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Huawei Technologies Co., Ltd. is a Chinese multinational networking, telecommunications equipment, and services company headquartered in Shenzhen, Guangdong. It is the largest telecommunications equipment manufacturer in the world; in 2018, Huawei ranked 72nd in the  Fortune Global 500 List. As of 2018, Huawei is the second largest smartphone manufacturer in the world behind Samsung.

While the features and quality of Huawei smartphones have been improving steadily, the brand image still  remains  that  of  a  value-for-money  player. As  part  of  the  marketing  department  of  the multinational, you have been tasked with creating a report for senior management on the line extension plan that your department is recommending, a new line of smartphones targeted at the premium segment of the market, under a new brand name. The launch is scheduled for end of 2019.

It is now your task to analyse, evaluate and prepare an individual report addressing the following issues…

  • Using appropriate sources, undertake a full marketing audit (internal and external environments) to assess strengths, weaknesses, opportunities and threats to your organisation. Include details about the industry competitive position and market share of your competitors.
  • Provide a critical evaluation of the organisation’s competitive edge (USP). Demonstrate its effectiveness by providing value added to its customers and include other relevant market performance data to underpin your evaluation (e.g. growth, sales trends and/or profitability) of your competitors.
  • Part 2:
  • Based on your Part 1 analysis select target segment/s and set clear marketing objectives to increase brand awareness, market share, sales and/or profitability for the new brand you are recommending. Your marketing strategy should address these objectives with the application of the marketing mix to your organisation.
  • These suggestions should be your own ideas but may include marketing tactics and strategies used by other successful organisations or companies.

For the purpose of this assessment students need to focus on marketing strategies being used at the B2C level.

PESTLE Analysis

Introduction 

The Huawai Technologies Co. Ltd. refers to a Chinese multinational organization that deals with telecommunication equipment as well as consumer electronics manufactures. The organization has its headquarters at Shenzhen, China. The organization was founded by Ren Zhengfei, a former military engineer, in the year 1987. Initially, the chief focus of Huawei was on phone switches. However, eventually the organization has expanded its business by building telecommunication networks along with provision of consultation and operational services both in local as well as international market. Currently the company has more than 170,000 employees all over the world and is considered to be the largest telecommunication equipment manufacturer across the world (Shubbak 2019). The current target of the organization is to come out of its “value for money” image and enhance it consumer base by offering a Smartphone line to the premium segment of the market. In this report, PESTLE analysis and SWOT analysis of the mentioned company along with evolution of its competitive advantage, current marketing strategy, Perceptual Map, Competitive profit Matrix and a survey will be conducted in order to understand the potential strengths, weaknesses, opportunities and threats that can be faced by the organization. Based on this part, the second part will include analysis of the premium target segment and development of set clear marketing objectives to increase brand awareness, market share, sales or profitability for the new brand recommended.

PESTEL Analysis 

The PESTLE analysis model helps marketers to analyze the macro environment of an organization. In order to understand the external environment of Huawai, PESTLE analysis of the Chinese electronic industry has been conducted bellow.

Political Environment

The political environment of China is more stable than majority of the developing countries of the world. As per the data obtained from the Fragile state index 2018, China has ranked 89th when it comes to political stability. According to researchers, the level of political stability of a country imposes high impact on the business policies, laws and regulations of the same (Feldman 2017).  Considering the fact that China is working on expanding its electronic industry, a good number of incentives and tax relations are provided on behalf of the Chinese Government. Thus expanding its business in the Chinese electronic industry will be beneficial for Huawai.

Economic Environment

In the past 5 years, the economy of China has experienced GDP growth. However, according to Lin et al. (2018) the exchange rate of Chinese money is fluctuating and thus it may impose negative impact on the business. From the increasing GDP of China, it can be understood that the living standard of the residents of the nation is gradually increasing. Currently, the GDP of the nation is second highest, the first highest being USA. However, due to huge population, the per capita income of the nation is not as high as the GDP of China. The Taiwan province of China ranks 37th when it comes to per capita income and thus it can be understood that majority of people in the nation belongs to lower middle and middle class.

