Marketing Strategy and Success of Nokia - Term Paper Example

Marketing Strategy and Success of Nokia Background of Nokia The Finnish company Nokia has gone through significant transformational changes since its inception over 150 years ago. Growing from a small company to a mobile phone manufacturing giant that is today, Nokia has had difficulties in its growth process. Venturing into different industries, Nokia has over time managed to survive through the years. The company has engaged in businesses such as rubber boots manufacturing, car tyres manufacturing, and even TV sets (Harms, et al p. 132). Over time, Nokia has grown to become the biggest cell phone manufacturing company it is today connecting over 1.3 billion people globally through its handsets and the recently launched smart phones (Stole 2006, p. 6). The company sells its products in about 150 countries globally and directly employs about 101,982 people in about 120 countries. Despite the company’s success in the cell phone business and its market leadership, it is fast losing to other more innovative and competitive companies such as Samsung and Apple. According to Williamson (2012, n.p.) in some of the traditionally markets known as Nokia’s dominant markets such as the Europe, its own home country, the company is fast losing to its biggest rival Samsung. The loss of the smart phone business for the company has contributed to the slump in the company’s revenues. The company’s recent reduction in its profitability and revenues can attest to this trend in business (Chikezie 2011, p. 6). In an effort to win back its lost market share, Nokia in 2011 got into a partnership with Microsoft in order to manufacture smart phones running on a windows operating system (Wingfield 2013, web). However, the deal did not pay off much, as Microsoft finally acquired Nokia, hence taking over the business as part of a Microsoft business. This is in a bid to help the company regain its market through different management. However, this proves unlikely, if Nokia’s strategy does not focus on low-end phones. While Samsung’s 80% of the total sales are smartphones, Nokia only sells small phones but few smartphones, hence losing in the competition as more people want phones that can provide them with more services (Stoll 2013, n.p.). As such, the company is increasingly losing in its revenues, leaving it struggling. According to Stoll, Samsung has taken over Nokia’s home market, Finland, controlling 36.1% against Nokia’s 33.6% (2013, n.p.). The company recorded a $33.89 billion in the last quarter of the year. Marketing Strategy of Nokia Although Nokia targets both the low end and the high-end markets, its recent smart phones do not target the low-end market at all. The company got into a partnership with Microsoft in order to develop Microsoft enabled mobile phones (Wingfield 2013, web). However, the company has not manufactured smartphones targeting the low-end market segment. Especially the Lumia series, which is the latest brand of smart phones, launched in the market targets the high-end market. This is the main reason why the company has failed to increase its revenues through the smart phone business. The fact that Samsung has affordable smart phones in market gives it a higher competitive advantage over others (Williamson 2012, web). Currently, Nokia targets at selling the windows phone concept. The uniqueness of the concept, by being the only company selling windows enabled phones gives Nokia an upper hand. The company has started an aggressive campaign aiming at selling these phones. The company incorporates a number of methods in its marketing strategy. With the understanding of the opportunities that online marketing provides to a company, Nokia started an aggressive online marketing for its smart phones (Parvinen, et al 2007, p. 135). The company seeks to target the young people who are active internet users and those who require smart phones for various activities. According to Ota (2011, p. 77), there is an increase in demand and growth of online marketing, especially on the social media. Increasingly, more companies are taking their products to the online platform, which presents them with increased opportunities and chances of making sales. Marketing Segmentation of Nokia Market segmentation is the process of dividing a market into different meaningful, relatively similar, but rather identifiable segments or groups in the market (Agarwal, et al 2010, p. 20). Market segmentation helps an organization in deciding the most appropriate marketing mix for a particular group of customers. With marketing mix, an organization’s marketing department knows the needs to target in order to satisfy this group of customers in an effort to maximize its revenues (Agarwal, et al 2010, p. 30) Among the various companies in the telecommunication business, Nokia has managed to practice a multi-segmentation of its customers. The company separates its segments according to a number of variables. Geographically, the company segments its customers using a regional approach. In its strategy, the company tries to appeal to the local population in order to win their respect and trust (Shields & Heinecken 2002, p. 