The use of hunger marketing strategies and their impact on Chinese customers from a company perspective, taking Apple and XiaoMi as the case study examples

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Chapter One: Introduction

1.0 Introduction

According to DMO (2018), in 2017 the mobile phone penetration rate in China stood at 47.93%, with the figure expected to reach 58.79% by 2022. These data substantiate the claim that the penetration rate of mobile phones in China is high (Yu, 2014). Presently, due to an increasingly competitive mobile phone market, more and more attention has been paid to the factors that inform the purchasing decision of consumers. Although the purchase of mobile phones is a subjective behavior exhibited by consumers, some studies have found out that some objective factors also greatly promote the decision-making of consumers (Karjaluoto et al., 2004). These factors include the price, brand as well as the marketing strategies adopted by mobile phone manufacturing companies. 

The smartphone market is one of the most promising markets in China with Apple capturing most of the market shares. According to data collected by Yu (2014), it is revealed that 48% of mobile phone users in China use iPhones. Apple's primary marketing strategy is hunger marketing, and this is a strategy that significantly affects consumers' tendency to buy Apple's latest products (Sun, 2014). However, recently Apple received a shock from China's low-cost phone makers, most notably, XiaoMi. Yarow (2015) asserts that XiaoMi's sales are beginning to outpace Apple's. To build the brand image of XiaoMi products, the company relies on fan loyalty, low prices and a limited inventory of market strategies, with the most important of these being the hunger marketing strategy (Gupta & Dhillon, 2014).

Yu (2014) opines that existing research suggests that the use of hunger marketing strategies does have any effect on the desire of customers to buy any product. Yu and Zhang (2016) define hunger marketing as a method that allows suppliers or companies to create a phenomenon of demand exceeding supply by limiting the sales of available goods. Through this strategy, the customer thinks the product is scarce and unique, therefore, prefers to buy it (Zhao, 2012). The mobile phone industry pays more attention to the relationship between hunger marketing strategy and customers' desire to purchase, this association helps explain how hunger marketing increase the sales of a company (Yu & Zhang, 2016).

Current studies have focused on research on the present situation of the mobile phone market (Turnbull, Leek & Ying, 2010); examination of the causes of consumers' choice of mobile phones (Karjaluoto et al., 2004); Apple's strategic analysis (Yu, 2014) and XiaoMi's strategic analysis (Rawal, Awasthi & Upadhayay, 2017). Nonetheless, there is a deficiency of research on the study and impact of both XiaoMi and Apple using the hunger marketing strategy in the Chinese market.

The research question of this study is:

RQ1: In the Chinese market, what are the different effects on consumers’ purchasing intention when Apple and XiaoMi use the same hunger marketing strategy?

This proposal will focus on the following:

                      I.            Exploring the pros and cons of adopting a hunger marketing strategy.

                    II.            Examining the differences between other types of marketing strategies and hunger marketing strategies.

                  III.            Comparing the impacts of consumers’ purchasing intention when Apple and XiaoMi use hunger marketing strategies.

This proposal will fill the gap in the marketing strategy of hunger by highlighting the advantages and disadvantages of using this mode of marketing. The intention is to aid the various mobile manufacturing companies to understand the advantages and disadvantages of adopting this strategy. By comparing the effects of hunger marketing strategy on consumers in two different companies: Apple and XiaoMi, this proposal will be used to guide other mobile phone companies looking to implement the hunger marketing strategy. This study will be of interest to other scholars as it will provide some relevant information to further their various research studies.

Chapter Two: Literature Review

2.0 Introduction

The mobile phone penetration rate in China has been increasing rapidly. China represents the largest market in the whole world that has the most significant number of smartphone that stood at 500 million users in 2014 with the number increasing significantly annually (Filieri & Lin, 2016). According to Sun (2014), taking up the smartphone market of China is very important, and it is one of the most promising markets globally. Mobile phone manufacturing companies have adopted hunger marketing strategy so that to gain competitive advantage and maximize profitability (Yu & Zhang, 2016). As one of the most effective marketing strategies, the hunger marketing strategy has gradually become popular. Presently, it has been adopted by several big phone companies aiming to sell their products, such as Apple and XiaoMi (Zhao, 2012). There is a need to analyze the effects and impacts of utilizing the hunger marketing strategy by Apple and XiaoMi on Chinese customers.

Although both Apple and XiaoMi have adopted hunger marketing strategy, both companies have different targets and ways of using it. This situation creates a gap that involves that analysis of their disparate targeted consumers and comparing the diverse effects of these two companies on adopting hunger marketing strategies. Although Filieri and...