SWOT Analysis

Social Environment

The society of china is considered to be more on the conservative side when it comes to culture and public morality. With the help of thee Hofstede model, six socio cultural factors of China that has the potential to impose impact on the business organizations established in the mentioned country that is Power Distance, Uncertainty Avoidance, Individualism, Masculinity, Long-term Orientation, and indulgence has been plotted bellow. It has been found that in the nation subordinate-superior relationship tends to be polarized and there is no defense against power abuse by superior (Hu 2016). The society of china is also found to be pragmatic in nature which can impose positive impact on the business of the Huawai Technologies Co. Ltd.

Technological Environment

In spite of being a developing country, China is quite advanced in technology. New digital media technologies as well as internet technologies occupies the lives of the consumers. More than 73.24 percent of the nation is currently available on popular social media platforms. The technological development of the nation act as a highly beneficial factor for The Huawai Technologies Co. Ltd, since it enables the company to reach out a huge number of consumers within very limited amount of time though online marketing and online promotional techniques (Bengtsson and Wang 2016).

Environmental Environment

When it comes to environmental environment, china needs to develop more strict rules and regulation in order to enhance and maintain the environmental sustainability of the nation. One of the major environmental issues faced by the mentioned organization includes air pollution. According to the global EPI ranking, the position of China is as low as 120th amongst 180th countries.

Legal Environment

The laws and regulations of China impose high impact on the basic requirements of the Huawai Technologies Co. Ltd. The business legal environment of china is currently disturbed due to good number of factors. From Table 1, it can be clearly understood that China is lacking ease of doing business which can be major obstruction for organizations who has established their business in the Chinese Electronic industry.

Strengths

1. The Huawai Technologies Co. Ltd is the largest telecommunication manufacturer across the world.

2. The  organization has high brand equity across the nation

3. The chief focus of the management is on innovation

4. The consumer base and loyalty of the company is high

5. The organization follows cost leadership and possess technical advantage

Weaknesses

1. The management is unable to capture the upper middle class an elite class consumers in both local as well as global market

2. Failure to enter US

Opportunities

1. The untapped Indian market can be considered as a major opportunity for the company

2. The organization can expand its consumer base by launching premium quality electronic goods

3. 5G opportunities

Threats

1. The increasing competition in both local and global market

2. import tariffs in China are relatively low compared to other countries


Table 1: SWOT Analysis of Huawei

Source (created by author)

Excellent product quality along with local service team

As a telecommunication service provider, the organization has succeeded in increasing the product quality along with building a strong local service team for fast responding of consumer request. In order to gain competitive advantage the organization provides special training to the employees so that any kind of network problem can be eliminated within a limited amount of time

Current Marketing Strategy

Since the initial days of Huawei, the pipe strategy has been built by the management of the organization. The organization has become the largest network infrastructure vendor across the globe after investing 10 percent of its revenue to R&D (Schlegelmilch 2016). Instead of looking for the fast money process, the organization focuses on building the core of its business.  

In china, the market share of Huawei is 15.8 percent (Blakeman 2018). The competitive advantage gained by the mentioned organization is majorly due to the high quality of its product and services provided to the consumer at a lower cost compared to its competitors.  Considering the fact that Huawei has adopted cost leadership, the strategy of the consumer to gain profit by capturing a huge amount of consumer base (Piercy 2016).

Samsung

Hauwei

Apple

Critical Success factor

weight

Rating 1-4

Score

Rating 1-4

Score

Rating 1-4

Score

Advertisement

1

2

3

3

2

1

2

Financial support

2

2

2

4

2

2

3

Consumer’s loyalty

1

3

2

4

3

3

4

Management

2

1

3

2

4

3

2

Innovation

1

4

2

3

4

4

3

Market share

2

1

3

1

3

2

2

Total

9

15

18

16


Table 2: Competitive profile Matrix

Source (created by author)

  1. What is your age?
  2. What is your educational level?
  3. What is your income level?
  4. Which of the three companies do you prefer for buying a Smartphone?
  5. Do you think the price of Huawei Smartphone is reasonable?
  6. Do you think the quality of the product is high?
  7. Do you find the logo of the brand attractive?
  8. Do you think that the battery life of the product is good?
  9. Which of the three celebrities will you prefer most acceptable for a Huawei performance?
  10. Do you pay for Smartphone on a monthly contract or all upfront?
  11. How much is your yearly budget for your smartphone?
  12. What are your 3 favorite apps for your smart phone?
  13. How much data per month do you use on your smartphone?
  14. Approximately how many messages do you send on a daily basis?
  15. Approximately how many calls do you make on an average day?

