Nokia Marketing Mix: Penetrates Large Demographic Worldwide - Case Study Example

Nokia Marketing Mix: Penetrates Large Demographic Worldwide Introduction: Nokia started out as a wood pulp mill in 1865, but has become a global force in the mobile phone industry. It reached the status it has today through innovation, teamwork, and a mindset that didn't limit it to being just a single mill. From the very beginning, Nokia as a paper mill joined forces with Finnish Rubber Works and Finnish Cable Works to officially become Nokia in 1967. Already at this point Nokia had several products under its company and developed the digital switch that evolved into the multifaceted platform that is still the basis for Nokia's infrastructure today. Nokia continued to acquire more companies and added knowledge and different products/ sectors having to do with electronics such as television manufacturers and computer firms. With all these companies coming into Nokia, the company needed to restructure and have a place for the different segments and organized the company into four main segments: electronics; cables and machinery; paper, power, and chemicals; and rubber and flooring. It was also granted from the Finnish government an allowance to have greater foreign ownership, and this allowed Nokia to expand into the global empire it is today. It continued to make innovative new products, especially in telecommunications and introduced a mobile phone that included phone, data, Internet, email, and fax services. The latest joint venture that Nokia will be entering is to join its network equipment business with Siemens Company. Nokia is doing very well worldwide but is behind Motorola in the US market. Nokia products are sold through carriers like Cingular and T-mobile and that makes them vulnerable. However, Nokia sales totaled $54,247,951, 453 in 2006 so they are still doing very well overall. Their phones are sold all over the world and they are a presence in developing markets such as Africa and India. Nokia is currently very focused on India as the country is seeing a big increase in mobile phone usage and they are expecting to have India become their second largest consumer by the year 2010. They appeal to consumers of all price ranges from basic mass-market phones, to mid-market color and camera phones, and to the high-end exclusive phones. The economy does not seem to have much of an effect on cell phone sales because it is becoming more of a necessity to have a mobile phone than a luxury. However, they may be a small drop in sales for the lower-end consumer with the increasing cost of living and gas prices. Phones are getting more advanced and Nokia even has mini tablet computers to help you get work done on the go and the majority of people will still need to replace phones when their old ones get broken. It is cheaper today to get a cell phone than to have a landline and you can be reached anywhere you are. Overview At present, Nokia remains to be the leading cell phone manufacturer in the world however, it has lost ground in the United States. Currently, it holds a secondary position in the U.S. market tailing behind Motorola which owns the 32% of the market (Motorola doubles Nokia in US market share in 2006). This shares reduction has Nokia changing its views on the cell phone and is moving to design new and better cell phones to compete with the popularity of Motorola lines of phones. They are still a big contender as Nokia pushes new high-end lines of phones but also increasing their strategy by introducing cheaper phone in to the low-end market. The net sales for Nokia in 2006 grew 20% and totaled 54,247,951,452.80 (converted from Euro at current rate of 1.32090) (Quarterly and annual information.2007b). This has allowed Nokia to increase its sales from 32% to 35%. In a separate report independent from Nokia, a group called Strategy Analytics researched that Nokia's market share was 33% in the global market, which is the highest of all the mobile phone companies. Its closest competition was Motorola, trailing behind at 20%. Nokia has the money and clout to continue having a successful business for time to come. According to US Growth aids Nokia Mobile Share (2007), the Company will not have shortage of assets with the success of their mobile phones, new products, continuing research, and ventures with other companies. Roche (2006) cited that phones such as the Nokia 5500 with its trim figure mirrors those of its fitness-focused target market. As Nokia explains in an introductory booklet bundled with the 5500, the handset is for: 'the sport user, an individual who enjoys being in the gym, always on the move or just hanging out with family and friends. Cha & German (2oo6) likewise, Phones such as the Nokia E62, E61, and the 9300i are aimed at the "corporate users." Phones that offer music capability