Huawei to Adopt a Touchy-Feely Brand Strategy as it Goes Premium

POSTED BY James Moar
For many years a white-box OEM and network infrastructure player, Chinese smartphone maker Huawei is taking bigger steps towards own-brand smartphone sales in European and North American markets in the coming year. The company is rolling out the new premium-positioned Huawei P8 in concert with a dual-channel strategy (online and MNO-distributed) for Huawei itself and the Honor sub-brand.

Getting the Phones into Customers’ Hands

Of the two, Huawei has high hopes for the Huawei premium line, which will take the majority of the offline sales. The company has low brand awareness for its phones, but immense confidence in its product. The problem is not with the phones’ design, it’s getting people to hold it, use it and appreciate it. To that end, they are focusing on a strategy that literally puts the phone in consumers’ hands – setting up Huawei stalls in MNO shops explicitly to sample Huawei phones. This kioskesque model is flexible, and could possibly extend to places beyond the MNO store (like in coffee shops, malls, airports etc), and indeed this may serve as a way for Huawei to differentiate itself at a much more grass-roots level than its competitors.
A Tale of Two Channels

Huawei is targeting that elusive and crowded “premium at budget price” space, drawing direct parallels to the iPhone at the recent P8 launch event in London. The company’s competitive price will serve it well, and the low cost base has proved attractive to operators in a range of markets, as well as online. The Honor and Huawei brands can command different sized margins tailored to the expectations of each channel, potentially forestalling a problem with having the same phones at different prices, which would lead to showrooming behaviours.

Should this problem arise (most probably by one channel’s sales flopping), Huawei could solve it in a similar way to how retailers are looking to use beaconing, as we discuss in our Mobile Context & Location Services research stream – offer discounts or exclusive software deals through either QR codes or partnership beaconing to discourage showrooming. Operator margins on the phones are already increasing in Spain, with resellers upping the price and still achieving good sales. And if this strategy doesn’t work out, the company can always shift to independently marketing their primarily digital-selling Honor brand through these kiosks, keeping the premium Huawei-brand devices for the MNO channel, or restricting online sales to SIM-free devices only.