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Executive Summary This report is intended to provide a critical analysis of Huawei’s brand equity with the focus on its smartphone product category and provide recommendations on how the equity can be improved. This report begins with an introduction on Huawei’s company introduction, market performance and positioning. Huawei is a market dominator in China and it positions itself as a creative brand for everyone. It competes in the market by adopting a dual brand strategy. Next, the report analyses Huawei’s brand equity by using CBBE model. Three strategies: Dual brand strategy, innovation strategy, and brand secondary association strategy has been identified and they influence the four layers of Huawei’s CBBE model. Overall, innovation strategy and brand secondary association strategy help Huawei build higher brand equity successfully. Dual brand strategy works well but causes conflicts. Based on the previous analysis, the report finds two issues and one opportunity for Huawei: Issue 1: Conflicts between Huawei Nova and Honor Issue 2: Inappropriate Pricing affected Huawei’s Brand Image (excluding Honor) Opportunity: The Coming of 5G Finally, three recommendations for the issues and opportunity are provided accordingly. Table of Contents 1 Introduction .................................................................................................................................. 1 1.1 Market performance - Market Dominator in China ................................................. 1 1.2 Positioning – An Innovative Brand for Everyone ...................................................... 2 2 Brand Analysis Using the CBBE Model ................................................................................... 4 2.1 Dual Brand Strategy ....................................................................................................... 4 2.1.1 Interaction between Huawei and Honor ......................................................... 4 2.1.2 Influence on Brand Equity ................................................................................ 5 2.2 Innovation Strategy ........................................................................................................ 5 2.2.1 Innovation Persistence and Government Support ........................................ 5 2.2.2 Customer-oriented Innovation ......................................................................... 6 2.2.3 Influence on Brand Equity ................................................................................ 6 2.3 Brand Secondary Association Strategy ........................................................................ 7 2.3.1 Linking brand with Patriotism ......................................................................... 7 2.3.2 Celebrity Endorsements .................................................................................... 8 2.3.3 Co-branding ....................................................................................................... 10 2.3.4 Influence on Brand Equity .............................................................................. 11 3 Two Issues and One Opportunity ........................................................................................... 13 3.1 Issue 1: Conflicts between Huawei Nova and Honor .............................................. 13 3.2 Issue 2: Inappropriate pricing affected Huawei (excluding Honor) ..................... 13 3.3 Opportunity 1: The Coming of 5G ............................................................................. 14 4 Recommendations ...................................................................................................................... 15 4.1 Recommendation 1: Remove Nova from Huawei or shift it to Honor ................. 15 4.2 Recommendation 2: Increase the Retail Price of new Flagship Phones ............... 15 4.3 Recommendation 3: Develop 5G network ................................................................. 16 5 References ................................................................................................................................... 18 6 Appendices ................................................................................................................................... 23 1 Introduction Huawei Investment & Holding Co., Ltd. (‘Huawei’), founded in 1987 in China, is an information and communications technology (ICT) solutions provider (Annual Report 2017). Huawei’s Consumer Business Group (‘Consumer BG’) is one of Huawei’s three business groups. Consumer BG provides products including mobile phones, mobile broadband devices and home devices (Huawei 2018). This report will evaluate Huawei’s brand equity with the focus on its mobile phone business in the Chinese market. Figure 1: Brand Shares in Chinese Mobile Phone Market 2013-2017 1.1 Market performance - Market Dominator in China Huawei is currently the largest market dominator in the Chinese mobile phone market and it witnessed a significant growth over the recent five years. As figure 1 illustrated, Huawei’s brand share (including Honor) increased from 10.1% in 2013 to 18.2% in 2017 and ranked as the first. Its local competitor Oppo followed it closely and Apple ranked as the fourth (Euromonitor 2018). 1 1.2 Positioning – An Innovative Brand for Everyone Figure 2: Huawei’s Positioning Statement Huawei positions itself as a brand that brings the latest technology and premium user experiences to everyone (Huawei 2018). Its electronic products have been award-winning for their innovation and user experiences (Annual Report 2017). The brand is associated with ‘innovation’, ‘technology’ and ‘dream’ because Huawei claims that it ‘shares its vision with people who pursue their dreams, people who are visionary challengers, people who are proactive with a strong belief in striving to achieve their goals’. Huawei competes in the mobile phone market by adopting a dual brand strategy: ‘Huawei’ and ‘Honor’ (Annual report 2017). Huawei brand focuses on ‘innovative features and superior experience’ and delivers value for a wide market; Honor combines fashion and technology and targets younger consumers. Currently, under Huawei there are five series for the Chinese market: 1) Huawei Mate and 2) P Series are for the high-end market; 3) G series and 4) Y series aim to provide phones with good price-quality performance; 5) Nova Series work similarly as Honor focusing on young and fashion-savvy consumers. With all these brands and series working together, Huawei provides a wide range of products for its target segments (Appendix 1). Huawei’s brand hierarchy is illustrated as figure 3. 2 Figure 3: Huawei’s Brand Hierarchy 3 2 Brand Analysis Using the CBBE Model Customer-Based Brand Equity (CBBE) model could evaluate the brand knowledge in customers’ mind. It includes four steps to build a strong brand, brand Identity, brand meaning, brand responses and brand relationships (Keller 2001). This part will use three main strategies to examine Huawei’s brand equity in different level of CBBE model. 2.1 Dual Brand Strategy According to the introduction, Huawei applies a dual brand strategy of ‘Huawei’ and ‘Honor’. Huawei’s Consumer BG aims to use product premium tier to perpetuate Huawei’s brand image as a symbol of business, innovation and competence. The Honor brand will focus on online business model to offer cost-effective products and build a younger and popular brand image (Robert 2015). Different from brand extensions, the key of this strategy is coordinating Huawei and Honor through production and technology and targeting separate customer segments. These two brands promote each’s strengths and uniqueness to insure their positions and increase market shares. 2.1.1 Interaction between Huawei and Honor Firstly, dual brand strategy influence brand awareness and brand identity. On the one hand, in terms of Honor, it thrived by taking advantage of Huawei’s established brand name and became a key player in the most competitive mid-to-low-end market, which Huawei has never touched (Interbrand 2017). However, on the other side, as Honor wants to shake off its inherent image as a Huawei-branded phone, Honor has a totally different set of brand elements, which are unrelated to Huawei. From this point, the dual brand strategy elevates Honor because it takes advantage of the market strength of Huawei, but conversely, the strategy has less positive effects on Huawei. 4 Honor has a diluted effect on Huawei’s brand image. Huawei delivers business style, quality, reliable and well-performing smartphones in the mid-to-high price tier. This is different from Honor, which is perceived as cost-effective and young. Although Honor uses different set of brand elements, consumers still have confusions between them (Yi 2014), and their perceptions of Huawei’s brand performance and brand meaning is affected by Honor. 2.1.2 Influence on Brand Equity The dual brand strategy helps Honor’s have higher brand awareness better associations and therefore have higher brand share. But the strategy has less positive effect on Huawei. Honor is overall inferior when compared to Huawei. The strategy weakens Huawei’s brand meaning because consumers’ impressions of Honor may affect their impressions of another brand – Huawei (Levin 2002), A positive brand image should have strong, favorable and unique brand associations (Keller 2001). However, Honor has become an influential market player and therefore it could blur Huawei’s differentiations and brand image. 2.2 Innovation Strategy 2.2.1