Rebuilding Brand Equity of Nokia - Essay Example

? Rebuilding Brand Equity of Nokia and number submitted Table of Contents Table of Contents 2 Introduction 3 Decline 4 Revival Efforts 4 Conclusion 6 References 7 Introduction Nokia, the consumer electronics company which once commanded the mobile communications race, has suffered a remarkable multi-faceted decline in the past two to three years. This decline has resulted in the company having to sell its mobile handset business along with the related patent licenses to the IT giant Microsoft for $7.17 billion (“Microsoft to acquire Nokia's Devices & Services business, license Nokia's patents and mapping services”, 2013, p. 1). Nokia has been in the mobile market for around thirty years (Kolk & Rungi, 2013, p. 5). Nokia, a 147 years old Finnish company, became the pioneer of public mobile communications technology in the late 1990s when it pushed mobile phone usage onto the global scale (Lindholm & Keinonen, 2003). It was by far the largest mobile phone manufacturer in the early 2000s and produced most of the working class people’s very first mobile phones. In the underdeveloped world, as per D. Steinbock’s claim, the word ‘Nokia’ became synonymous with the word ‘mobile’ (Steinbock, 2001, p. 33). The company Nokia was one of the biggest beneficiaries of the so called ‘dotcom bubble’ (Panko 2008) but unlike the other manufacturing industries, mobile phone manufacturing has seen new market leaders emerge soon after the inception of the business. The apparent reason for this unseating of Nokia from the mobile manufacturing throne seems to be a progression of mobile handset technology – specifically from the standard or dumb phones era to the age of smart phones. Useless to say, the previous statement implies that Nokia has not been successful in commanding this shift. With the basic division of the handset technology between the old technology and the smart phone technology, Nokia has remained master of only the old technology. Smart phone sales surpassed the dumb phone sales in the second quarter of 2013, with smart phones accounting for fifty two percent of the mobile phone sales in that period (Shaer, 2013, p. 14). Decline Nokia occupied thirty five percent of the global mobiles business in 2003 (Bosch, 2005, p. 28); ten years later this figure had dropped to fourteen percent (Olson, 2013, p. 6). In October of last year, the company dropped out of the list of the five largest mobile phone vendors for the first time since the financial analyst IDC started maintaining the list (in 2004) (“Apple Cedes Market Share in Smartphone Operating System Market as Android Surges and Windows Phone Gains, According to IDC”, 2013). The Korean consumer electronics corporation Samsung now leads the mobile manufacturing business, while Nokia has already given way (in 2010) in the smart phone platform race as well to Google (which boasts the Android Operating System for smart phones). Resultantly, Nokia has shrunk as an organization overall; it has fewer resources at its disposal and has become less profitable than how much it used to be. The cash reserves of Nokia fell from €4.2 billion at the end of the second quarter of 2012 to €3.6 billion at the end of the very next quarter (Scott, 2013, p. 2). Ever since the company appointed a new, and the first non-Finnish, CEO (Stephen Elop) in 2010, the company has been practising salary base reduction as one of its primary tactics for dealing with the continuous financial loss. The company currently employs only 44,630 people out of the 66,995 working at Nokia at the start of the previous year (“Nokia Lumia 525: Windows Phone Handset Put Up For Sale At $100 Price Tag In China”, 2014, p. 4). Revival Efforts Susan Sheesha, the head of Global Communications at Nokia, has been promulgating Nokia’s repositioning of itself as a ‘challenger’ brand (Schechner, 2013). She says that after letting go of the ‘market leader’ narrative, the company’s senior management now looks to challenge the current market leaders by promoting in the public what is different, innovative and fresh about Nokia’s products in comparison with those of the market leaders. She says that the executive management now focuses on “Why do people want this? Not ‘Why does Nokia think this is best’”. She says that the company is changing and refining the metrics it uses to measure its performance in the market. For instance, in order to measure the consumer response for a newly launched product, the company has introduced another metric: the ‘net promoter score’. But the main transition in measuring performance has been the prioritisation of product chatter as a product