International Business: Executive Summary on Nokia Company - Essay Example

?Executive Summary Nokia is one of the largest companies in the telecommunication industry in the world. In 2000, it has reached total sales of around $28 billion. It is considered to have the largest chunk of market share as compared to its competitors. Being in a strong leadership position, the company has reached its maturity stage. Economic crunch has affected the growth of new subscribers while the increasing demand of handsets with distinct features and brands has become a commodity item for every person. Heavy investments are also needed to be made in order to upgrade to the level of 3G technologies. In the midst of this havoc, it would be interesting to see how Nokia manages to retain its customers and maintains its brand loyalty. These two factors have always been the driving factors behind the peak sales of Nokia. China has now become the centre of attention for many companies because of its large population. Like many other companies, Nokia is also planning to enter the Chinese market in order to cater the large masses of population with its telecommunication products. The company has to develop an extensive marketing plan, in order to ensure that the decision of entering new market like china is not wrong. In this marketing audit report, introduction of Nokia, products offered by the company, its competitors, customers, marketing mix and marketing strategies are discussed in a detailed manner. Introduction of the Company Nokia is considered as the multinational corporation. It has had itsfocus onwired and wireless telecommunications. It possesses the largest market share in cellular industry which is about 38% in 2007. Worldwide, the success of Nokia’s popularity lies in its successful cellular production services. The foundation of its success in cellular industry is its ample experience, scientific marketing andtechnological advancements. The concept behind the existence of Nokia is that “Technology connects People”. This concept has been deeply rooted in the minds of people worldwide. The first branch of Nokia was opened in Beijing in1985. It depicts that Nokia initially tried to cater the Chinese market. At that time, the numbers of employees of Nokia in China were more than 6000. Nokia believed in doing further marketing research in China and in this regard, it established two research and development centres in China. By participating in public service activities, Nokia has gained healthy reputation in China. Nowadays, Nokia owns manufacturing concerns, research centres andsales representatives all over the world. Nokia possesses its headquarters in Espoo city, which situated in neighbouring locality of Finland. Nokia plays a vital role in boosting the economy of Finland. Worldwide, Nokia has around 109,871 employees. Customer and extent to which Nokia is Customer Centred The basic triggers behind the soaring sales of Nokia are the brand loyalty and customer loyalty. Nokia always keeps an eye on the changing preferences and changing demands of customers and has always been a pioneer in conducting research and development process. Nokia serves every level of social stratification. From lower layman level to business class, Nokia has been catering each and every customer with wide range of cellular phones that it offers. Nokia heavily relies on the preferences and needs of its customers and therefore has launched numerous products by making more and more segments for each kind of customer groups.Nokia has always been vigilant in tracking the demands of customers. Nokia has always taken into account the changing trends of markets and has offered products having a consistent upward trend. Range of Products offered by Nokia The original series of Nokia contains the following sub-series: Nokia Ultra basic 1000 Series; this series consists of the most affordable range of mobile phones. It essentially targets the developing countries whichjust require the facility of calls, SMS, reminders and alarm clocks and do not demand advanced features. Nokia Basic 2000 Series; these customers possess slightly higher demand than that of 1000 series customers. Cellular phones for such people include features like Bluetooth and Infrared, camera and coloured screen. Nokia Expression Series-3000; these phones come in mid-range and generally targets youth markets. These phones possess features like FM radio, mp3 player etc. Nokia Active Series- 5000 Series; this series comprises features of all the previously launched series. It includes advanced features likecamera, infrared, Bluetooth, mp3 player etc. Nokia 8000 Series; Nokia 8000 series primarily includesWalkman phones which are more funky in style so as to cater the youth market. It gained huge popularity among youth market as the idea of integratingWalkman with mobile phone was far more innovative then any other. Nokia Classic Business Series;These range of mobile phones are particularly designed business class and therefore possess options like video conversation, e-mail, networking services. The purpose of launching this series was to compete with other business