Market Plan
Student’s Name
Institutional Affiliation
Market Plan
Abstract
Ren Zhengfei founded Huawei in 1987. It is a multinational telecommunications equipment and networking company with headquarters in Shenzhen. It is also the largest manufacturer of telecommunications gear in the world after overtaking Ericsson in 2012. Huawei has the second largest market share of mobile phones in the world, and it has 5G technology that is about two or three years ahead of its competition. It should focus on its core competencies, which entail the existing market of smartphones and 5G technology. The firm should incorporate Honor TV and Harmony OS at the heart of its market penetration due to the blacklisting by the US government. Individuals buying smartphones and countries interested in 5G technology have different choices to make. This means that Huawei should provide the best services and products to ensure that they can attract clients. It should use an estimated budget of $1.331 billion to achieve the objective of market outreach in three years.
Market Plan
Table of Contents
Abstract 2
Introduction 4
Case of Huawei 4
Rivalry Scope 5
Stage of the Smartphone Industry 5
Target Market 6
SWOT Analysis 6
Strengths 6
Weaknesses 6
Opportunities 7
Threats 7
Marketing Objectives 7
Targeting and Positioning 8
Product and Service Marketing 9
Budget 10
Conclusion 10
References 11
Introduction
Huawei Technologies is a Chinese multinational telecommunications equipment and networking company with the headquarters in Shenzhen. It is the largest manufacturer of telecommunications gear in the world after overtaking Ericsson in 2012 (Zhang & Huang, 2019). Ren Zhengfei founded the organization in 1987. As such, the company promotes its business through long-term partnerships with operators all over the world. It offers terminals and software as well as applications and network products. In this context, the enterprise also provides core network and wireless merchandise (De Cremer & Tao, 2015). Notably, the majority of the products utilize shared platforms and ASIC chipset. As such, the organization was recently blacklisted by the United States because of security reasons concerning a backdoor it created in its networking equipment (Balding & Clarke, 2019). Interestingly, the United States accused the company of working with the Chinese government to promote espionage. Notably, Huawei has the second largest market share of mobile phones in the world, and it has 5G technology that is about two or three years ahead of its competition. As such, the focus of this marketing plan is to focus on how the company can sell its products without relying on critical components from the United States.
Case of Huawei
The organization is in a strong financial position, which means that it can begin new projects and make investments (Ke, 2015). As such, the money should be used in research and development to ensure that the software solution it has developed can have a market appeal. The software is called Hongmeng OS in China and Harmony OS in the rest of the world. In this context, it is an open software solution that the company can use in several devices apart from mobile phones.
Rivalry Scope
The 5G and mobile phone industry has been increasing significantly because of the propensity of people to purchase mobile phones and require advanced technology. Companies are competing in the communication sector, where success attracts clients to buy services and products. As such, the competitiveness in the market is high because organizations are offering the same products and services. However, individuals buying smartphones and countries interested in 5G technology have different choices to make. Notably, companies need to provide the best services and products to ensure that they can attract clients (Kang, 2015). Thus, this means reducing the costs of the products in the market and improving value.
Stage of the Smartphone Industry
The smartphone industry is in the mature life cycle stage. Nearly all individuals in the world own a smartphone. Profitability and growth in the sector depend on the ability of a given company to attract new clients (Drahokoupil et al., 2017). The continuous improvement in services and smartphones attract potential clients because of value-added services. It means that organizations need to become innovative smartphone designs by improving the physical appearance of the devices they send to clients. Huawei was one of the first companies to deploy a glass back on a smartphone that changed the color depending on the direction from which one viewed it (Deng, Zou, & Mao, 2018). As such, this meant that light was bouncing off the smartphone and emitting various colors contingent upon the pigment underneath. Companies also need to give additional services to ensure that individuals buy smartphones. In this regard, it means that they need to provide features that customers should use on their smartphones without deploying gimmicks. It also implies that Original Equipment Manufacturers should send software updates to their customers. These regular updates boost the security of the devices they have sold to customers. Huawei has been giving regular updates to its customers, but these have been coming late.
Target Market
Huawei has a sub-brand called Honor. Its focus is on young, vibrant individuals. The parent company manufactures 5G equipment under its brand. The target market for the parent company is the premium market for its 5G equipment and range of smartphones.
