Htc Business Model Essay

executive summaryUsing Googles Andriod platform has given HTC a boost, impartd now the Taiwanese handset maker atomic number 18 vulnerable to underwhelming gross r unconstipatedue in the States and Europe. Their hope? china.HTC only entered chinaw ar in early 2010, much slowr than its established peers. It is playing catching up with planetary premium brands, much(prenominal) as orchard apple tree, Samsung and LG, where HTC is presently aiming to get a slice up of the pie. However, the bon ton is also facing stiff competition from local anaesthetic brands who get at the let down price grocery store.In this Global Marketing proposal, we target several(prenominal) initiatives for HTC to grow its current 1% securities industry cope in the china busy echo trade, including new merchandises for HTC to tap into the lower price market as well as localized promotion foments to sell phones in rustic areas.It is time for HTC to sway away from satisfied with being quietly vivid.Context digestCompany BackgroundHTC Corporate, founded in 1997, was a comparatively obscure Taiwanese original design manufacturer (ODM). Incorporated as High technology Com fructifyer, HTC focused on manufacturing of computer nonebooks. The company created the creative activitys jump pocket size PC in coaction with Microsoft in 19981 it later work uped the iPAQ, one of the earliest PDA for Compaq in 2000.HTCs close tie with Microsoft led them to develop XDA2 in 2002, prototypical ever smartphone operated on Windows. The company remained true to ODM principles when it sayd smartphones by efficiently cater for carriers specifications and requests. HTCs ODM smartphones continued to generate profit margin as mellow as 20% compared to industry average of 5%3. According to Harvard lineage refreshen, HTC shipped to a greater extent(prenominal) than 70% of the humanss Windows smartphones in 2006 at its peak.HTC won a reputation for ex prison cellent smartphones. But it wanted more, and began to invest more in innovation before eventu onlyy creating its feature brand in 2007. HTC set up a unit called Magic Labs4, where engineers from mingled disciplines decrease up with lots of ideas, even if almost were quickly discarded. From this unit bred several ground breaking ideas, including HTC touch, a touch class device that appeared few weeks before orchard apple trees first iPhone and first ever android phone in collaboration with Google.Reaping from the humanoids high cleverness rate, the company experienced unprecedented dourshoot from 2008 onwards and became the return seller of smartphones in America in 3Q of 2011, according to Canalys enquiry. HTC has recently eclipsed Nokia in market capacity and has climbed up to the no.3 spot for smartphones sold worldwide, behind Apple and Samsung. In terms of brand equity, the company has invested heavily in developing its own brand and broke into Interbrands top 100 Brands 20115 (no. 98) . china ware Macro-environmental Factors politics china remained a single party directed commonwealth since the institution of Peoples Republic of China in October 1949. Putting semipolitical ideologies differences aside, efficient decision-making is widely seen as a characteristic of Chinas political system. The profound changes that pull in taken place in various fields of this nation from Deng Xiapings Special Economic Zone in the 80s to the economic leaps in the turn of the century.Inefficiencies in the political system much(prenominal) as corruption motionless exist today, solely Chinas communist party has taken bold steps for reform. The party has embraced market societalist economy to lead China out of poverty and whizz to one of the most powerful nations in the world.EconomicDespite China has mounted new heights in her economy, outshining Japan as the here and now largest economy in the world, the slowdown in economic harvest-tide has non abated. The housing boom in the past decade is now over, implying that growth now weigh on heavy industry and local consumption. In the past, China has takeered massive infrastructure stimulus, as it did to prop up growth following SARS and the global financial crisis. However, local governments have intimate not to overheat the economy, as evidenced by the late 2011 conviction c grazech in Wenzhou6. Central government is expecting a moderate gross domestic product growth of 6%, but China is due for correction in its property and possibly stock market.SocialChinas communist Party maintained its strong foothold in the nation, as the country enjoyed a period of unprecedented prosperity in the past decade. As Chinas economy take flight, the number of local billionaires and millionaires grew by leaps and bounds. The wealth gap, at the same time, widened drastically. As a consequence, there have