performance measurement tool and the disregard of corporate standing as an indicator of real time market performance. Similarly the company’s management is learning to heed more importance to stories in and relations with the consumer press rather than those in the business news sector. According to Susan, the improvement in the performance measurement capability has been vital in allowing the product development and marketing teams to effectively assess and reassess the results of their efforts. The Chief Marketing Officer of Nokia has however stressed on the need for better internal coordination compared to external communication in the organization. The CMO believes that the lack of out-of-the-box thinking on the part of the senior management of Nokia is what has driven the company to its late decline. The CMO has been focusing on the 147 years long historical identity of Nokia which seems to have been forgotten by its key people. He says that the current management has been trying to revive the professional values of Nokia while at the same time consulting with the academia, futurists and industrial analysts to understand the likely major themes and trends of the mobile phone industry in the future. He says that he and his associates are looking hard at what the company has historically been good at and what the people who work at the company like about it. Conclusion In order to rebuild its brand equity, Nokia needs to revisit its famous, still relevant, company motto: “Connecting people.” But now the company should perceive its motto as an identifier of the company’s values and internal priorities instead of as a marketing pitch. Hence the company should look to wear its brand identity and implement it rather than just promote it amongst its potential customers. It is important to know that given the size of the mobile communications market, there will always be stratification based on product pricing in the mobile manufacturing industry. Hence the company’s motto of “Connecting people” is ideal for targeting the low end smart phone consumers. If the company leaves the race for cost-indifferent mobile technology to the other leading smart phone manufacturers, it will be able to conserve valuable financial resources which it can use to get ahead of the other companies competing for priorities of the highly price-conscious buyers most of whom come from the developing countries, which make up more than seventy percent of the global mobile marketplace (Fehske, Fettweis, Malmodin, & Biczok, 2011, p. 56). Hence in general, out of the famous economist Michael Porter’s three strategies for marketing, the company should deemphasize differentiation in favour of pricing and segmentation. References Kolk, A., & Rungi, M. (2013). Total Exploitation Orientation in Capability Development: The Cross-case of Google, Ericsson, Microsoft and Nokia. Research in Economics and Business: Central and Eastern Europe, 4(2). Lindholm, C., & Keinonen, T. (2003). Mobile Usability: How Nokia Changed the Face of the Cellular Phone. McGraw-Hill, Inc.. Steinbock, D. (2001). The Nokia Revolution. The Story of an. Panko, R. R. (2008). IT employment prospects: beyond the dotcom bubble. European Journal of Information Systems, 17(3), 182-197. Shaer, M. (2013, August 14). It's now officially a smart phone world, report shows. Christian Science Monitor. p. N.PAG. Bosch, J. (2005). Software product families in Nokia. In Software Product Lines (pp. 2-6). Springer Berlin Heidelberg. Fehske, A., Fettweis, G., Malmodin, J., & Biczok, G. (2011). The global footprint of mobile communications: The ecological and economic perspective. Communications Magazine, IEEE, 49(8), 55-62. PR, N. (2013, September 2). Microsoft to acquire Nokia's Devices & Services business, license Nokia's patents and mapping services. PR Newswire US. Shaer, M. (2013, August 14). It's now officially a smart phone world, report shows. Christian Science Monitor. p. N.PAG. Olson, P. (2013). Nokia's Q2 Handset Sales Disappoint After 'Difficult Start' To Year. Forbes.Com, 22. IDC. (0008, July). Apple Cedes Market Share in Smartphone Operating System Market as Android Surges and Windows Phone Gains, According to IDC. Business Wire (English). Scott, M. (2013). Nokia, Despite Loss, Shows Progress in Shift to Networks.(Business/Financial Desk)(Financial report). The New York Times. p. 2. International Business, T. (2014, January 2). Nokia Lumia 525: Windows Phone Handset Put Up For Sale At $100 Price Tag In China. International Business Times. Schechner, S. (2013). Deal changes Nokia's focus: remaining business largely focused on network equipment. Wall Street Journal. Europe. Read More