xiaomi, the “Apple of China”, has been the recent phenomenon; hotly debated in marketing circles. It was founded in 2010 by serial entrepreneur Lei Jun. The Meteoric rise of Xiaomi, which is still in its infancy, has been the result of combination of great products and shrewd marketing manoeuvres.

Xiaomi partnered with Flipkart to enter India in June 2014. Since then there has been a mad rush of buyers on Flipkart to grab Mi3 and RedMi 1S. This has been the show of hunger marketing at its best; but Xiaomi must remember that “hunger marketing” is the double edged sword. You overdo it, and the things can turn upside down within no time.

Are Xiaomi and Flipkart using hunger marketing intelligently or are they fooling people?

What is Hunger Marketing?

Absence of a thing makes your heart grows fonder for it. Get a great product to market, lure the buyers with crazy pricing and then restrict the supplies to create imaginary shortage. Use this strategy to get higher profits or generate artificial hype without spending a dime.

Let’s see how Xiaomi and Flipkart are using this strategy stretched too far in India.

Hunger marketing

Offering enticing product: Let’s look at the specifications of Mi3 – a smartphone with 5-inch screen, Corning gorilla glass 3 protection, 2GB LPDDR3 RAM, 13-megapixel camera, dual LED flash, Aluminum-magnesium alloy frame, Snapdragon Quad-Core 2.3 Ghz processor, 3050 mAh battery… and the list goes on.

Mi3 has the Display from LG or Sharp, Camera from Sony, Processor from Qualcomm Snapdragon 800 which is used in LG G2, Nexus 5, gorilla glass from Corning.

Haven’t these credentials made Mi3 a superior product and enticing enough to grab the eyeballs and go viral, especially when it is attractively priced one third of the phones with similar features and hardware?

Mi3 doesn’t seem to be another cheap Chinese crap. In fact it is using top of the line hardware, thus giving tough times to Apples and Samsungs of the world.

xiaomimi3_002

You may see the detailed specifications of Mi3 and Red Mi 1S on Xiaomi’s website.

Controlling supplies to create demand: You can buy Mi3 or Red Mi in India only through Flipkart, the online store. Xiaomi sold around 90000 Mi3 phones through six flash sales and 40000 Red Mi through 2 flash sales on Flipkart.

The limited number of units released for sale turn the unsuccessful buyers into frustrated lot. In fact, in last flash sale on Flipkart, 20,000 Mi3 sold out in 2.4 seconds and 38,000 RedMi 1S sold out in 4.2 seconds. This was against 2.0 lakhs to 3.0 lakhs registrations by prospective buyers.

The strategy has been successful till now, creating huge uproar and surge in demand.

Sold out

Generating viral media and word of mouth: The social media and word of mouth have gone viral on Mi3 and Red Mi. Xiaomi is all over Facebook, Twitter, blogs, and news media. Xiaomi couldn’t have grabbed so much attention even with big advertising budget. It has reached the envious position without spending a penny on advertising.

People hate Xiaomi or they love it but they certainly can’t ignore it. This is the strength of the tactics that Xiaomi adopted.

The philosophy of passing on the price benefits to customers by not indulging in advertising, and eliminating dealers and physical stores have enabled Xiaomi to sell the high end products at dirt cheap prices.

Are Xiaomi and Flipkart Fooling people?

If the customers can see through your nefarious designs, then you are doomed. Customers don’t want companies to play tricks with them.

Xiaomi and Flipkart seem to stretching the hunger marketing manoeuvres a bit too far. I reiterate, this can be a double edged sword.

The eager buyers have started feeling being fooled. The reasons are obvious to understand.

Limited manufacturing capabilities: Xiaomi manufactured its products through Foxconn and Inventec. Either Xiaomi has limited manufacturing capabilities or it is tightly controlling the supplies to keep the imaginary demand on higher side. Not an advisable move for long term. Not a trust building move with prospective buyers.

Not releasing the products through other channels: Restricted supplies through Flipkart where people contest to win the products; ultimately makes a large number of prospective buyers feeling dejected, frustrated and fooled.

Flipkart ignoring its premium subscribers: There has been surge in the membership of Flipkart first, the premium subscription service. People paid Rs.500 each for registration in anticipation of preference in product allocation. They felt cheated when they didn’t get any preference for Mi3; and only 2000 units allocated for them of RedMi 1S.

This indicates that the current marketing ploy can be dangerous for both the partners.

Releasing lower model: Xiaomi stopped registrations for Mi3, and in that place released 40000 units of RedMi 1S which were sold in within seconds. This is obvious plan to piggyback RedMi 1S on hype created by Mi3 flash sales. The people who have been desperately trying without success for Mi3 felt Xiaomi pushing the lower model by restricting supplies of superior model.

Although RedMi 1S is attractive in its price point, but Mi3 specifications are far more superior.

Xiaomi and Flipkart have reached the verge of breaking point. Further stretching aggressive hunger marketing tactics may be detrimental for both the partners by the way of negative publicity and prospective buyers moving away to other brands.

Even Apple use this ploy only in the initial period of product releases; making products available in later stages.

People don’t want to be the victims of marketing ploys and they don’t want to get fooled by any company.

I hope Xiaomi and Flipkart is listening…..

What do you say?

Hardeep Handa

Hardeep Handa

I am a seasoned marketing professional. I am ardent reader and avid writer. Management and technology equally excite me. I write regularly in my blog www.biztekmantra.com and www.virginwords.com

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