6). With respect to this strategy, the company opens various flagship projects in the Asian and Middle Eastern rural regions in order to provide these people with the latest innovations and provide them with the most reliable quality support services. The company does not provide these services in other regions. Nokia also demographically segments its customers in terms of their age. Nokia develops different types of phones and smart phones in order to appeal to people of different ages. The pricing of these phones also cater for people of all, income levels (both the high end and the low end). Its wide variety of products also appeals to all family cycles, whether married or single as well as people of different relational beliefs. Unlike Apple, all Nokia phones target a particular gender, although most of these phones target the women and young girls. For instance, most of the smart phones by Nokia have beautiful colours such as yellow, pink, or gold, which are more appealing to women than it does to men. Nokia Roxo purposely targeted women. Even with its logo, “treat her like a lady” suggested that the speciality used in creating the phone targeted women. Additionally, the company also targets the bandwagon effect, which is the need for people to belong to a particular group. Shields & Heinecken (2002, p. 4) assert that by addressing the needs of a particular group of customers, a bandwagon effect aims at making consumers feel that they miss out from the rest of the people. The bandwagon effect acts on the notion that people want to be part of the group that they all conform to at any particular time (Zou & Volz 2010, p. 68-75). Everybody wants to take part of the fun and joy, share the good things and moments together with his or her partners and friends. To show the effectiveness of a product, observes Shields & Heinecken (2002, p. 48), most of the adverts will point out that a high number of people use the product, and as such, those who do not use the product are not part of the group. The biggest concern for the bandwagon effect is that it insists people should buy the product simply because other people are buying. Asha models of Nokia have the slam feature, which allows documents sharing by just slamming two mobile phones together. Hence, if one does not own a Nokia Asha phone, then they cannot share documents and files with a person having a Nokia Asha phone. The company uses the slogan, the Asha club in order to identify people owning such a phone. The Unique Selling point (USP) of Nokia The company also targets people’s tastes and preferences, hence segmenting its customers according to their tastes and preferences. Nokia develops smart phones for people with a high social class, business executives, organizational managers, and CEOs. A number of products by Nokia appeal to people with high tastes and lifestyles, focusing at differentiating themselves with the rest of the people in the society. For instance, the marketing of the N7 mobile was done as sports phones, owing to its heart monitor implemented from polar. The wireless polar Bluetooth of the phone, having a WearLink connection to the heart rate helps on monitor their pulse rate whenever in the field either jogging or practicing. The recent introduction of the Nokia Lumia series targets business executives and well up people in the society. Current Marketing Activities for Nokia Nokia undertakes aggressive marketing campaigns for its newly launched phones in order to capture the target market. Through massive campaigns, which it conducts in all forms of media, from audio-visual to print, online and verbal, the company makes sure that everybody has the knowledge of the new products launched (Fagerstrøm & Ghinea 2010, p. 68). To win the attention of the target audience, Nokia uses creative messages and slogans. Most of its models have an additional logo in addition to the normal Nokia slogan, “connecting people.” in its recent campaign to promote the Asha series models, a phone targeting the low-end users, the company in some markets used the “Asha club” slogan, creating the notion that all people who own Asha phones belong to the Asha club. Targeting students who love the social media, texting and chatting, the phone has features perfectly designed for this group of people. Additionally, the company used the logo, “treat her like a lady” in its campaign to market the Nokia Roxo phone, which targeted women. These catchy messages appeal to the people more, hence enticing them to buy the product. SWOT Analysis for Nokia Strengths A number of factors give Nokia a competitive advantage over other companies in the mobile phone business. Nokia has excellent skills in hardware manufacturing, a reason why it has been in the market for a long time. Initially, people cared about the hardware features of mobile phones rather than the software. The fact that the market in the recent past was more concerned with the hardware features favoured Nokia as a company (Stole 2006, n.p.). This won Nokia a competitive advantage over other companies in the cell phone business. The fact that Nokia was able to understand the needs of the customers then gave it loyal customers compared to other