Brand Management: Evaluating Nokia as a Brand - Term Paper Example

Report: Brand Management: Evaluating Nokia as a Brand Table of Contents Introduction………………………………………………………………………………………3 Brand Management……………………………………………………………………………...3 Introduction to Nokia……………………………………………………………………………5 History…………………………………………………………………………………….5 Current Scenario…………………………………………………………………………6 Nokia as a Brand…………………………………………………………………………………6 Development of Nokia as a Leading Brand…………………………………………….7 Brand Image……………………………………………………………………………...9 Brand Positioning………………………………………………………………………10 Brand Value…………………………………………………………………………….11 Current Scenario………………………………………………………………………..12 Conclusion & Recommendations…………………………...…………………………………13 References……………………………………………………………………………………….14 Introduction A Brand is the identity of a particular product or service, which distinguishes it from other products. The concept of branding has gained a lot of importance with the passage of time and nowadays branding has become an essential part of marketing for many companies. Nowadays, everything from a product to a person is a brand (Parameswaran, 2006). In this report, I will discuss the effectiveness of Nokia as a brand and evaluate it on various criteria that form the basis of brand management. Brand Management: Brand management understands what a ‘brand’ actually is and an approach to managing it in a way that it creates value for a company (Miller & Muir, 2004). A brand is the differentiating factor between two products which makes it special and gives it a competitive edge. A brand put forwards a promise which defines what the product has to offer to its customers. Marketers create a proper image of the brand through visual images, logos, etc so that a customer can identify with it. Hence, brand management is a comprehensive process starting from understanding the brand to maintaining its image. Brand management can be simplified into 3 steps: First step is to create a promise i.e. understanding the brand and what it has to offer and defining it to the customer. Next is to make that promise which is how the image of the brand is created to register in the minds of the customers. Last is to keep the promise i.e. no brand can only survive on its name. A brand survives on what it offers to its customers and more. So brand management is also about living the promise of the brand till it exists. There are various ways to evaluate the effectiveness of a brand. The most important criteria are: Brand Image: A brand has a personality and a promise and the impression or image of that personality in the mind of a consumers’ mind of a brand’s character is known as brand image. Brand image is the overall impression of a brand that a consumer acquires from various sources. For example while purchasing a car Nissan would be associated with style, while Toyota is associated with reliability. Brand image is based on the fact that customer’s buying decision is associated with the image of the product and the customer is purchasing that set of beliefs (the image) that he has about the product. So a brand image should be positive and distinctive. Various promotional tools can be used to strengthen bran image like advertising, packaging etc. Brand Positioning: Positioning refers to how a product appears in the eyes of the target market as compared to other products (Bettman & Sujan, 1989). A brand must be positioned in such a way that all the activities related to the brand focus on the benefits of the brand and to reasons why a consumer should purchase this product in preference to others. Brand positioning is ascertaining the right identity of the brand and it is a very important factor marketing strategy. Positioning provides the foundation through which the customer’s perceptions can be built regarding the brand. Since, positioning is very important for any product, various positioning errors can cost a brand. They are: Under Positioning: When customers have an un-clear perception of the brand. Over Positioning: When customers have limited awareness of the brand. Confused Positioning: When customers have a confused opinion about a brand. Double Positioning: When customers believe that the brand has made promises which are not true. Brand Value: Brand value is a reflection of the outcomes achieved by a company as a result of the brand name of a particular product. How the product is perceived by the people in general and also by the target audience defines its value. Brand value results in increased financial value to the company as well but that is not the only measure of increased brand value (Hallward, 2005). Along with financial factors, brand value can be measured by consumers’ perceptions about the brand and how much they recognize the logo, the music or other visual elements of the brand etc. Hence, we see that brand management encompasses all the marketing mix medium of a product to create an identity for it. From creating a brand to making it successful, a competent brand management system is the key. Introduction to Nokia: History: Nokia, the world’s leading mobile brand has come a long way since it was developed in 1865. It started as a paper mill, evolved into a rubber firm and would have turned into a major industrial force in 1967 had it not merged with a cable company to form the new Nokia Corporation which set its path to the telecommunications field. From 1968 to 1991, Nokia created great products in the telecommunications market and its constant endeavor led to the world’s first GSM call. From 1992 to 1999, Nokia shifted its complete focus to the telecommunications business and various steps taken by Nokia made it the world leader. In 1999, Nokia launched its first WAP handset. Current Scenario: The mobile business has been booming since the advent of the 20th century. Many more competitors have entered the market and Nokia has had to make more efforts to maintain its leading position. From 3G, mobile multiplayer gaming, multimedia devices, internet services etc Nokia has been keeping up to continue dominating the worldwide mobile markets. However, it is being given strong competition by other mobile brands, Apple and Blackberry being its strongest competitors. Nokia, being the largest