After conducting the survey, it has been found that more than 65 percent of the consumers prefer Huawei smartphones compared to Apple and Samsung. Majority of the consumers think the company provides high quality product within a limited price range.

Brand name: Huawei Premium

The idea behind Huawei Premium is to provide the consumers with a premium quality smartphone with multiple futuristic features. The Huawei Premium offers the consumers with 5.8" OLED display, Faster A11 Bionic processor, edge to edge display, wireless inductive charging facility and facial detection. The edge-to-edge top-to-bottom Super Retina display adopts OLED technology for true-to-life colors, deep blacks, and a million-to-one contrast ratio. It features a 2436 x 1125 resolution and 458 pixels per inch.

The color of the brand is golden that signifies its premium quality and features.  

The chief purpose of the segmentation, Targeting and positioning model is to select the right consumer in the market in order to experience an increased revenue and consumer loyalty (Xia and Gan 2017). In the following table, segmentation of consumers of the Huawei Premium smartphone line has been conducted.

Segmentation type

Segmentation criteria

Huawei premium segment

Demographic

Age

30 years to 60 years

Gender

Male and female

Income

Upper middle class and elite class

Generation

Middle aged and young

Occupation

Business personnel, managers , CEOs  

Geographic

Density

Urban

Region

Both domestic and international

Psychographic

Social class

Upper middle class and elite class of the society

Consumer personality

Confident, suceeder, explorer

Behavioral

Consumer loyalty

Both hardcore royal and switcher

Consumer user rate

Regulars, first times, potential

Buying frequency

yearly

Benefits sought

Sense of achievement and belonging, speed of service, advanced features and capabilities


Table 3: Segmentation of Huawei Primium

Source (created by author)

The Huawei Premium brand has been launched focusing the upper middle class and elite class of the society and thus is using a differentiated targeting strategy (Tsai and Chang 2018). The differentiated marketing strategy of the mentioned brand is to expand its consumer base in the upper middle class and the elite class of the society. The manufacturing and investment cost of the product is high in order to ensure premium quality and service. The target consumers of the Huawei iphone X middle aged businessman with very high disposable income. The smartphone for now will only be available online and at Huawei stores.

Perceptual Map

Positioning of a brand is defined as the market effort and can be done with the help of promotion and advertising (Kim and Chao 2018). The brand identity, elements and quality of the product offered by Huawei does play a major role in the positioning of Huawei Premium. Huawei has positioned its Huwei premium series by offering a Smartphone series that has futuristic features and are uniquely different from its competitors. The premium smartphone line is promoted as one of its kinds and is presented as a status symbol of the consumers.  The company’s chief target is to create a product differentiation by applying effective positioning strategies so that it can be distinguished from the product offered by its competitors. considering the fact that the target consumers of the brand is the elite class society, the company is not focusing on gaining competitive advantage by lowering the price range of its product. Instead highlighting the uniqueness of the product along with establishing it as a new status symbol is the technique adopted by the management to position its new product.

Time

space

Media exposed to

7.30 am to 8.30 am

Morning work

On hoardings

8.30 am to 11 am

Getting ready for work

Advertising in newspaper and social media

11 am to 1 pm

At work

Internet via laptop

1pm to 6 pm

Afternoon work

Social media through phone and internet in laptop

7 pm to 10 pm

Driving back home

Advertisement in hoardings by the side of the road

10 pm to 11 pm

Night walk

Advertisement in hoardings by the side of the road

11 pm to 12 pm

Getting ready to sleep

Social media through phone and internet in laptop

12 pm to 7.30 pm

Sleep time

NA


Table 4: Time Space Chart

Source (created by author)

Specific

40 percent of the market share by the end of 5 years

Enhance the target consumer base by at least 35 percent with the 5 year

Measurable

1. Achieve 5 percent of the market share by the end of 1st year

2. Achieve 10 percent of the market share by the end of 2nd year

3. Achieve 17 percent of the market share by the end of 3rd year

4. Achieve 25 percent of the market share by the end of 4th year

5. Achieve 40 percent of the market share by the end of 5th year

attainable

1. implementing a good number of promotional techniques both online and offline

2. regular monitoring of the sale percentage

Realistic

1. to communicate regularly with the consumers through social media platform

2. T o provide effective training to the consumer service executives for excellent after purchasing service (Malysheva et al. 2016)

Time specific

1. To achieve 5 % level of brand influence share within the first 12 months of the business started.

2. To achieve 10% level of brand influence share by the end of 2 year of the business started.

3. To achieve 15% level of brand influence share by the end of 3 year of the business started.


Table 5: Smart Goals

Source (created by author)

The 4P marketing mix can be defined as the set of tactics used by an organization to promote its brand or product in the market and enhance its revenue and consumer base.

