Is it heading towards Oppo Vs. Realme?
Updated: Nov 13, 2018
Online contribution to overall sales of #MobilePhones in #India had been on the rise with some agencies putting it at anything between 42% and 51% for OND and 38% approximately for the year 2018 against 33% in 2017.
It is therefore understood that it may be important for any brand which wants to be in the top 5 to have a reasonable share in both the channels. How much weight to put in each channel is a brand call.
There are different ways key brands are addressing it.
#Xiaomi started the trend of first launching a new device online, building hype around it and then moving it to offline. It worked and worked well for them. While the brand’s business is majorly coming from online, #Mi is also looking at scaling their offline business to setup a prominent presence in the traditional bricks and mortar way of selling as well.
#Samsung launched a separate series – the #SamsungGalaxy #ON series to address the online market. It may not have been successful to the extent they expected, but it has not cannibalised their offline business. They remain majorly offline players.
Now #Oppo which started off as primarily an offline brand, has decided to take on Xiaomi with the launch of Realme, a brand so far for online. The initial response online has been good, going by the figures floating. While they have also talked about entering the general trade, the question is whether the models will be different for the 2 channels or will they sell their existing online models, offline.
Is it the right move is a question for Oppo/Realme combined?
I am going on the understanding that they will bring their existing online models offline, like Xiaomi, as they have seen their success online and also seen them being sold offline by some retailers.
I am sure the idea is to increase the stagnating market share of Oppo up by addressing online with Realme. But then why bring Realme offline when they already have Oppo there? Why not be creative and push Oppo – a 4 year old brand now on its own strengths with a right mix of Product, GTM and execution.
Why I am saying this is because I strongly feel that the concept may initially get them some growth, but eventually they may end up losing more than gaining. Every business is built to make money. Oppo does make money on the product in isolation. What makes their bottom line go red is their marketing expenses, which they have been reducing. They have built a brand and managed to come in the top 5, but struggling to cross a double digit market share.
My fear is that this strategy is going to cost them heavy. If I take them as one brand which the channel and customers will do, they may get some initial gains in market share but it may not be possible to sustain it. Why should a customer buy a product from the Oppo stable when they get a cheaper product from Realme ? So the net effect is nullification of the growth by Realme by a de-growth of Oppo. The Oppo distributors who have struggled to get where they are today after years, will be the biggest losers, which will hit Oppo sales. The company will also stand to lose as they will be making marginal or no money on Realme. The new distributors for Realme may or may not make money depending on the margin structures and the pressure they put offline.
If I were in their place I would stick to Oppo as a pure offline brand and Realme as a pure online brand.
Juggling multiple brands is tricky and has tripped up even some of the world's top companies, from Levi Strauss to Mazda.
Experts in the field of brand management offer these five key tips for multiple brand management:
1. Prioritize And Distinguish
With Realme playing in both channels there is no prioritisation unless they cap the % sales offline which may not be possible as it may not meet their objective of challenging Xiaomi. In terms of the product there is not much differentiation in design or specifications, but the prices differ substantially. Have a look at the chart attached and you will understand from the channel and customer perspective. The target audience is more or less the same. So they do not meet the first requirement.
2. Be Realistic About Your Brand Equity
Since launching a new brand requires a significant investment, experts recommend first analysing your strategy to determine if the investment is likely to pay off.
A lot of money has been spent on building Oppo as a brand and for offline some monies will be required for Realme as well. In fact, if Oppo sales suffer, the ROI on Oppo may reduce both for the company and its old distributors who have contributed to their growth till now. Even if we consider the two as one on the investment front from the company perspective, I doubt if the total investments will pay off vis a vis the returns.
For me a negative here again.
3. Multiple Brand Management: Stay Organized At The Top Levels
All that work you did to differentiate your brands in customers' minds will go to waste if you're cannibalizing your own business by competing with yourself. If not at the brand end, the cannibalisation will happen at the channel end, with Realme distributors themselves diluting Oppo on the Price:Specifications front. This is a hard fact of life.
Successful companies set up a centralized way of controlling the brands. They have a vested interest in seeing the total of brands doing well, not just one brand.
Most companies doing more than one brand appoint a Chief Marketing Officer (CMO) with oversight of all the brands, so someone is always looking at the big picture and making sure the brands are cooperating properly. Common top executives at the top should be encouraging employees to share best practices or else the company will be stuck with "incessant competition" with different parts of the same company.
Management should also be periodically reviewing the brands through customer surveys and the like to make sure they are not overlapping.
What I hear is that Oppo and Realme will work as two separate entities in terms of teams internally, externally and distributors.
I see a severe challenge here on various parameters. Below the top level team handling both the brands, the team down below has to be experienced, with good exposure to national offline characteristics (India is a vast geography with regional characteristics) and mature enough to get the act right the first time. As I mentioned in my earlier posts, they will not have the luxury of time on their side.
4. Create a Significant Ad Campaign
I agree that sometimes creating a whole new product is a better way to shake up your company's image, but then Oppo does have a good image and why should someone want to change it?
The key to getting distribution for a new brand is a strong media campaign or brand equity, Realme will have that advantage a lot of distributors queuing to sign up with high expectations.
5. Stick To An Overarching Brand Identity
What about companies like GE and Mitsubishi that have to not just handle multiples brands in the same field, but also brands in other areas, from light bulbs and entertainment companies to cars and stereos?
It can be challenging, but the experts say the key is to have an overarching identity that consumers will associate with all of your brands. GE did this successfully by making the idea of innovation central to the brand vision and mission statement for years.
I don’t see this parameter being met as of now.
To me, based on my understanding, the move by Oppo to take on Xiaomi through Realme may be right for online, but Realme going offline may not be the best, unless they want to push the non-selling or slow moving stocks from online to offline.
Whether Realme will be a competitor to Oppo OR whether Realme will help Oppo, and both the brands will gain from each other, only time will tell.