Differentiation Strategy Determines Success in Chinese Mobile Phone Market, Says CCID

Sep 13, 2007
Nikkei Electronics Asia

CCID Consulting has released an article discussing how brand concentration of mobile phones is improving, with success determined by a company's differentiation strategy.

CCID Consulting revealed in the first half of 2007 that domestic Chinese mobile phones featured a sales volume of 71.478 million sets and a sales revenue of Rmb84.58 billion, with a respective growth of 25.5% and 5.5% compared with the same period last year. The market scale expanded continuously and the average price of mobile phones dropped steadily. Foreign brands have driven up the sales efforts of low-end products and bundled mobile phones. Foreign brands have continued to cultivate the high-end product market. In the first half of 2007, Nokia, Motorola and Samsung accounted for a total market share of 61.4% with an increase of 8.9% compared with the same period of last year, and brand concentration rose steadily.

In today's fiercely competitive mobile phone industry, the differentiation strategy has major influences on brand development. Foreign brands such as Nokia and Motorola strive to occupy market share by improving the sales volume of low-end products. The data by CCID Consulting's Research Report on Mobile Phone Market in Jan-Jun, 2007 revealed that Nokia and Motorola occupied a share of 57% in the Rmb500-700 mobile phone market and 70% in the less-than-Rmb500 mobile phone market.

Second-line domestic brands have also adjusted their product orientation. According to different market features, they have worked out differentiation product R&D and sales strategies, driven up the mobile phone customization provided by operators, produced dual-G/dual-mode dual-standby mobile phones, stock mobile phones and navigation mobile phones. Through marketing channels, these companies have actively explored many modes such as TV-based direct selling, network-based direct selling, selling to high-end users and selling to specific areas and aimed to receive active market feedback.

As the data from CCID Consulting shows, compared with the same period last year, the sales value of Coolpad, HTWChina, K-TOUCH, Changhong, Huawei rose to a certain extent. Lenovo, the first domestic brand, made a solid achievement in sales in 2007 by adopting appropriate marketing strategies, executing strict quality control and process control in brand, product design, production and other processes, and forming its own unique product concept and design planning.

Domestic mobile phone brands shall follow the market and win customers by launching a series of brand popularity campaigns to interact and communicate with users. This will allow more users to better understand and know of enterprise products, which will in turn improve the novel and unique user experience in 3G, mobile phone TVs, smart mobile phones, and new technology and applications.

Domestic mobile brands will hopefully immerse themselves into the hotspots of the mobile phone industry to carve out a differentiation development road, building up their brand image by first developing mobile phone TVs, GPS and other integrated terminals, by developing high-end users for Chinese-specific handwriting mobile phones, and by cultivating rural users and developing farmer-specific low-end mobile phones.

Experience has shown that differentiation strategies are an effective way to develop enterprises.