been several localized pro-democracy campaigns since 2011. Termed Jasmine revolution, citizens used social ne devilrk i dentify such as microblogs to organize public protests requirementing fairness, housing and food social issues that are often overlooked during economic boom. Such unrests were quickly put to rest as Beijing aims to mitigate any form of dissidents since nurture the hard lessons from Tiananmen protests in 1989. Other than localized protests and occasional controversy in human rights, Chinas social order have been maintained.TechnologyChina has sparked its technological boom since it gained accession to the world trade government in 2001. Internally, China has developed a matured internet market which now boost one of the largest internet users in the world. In prompt phones, the market evidenced a dynamic growth due to the rapid development of nimble subscriptions and growing third-generation (3G) networks.China Smartphone MarketIndustry analysis aft(prenominal) Chinas telecommunications operators acquired 3G licenses, they formed several strategical alliances with mobile phon e brands. For example, China Unicom has established alliances with Apples iPhone and Lenovos LePhone, whilst Motorola and HTC and strategic partners with China telecommunication.Customer analysisAccording to government statistics in 2012, China has be beget to first country to top 1 billionThe cell phone users, a soar from 2010s 787 million users. The number of users is equivalent to 74% of Chinas population. That being said, only 14% of users are 3G users. expeditious phones are seen as a necessity, as nodes regularly use phones for texting and micro-blogging. contest analysisMobile phones are relatively consolidated in China, with the top five brands deriving nearly 72% of total retail the great unwashed stales in 20107. Top five brands are Nokia (34.2%) , Samsung (18.1%), LG (6.8%), ZTE (6.3%) and Huawei (6.3%). Apple (1.4%) and HTC (0.7%) are late boomers in the market, with both companies having entered China in 2009 and 2010 respectively.According to market investigate by Canalys8, world-wide brands such as Samsung, Apple and HTC should continue to govern in the space above RMB2,500 (US$400). Leading local ground level-one brands, such as Huawei and ZTE, are diversifying beyond the entry level by launching a number of high-profile, flagship smart phones. As of late, Lenovo has made efforts to penetrate the low cost, country-bred market by introducing models starting from RMB700 (US$158).Company AnalysisHTC in ChinaHTC only entered China in 2009 and occupied a market share below 1% as of figures in 2010. Its strategy is to cont complete Samsung and Apple as the biggest smartphone players in Mainland, but it also faces stiff competition from local brands such as Tianyu and ZTEDespite its geographical proximity in Taiwan, HTC started off late in China than in richer parts of the world largely because the countrys 3G structure was not as matured in 2009 as today.Targeting & PositioningHTCs mission statement is to stick the lead innovative supplier of mobile information and communication devices by providing value-added design, world class manufacturing and logistic and service capabilities. Whilst this may have been a happy formula over the past 10 years in geographic location, HTC is in danger of falling behind competitors in China.HTC currently has 10% of the market for smartphones costing more than RMB2,000 (US$320). Its strategy is to target those high-end customers who utilizes 3G network and appreciates international brand. As if HTCs Magic Lab works tirelessly to come up with numerous innovative products, HTC currently adopts a similar quite a little approach in its phones. HTC regularly pushes forward phones in the market. In 2011, when Apple had launched one new iPhone, HTC introduced fifteen new models.HTCs ChallengeAfter a meteoric mug up which placed it briefly atop the U.S. smartphone gross revenue charts, HTC revenue as a whole in the first two months of 2012 was a staggering 45% down on last year. HTC has r un afoul of punitive legal juggernaut Apple, which delayed the availability of HTCs handsets. Determined to avoid the fate looming over troubled rivals like Research in Motion, HTC saw a big revitalization push in China, championed by several flagship phones such as HTC One X and Evo 4G Lite. gross sales in Europe have been dropping but HTC saw dampen than expected revenue in China.The rise of HTC in China patronage its late entry could be partially attributed to their advanced operational systems with Android and excellent hardware, such as dual core processing units and accessible features where the phone rings louder when in a bag. But with competitors catching up hardware specifications overnight these days, can HTC sustain its