Honor targets established brands with fan-first approach

Honor may be a young company but they’re taking the market by storm by picking up where the Nexus range left off in offering flagship handsets at a very competitive price point. In its short existence, the company has managed to sell 30 million handsets with their current flagships – the Honor 6 and Honor 6 Plus – offering premium specs with an affordable price tag.

Yet to truly make a mark, you need a fan-base of ardent followers who are actively engaged with the brand and Honor is adopting this strategy in a bid to challenge the established brands. At last week’s 100 Days of Honor event in London which saw the Honor Holly launched in Europe with a unique fan-first pricing structure, we spoke with Honor Vice President of Handsets, Lars Weisswange, for a few minutes about the brand, marketing strategy and the fan-first approach.

In the following, my questions are represented by NG and Lars’ responses by LW. [Quotes in italic] describe his reactions to my questioning.

NG: How is Honor aiming to change the perception of the Huawei brand in Western Europe or is it being treated as a separate brand?

LW: From a [Go To Market] approach, it’s a separate brand. You can see Honor as the Mini of Huawei as Mini is to BMW. We have a very dedicated user base we target and we have a dedicated tone of voice. We have different approaches and we don’t want to support the rest of the group, we want to focus on our customers.

Although we are in the lucky situation that we’re able to use a lot of Huawei’s knowhow, expertise and economies of scale [for components and R&D], we have the possibility to be a startup within a big corporation which is a great thing and key to the survival of Honor.

NG: Who would you say are Honor’s main competitors?

LW: Definitely the established brands. They are saddled with their existing market models and can’t adapt to a B2C model as fast so we’re aiming to capture as much of their market share as possible.

NG: The target is 10 million fans in Europe. Which are your key European markets and how many of these 10 million fans are likely to become actual customers?

LW: First let me elaborate on the ten million fans – it’s like a Ferrari as there are a lot of young people who want to one day own a Ferrari but may never have the opportunity and means to do so in their lifetime.

For us, winning fans is very important as that helps to convert [customers] into sales. Our target is 2 million unit sales within the European market across our portfolio of devices and our key target markets are the ones where we already perform strong – Spain, Italy, France & Germany – and we also want to make sure we break through in the UK market as quickly as possible as well.

NG: What period is the 2 million sales targeting? Is there a target for the number of the 10 million fans who go on to purchase a handset?

LW: [Chuckling] The 2 million sales is the target we have announced but I cannot confirm the time period. The 10 million fans is a big target for us as it allows us to have a community that can help our future direction. As for number that go on to purchase – obviously we have targets but I cannot share these with you. The two million unit sales is the public target that we are striving to achieve.

NG: Do Huawei have a lot of input into Honor or is the management strategy completely separate from the parent company?

LW: Funny you should ask that – in Europe we have a lot of flexibility about what we want to do. We’ve learnt that local requirements in Europe are very important and obviously, whilst there are a certain movement in the Chinese market towards e-commerce which was a key reason behind the Honor brand in China, E-commerce is not as advanced in Europe as it is in China.

We believe that with Honor in the European market, we do have the chance to be a game changer in the market and to really act as a disruptive [change] to bring new ideas within the mobile space.

NG: We recently spoke with some Huawei executives where it was said that one of the reasons for the creation of Honor was in reaction to the emergence of rival low-cost Chinese manufacturers. Would you agree with this?

LW: The creation of Honor was driven by the strong movement to e-commerce and rival manufacturers [such as Xiaomi]. In Europe, the decision to launch Honor was not based on thoughts about competitors but about the ability to disrupt the existing market using an e-commerce model.

People have jumped in the water to test the market but no-one has really embraced the e-commerce model and now we have the first dedicated team to bring devices to the market via the Consumer-to-Business model which hasn’t been tackled by manufacturers until now. The Honor brand needs to do things completely different to anyone else to be a success and the engagement approach to the market will allow us to quickly generate fans who become our brand ambassadors.

NG: Honor is about the now and also about the future, when the market becomes more about the e-commerce model than the retail channel. You are aiming to targeting the established brands but do Honor have intentions to launch a handset around the £500 price point or is the handset strategy driven by Huawei’s global handset strategy?

LG: If you look at devices like the Honor 6, these are already high-end devices with high-end specs and high-end performance but these come in at a very aggressive price. The reason we can afford these prices is obviously party due to our business model as we try to optimise the price using our channels and route to market to offer the best experience and best performance at the best price.

I do thoroughly believe that the people currently buying established devices at high price points will think twice when they buy their next device because with the ever-increasing replacement rate and the pressure of innovation and the move to newer platforms, people will be less willing to invest a lot of money into their new phone, especially when replacing your device multiple times within your country.

This is where we see an opportunity for Honor to establish ourselves and capture market share from established brands.

Faster, Further, Clearer

NG: If you could describe the Honor brand in three individual words to describe the brand, ethos and future, what would they be?

LG: “For the brave” [Chuckle]. I think the summary of our launch video is Faster, Further, Clearer is a good way to summarise but the only thing missing is Engagement as to us, our fans are a key part of the overall brand. Without the fans, we wouldn’t be where we are now and we fully intend to keep making sure that fans represent a big part of our ethos going forward.

NG: Any last words for us, Lars?

LG: Honor is about fans and delivering exceptional performance and equally, exceptional value for money. We are a startup within a global giant and are able to offer such low prices through our unique model. At a time where everyone is making similar devices and experiences, our e-commerce model is different and will allow us to become disruptive now whilst also preparing for the future when the e-commerce channel becomes more important than the retail channel.

We have only introduced three devices now but we have plenty more coming and you’ll see some new interesting things in the coming weeks.

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A special thanks to Lars for agreeing to the interview at short notice. Do you have any questions for Huawei or Honor? Do you think the fan-first approach is the right way to be successful in the mobile market? Let us know in the comments below and we’ll put them forward to the company.