global manufacturer of mobile phones has a market share of global devices of 30% in 2010 that fell from 34%. The company’s stock price has also decreased. All this said, Nokia is still a very important player in the telecommunications market and is continually making efforts to regain its leading position. Nokia as a Brand: The great success behind Nokia is not only its great achievements in the telecommunications industry. Nokia also owes its success to its great marketing strategy and how it has developed as a brand over the period of time. Nokia, a Finnish brand has been ranked consistently as one of the best Finnish brands. Its success as a brand is however, worldwide. Nokia was ranked the fifth most valuable global brand in 2007 and it maintained its spot for 3 consecutive years. In 2010, Nokia came down to number eight; however, being a top ten brand is in itself a great achievement for Nokia as a brand. It is also the number one brand in Asia (as of 2007), and Europe (as of 2009). Development of Nokia as a Leading Brand: In 1992, Jorma Olilla became the president and CEO of Nokia Corporation and it was his strong emphasis on branding which took Nokia to where it is today. In word of Jorma Olilla: ‘While technology continues to be a key source of added value, I would like to emphasize that effective marketing and the strength of the Nokia brand creates an increasing portion of the added value, With this emphasis on marketing, Nokia’s brand strategy was always closely linked to its business strategy. They promoted ‘mobile phones’ as not only a product, but as a concept, and as a way of bringing people together. They did not forget the human element and incorporated it in advertising their product as it is evident from its slogan line, ‘Nokia – Connecting People.’, and which was outlined in its vision as: ‘Nokia enhances the quality of people’s lives by connecting people’ Even today, its vision remains the same however it has integrated the demands of today in the vision it carries today. It says: Connecting people" is now connecting people to what matters - whatever that means for each person - giving them the power to make the most of every moment, everywhere, any time. Connecting the "we" is more powerful than just the individual. That's how Nokia is needed to help make the world a better place for everyone. Therefore, we see how over the years, Nokia has been committed to bring the best for its customers as they say: ‘The Nokia Way: Customer satisfaction, respect for the individual, achievement and continuous learning’, and indeed it is. Nokia’s strong branding is evident by the fact that from a layman to people associated in the technology business, everyone knows of Nokia when you would ask them about a good mobile brand. Being rated as one of the top-ten brands is indicative of the fact that Nokia has built up a strong reach to its customers over the period of time and is entrenched in people’s mind. A brief timeline of how Nokia developed as a brand is as follows: 1991: In this year, with the development of the first GSM call, Nokia decided to focus all its attention to the telecommunication business and in specific to one brand, Nokia. 1992: With the appointment of a new CEO, Nokia established four primary goals for its product development. They were telecom-oriented, focused, global and value-added. 1993: With a proper strategy decided, from this year onwards, Nokia started concentrating on building its brand with emphasis on global commitment in the long-term. While work on technology continued, Nokia emphasized the role of connecting people. This brand strategy was very successful because the mobile phone market was relatively new at that time. So mobile telephones as a way of connecting people anywhere and everywhere was much appreciated by the consumer and technology was not the high-point even for the consumers at that time. 1996: With continued efforts for brand building, Nokia also tried to gain global leadership in the most attractive global telecom segments. 1999: All efforts paid off as Nokia claimed 70% of the profit in mobile phone industry and gained the leading position. Here we see that Nokia had the great advantage of being one of the first in this market. This coupled with the relative novelty of the mobile phone industry and Nokia’s great marketing strategy to tap both these advantages resulted in great success for this brand. Even today as competition has risen by manifolds and as mobile phones have become a norm and focus has moved on technology, Nokia reaps the benefits of its great branding and exists in the mind of the people as one of the best mobile brands. Let us now evaluate Nokia on the basis of various criteria to see its effectiveness in each: Brand Image: Nokia as many characteristics as a product, but Nokia has never projected that as the central idea of its brand. Characteristics like unique design, style etc is outlined separately with each product, but the overall impression that Nokia has given to its customers is of trust. The personality that Nokia has projected is of a trusted friend. The human dimension is the highlight of Nokia’s image as a brand. This is proven by the fact that whenever a customer is purchasing a mobile, it may turn to other brands for different features and technology, but when it comes to a trusted mobile phone which would last, Nokia is the number one choice. This does not mean Nokia does not concentrate on its product design. Nokia’s products are simple yet stylish and the most important feature of Nokia’s products is its user-friendliness. The element of human technology and being a trust-worthy mobile is reflected in Nokia’s product design. While every product has a different design, generally Nokia products have a large display, easy to hold, soft key touch pads, and easy to use operations etc all adding to the brand personality of Nokia as being a user-friendly mobile. Hence, Nokia has created the promise of trust as the main feature of its brand, lived the promise through its products and their features and continues to keep the promise of trust by the human dimension in its brand personality and that carries over to the positioning strategy of the brand as well. Brand