SWOT Analysis
Strengths
Most phones are sold at a reasonable price, and this means that the organization can compete favorably within the market. The company has a broad range of products that gives it the benefit of providing end-to-end Solutions. It has research and development facilities all over the world to enable it to create products that almost everyone requires (Yanrong, Minglei, & Lihua, 2018). The organization has exceptionally high customer loyalty. This means that the focus is on getting more customers. It has superior technologies by deploying efficient and quick solutions to its existing problems. Finally, Huawei’s brand recognition is high and is rapidly increasing in Europe.
Weaknesses
Huawei is tied to the Chinese government, and this means that it complicates the relationship with other governments like the United States. This has led to the company being blacklisted in the country. The company depends on its low pricing strategy, and this means that it does not have an alternative plan for its services and products. Employees are satisfied with the company, but most of the workers in the supply chain complain about the working conditions (Cao, 2017). Notably, the brand image is focused on selling and processing mobile phones, and this means that the company needs a change in its existing strategy to survive in the market. However, it lacks a strong physical presence in other areas in the world except for China, and this means that it is hard to establish itself as a leader in the market. The company does not deal with customer complaints in the best way possible because it lacks integration with support services. Finally, the supply chain fails to deliver merchandise to customers at the right time. This may be due to market penetration and a high number of products in Europe.
Opportunities
5G technology is expanding all over the world, and Huawei is a market leader. The company is two or three years ahead of the competition in this technology. It means that the organization can take advantage of this opportunity to become competitive by increasing its market share (Chen et al., 2018). Similarly, it should use the Honor brand to sell televisions and mobile phones to the young market. The brand is imperative in helping the company reduced the prices of its merchandise. This is relevant to its business model because it helps the company to implement a strategy that is useful in reaching out to a large portion of the market.
Threats
Nokia and Ericsson are manufacturers of 5G equipment, and they are rivalries to Huawei. Samsung and Apple are the major competitors of Huawei in the mobile phone market (Pepermans, 2016). However, Chinese manufacturers like Oppo and Xiaomi are also competitors of Huawei in the local Chinese market.
Marketing Objectives
The company should formulate objectives for the next three years. It is imperative to ensure that it can remain relevant in the market by focusing on the goals it has set and how best it can achieve them (Murmann, Huang, & Xiaobo, 2018). The first year should entail the implementation of the Harmony operating system and getting 2% of 5G contracts in the world. It should also focus on developing its existing Honor TV to sell to a wide range of clients (Luo, 2019). Year 2 should entail getting 10% of the 5G contracts in the world. It should carry out research and development on the implementation of Harmony OS in the world as a replacement for Android. Year 3 should focus on research and development concerning the implementation of the Harmony operating system. The company should also focus on getting at least 50% of all the 5G contracts in the world. Research and development of its existing 5G technology is imperative to ensure that the company maintains its competitive advantage over other organizations in the world. This means that the company should find ways to improve the security of its networking equipment. Security was at the core of the blacklisting by the United States government because it was thought that the company provides loopholes for hackers and the Chinese government. Finally, improving working conditions for employees all over the supply chain is deemed pre-emptive.
Targeting and Positioning
The company needs to choose the best target for its products. This means understanding the commercial attractiveness of the products and services it is offering customers, and the accessibility of market segments evaluates this. It should realize that estimated profits need to exceed additional costs of marketing. The company needs to take into account the marketing costs that need to be less than the expected benefits.
Segmentation should be based on values and lifestyles in addition to income and gender. The company also needs to understand that age is a critical factor to consider when contemplating people who will buy its products (Micheli & Carrillo, 2016). This means decline psychographic segmentation to group customers according to their traits and values or attitudes. Interests and lifestyles may also be used to help the company to segment its market in the best way possible to achieve the desired objective of increasing its market outreach. It may also use behavioral segmentation where it divides individuals according to their buying patterns, such as brand loyalty and usage occasions (Luo, 2019). The company may also use the benefits that people seek and the frequency of usage. Demographic segmentation depends on ethnicity and income, in addition to age and gender (Micheli & Carrillo, 2016). Finally, geographic segmentation entails dividing people into groups such as countries and cities. This also means using a specific region to segment the market.