such as the N91 and 7000 series are aimed towards music fans. Products such as the Nokia 770 and N800 Internet tablets appeal to "gadget hounds and techies a device for those who want to stay connected." A phone like the Nokia N-gage is aimed at the youth market. According to Mike Berniker of internetnews.com (2003), "Nokia's strategy is to target the avid videogame user in the 16 to 30 year old market a market that Nintendo has dominated." Nokia, as pointed out by Nokia Fostering Innovation was still open for ideas no matter how absurd they may sound, and a number of such ideas surprisingly turned out to be a star product on the market. Nokia is a company with great potential and has a lot of opportunities ahead of it; however it will have to fight for those opportunities with its main rivals that are such companies as Motorola, Samsung, Siemens, Sony Ericsson and LG Group. Another factor in the success of Nokia Company and one of its major strengths is the organizational culture, Nokia has a very strong corporate culture which cultivates the innovative spirit in the group and persuades the initiative of every particular individual. At Nokia, both information and people circulate around the company, sharing knowledge and "assisting internal benchmarking". As the Nokia website states the company consequently, learned to focus on research for the future, while generating new technologies useful for the present. Nokia is a dominant player in the smart phone market; its position is even stronger due to the majority ownership of Symbian and its proprietary Series 60 user interface which are predicted to embody the majority of the 100M smart phones sold in the next couple of years. Also Nokia's size, one of its big strengths, enables Nokia to pay off high R&D costs and still get cost advantages. However, it had been stressed that there are some weaknesses, for example being the market leader and having an increased role in Symbian, Nokia had a bad image, much alike as Microsoft in the PC industry; also Nokia may be late in developing third-generation phones as the competition in that field is very strong. Plus Nokia position in the future can be rather fragile due to the fact that the European market for cellular phones with current technology is nearly saturated (Wikipedia, 2007). PRODUCT From 2006 to present, Nokia is comprised of four business groups: the Mobile Phones, Multimedia, Enterprise Solutions and Networks. Its Mobile Phones provide expanding mobile voice and data capabilities across a wide range of mobile devices. Multimedia brings mobile experiences to consumers in advanced mobile devices and applications giving people access and use of multimedia through a range of radio technologies. Enterprise Solutions offer businesses and institutions a broad range of product solutions, including enterprise-grade mobile devices, security infrastructure, software and services and collaborating with companies to provide fixed IP network security, mobilize corporate email and extend corporate telephone systems to Nokia's mobile devices. Mobile Phones- In 2005 alone, 41 new mobile device models that include 18 new Code Division Multiple Access (CDMA) phones. 32 were mid-range or high end while nine were at the entry level. Nokia identified four launch highlights as: Nokia's first operator-specific designs on models such as Nokia 6102 and Nokia 6234 3G or Third Generation phones for mass market: Nokia 6280/6282 and Nokia 6233/6234 First musicphone: Nokia 3250 L'Amour fashion collection: Nokia 7380, Nokia 7370, and Nokia 7360. Nokia's highest revenue generating phones for 2005 were the high-end Nokia 6230 and Nokia 62301. These are also the mobile phone industry's best selling devices in Europe selling about a cumulative volume of 25 million units (Nokia, 2006). On top of this, Nokia is currently outpacing iPods of Apple in sales of MP3 capable mobile phones selling about 15 million in 2006. It aims to sell about 80 million music phones (Forum-Nokia, 2007). Multimedia - This division aims to design devices and applications that bring multimedia experiences to customers of Nokia allowing users to create, access and consume multimedia and share this experiences as well. These devices use a wide range of connectivity including GSM, 3G/WCDMA, WLAN and Bluetooth. The Nseries uses Symbian operating system. Driven by converged modern devices with advanced imaging, music, web browsing and email functionality, Multimedia continued growing making Nokia a market leader in 3G or WCDMA devices for 2005. Key development was the launch of six Nokia Nseries sub-brand and multi-media computer product category models. These targets early adopters and technology leaders and shipment began that same year for two units. Devices include Carl Zeiss optics, megapixel cameras, multi-gigabyte memories, stereo sound, VHS