Why would BBK Electronics own five different brands to make smartphones?
This sounds like an interesting topic.
This will be a lengthy answer. In short, the reason why BBK Electronics has 5 brands to make smartphones is to occupy all the market share online and offline with a single brand that focuses on a specific smartphone category.
You want to learn more? Let’s start with the company’s history. BBK Electronics.
What is BBK Electronics?
BBK Electronics, a Chinese company, was established in 1995 to produce gaming consoles. Oppo was their first venture into the music business. Vivo, which was then known for its Music Hardware (Technology) brand, emerged in 2009. Oneplus is a smartphone brand that was established in 2013. Oneplus is not owned by BBK Electronics, but it was founded by Vivo. In 2018, a brand emerged with amazing smartphones from an additional sub-brand (Oppo), which we hear about every now and again. Realme.
OPPO
It was established in 2004. Oppo’s main goal was to sell music equipment such as CD-ROMs, DVDs, and music players. They entered the smartphone market later. They have a series of smartphones called A, F N, R and Find. Recently, Reno was added to their portfolio. Although their smartphones are intended for offline use, they also have a number of smartphones that can be used offline. Oppo Find series was where they introduced new smartphones with innovative features. Oppo was the first smartphone to have a Full HD screen, first smartphone to have a Quad HD display and 1st smartphone to have a rotating camera, and 1st smartphone that supports 50W charging. Oppo Find X was introduced last year. I’m sure you have heard of it. Oppo was a big player in the Indian smartphone market, entering it with a bang. Official title sponsor of the IPL. They have launched so many smartphones in different categories, with massive promotions that we will be able to see in a little.
VIVO
This sub-brand was also founded by BBK ELECTRONICS in 2009. Vivo is well-known for their Music Technology. They provide excellent music hardware, e.g. They also include Hi-Fi chips into their smartphones. Vivo smartphones were targeted at consumers who had a priority for music and camera. In 2014, Vivo smartphones entered the Indian smartphone market. All of their smartphones were offline-targeted and focused on Camera and Music. Like its sibling, its sales were a result of huge promotions. They later introduced innovative smartphones. They have a variety of smartphones: V, U and X.
ONEPLUS
Pete Lau, former president of Oppo’s smartphone division, founded this company in 2013. This company was founded by Pete Lau and Carl Pei, a fellow Oppo employee who shared the same vision. Oneplus is a subbrand of Oppo. This is because all of its resources were provided by Oppo at the time it was established. Later, it became a subsidiary under the Oppo. The brand is not similar to its siblings, i.e. Oppo and Vivo target offline customers, whereas Oneplus is an online-focused brand that relies on limited advertisements. In 2014, they entered the Indian smartphone market. After launching their first smartphone in India, they were faced with a legal battle against YU, a sub-brand of Micromax, for using CyanogenMod in their smartphones. These rights were owned by Micromax at the time. They soon came up with an alternative OS, namely. They created Oxygen OS, which is the best Android OS. Their phones were a huge success because of the high prices they charge. Oneplus has a more than 40% market share in India’s premium smartphone segment. This is despite the fact that they compete with industry leaders like Samsung and Apple.
REMEMBLE
Sky Li, who was once vice-president at Oppo, established this smartphone brand in 2018. This smartphone brand shares similarities with its older sibling Oneplus, which is online-focused. At first Realme smartphones i.e. Realme 1 was the first to use the Oppo brand on their smartphones. Later, they declared that it had become an independent brand but still shares resources such as software and service centres with its parent company Oppo. Redmi is the reason this brand was created. We have been watching the promotions for Redmi and Xiomi India over the last 3 years. They occupy the largest market share in India. Oppo created this brand to compete with Huawei and Honor. The name “Redmi” and “Realme” are identical. Realme has launched over a dozen smartphones since then, making them the fastest-growing company in the world. They occupied 16% market share in just one year, which is impressive considering Oppo’s market share of only 7%. It is not clear that this brand is keeping up with the Online trend. However, it seems like it is moving towards the offline market like its elder siblings.
IQOO
BBK Electronics launched Vivo and Oppo sub-brands. Later, Oppo launched Oneplus and Realme sub-brands. Why not Vivo? Vivo then launched its subsidiary IQOO, which is very similar to Realme. Both brands are online-focused and are competitors for Xiaomi. Although we don’t know much about the company, it appears that even this one will be able to compete with Xiaomi. Xiaomi has three sub-brands: Redmi, Black Shark and Poco. Poco and Black Shark are not mentioned. These two brands have been a recent phenomenon in the smartphone industry, with their aggressive pricing and high-quality specifications. This brand seems to be in direct opposition to Poco. They recently launched the IQOO 3 smartphone, which has 5G.
Let’s now look at the individual brands.
BBK Electronics Marketing Strategy:
Did you notice any brands that this smartphone giant owns? Let me tell you, they have multiple business strategies. Push marketing and pull marketing are two of the strategies I discovered. I found them through other online resources. I also came across birth of vivo.