Positioning: Whether, it is Nokia’s logo, its tagline, its products; Nokia has positioned itself exactly the way its image is i.e. of trust which is the board concept. This concept has two features one of connecting people and second of human technology. Both these are closely linked defining the basic fact that Nokia has a consumer-first approach. When Nokia first positioned its brand, the marketplace was not that crowded and competition minimal. In this situation, several choices are available to the marketer to position itself as a differentiated product (Sujan & Bettman, 1989). Nokia positioned itself as connecting people through mobile services. Here, since mobile telephone was a new concept, Nokia integrated the human technology factor by creating mobiles which were easy to use and which made people familiar to the concept of using mobile phones. Now as competition increases, and various brands have entered the market with different styles, designs and other features, Nokia clearly brings together technology and its human side in a strong way. Nokia’s tagline, ‘We call this Human technology’, is indicative of the fact. This promotes a sense of trust and consideration amongst the consumers. They understand that technology is only an enabler so that the customer can enjoy life better and so even technology should be simplified for them. Nokia uses various inspirational, benefit based, emotional features, and competition driving strategies that accentuates the ‘human’ dimension in mobile communications. While competitors fight over style and technology, and Nokia keeps incorporating them as well, but Nokia owns the human technology factor, taking the best position for it. Brand Value: There are various ways a brand creates value for itself and it is the most vivid section encompassing many factors. Value is created and maintained by good quality, appropriate positioning, proper communication with the customers, focusing on the future etc. Nokia has with its strong branding efforts has created strong value for itself both financially, as well as in the eyes of the customers. Being rated as one of the top-ten brands speaks for the value, Nokia has created for itself. Nokia has high prices as compared to others but its good quality and reliable products are preferred by many people over the cheaper ones. This extra money that buyers are willing to pay for Nokia phones is the value or equity of this brand. Even after extreme competition and fall in profits, Nokia has a huge global market share and continues to be world’s largest mobile telephones manufacturer. So, we see that by consistent branding, Nokia has created a very strong brand and its brand value is indicative by its market position backed by first-class logistics and manufacturing, all of which revolve around what consumers want (Temporal & Lee, 2001). Current Scenario: While Nokia has carried out its branding strategy over the past decades and emerged successful, the same strategy has been affected by changing conditions in the market. Nokia first had a varied products under one name i.e. Nokia. It was serving all segments in the cell-phone market from expensive and high-tech phones to simple, inexpensive phones etc. There was a different phone for every different type of customer and all the devices came under the Nokia branding of connecting people. From the time when Nokia started, mobile phone was a new market and it entered into it fully by creating various different phones. The emphasis was on the human technology factor and that of mobile phones connecting people. With this approach, Nokia did something that marketing experts say can’t be done. It served all segments in a market and was victorious in doing so. However, with competition increasing, Nokia is having branding problems. The novelty of mobile phones and it being a way of connecting people doesn’t exist anymore. Today, almost everywhere, anywhere, has a mobile phone. Technology has now become the high-point and differentiating factor between mobile phones. Nokia’s competitors are strong brands like Apple and Blackberry. Blackberry has a single type of phone, while Apple has also created a strong brand with similar products like iPod, iPhone and iPad. In such a scenario, Nokia being a player in all segments has become wrinkled its meaning. So, we see that while Nokia had chosen a different path of branding for itself but it had turned out to be the right path for it. But changing external problems has created branding issues and affected Nokia’s brand to some extent. Conclusion & Recommendations: Nokia is one of the largest telecommunication manufacturer company and a world-class brand. It is famous for its reliable and good-quality products and has a great reputation all over. Losing some of its market share, and falling down from No. 5 to No.8, Nokia still stands in the top ten global brands. No other mobile company is in the top ten. This proves that Nokia has been very effective as a brand and has emerged as a strong brand over the years. Nokia continues to be popular; however, various threats and competition have crumpled Nokia’s position to some extent. The new leadership team at Nokia has a long list of challenges to bounce back. Re-analyzing its brand strategy and developing a more compelling brand portfolio should be one of its top priorities. Moreover, Nokia should constantly gauge its competition, as competition has risen to a great extent in the mobile telephone industry. The kind of spirit and strategy with which Nokia emerged as market leader over the years will help Nokia regain its position as well. References Parameswaran, M.G (2006), Building Brand Value, Tata McGraw-Hill Publishing Company Limited. Hallward, John (2005), Understanding Brand Value – A Review of Price, Performance, Equity and Category Dynamics, Ipsos-ASI. Miller, Jon & Muir, David (2004), The Business of Brands, John Wiley & Sons. Temporal, Paul & Lee, KC (2001), Hi-Tech Hi-Touch Branding, John Wiley & Sons. Sujan, Mita & Bettman, James, R (1989), The Effects of Brand Positioning Strategies on Consumers’ Brand and Category Perceptions: Some Insights from Schema Research, Journal of Marketing Research, Vol XXVI, November 1989, 454-67. Read More