purpose phone like Blackberry etc. Nokia Fashion and Experimental Series;this range includes phones having funky features with attractive andstylish cases. It is essentially designed for those people who want to be indulged in fashionable and stylish products. Nokia Premium Series; premium series targets elite and niche class of customers. Competitors Nokia is company which is based upon expediting communication processes. The basic applications of cellular phones include: MMS (Multi Media Services) SMS (Short Messaging Services) Polyphonic ringtones WAP (Internet) Camera Phones Video Recorders With all the above mentioned basic features, every other cellular company is thriving hard to incorporate these applications andfeatures in order to make their cellular products more attractive for customers. This factor has put a lot of competition pressure on Nokia from every aspect. The major competitors of Nokia include: Samsung Motorola Sony Ericson Panasonic Siemens NEG Toplux Sagem Despite of having such immense pressure from its competitors, due to its innovative strategies, Nokia has been able to go ahead of its competitors by implementing its marketing strategies in a much more successful wayas compared to its competitors. In 2000, the market share of Nokia as compared to its competitor was: Nokia 37.2%   Motorola 17.3% Samsung 9.8%   Siemens 8.5%   Sony Ericsson 5.2%   Ansoff’s matrix has four broad categories: Market Development Market development means to sell similar type of products to different people. This section helps a company in focusing new areas of markets ongeographical basis.In this section, a company: Segments and targets new and different markets on the basis of their geographical location. Can use different channels to enhance sales for example online sales or direct sales Targets new and different segments of customer groups on the basis of gender, age and other demographic features. Diversification Diversification is considered to be as the most risky of all other segments because under this section a company takes step for an entirely new idea, service or product which is entirely different from the present products of that company. The basic purpose and advantage of diversification is that its helps in recovering its losses through its new product. Market Penetration In this segment, company makes it rot more firm and strong in the present market. In market penetration, a company strives to sell new products or features to the existing group of customer or market. Here, a company might: Bring more advertisement to induce people to use more of the same products Increase the activities of sales workforce Launch changes pricing policies or promotional schemes etc.  Product Development Under the segment of product development, company adds new lines of products to its existing range. In this section, company expands through width extension or line extension.Nowadays, every company undertakes this strategy and this is nowadays it is hardly observed that a company is offering just a single product. A company can do product development by: Brining in new products pertaining to the same industry Adding new versions, designs and variants of existing products Determining new ways of usage of the existing product From all of the above mentioned strategies, the strategy on which Nokia has always focused upon so as to boost growth is ‘Product Development’. It has invested hefty amount in integrating and acquiring latest software like android in their cellular phones. Many current Nokia users find it difficult to use their smart phones and other mobile phones therefore it has to focus on improving the technological issues related to its existing products. Nokia - Product Development Process Nokia is currently facing weakening sales and most of the customers of Nokia are switching towards other cellular brands including Apple, Sony Ericsson etc. Nokia has experienced huge decline in sales since 2000 which is an alarming sign for Nokia. This indicates that Nokia must change its strategies at this point of time. Market share of Nokia is shrinking because other smart phone giants like Apple are taking over the market share by launching better products. The only benefit that Nokia possesses is that its products are way more affordable than that of Apples’. However, despite of such advantage customers of Nokia are continually encountering problems with the software of mobile phones.It is suggested that despite of launching more and more products, Nokia needs to improve the quality of new products so that brand loyalty is not hampered. It is recommended that it should conduct market research in order to find out the primary reason behind decline in sales. The major reason can be the technological problemsfrom the side of Nokia. The company has already reached its saturation stage therefore there it is useless to launch new products instead it should modify its existing products by enhancing and improving their quality. In this manner, it can retain its current market share. Having the only competitor to fight with, i.e. Apple, Nokia can strive to compete by providing similar products