resolution video, and Wlan connectivity (Nokia, 2006). PRODUCT PORTFOLIO - Nokia currently offers 14 phones in their product lineup. - Nokia also offers 6 Bluetooth headsets. - Accessories ranging from keyboards, to cases, to wireless car kits. - Two Internet tablets, the 770 and N800. - And the N-gage, a phone that in addition to placing calls and having functions similar to a PDA, can play different video games (Nokia, 2007c) Nokia Branding Branding issues are clearly explained and are thoroughly thought out the potential impact on company brand equity is considered likewise, potential impact on other products in the portfolio is not overlooked. Goldman Sachs (2000) indicated that of the four-tier players in the handset market, Nokia is in tier 1 managing to establish a powerful brand that is widely recognized - fifth after Coca Cola, Microsoft, IBM, and Intel (Financial Times, 2001). Its prediction and satisfying offers to the needs of consumers ahead of the competition including but not limited to Matti Alahuhta's three-point focus of product development with global appeal, fast and flexible international sales, and commitment to learning what consumers want without consideration of the limits of existing technology (Isaacs, 2001). It was suggested that Nokia with other later mobile phone entrants Samsung and Ericsson developed its strategies by avoiding being a copycat and instead develop sustainable business based on innovative technologies (He, Lim & Wong, 2006). As it commits to three strategic assets that Nokia will invest in and prioritize: Brand and design Customer engagement and fulfillment Technology and architecture Market trends that Nokia adheres in to include the user experience concept making simple products rich with customer experience sharing, from messages, photos, to music, wireless convenience and internet convergence, consolidation of regional, global operators, internet diversity, acknowledging the role of Asia as China and India drive demand and design preferences (Nokia, 2007). Strategic Direction (2005) also summed up that Nokia fared well in facing up to challenges in the fickle and fast-changing technology market closely linking Nokia's fortune to Finland as it accounts to 20% of the country's exports. PROMOTIONS The journal Nokia experience centers - something for everyone (2005) affirmed that the Company promotes its brand through television commercials, fliers, licensing, rebates, and through Nokia's Experience Centers. The purpose of these Experience Centers is to not only showcase Nokia products, but also to gain valuable consumer insight about their needs and wants, allowing Nokia to come up with better consumer-focused products. At this time, there are 11 of these Experience Centers throughout the United States. They have various promotions in these Experience Centers that draw customers in such as basketball giveaways during the NBA all-star weeks, celebrations for Mother's Day, Earth Day, etc. Moreover, unlike other mobile phone companies, Nokia is aiming its promotional strategies at the low-end consumer. Abhijit said that Nokia's slogan is "the phone still works at the end of the long, hot, dusty, journey." Furthermore, Nokia's advertisement strategies usually dwell on the human angle of the technology and not on empathizing the technological aspects or high technology growth and that what caused the company to have such a success. PLACING/DISTRIBUTION At the end of 2005, Networks had more than 150 mobile network customers in more than 60 countries, with their systems serving in excess of 400 million subscribers. One can buy a Nokia product worldwide on the internet, and locally in the mall booths, mom and pop cell phone shops, Radio Shack, Circuit City, pretty much wherever electronics are sold. You don't have to search very hard to find a Nokia product because they are very easily accessible. Worldwide they are sold in North America, Latin America, Europe, the Middle East, Africa, Asia Pacific, China, Hong Kong, and Taiwan. Asia Pacific includes Australia, Korea, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, and Thailand. As cited by Welcome to Nokia Worldwide journal (2007), if there are mobile phones in a country, there is going to be a Nokia presence. Abhijit also argued that one can take a look at Nokia's distribution strategy from the example of India where Nokia appeared not that long ago. As part of its distribution strategy in India, Nokia has ensured that it is present in 2,000 cities and towns that have cellular coverage. According to the sources, Nokia's distribution network is almost double as that of other mobile companies. One of the best strategic ideas of Nokia is that the company introduces phones at all price ranges, from the mass-market phones, to the mid-market color and camera phones and also to the high-end