China growth?The challenge of HTC faces is not neither simply in hardware nor software. HTC ineluctably to cast a marketing and branding strategy for China, as to fend off the fierce challenge by international brands (Apple, Samsung) and local play ers.Proposed Marketing carryFor the proposed marketing campaign, we propose a bi-polar approach to target existing high-end customers of HTCs and also tap into the grass grow customers specturum, an area HTC has not entered so far.High-end customersHTC is currently focusing on high-end customers who are tech savvy, able and willing to gift for premium mobile phones. These high-end customers are currently up and coming professionals, awake(p) a fast moving flavorstyle and mostly reside or work in first or second tier cities, such as Beijing, Shanghai and Xi Chuan. All of these customers have haved or are going to subscribe 3G network, in order to make the most of out HTCs smartphones.In addition to product quality and operating system, high-end customers nowadays also care about brand reputation and image. The proposed marketing campaign for HTCs high-end customers is therefore to enrich the brand experience and break HTCs personality.Basic customersAs mentioned earlier, 3G us ers accounts to less than 20% of Chinas mobile phones market. According to market analysis, local players, best represented by ZTE and Huawei, are more popular amongst price sensitive mass and lower-end customers. These canonic customers reside in third tier cities or pastoral areas, demand basic functions for their phones and also aspires to own a smartphone one day.ProductDesigners collaborations are nothing new. Indeed, they are now a well-established marketing tool as well as source of income. Standard Hotel Group in America has joined forces with the likes of surfwear brand Quiksilver to provide exclusive trunks and bikinis that guests can procure in the groups resorts. H&M, the Swedish fashion behemoth, took rise after asking Karl Lagerfeld, designer for Chanel and owner of Fendi, to come up with a special collection back in 2004.For mobile phones,it is no contrastive story. RIM collaborated with Porsche design and launched a high-end luxurious blackberry in 2011. LG and Prada started workings together in 20069 and continued to attract fashionistas for their crossover phones.For high-end customers, HTC should leverage linkup with a renowned brand within the Chinese community and produce collaborate products. Nike would deem to be an appropriate choice, given the brand is held in high regards among Chinese and its innovative brand image aligns with that of HTCs. Nevertheless, Nike has strong union with Apple as Nike currently produces Nike+ a tracking device that connects an athletes instruction execution data with iPhones, iPods etc.If there is a brand for up-and-coming professionals which matches HTCs pricing and targeting strategy, Adidas would be a great fit. Rather than choosing a prodigality brand such as LVMH or Gucci, a partnership with Adidas could not only appeal to the sports lovers, but also be perceived as socially acceptable. Partnering with luxurious propers might risk further alienation as the wealth gap widens in China.Adidas is actively investing on its mi adidas platform that rivals Nike+. The sports company enjoys a good reputation in China after sponsoring Team China in Beijing Olympics, and its innovative roots in products and designs could enrich the HTC brand experience.For basic customers, HTC could build 2G or even very basic 3G phones to attract the mass. With much reduced functionality and a lower price point, HTC could attract the 80% users who have not yet subscribe to 3G network. While the simpler handsets should have less fancy functions, embodying the HTC names mean that that the phones should still be innovative. HTC could be more localize with these phones by having local functions such as Chinese keyboard and improved durability that adapts to environment in rural areas. Perhaps basic phones could have a brighter screen for users to view the screen easily in on the fence(p) rural areas, or made in anti-sand materials as desertification is common in northwest China.Aside from hardware reengineering, HTC needs to redesign its software capabilities. HTC is relatively weak in content when compared to rivals such as Apple. It has no plans to launch its own app store, preferring instead to reply on Android marketplace and its apps. HTC acquired French content provider Abaxia in June 201010 to develop innovative apps for its devices. Recently, it has installed digital map apps in HTC Sense interface. Currently, there is a market gap in smartphone manufacturer originated apps in China. Almost all of the apps available on Android/iPhone system are developed by individual software company. HTC