like Apple but in more affordable prices so that every social class of customer groups can afford them. Marketing Mix of Nokia In order to modify an effective marketing strategy, substantial investments is required to be done in resolving the technological issues pertaining to the existing software that Nokia is currently having with its smart phones. Apart from thedevelopment of a culture of innovation, Nokia should devise a marketing mix for its new product i.e. smart phones. The four elements of marketing mix which are widely popular by the name of 4 Ps help in assisting a specific target market. The 4 Ps of marketing mix include: Product Nokia should focus on offering value basedhigh quality smart phones to its customers. The smart phones should possess some specific features that may direct towards a successful growth for the organization. For instance, the smart phones should mainlycater the requirements of the elite class of customers. Rather than spreading smart phones to mass market, only niche class of customer groups should be targeted. The reason is if smart phones would be offered to mass market then there is high risk of hampering quality of smart phones as the mass market would generally be price sensitive and they would demandaffordable and cheaper phones with reasonable compromises in quality. In this way, elite class would let down with the quality of smart phones which eventually may result in loss of substantial numbers of elite class customers. From technological perspective, Nokia should primarily focus on upgrading and developing sophisticated operating systems to support the compatibility of its smart phones. Since the new smart phones of Nokia revealed issues related to software concern, therefore these technical problems should be recovered by the technical department of Nokia on preferential basis to make Nokia “reliable” all over again. Price Currently, in order to grab the market share,Nokia is adopted the price penetration strategy to serve the masses at the most reasonable prices. This strategy has led to severedistresses to Nokia as the quality got at stake in order to make the phones affordable to the customers. The customer faces aterrible experience with the lowered quality of product and in this way, is compelled to switch to other reliable competitors in the industry. Nokia should focus on implementingPrice Skimming Strategy to sell its smart phones at premium prices while remaining the smart phone for specific niche class. This would generate hefty revenues to Nokia and the quality of smart phones would also not be hampered. In this way, the customers would remain loyal to Nokia. Place Since Nokia is a global brand and offers its products to almost every corner of the globe, therefore, as such not much consideration can be done in this area. Resilient distribution strategies of Nokia have made it convenient to distribute its smart phones using old channels of distributions. Promotion Since the current promotional andadvertising campaigns of Nokia are purely based on mass marketing, promotion is a major concern for Nokia. Nokia has to make a paradigm shift in its marketing strategy and should target the elite class as its primary target audience. The category of elite class must not have any direct link with the brand if name of Nokia. Attractive advertisements with particular requirements that are demanded by the niche class should be revealed by Nokia in its advertising promotions and campaigns. Internet based marketing can be an attractive idea for Nokia as most of the people coming from niche class are highly induced to the internet and spend more time on internet than the masses do. Websites including Facebook, Hotmail, Yahoo, Gmail, Tweeter, LinkedIn can be utilized as a primary platform for the advertisement of its smart phones. Push Strategy of Nokia A push strategy is based upon utilizing the sales force of the company promoting trading activities to generate the demand of the products. The manufacturer promotes the products to wholesalers, wholesalers promote it to the retailers and retailers then encourage the customers to purchase this product. Nokia has always been a very good example of pushstrategy. Trade promotion and personal selling are considered as the most effective tools for companies like Nokia. It includes offering subsidies on their products in order to induce retailers to sell more of their products. A push strategy has been utilized by Nokia which includes selling the handsets directly to the customers, bypassing all other distribution channel. This strategy most likely incorporates promotional tools like advertising and consumer promotions. Pull Strategy A pull strategy is more inclined towards creating demand of products among customers. By advertising, promotion and offering high quality products, customers get enthusiastic about acquiring that particular product. Of the strategy gets successful, customers will inquire about the product. This inquiry or demand will then be passed through distribution channels to manufacturer. Nokia has been very effective in using push strategy rather than using pull strategy. Pull strategy