Product

Considering the fact that the target consumer of the mentioned brand belong to the elite class of the society, Huwei premium Smartphone are luxury Smartphone with crystal cut design. The unique features of Huwei premium Smartphone include stainless steel frame and hand-wrapped Italian leather backplate. 5.8" OLED display, Faster A11 Bionic processor, edge to edge display, wireless inductive charging facility and facial detection. The edge-to-edge top-to-bottom Super Retina display adopts OLED technology for true-to-life colors, deep blacks, and a million-to-one contrast ratio. It features a 2436 x 1125 resolution and 458 pixels per inch.

The Internet of Things is an emerging communication concept that interconnects variety of devices with people, processes and data along with allowing them for communicating with each other in a seamless way. Being a smart phone with highly advanced technology, the mentioned product does count in the Internet of Things. In the personal IoT of the Huawei Premium, it will be easier for the consumers to locate health and fitness.

The product has been designed s a Veblen good. Veblen goods refer to desirable consumer products that are designed for conspicuous consumption due to the high price of the same.

price

Due to high manufacturing costs along with the fact that the target consumers of the brand are elite class consumers, the price of the product is higher than its local competitors. The price of a Huawei premium Smartphone is 1,700 dollars currently.

Corporate cannibalism refers to a decrement in the sales of the product or market share after a new product has been launched by the same organization. For instance, Apple had suffered Cannibalism after launching i-Phone afolling i-Pad. Cannibalism takes place when the target markets of an organization for the newly launched superior quality of its products are kept the same. Considering the fact that the target market of the mentioned organization is completely different from the target consumers of its existing product range, launching the Huawei premium will not result in Cannibalism

place

The smartphones are currently available at online marketing sites along with Huawei stores in China. However, when it comes too global marketing of the product, the organization will follow the waterfall strategy. The waterfall market entry strategy enables the company to revitalize its products in the maturity stage, which in turn prolong their life-cycle, while maintaining a stable position within the market. Huawei will first target highly developed countries like UK and USA, followed by developing and underdeveloped countries.

promotion

The management has invested on promoting brand with the help of celebrity promotion. Popular south Korean actress Song hye-kyo is the current brand ambassador of the Huawei Premium range (West,Ford and Ibrahim 2015). Along with this internet and social media re also considered as major promotional sites through which the product is promoted.

In order to attract a huge range of consumers, within a limited timeline, the management of the organization should implement the AIDA model.

Attention: This step includes attracting the attention of the consumers. In order to attract its target consumers, the Huawei Premium brand should conduct offline campaigns for attracting local consumers.

Interest: Along with this, promoting the product with the help of Celebrities will also enhance the product awareness within the consumers. this will enhance the interest of the consumers in the product.

Desire: Once the target consumers are aware of the existence of the product, it is time to enhance the desire of the product in the consumer’s mind. For this, social media platforms and television commercials can be used. The unique of the smartphone and how it acts as a status symbol can be shown through videos in social media.

Action:  The ultimate goal is to drive the receiver of the marketing campaign to initiate action and purchase the product or service.


Table 7: 4P Analysis

Source (created by author)

The idea of obliquity includes wining a decisive battle and meet business target by considering indirect strategies. It case of Huawei Premium, being a company known for “its value for money” business strategy, has incorporate high tech innovation and launched a luxury smartphone range. With effective promotional technique and marketing strategies it is expected that the brand will definitely gain success in near future.

Conclusion and Recommendation 

After conducting both macro and micro analysis of the product, it is clear that the consumer loyalty and the brand equity of Hauwei are high. However, since the company has launched a brand new product line targeting a completely new consume base, the organization needs to consider the following recommendation along with following the above discussed strategies.

