The smartphone business is sinking.
For the fifth consecutive quarter, global sales plummeted in the fourth quarter of 2018. Reports suggest that these results predict further declines and analysts expect this year to be no different.
But if some recent trends are any indication, phone makers have focused on ending the decline. Companies have aggressively started exploring several new and experimental avenues to spark interest again and, more importantly, convince users to upgrade. And one of them, as it turns out, is dividing the product lines into sub-brands.
The rise of the sub-brand.
In recent years, smartphone sub-brands have emerged in droves. Despite speculation, however, he has been a fairly successful pivot for many. Oppo has achieved climb back up the leaderboards in India with Realme. Huawei’s Honor has remained one of the most consistent presences in the budget segment for nearly half a decade. Little Xiaomi has bagged numerous accolades since then Its introduction in 2018.
On the surface, though, it’s hard to see the ins and outs of the sub-brands. After all, it seems to be a valid argument for asking why a well-established company wouldn’t take advantage of its current brand and instead spend resources to create a new one from scratch.
It becomes even more complex when you consider the fact that the smartphone market is no stranger to these dual-brand strategies. A host of manufacturers have tried the approach in the past without much luck. Remember when Lenovo sold phones under the names Lenovo and Moto? Or when Micromax and Yu were the village talks.
Smartphone sub-brands: why now and why not at all?
Today’s smartphone industry is full of options and opportunities for original equipment manufacturers (OEMs). There are a number of channels that you can adopt to sell and promote. There are a multitude of new technologies that you can pack into your products. There are a lot of niche audiences that you can address. Of course, a brand does not have to invest in each and every one of those aspects.
But with a stagnant market, they need it. And while they do that, they don’t want to fail either. Well, they are fine with failure, it just shouldn’t affect the reputation of the main brand. A reputation that took years to establish and that’s where a secondary brand comes in.
The new arm allows the company to execute a new strategy while dissolving risk if it ever comes to that. It’s almost like building a brand name litter box to test an unproven plan.
“Sub-brands are generally launched to move away from the positioning of the main brand or to move towards a different pricing strategy, without the risk of impacting the established positioning of the main brand. It also helps to infuse a certain freshness around the brand in the market with new products under the new sub-brand, new messages. This is very important in the smartphone market, especially in a very competitive market like India. In that sense, the intentions of the brands that launch sub-brands are quite clear: to stand out in the market, test the response to new product lines with new prices, etc. ”Said Navkendar Singh, research director at IDC.
The differentiation factor, therefore, plays a critical role for sub-brands to thrive. It is imperative for motive and allows the company to change gears in case its strategy does not work as intended.
For example, Xiaomi Poco operates on the higher end of the budget spectrum, away from the thriving phone maker Redmi series.
“Both brands create phones for a different target segment. While Huawei through its product launches is aimed at a premium user, Honor has focused its energies on bringing innovative products for young people in an affordable price band, “Suhail Tariq, CMO, Honor said in an email interaction. on why Huawei decided to have a sub-brand.
There should be no loopholes that can lead the consumer to relate the two brands at stake. Companies are careful not to use the same set of gradients for marketing materials. In essence, it is the safest way for a manufacturer to go down a new path.
There are some cases where an OEM lets its multiple internal brands compete with each other, such as Lenovo and Moto. But eventually, the two started to overlap and at the time, unlike today, there just wasn’t enough to separate them. In the end, the Lenovo’s label was closed in India.
It is when all the factors are addressed with precision and the parent manages to hammer the message home, does a brand strategy sub-flourish.
“The success of a sub-brand depends on many factors: the moment in the market, the time to reach the market, the clarity of the objective in terms of scale to reach and the price segments to play. Also, consistency and persistence in marketing and messaging are very important. important, along with the expected regular portfolio update. “Brands like Realme, Honor are able to do all this with great success, while other brands like Yu, Zuk, were not clear about their reason for existence,” added Singh.
The game of perception.
Thats not all. The sub-marks can also break predetermined stigmas instead of protecting the head.
Vivo, for example, is not normally associated with the high-end. Therefore, the company went ahead and announced its first sub-brand called iQOO. It will bring premium flagships under iQOO and essentially try to make a mark where it couldn’t be otherwise. Little Xiaomi is pretty much the same story, but the gap is not as wide as what Vivo is trying to do.
An odd common trait among these rising sub-brands like Poco, Honor or Oppo’s now-independent Realme is that they are all Chinese.
A shrinking base surely affects all players, right? The question remains then, why do others like Samsung, which It lost pole position in the second largest smartphone market. After years of reign, haven’t you jumped on the sub-brand bandwagon yet?
The reason for this is quite simple. Veteran brands like Samsung don’t require constant updates to reinvigorate their presence. A lot of failures don’t severely tarnish their names. I’m sure we can remember the Galaxy Note 7 debacle, right? Yes, it was an embarrassment for Samsung, but not for long. The Galaxy S8 / S8 + followed by the Note 8 undid all the damage suffered after the recall of the Note 7.
Yes, they will lose the numbers, but a competent recovery is all they would need to retaliate and make up lost ground. While companies like Oppo, Vivo, etc., carry much more fragile identities. Another factor to keep in mind is that the regions where Chinese phone makers have the highest sales are the fiercest when it comes to competition than the United States. In the vast space for Android smartphones, brand loyalty is not as strong as with an Apple device. A Samsung user might well go for a Xiaomi phone and then go for an Oppo device.
Singh agrees. “While the China-based brands established themselves very quickly in the Indian market, their brands are certainly not as strong as Samsung, so they need to infuse freshness regularly to find new pockets and growth segments specifically in India,” without cannibalizing their original brand, which generally follows the same brand strategy globally, “Singh said.
Poco / Redmi, Realme, Vivo declined to participate in the story.
Like any other trend in the smartphone business, some sub-brands are in fact just sheep following the herd. However, since it’s not as easy as notching screens, most of the sub-brands are the result of extensive research.
The whole concept essentially boils down to manipulating the perception of the brand. It’s about going to places where the mainstream brand cannot in its current state or staying where it is today while continuing to progress and experiment.
Plenty of sub-brands are expected in the coming quarters as companies try to streamline their lineups and capitalize on growing niches, including mobile gaming. It remains to be seen whether they end up being victims of a severe market or driving their parents out of the blues of the crisis.
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