Product and Service Marketing
Huawei has been focusing on the experiential and digital campaigns as well as public relations to build its brand. The commitment to learning is imperative in improving its market position. The company has the propensity to measure and optimize its advertising in real-time and uses metrics such as article sentiment and awareness of its products. It also considers purchase Intent and product consideration to maximize its merchandise. The organization understands that other companies need the same plants that it serves. This has enabled it to appreciate global digital awareness and automation in the industry. It also knows about the changing lifestyles of people and the increasing purchasing power parity. This enables the organization to use the 360-degree advertising incentive to reach out to customers in all points of contact. Huawei sends emails to existing and potential customers. It uses its website for marketing its product. It has social media platforms that enable it to reach out to various clients and organizes its presence at events such as CES and MWC. It also uses print media for advertising its products in mainland China.
Budget
Below is a budget that the company can use to ensure that it takes advantage of the existing market. This will improve the market outreach of Huawei.
Year 1 Year 2 Year 3 SUB-TOTAL
Harmony OS R&D $30,000,000 $30,000,000 $30,000,000 $90,000,000
Getting 5G Contracts $22,000,000 $4,000,000 $12,000,000 $38,000,000
Developing Honor TV $1,000,000 $1,000,000 $1,000,000 $3,000,000
5G R&D $400,000,000 $400,000,000 $400,000,000 $1,200,000,000
TOTAL $453,000,000 $435,000,000 $443,000,000
GRAND TOTAL $1,331,000,000
Conclusion
The United States accused Huawei of working with the Chinese government to promote espionage. Remarkably, Huawei has the second largest market share of mobile phones in the world, and it has 5G technology that is about two or three years ahead of its competition. It should focus on its core competencies, which entail the existing market of smartphones and 5G technology. The firm should incorporate Honor TV and Harmony OS at the heart of its market penetration due to the blacklisting by the US government.
References
Balding, C., & Clarke, D. C. (2019). Who Owns Huawei? Available at SSRN.
Cao, X. (2017). Marketing Strategies of Chinese Mobile Phone MNCs in the European Market:-A Case Study of Huawei.
Chen, R., Ge, Y., Liu, W., & Zhang, J. (2018, September). Software Architecture Measurement—Experiences from a Multinational Company. In Software Architecture: 12th European Conference on Software Architecture, ECSA 2018, Madrid, Spain, September 24–28, 2018, Proceedings (Vol. 11048, p. 303). Springer.
De Cremer, D., & Tao, T. (2015). Huawei: A case study of when profit sharing works. Harvard business review, 24.
Deng, Z., Zou, Y., & Mao, J. Y. (2018). Unconventional Internationalization of Huawei: The Role of Core Values. In Business Despite Borders (pp. 179-191). Palgrave Macmillan, Cham.
Drahokoupil, J., McCaleb, A., Pawlicki, P., & Szunomár, Á. (2017). Huawei in Europe: strategic integration of local capabilities in a global production network. Retrieved from http://real.mtak.hu/80609/1/Chapter11_u.pdf.
Kang, B. (2015). The innovation process of Huawei and ZTE: Patent data analysis. China Economic Review, 36, 378-393.
Ke, J. (2015, September). Analyses on Strategies of Enhancing Brand Competitiveness of HUAWEI Company. In 2nd International Conference on Intelligent Computing and Cognitive Informatics (ICICCI 2015). Atlantis Press.
Luo, C. (2019). The Real Huawei Story and the 5G Era. The Park Place Economist, 27(1), 18.
Micheli, J., & Carrillo, J. (2016). The globalization strategy of a Chinese multinational: Huawei in Mexico. Frontera Norte, 28(56), 35-58.
Murmann, J. P., Huang, C., & Xiaobo, W. (2018). Constructing large multinational corporations from China: East meets West at Huawei, 1987-2017.
Pepermans, A. (2016). The Huawei Case and What It Reveals About Europe’s Trade Policy. European Foreign Affairs Review, 21(4), 539-557.
Yanrong, W., Minglei, G., & Lihua, Z. (2018). How Paradoxical Leadership Promote Organizational Ambidexterity—A Case Study of Ren Zhengfei and Huawei. Human Resources Development of China, (7), 16.
Zhang, X., & Huang, S. (2019). The challenges of “cradle-to-cradle” strategy: A case study with Huawei Company. Retrieved from chrome-extension://oemmndcbldboiebfnladdacbdfmadadm/https://uu.diva-portal.org/smash/get/diva2:1328714/FULLTEXT01.pdf.