  1. Regular contact with the target consumer should be maintained through popular social media platforms. This will enable the company to understand the exact requirements of the consumers and enhance company consumer relationship (Jiang et al. 2016).
  2. Excellent consumer service is the key to retain consumers. Hence, Huawei should provide its consumer service executives with effective training in order to ensure consumer satisfaction (Saif and Aimin 2015).

References

Akundi, A., Tseng, B., Wu, J., Smith, E., Subbalakshmi, M. and Aguirre, F., 2018. Text Mining to Understand the Influence of Social Media Applications on Smartphone Supply Chain. Procedia Computer Science, 140, pp.87-94.

Bengtsson, L. and Wang, W., 2016. Cost innovation in global supply chains: the case of Huawei Technologies. International Journal of Logistics Systems and Management, 23(2), pp.189-208.

Blakeman, R., 2018. Integrated marketing communication: creative strategy from idea to implementation. Rowman & Littlefield.

doingbusiness.org (2019). Rankings. [online] World Bank. Available at: https://www.doingbusiness.org/en/rankings [Accessed 25 Mar. 2019].

EPI FRAMEWORK., 2018. [online] Epi.envirocenter.yale.edu. Available at: https://epi.envirocenter.yale.edu/downloads/epi2018policymakerssummaryv01.pdf [Accessed 21 Mar. 2019].

Feldman, M., 2017. China's outbound foreign direct investment: the US experience. International Journal of Public Policy, Special Issue on the Regulatory Response to China's State-Owned Enterprise Investment Abroad, pp.15-18.

Fundforpeace.org. 2019. Global Data | Fragile States Index. [online] Fundforpeace.org. Available at: https://fundforpeace.org/fsi/data/ [Accessed 21 Mar. 2019].

Gross domestic product. 2019. Gross domestic product. [ebook] World Development Indicators database, World Bank. Available at: https://databank.worldbank.org/data/download/GDP.pdf [Accessed 21 Mar. 2019].

Hofstede Insights., 2019. Compare countries - Hofstede Insights. [online] Hofstede Insights. Available at: https://www.hofstede-insights.com/product/compare-countries/ [Accessed 21 Mar. 2019].

Hu, Z., 2016. THE RELATIONSHIP BETWEEN BRAND ORIGIN AND BRAND EQUITY: Case Company: Huawei Technologies Co. Ltd.

Jiang, N., Chen, J., Wang, M.P., McGhee, S.M., Kwong, A.C., Lai, V.W. and Lam, T.H., 2016. Electronic cigarette awareness and use among adults in Hong Kong. Addictive behaviors, 52, pp.34-38.

Kim, R.B. and Chao, Y., 2018. The effect of country of origin on consumer-based brand equity (CBBE) of Colombian consumers: An empirical investigation of Samsung vs. Huawei brands. Journal of International Studies, 11(3), pp.70-81.

Lin, X., Liu, B., Han, J. and Chen, X., 2018. Industrial upgrading based on global innovation chains: A case study of Huawei technologies Co., Ltd. Shenzhen. International Journal of Innovation Studies, 2(3), pp.81-90.

Malysheva, T.V., Shinkevich, A.I., Kharisova, G.M., Nuretdinova, Y.V., Khasyanov, O.R., Nuretdinov, I.G., Zaitseva, N.A. and Kudryavtseva, S.S., 2016. The sustainable development of competitive enterprises through the implementation of innovative development strategy. International Journal of Economics and Financial Issues, 6(1), pp.185-191.

Piercy, N.F., 2016. Market-led strategic change: Transforming the process of going to market. Routledge.

Saif, N.M.A. and Aimin, W., 2015. Analysis of Huawei’s Smartphone Marketing Strategies in Arab World. Asian journal of management sciences & education, 4(1), pp.51-57.

Schlegelmilch, B.B., 2016. Segmenting Targeting and Positioning in Global Markets. In Global Marketing Strategy., pp. 63-82.

Shubbak, M.H., 2019. The technological system of production and innovation: The case of photovoltaic technology in China. Research Policy, 48(4), pp.993-1015.

Tsai, W.L. and Chang, P.T., 2018. Combining data envelopment analysis and competitive dynamic theory for exploring global smartphone manu-facturers' performance. JABS, 4(2), pp.109-125.

West, D.C., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage. Oxford University Press, USA.

Xia, W. and Gan, D.Z., 2017. The Marketing strategy of HUAWEI Smartphone in China.

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