companies in the business. People loved Nokia for its ability to provide reliable mobile phones with long battery life. The company provided the people with a variety of mobile phones to choose from, giving people a wide range of choices to choose from, increasing the profits of the company. Weaknesses The entrance of companies such as Apple and Samsung however gave Nokia a stiff competition in the mobile phone business. They focused on developing mobile phones supporting more software, innovatively providing people with Google-enabled phones through the android feature (Chesbrough 2006, p. 38). People could assess their emails and Gmail through their mobile phones, as well as integrating various applications in a single device. The android generation and the era of smart phones increased the uses of mobile phones, making them more than just mobile phones (Monaghan 2013, web). Nokia on the other hand was developing mobile phones, that focused on the initial features, with little innovation and creativity. Apple on the other hand in a creative way developed smart phones targeting the high-end market with aesthetic features, highly differentiated from other phones in the market (Rushton 2012, n.p.). Opportunities Currently, people believe Nokia to be a more superior brand than other companies in the business. The fact that it has one of the earliest pioneers in the mobile phone business gives it the advantage over mobile entrants such as HTC among others. Stoll (2013, n.p.) argues that athough some of these companies manufacture mobile phones with better features, people show loyalty to Nokia as a company. Johansson (2006, p. 5) on the other believes that it is only with reforms that companies such as Nokia could make impacts in their marketing strategies. Customer loyalty is one of the main reasons why the company has remained in business despite the increased competition in the software features. Threats Although Nokia targets the smartphone business, which has a high number of buyers and fewer players, product differentiation significantly affects its success in this field. It faces stiff competition from Samsung and Apple companies, whose products are more popular than Nokia’s. Additionally, the threat of entry of other entrant firms such as HTC makes the company’s survival chances lame. In the first quarter of the financial year 2012, Samsung’s sales rose to 38% against Nokia’s continuous fall, shedding off 25% (Stoll 2013, n.p.). The Future of Nokia Although the company’s smart phone business targets the upper end market, this is a small market, demanding less smart phones than the low-end market (O'Reilly 2011, web). Samsung targets the middle and low-end markets, the market having a high demand for markets. Hence, Samsung has not only taken leadership in the smart phone business, but also increased its revenues and profitability. Nokia however is coming up rather too late to capture the lost market. The innovativeness with which Samsung develops its products is amazing. Apple too has started taking over the high-end market, leaving Nokia struggling to control this segment (Monaghan 2013, web). However, the company seems rather weak in fighting for its position, not with Samsung having taken over even the company’s home market (Troianovski & Arild 2012, web). Nokia phones could be of high quality, but few people can afford them. Hence, it can only gain the lost market share by reducing its smart phones’ prices. However, if it were to reduce the prices of its products, then the company would compromise its profitability (Sandstrom & Sven 2012, n.p.). The only way of doing this would be looking for alternative ways of reducing its expenditure, which is by reducing its production costs. This is possible through production of poor quality products, which would undermine the reputation that the company has. Nokia will thus have to contend with the lost market share, as it tries to adopt the most recent technology that would help in reducing its operation costs. Its partnership and recent acquisition by Microsoft is a step bold enough towards winning back the lost market share. However, before the company manages in doing so, its share prices are likely to remain within their current range. According to Milmo (2012, n.p.), the company’s smart phones sales increased tremendously. This is an indication that it is likely to experience increased sales volumes in the future, especially with the use of windows technology. It could be hard for people to change from the android system, but as Microsoft recently launched windows 8 for computers, the same technology that the recent Nokia phones use, then people might decide to start using a similar technology as their computers, hence shifting to Nokia smart phones (Ammisetti 2012, p. 17-19). Works Cited Agarwal, J., Malhotra, N. K., & Bolton, R. N 2010, A cross-national and cross-cultural approach to global market segmentation: An application using consumers' perceived service quality. Journal of International Marketing, 18(3), 18-40. Ammisetti, A. 2012, "Nokia: The Troubled King of the Indian Handset Market", Vidwat, vol. 5, no. 1, pp. 14-20. 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