Since 2015, the global smartphone market has slowed; in the face of greater challenges, smartphone vendors are now making more efforts to stand out from the competitions, with innovation becoming a key driver for market penetration.
For some time now, Chinese mobile phone companies have succeeded at this and been at the forefront of creating affordable, high-technology products. One such brand, Honor - a smartphone e-brand - has most recently been spearheading its growth with a strong focus on creating products tailored specifically to the preferences of a younger generation of consumers.
In this Q&A, we speak to George Zhao, President of Honor, on why there is a need for smartphone brands to become increasingly innovative if they wish to achieve global expansion and raise the stakes for existing producers in an already saturated market.
1. How is the smartphone industry changing and where does innovation come into the equation?
Over the last couple of years, we have seen the smartphone sector transition. All of the once ‘new to market’ smartphone features have now been replicated in some way, shape or form, meaning people hold on to their devices for longer and existing high-end smartphone owners now outnumber first-time buyers.
So you need to look beyond innovation in technology and bring innovation into the philosophy behind the brand, placing the customer at the centre of everything you do. At Honor we innovate in response to what we learn about the needs and habits of our customers through research, meaningful engagement and involving them in co-creating products and brand programmes.
This creates a shared culture and a set of values – an emotional bond between the brand and the customer - that propel the business alongside the inevitable technology advances and product upgrades.
2. Some have suggested that smartphones are at the end of the road in terms of evolutionary advances. What are your views on this?
The Honor brand and products were created precisely for the specific demands of digital natives. Brands need to understand what the consumer wants next and how to give it to them. Far from being at the end of the road, this puts smart brands at the beginning of a new one where they have the power, through the consumer, to unlock the next wave of technology advances.
Honor is committed to millennials and by leveraging our insights into this target group we will continue to create innovative products that cater to their needs, while at the same time creating bolder and more creative experiences for our customers.
3. Are smartphone industry incumbents behind the curve in terms of their innovation strategies and the originality of their product offerings?
There are many excellent global brands in this industry. Those that fail to accelerate their efforts will rapidly fall behind the curve, not just in product offerings or originality of features, but in terms of the whole experience they offer to customers.
Honor has grown rapidly in three short years because our holistic approach is disruptive as well as fast-paced. Our products are designed by a world-class team who are global trendsetters. They achieve this by continually refreshing their understanding of millennials, and the aspirations and challenges they face in life. These same insights drive us to create marketing campaigns that resonate with our customers, giving them an experience that bonds them to the brand and the product.
Product design and marketing that isn’t driven by these continually evolving insights lacks innovation in the eye of the customer, is not experiential, and will have little appeal.
4. What will happen to the industry incumbents if they do not amp up their innovation strategies?
Brands need to look closely at the evolving landscape and be agile enough to respond to change. They need to look beyond just anticipating future trends, but instead to be aligning themselves with what is happening now, thus allowing them to influence and drive new trends forward.
For example, the Honor brand is aimed at millennials, but our target audience is not defined by age or other boundaries. Our brand spirit ‘For the Brave’ is not just a slogan. It stands for an attitude of courage, determination and strength. It is also a call to action to transform the words into concrete actions and amazing experiences. This culture and set of values is embodied in our products and our marketing, delivering innovation in technology and experience. This goes beyond looking for the ‘next big thing’, it invites the customer to be a part of creating it.
As mobile phone users get younger than ever before, whether in age or just by being ‘young at heart,' brands need to innovate more than ever to get, and to stay, ahead of the curve.
5. Half of the top 10 smartphone manufacturers in the world are Chinese. How have Chinese phone makers come to be such a dominating force? What do you think the future holds for them?
Chinese smartphone makers have benefited from various advantages. Not only is China lucky enough to have a very large domestic market of its own, we have also the advantage of an innovation cradle - Shenzhen – our very own “Silicon Valley” equivalent, which is where Honor was born.
Honor grew out of Shenzhen and now draws inspiration from its global team; Honor products are designed by a world-renowned team, and their design embodies the style and leading fashion trends in cities such as London, Milan, and Paris. Our latest flagship phone, Honor 8, leveraged valuable insights and the creative expertise of the team. So nowadays, when you look at the smartphone innovation out of China, you are really looking at global innovation driven by China.
Today, the competition in the mobile industry is fierce in China. As a result, many players try to win market share by finding a ‘short cut’ - either aggressive advertising campaigns, price wars, or rushing new products to market every few months. However to create and sustain future success, beyond beautiful design and powerful marketing I believe that Chinese brands need to go ‘back to basics’ and ensure they do not lose sight of the fundamentals of any good business model: quality, innovation and service.
6. The Honor brand is geared towards millennials. Can you explain a bit more about the concept of creating a brand specifically for 'digital natives?'
Honor’s brand philosophy is focused on ‘making phones for millennials’. For Honor, the idea of ‘being young’ goes far beyond age. It is a mind-set based on courage, bravery and strength in today’s world.
Millennials are proven risk-takers. They are brave enough to make themselves heard and unafraid to question products and brands, before choosing the one which is right for them. On a branding level, we want Honor products to be suitable ‘for the brave’ and provide customers with the right technology meet their needs.
7. Millennials are arguably a group of people who expect continuous innovation. How do you plan to achieve this in terms of new product development?
The expectations of millennials is precisely why Honor believes in innovation as one of the key fundamentals of the industry. With 10 per cent of our revenues invested in research and development, we are ahead of the curve in bringing the best technology to our customers and becoming the preferred brand for those who are looking to enhance their everyday mobile internet experience.
Furthermore, our product development is driven by millennials themselves - Honor is essentially a brand run ‘by millennials, for millennials’, with 77.49 per cent of our employees aged between 18-34 years old - our target market truly sits at the heart of the brand.