Here’s why Redmi as an independent brand is good for Xiaomi — but even better for budget smartphone users

• One of the popular smartphone manufacturers in India, Xiaomi, announced that its Redmi phones would become their own brand on January 4.
• Redmi will be the second sub-brand under Xiaomi after POCO was launched last year.
  
• At a time when the smartphone market is booming, brands are looking to specialise and diversify — even the users want variety, but with specificity.
  
• Local smartphone manufacturers in India have also tried this strategy in the past but it did not yield much success.

Xiaomi recently announced the launch of Redmi as an independent brand under the parent company. The Redmi and Redmi Note series have been crucial to Xiaomi’s growth and popularity in India.

The Redmi sub-brand will be the second under Xiaomi’s umbrella after it launched POCO to target its ‘affordable flagship’ users last year. Redmi, on the other hand, will continue to offer ‘value for money’ budget smartphones.

The breakaway of Redmi is an opportunity for Xiaomi. It’s about giving the users what they want, and more of it. Specialisation allows Redmi to be its own brand as per its price and also tailor its distribution to cater to its target audience — users looking for budget smartphones (₹10,000 - ₹20,000).

Not that there’s isn’t something in it for Xiaomi as well. The multi-brand approach allows the company to boost its growth. Since the strategy for each sub-brand will be specialised for its mission — the cumulative growth of all the sub-brand will also the parents brand to grow even further.

What’s in it for the user?

Having a separate brand for an entity that specifically caters ‘budget smartphones’ cuts marketing dissonance out of the equation. That means if you go to an offline retailer for a ‘budget smartphone’ — the retailer will know exactly which brand to offer.

Even consumers will have a clear idea about which phone brand serves their exact purpose rather than comparing the ‘budget launches’ of different brands. Redmi will be able to specialise in the different facets of the phone, rather than being Xiaomi’s ‘budget offering’. That means camera-focused phones, performance-focused phones or even display-focused phones.

At a time when the Indian smartphone market in booming in India, users are looking for variety in their options but they are also looking for specificity. Over 70% of smartphone users in India are switching smartphones brands over the span of just three months.

The trend shows how upgrade cycles are getting shorter as users are looking for the ‘next big thing’ to hit the world of smartphone technology.

Xiaomi has the most to gain with 37% of users switching over to the Chinese smartphone manufacturer — most likely since its products offer latest technology at a ‘value-for-money’ price point.

It’s not just Xiaomi’s strategy

Xiaomi and Samsung have continually battled for the top spot as India’s biggest smartphone company. In recent quarters, Xiaomi has taken the lead with Redmi phones driving much of their growth in terms of sales.

Sure, Xiaomi may have two sub-brands under its belt but its not the only smartphone company to apply the multi-brand strategy in India. Huawei’s sub-brand, Honor, has been in the market for the longest time along with new entrants like RealMe under Oppo.

Lenovo tried to be multi-branded with Motorola as its sub-brand — a strategy that did not work out at the time despite Motorola already having social capital with users in India.

Local smartphone manufacturers like Lava and Micromax also tried to implement Xolo and Yu as their respective sub-brands, only to face failure.

While some experts view launching a sub-brand as starting from scratch, others believe that it allows leverage of the parent brand to merge with the freshness of a new sub-brand.

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