How Redmi became a perfect example of 5 Concepts of Economics

When Redmi entered Market, there were many competitors in the small price segment mobile companies. Some of the competitors were Micromax, Lava, etc. The market was a Perfect Competition market. A Perfect Competition market is a market where there are many firms, the entry of new firm is unrestricted, and the nature of product is undifferentiated.

Redmi came up with its first smartphone, which became a big hit and the Demand increased. As the demand increased the price went down as to cater to more customers. Eventually the customer’s tastes and preferences changed, following the non-price determinants of Demand and some customers even shifted to high priced smartphones because of a positive change in income.

The company was not being able to earn much revenues initially and it started to lose its customers. The company then came up with a new product called the MI Band. The company started to offer MI Band at less cost when purchased along with a smartphone. More customers were now generated by Redmi. Incentive played a role here.  This made people buy more of Redmi Products.

Then as the company grew it started producing different products and incurring less cost with more diversified products, thus following the concept of Economies of Scope. The company came up with new products like MI TV, MI AR glasses. The company incurred less cost to produce one extra unit this items.