exclusive phones, so all the segments of market are fairly targeted. Joint Ventures report (2007) acknowledged that Nokia's biggest strength is its forward thinking. Instead of trying to outwit the competition alone, they create many joint ventures with other companies. This allows them to share resources and come up with new developments and technology to better satisfy their customers. Also, these joint ventures with local partners allow them to effectively penetrate new and emerging markets. Nokia currently has 14 joint ventures. PRICING Nokia E65 pricing is an unsubsidized approximate retail price of $400. Nokia E61i will become available during the second quarter of 2007 for an unsubsidized retail price of $400. The unsubsidized retail price of the Nokia E90 Communicator will be around $750-800. (Nokia unleashes second wave of Nokia Series business devices.2007) This sort of pricing is typical for mobile phones, maybe slightly more pricey. There are different lines of products and it is going to be more expensive to buy a phone when it has so many features. It is possible to get a Nokia phone for free from the network providers with a contract but the phones that have Internet and e-mail capabilities (especially those used for business) are significantly more expensive than phones used by consumers that just need a basic mobile phone. Albeit Nokia has a great number and variety of mobile phones, they do not have a variety of other products. It would be good for the company however, to branch out further into cameras and provide more accessories for their products. If a consumer is trying to buy ringtones or graphics, Nokia is missing out on those revenues. Ringtones, Graphics & Games journal (2007) stated on their website that Nokia is currently working to create a new and improved ring tone offering. Analysis: In all aspects of the marketing mix, from product, price, placement and promotion, Nokia is perceived to be doing its best to be as competitive as it was innovative. These are sure-fire strengths that could not be easily taken away at the moment while it leads the industry. Pricing strategy of Nokia is from the bottom up to the top of the heap as it uses market segmentation scheme targeting almost all market segments. Likewise, its products, although not as durable as Motorola's classics, prove to be preferable than other brands that either provide for a niche market such as Sony-Ericsson. Nevertheless, the lack of focus or the weakness of putting all features in one product seem to much to handle as music, video and gaming could not be done at all times. It is like a choking engagement where the user, who is the other partner, almost wants to get out. Nokia could not be faulted for its promotions. It has carved a universal theme of touching lives as it promotes the basic provision of social humans: communications. As for its placement, Nokia has turned the global market upside down so that it is available in the exclusive telecom hubs, as well as side street vendors. It all boils down to which is the original and which is pirated or copied. Conclusion: Nokia's skyrocket speed to extreme growth and market dominance is attributed to the proficient leadership of it's former CEO. Undoubtedly, Nokia has gone a long way up the ladder of success and perhaps it will continue to dominate the emergent world markets in the future. But the assurance is low as diversity seems to divide focus on the priority of the company. At present, its line of products may be interrelated to one another and its R&D continue blazing trails in the industry as Nokia still enjoy dominance. Its products now include all-in-one mobile phones, with camera, music, and even games. With the upward improvements and constant industrialization of other countries worldwide, specifically in Asia, much is still left to be desired. Nokia's dominance might one day be threatened. No one knows. It all remains to be seen. References: Cahners Business Information (CBI) (2000). "A Tale of Two Mobile Telephone Makers." May. Collin, Jari and Dennis Lorenzin. (2006). "Plan for supply chain agility at Nokia: Lessons from the mobile infrastructure industry." International Journal of Physical Distribution and Logistics Management 36 (6), 418-430. D'Souza, Sean (2005). "Is Nature a Marketing Guru" Psycho Tactics. Accessed from http://www.psychotactics.com/artnature.htm Forum-Nokia. (2007) "Developing Music Applications." Accessed from http://www.forum.nokia.com/main/market_segments/music/index.html Goldman Sachs Global Equity Research (2000) Mobile Handsets Report. September 5 He, Z.L., Lim, K., & Wong, P.K. (2006). "Entry and competitive dynamics in the mobile telecommunications market." Research Policy 35, 1147-1165. Human Resource Management International Digest (HRMID) (2004). 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