could potentially develop operating system with apps cogitate to popular Chinese social media sites, such as QQ and Sinas Microblog. damageHTC should continue to target upper tier price points for its high end customers. Its currently price point closely resembles Apples and Samsungs, averaging nigh RMB2,500 (US$400). The high price setting strategy further illustrates HTCs drea m to compete with the international brands but the company could consider undercutting its price by a fraction, say less than 10%, than the attractions so as to gain stronger market share. Price reduction should not be advertize aggressively, as it might signal a loss in quality.For products in the lower end market, HTC should try to be a price leader in the arena. Lenovo markets its cheaper line of phones around RMB700, and HTC should try to undercut Lenovo. It is important to magnetize the basic customers first, with the hope that HTC could persuade basic users to switch to more expensive phones over time.PlaceAccording to Economists, HTC now as 2,300 authorized retailers in China. Apple has 3,500 not withstanding its flagship Apple store and website charm Nokia and Samsung have 9,000 each. HTC could open more stags by granting authorized retailers license, but it is easier said than done as brands jostle retailers for shelf spaces.Rather than investing heavily in beginnin g its own shop, HTC could form a strategic partnership with popular online shop Taobao or Alibaba to reach customers in the second or third tier cities to compliment its e-shop. Further place promotion could been referred in HTC ambassador campaign in People section.In first tier cities, HTC could theoretically leverage on Adidass store presence and distribution network. Nonetheless, HTC should adopt a selective approach by opening flagship store that can illustrates its customer experience.PromotionIn HTCs incumbent global marketing campaign, the company slogan is quietly brilliant. HTC commercials do not focus on the precise functionality of their handsets but the way battalion use them. The concept itself is intuitive, but the campaign is not as much advertised in China as other places the slogan does not even has a Chinese translation. As a result, HTCs promotion in China is product focused. HTC One X advertisements were filmed where a photographer takes pictures with HTC phon e while skydiving stressing the superior camera quality of the handset.To revamp the promotion campaign, HTC should first come up with a better slogan for China or even for its global campaign. Stressing on the way people interact with HTC cell phones is a good idea, but conceptually the slogan could be more straight forward Nokias connecting people or LGs life is good are good examples.For China specifically, HTC needs to build on build on enriching users experience. Yan Siqing, chief operating officer of China Telecom said HTC grew rapidly despite its late start because it provided a good user experience. Nationwide promotion campaign should focuses on how HTC helps people to capture their moments in life. Whether is at work, in sporting moments or vacation, a user-friendly HTC handset is always there to make things happen.PeopleSimliar to Unilevers Shakti Revolution to help women in rural India to become entrepreneurs11, HTC could foster partnership with non governmental organi sations, banks and local counties, to promote handsets at rural areas through employing HTC ambassadors. Ambassadors are underpriviledged residents in country sides and they are invited to become direct-to-consumer sales distributors for HTCs basic handsets for second or third tier cities. Contrary to normal mom-and-pop shops, HTC should provide training in selling, commercial knowledge and bookkeeping to help ambassadors become micro-entrepreneurs. This proposal could not only expand HTCs reach in the lower tier markets, but also been seen as a socially responsible act of goodwill.1Kim R. & Yoffie D., HTC Corp. in 1999, 8th Dec 2009, Harvard Business Review 2Sourced online http//xda.o2.co.uk/3Kim R. & Yoffie D., HTC Corp. in 1999, 8th Dec 2009, Harvard Business Review 4HTC The brand from no where The Economist, 7th Apr 2012, sourced online from 5http//www.interbrand.com/en/best-global-brands/best-global-brands-2008/best-global-brands-2011.aspx 6Wolfe A, Gurushina N & Gassambe I, Ch ina Outlook The Tao of Hard Landing, 28 May 2012, Roubini Global Economics Report 7Mobile Phones in China, Category Briefing, 19 Sep 2011 Passport GMID 8http//www.digitimes.com/news/a20120619PR203.html9http//www.gizmag.com/lg-prada-collaborative-phone/20862/ 10http//www.ubergizmo.com/2010/06/htc-acquires-abaxia-to-strengthen-its-software-capabilities/ 11http//www.unilever.com.au/sustainability/casestudies/economic-development/creating-rural-entrepreneurs.aspx