As mentioned, BBK used to make products that were related to music, education, and gaming consoles. They lost their money in a lawsuit and almost went bankrupt. Oppo, Vivo and their siblings, i.e. Oneplus, Realme, and IQOO. Oppo and Vivo were launched because BBK will not be affected if any of its subsidies go under. We see Oppo – Oppo Camera and Vivo– Camera and Music.
They follow multiple business strategies, as I mentioned. Push marketing and pull advertising. Let’s now discuss this.
Push Marketing:
Push marketing refers to pushing the product or brand’s products in the market via promotions.
Are you familiar with hoardings that featured advertisements for Vivo and Oppo, which are marketed by celebrities? These advertisements were commonplace. This marketing technique is known as push marketing. Brands invest money in sponsorships and advertisements to promote their products to the public. This type of investing is short-term because they gain customers through huge promotions. While this is acceptable if the product is of high quality, it doesn’t provide any information about the price. This type of marketing strategy is generally used when the product isn’t great. They know that if they don’t invest in marketing, they will lose market share.
Take this example:
- Oppo’s F series, A series isn’t equipped with great specifications, but they are hugely popular and have huge promotional offers.
- Vivo’s V and Y series also does the same.
This business model also includes:
- Advertising in T.V.’s and hoardings to increase brand equity
- Sponsorships of major events such as IPL (Vivo IPL), and sponsorship of the Indian cricket team (Oppo), and other events such as PUBG, Pro Kabaddi, etc.
- Targeting the offline market – The largest market for these brands is in the offline smartphone market. These brands offer high commissions (20%) for their offline retailers, according to some online resources. They make high profits because their smartphones have high-end specs and are highly priced.
This is the main point. Oppo and Vivo are selling products with low specifications. The majority of smartphones from these brands fall within the mid-range range. These brands are targeted offline with high profit margins.
However, I noticed that smartphone OEMs have been launching new smartphones since mid-2018. Vivo In-display fingerprint sensor, Vivo Apex concept, Oppo Find X etc. These brands began to focus on online customers later, which we will discuss in a moment.
Pull Marketing:
The Pull Marketing Strategy is all about attracting customers with great value products. Promotions are almost as effective here as any other.
Realme and Oneplus follow suit. Although we know the story of Oppo and Vivo, this company (Oneplus), is not related to Oppo nor Vivo in terms business model. Oneplus was founded by an ex-Pompo president to build great products. Oneplus 1 was launched and was a huge success. It grew into a premium brand over time by increasing their smartphone prices year after year. But even then, they were excellent. These brands’ strategy is to attract customers online and keep them loyal. If a brand offers great value to its customers, they will stick with it. This is brand value. These brands invest in R&D to improve their products. This is long-term investing because they are gaining something. Customers in the long-term, unlike its siblings (i.e. profits). Although we don’t know much about the IQOO, I believe that even this one fits into this category.
Take this example:
- Realme smartphones are the best on the market.
- Oneplus only offers 2 series: one numbered, the other “T”. Both offer good specs but not great at an affordable price.
This business model also includes:
- There are no advertisements
- Sponsorships are not available.
- Targeted products online
- R&D is the main investment.
You might be asking yourself, “Then why do you see advertisements for Oneplus and Realme?” We’ll answer that question in a moment.
Oneplus and Realme have the largest online market share, while their siblings hold the majority of the offline market. Oneplus is in the Premium category, while Realme is in the Budget category. These products have lower profit margins, but they are more popular overall.
Analysis:
These are my thoughts and analyses about these smartphone OEMs.
First, all of these OEMs for smartphones are managed by one company. These brands operate in different markets with different marketing strategies.
As we can see all these brands combined are wide spread across all smartphone categories from Budget to Premium. Not only that these occupy whole online and offline markets. Here you may argue that brands like Vivo and Oppo also have smartphones in budget category, yes I agree with that but mid-range is their main focus. On whole this is the business model of BBK Electronics, focus at a single area (category) and try to get most out of it in all the possible ways (profits from high margins and profits from low margin in huge quantity). Thus BBK Electronics own 5 different companies to manufacture smartphones. In India Xiaomi is the market leader with 26% market share if single brands are considered but on the whole BBK occupied 46% in Indian smartphone Industry.
One last thing:
As I mentioned earlier, we will be discussing more about these brands that I have seen in recent times.
Oppo and Vivo launched smartphones in the past that were less than stellar, more offline-oriented. But they have been shifting gears since mid-2018. Both brands now offer new smartphones with a good price/performance ratio. Vivo X20 – First smartphone to have an In-display fingerprint sensor. Vivo Nex, Vivo U and Vivo Nex are other examples. Oppo has been a great smartphone maker since its inception, but they have never released them in India. Oppo K1 and K3 are high-quality smartphones that offer good value for money. We have never seen any ads for these smartphones.
Another thing that caught my attention was Oneplus’s shift in their market strategy. They have great smartphones, but Oneplus has been investing more in advertisements or promotions. Realme launches a new smartphone every month and is now focusing on the offline market.
This is the main takeaway: Brands that were previously offline-focused are now moving towards online, but not completely. Brands that were online-focused are shifting towards offline (but not entirely).