has not been so successful in Nokia. Since Nokia has already offered wide range of handsets for every social class, customers hardly demand any new feature or handset from Nokia. Entrance of Nokia in Global Market While entering into new overseas markets, Nokia has considered the following factors. Innovation In a telecom industry, the demands of consumers change much rapidly than in any other industry. Nokia has been very vigilant in bringing in user-friendly as well as innovative products. It has tapped into changing market trends and consumer preferences and therefore has provided products for every social class. Industry Clusters In order to attract different segments and specific regions of markets, Nokia’s strategic efforts have made it successful in catering Scandinavian and Western European Markets. Nokia has extensively taken advantage of cluster process. It has highlighted on clustering the multinational IT corporations. Telecommunications in Global Economy Nokia has been the pioneer player in facilitating telecommunication process at global level. It has improved the telecommunications networks in many ways. Changing Consumers Taste Nokia has been cautious in observing the changing consumers’ needs. It observed that people have strong trend of switching to mobile devices rather than landline phones. In this regard, Nokia has taken first movers advantage in catering the telecommunications of demands. Conclusion Since Nokia is facing immense competition from major players in markets including Apple and Samsung which have introduced the concept of touch screen, there are substantial chances that Nokia might lose a considerable chunk of its market share. Despite of that, it is also a considerable fact that every social class cannot afford such expensive handset manufactured by large giants. Therefore, Nokia can provide value addition to its existing customers by providing high quality products in affordable prices. In order to increase the fragmented market, Nokia needs to shift its corporate strategy to cost leadership. Long term strategy to observe regionalized markets needs to be developed by Nokia so as to maximize economies of scale. For gaining customer loyalty, it is recommended that price reduction system and handset replacement system should be targeted. To gain the customers, timely innovation is also required. Moreover, before making any modification and alteration, consumers taste, preferences and behaviour must be considered. The above discussed marketing strategies can assist Nokia in achieving its majorgoal of making growth and expansion for acquiring sustainable competitive advantage. References Ali, S. E, 2008. MARKETING MIX AND THE BRAND REPUTATION OF NOKIA. Market Forces. 4, pp.15-29 Armstrong, G., Harker, M., Kotler, P. and Ross, B.,2009, Marketing: An Introduction, 9th ed. United States: Prentice Hall. Blithe, J., 2006. Principles & practice of marketing. Chicago: Cengage Learning EMEA. Bhasin, H., 2011. Why Nokia lost its market share. [ONLINE] Available at: http://www.marketing91.com/nokia-lost-market-share/. [Last Accessed 1st May 2012]. Brooke, M. Z. and Mills, W. R., 2003. New Product Development: Successful Innovation in the Marketplace. United Kingdom: Routledge. Doyle, P., 2008. Value-based marketing: marketing strategies for corporate growth and shareholder value. 2nd ed. United States: John Wiley & Sons. Hawkins, 1998. Consumer Behaviour, 7th ed. United States: Tata McGraw-Hill. Jobber, 2009. Foundations of Marketing, 2nd ed. New York: Tata McGraw-Hill Education. Joseph, S., 2011. Nokia focuses brand strategy on retail stores. [ONLINE] Available at: http://www.marketingweek.co.uk/nokia-focuses-brand-strategy-on-retail-stores/3032389.article. [Last Accessed 1st May 2012]. Kotler, P.and Armstrong, G., 2010. Principles of Marketing, 13th ed. United States: Pearson Publisher. Kotler, P., 2009. Marketing management, 10th ed. University of Michigan: Prentice Hall Inc. Lester, A., 2009. Growth Management: Two Hats Are Better Than One. United States: Palgrave Macmillan. Masterson, R. and Pickton, D., 2010. Marketing: An Introduction, 2nd ed. United Kingdom: SAGE Publications Ltd. MeriNews, 2007. Nokia's marketing strategy: A need for change. [ONLINE] Available at: http://www.merinews.com/article/nokias-marketing-strategy-a-need-for-change/124478.shtml. [Last Accessed 1st May 2012]. Meldrum, M. and McDonald, M., 2007. Marketing in a nutshell: key concepts for non-specialists. London: Butterworth-Heinemann. O'Reilly, L.,2011. Nokia profit tumbles 21%. [ONLINE] Available at: http://www.marketingweek.co.uk/nokia-profit-tumbles-21/3022815.article. [Last Accessed 1st May 2012]. Smith, Paul Russell and Taylor, Jonathan, 2004. Marketing communications: an integrated approach. 4th ed. New York: Kogan Page Publishers. Thomas, Robert J., 1993. New product development: managing and forecasting for strategic success. United States: John Wiley and Sons. Trotman, Elizabeth F., 1969. The Marketing Mix: Managing the Marketing Concept. United States: Education for Management, Inc. Winer, Russel S., 2000. Marketing Management. University of California: Prentice Hall. Read More