Yes, you heard it right. Xiaomi is no longer the market leader in the Indian smartphone market. It currently holds 28% of the Indian market share (as of 2019 Q2).
|BBK Electronics, the market leader of the Indian Smartphone market|
Wait! There’s a catch. The new market leader, BBK electronics, holds 31% of the Indian smartphone market share. The 31% consists of 12% from Vivo, 9% from Realme, 8% from Oppo and 2% from OnePlus. All of these companies, which seem to be different from one another are in fact, either wholly or partially owned by BBK Electronics, one of the largest electronics producers in China.
The big questions arising from the aforementioned fact are why.
- Why does a single company has to release 4 different brands into a single market?
- Do the sales of one brand cannibalise the sales of its own brothers?
- Is it just a namesake difference, or are they totally different?
Let us dive into the topic a step deeper.
|Different brands owned by BBK Electronics|
Why multiple brands?
This practice to release multiple brands has not only been the case with BBK Electronics but other players have also tried this. Xiaomi, for example, has multiple brands under its name, Redmi, Poco and Mi. Huawei has Honor, Micromax has Bharat, Samsung has the Galaxy and there any many others.
However, a broader look at things suggests that this is not the case only in the smartphone industry but in other industries as well. ITC, under its name, has various cigarette brands namely, Insignia, India Kings, Classic and many others. Procter & Gamble has Tide and Ariel under its brand (P&G India).
Different brands are usually created to target different market segments. Taking in consideration BBK Electronics, Oppo and Vivo majorly focus on the offline retail market, OnePlus focuses on the premium segment and is actually the leader of that segment in India (beating Samsung and Apple) and Realme acts as a direct competitor to Xiaomi, focus on the budget segment. Let’s have a look at the target segments of all four of these brands.
|Brands and their target segments|
The sales cannibalisation happening in these brands and it is very low. Target markets for each of the products vary between different classes and usage imageries.
This is another reason for creating totally different brands under a single house. The different brands help the companies to focus on more specific targeting of the customers. Considering the hypothetical situation where all the phones of OnePlus were released under the Oppo tagline, they would have gained traction for the OnePlus models but at the cost of its own sales at similar price points.
Working of these brands
These different brands are separate entities and are not connected to their parent brand, which only holds a part of the brand. However, there still exists a technology sharing between the brands, otherwise also known as co-opetition. Oppo, which is a technology innovator, shares its fast charging technology (VOOC) with OnePlus and Vivo. However, OnePlus uses the term “Dash charging” for marketing gains.
A more interesting fact reveals that OnePlus was actually meant to be an experimental company for Oppo. It experimented with premium specifications at non-premium prices. The response received for the OnePlus 1 was so positive that it was left as a separate brand altogether. Also, Realme, when introduced in the market, was introduced as Realme by Oppo, a brand that was later changed to Realme due to the positive acclaim.
This strategy of creating different brands under a single house is nothing new. However, it is not bound to be a success every time a company releases a new brand. The main factor affecting this gain/loss is creating a differentiated target market. A shared target market may lead to the cannibalisation of sales of either of the brands. A proper execution at differentiated brands may lead to becoming the market leader as in the case of BBK Electronics or otherwise losing your sales to your own as in the case of Lumia and Nokia X series.
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