The Marketing Strategy of Nokia - Essay Example

Executive Summary: Nokia is a company that was founded in Finland, and over the years, the company has managed to dominate the mobile phone industry. Nokia operates four major business groups, and these are, Enterprise Solutions, Networks, Mobile Phones, and Multi-Media. However, with the end of cold war, and the introduction of structural adjustment policies by World Bank and IMF, the economies of most countries were liberalized. This was an opportunity for multi-national companies to emerge, for purposes of taking advantage of the new markets that were made possible by liberalization of most economies of the world (Barnes, 2011). However, this was a great challenge to Nokia, specifically because new companies began to emerge, that were able to produce cheap mobile phones, which were also innovative. During the 21st century, Nokia began losing competition to mobile phone giants such as Apples, Samsung, and the numerous Chinese mobile companies that produced cheap, but innovative mobile phones (Sundback, 2008). One of the major reasons as to why Nokia was losing competition is based on the fact that it had a poor marketing strategy. Nokia was unable to effectively communicate its proposition, and what their products stand for. This is an aspect that Apples and Samsung have managed to communicate effectively in their marketing campaigns. Furthermore, the advertisements of Nokia are not consistent, communicating messages which are not relevant to their target market (Barnes, 2011). It is important to understand that to achieve success in marketing, it is essential for a business organization to highlight how their products serve the needs of their customers. On this note, failure of Nokia to achieve market growth is not because of low quality products, but mainly because of their poor marketing strategies. Introduction: Nokia is a company in the telecommunication industry. In reviewing the marketing strategy of Nokia, there is a need of concentrating on the strategy that the organization employed in marketing its Nokia brand of mobile phones (Glotz, Bertschi and Locke, 2005). This report will provide a critique of the marketing strategy of the organization, identifying various weaknesses that the company needs to improve on. The main intention of providing a critique on the marketing strategy of Nokia is to make a recommendation on how to improve its marketing mix, in order to be an effective competitor in the telecommunications industry (Häikiö, 2002). On this basis, this report is a critical analysis of the marketing strategy of Nokia mobile phones, identifying its weaknesses and strengths, and providing recommendations on how to improve its marketing mix in the long run. This report is divided into three major parts. The first part is an introduction, which is this section. The introduction contains the reasons for the research, and it gives a justification on the reasons of choosing Nokia as the company to study. The second part is the marketing audit of Nokia. This part outlines the current marketing situation of Nokia, and the marketing activities that the company undertakes. This section further evaluates the marketing challenges that Nokia faces, and the strategies it has developed for purposes of overcoming the challenges under consideration. This section further identifies the micro and macro environments that Nokia operates under. Section three is the recommendations section. It gives out the manner in which Nokia should develop its marketing mix for the next two years, for the main purpose competing effectively in the telecommunications industry. Nokia is a multinational telecommunications company that has its headquarters in Finland (Sundback, 2008). The company is responsible for the provision of internet services, music, games, navigation services, messaging services, etc. The company is also responsible for providing telecommunication services and equipments such as mobile phones that operate under the brand name of Nokia. Nokia offers four major business services, and this includes multimedia, enterprise solutions, mobile phones, and internet networks (Glotz, Bertschi and Locke, 2005). This paper mainly focuses on the mobile phones business of Nokia. As of the year 2013, Nokia was able to employ approximately 90,000 employees, in more than 120 countries of the world. Furthermore, the company has business operations in approximately 150 countries of the world, and it always reports an annual income of 12.7 billion pounds (Glotz, Bertschi and Locke, 2005). Nokia is traded publicly at the New York stock exchange, and also at the Helsinki Stock exchange (Glotz, Bertschi and Locke, 2005). Furthermore, as of 2013, Nokia was voted as the 274th largest organization in the world (Barnes, 2011). However, due to increased competition and poor marketing strategy, Nokia has been unable to compete effectively with mobile phone companies such as Samsung, Apples, etc. The company was almost going bankrupt, when Microsoft decided to buy it in the year 2013. It is important to understand that the products of Nokia are not inferior when compared to the products of its competitors. It is important to denote that Nokia produces a wide range of mobile phones, and this includes Nokia Asha, Nokia Lumia, Nokia N series, etc (Glotz, Bertschi and Locke, 2005). These are a wide range of innovative mobile handsets which are produced by the company. The main reason of choosing Nokia as a case study is because of the failure in its marketing strategy. This has made the company to lose competition to rival companies such as Apples, Samsung, and other Asian mobile phone companies (Barnes, 2011). Companies such as Apples and Samsung have a highly effective marketing strategy that makes them to stay ahead of Nokia. For instance, iPhones are always considered as very prestigious, and hence they are equated with social class (Sundback, 2008). It is important to understand that iPhones are manufactured by Apples, and it is there marketing strategy to depict them as high value substances for purposes of appealing to their target market. On the other hand, the android phones that are manufactured by Samsung are always seen as versatile, and more easy to use, as compared to the products of Apples, that is iPhones (Barnes, 2011). On the other hand, Nokia failed to come up with a marketing philosophy that would make users to identify their mobile products. Based on this fact, Sundback (2008) explains that Nokia failed in developing a marketing strategy that could make it to effectively compete with companies such as Apples, and Samsung. Based on this fact, it is therefore justifiable to analyze the marketing strategy of Nokia, and identify its weaknesses for purposes of developing recommendations that can help it achieve its former status as one of the leading mobile companies in the world. Sundback (2008) explains that marketing is an essential process that business organizations have to undertake, in case they want to achieve growth in their operations (Glotz, Bertschi and Locke, 2005). Marketing refers to the process of giving information about the values of a product to the customers, for the main purpose of selling the product under consideration. Because of extensive competition, every business organization must develop an efficient marketing strategy that can help them overcome competition, and increase the share of their market (Barnes, 2011). Based on this fact therefore, this report is useful because it would provide recommendations on the strategies that Nokia should use, in developing an efficient marketing mix. Marketing Audit: Audit Approach: In carrying out this marketing audit, their will be a need of analyzing the internal as well as external marketing environment of Nokia. This would help in identifying the marketing strategies and weaknesses of those strategies that Nokia develops. Furthermore, undertaking an external analysis of the marketing strategies of Nokia would help in understanding the nature of competition that Nokia faces, and hence provide a recommendation on the best way of developing its marketing mix (Barnes, 2011). Furthermore, to better understand the internal environment of Nokia, there will be a SWOT analysis. It is important to understand that a SWOT analysis is one of the most effective methods of analyzing the capability of the company, and its performance (Steinbock, 2010). By understand the SWOT analysis of the company, and then chances are high that it would be possible to understand the marketing mix of Nokia, and the reasons as to why it has failed in its marketing approach. There is also a need of identifying the various marketing approaches used by the competitors of Nokia, for purposes of making a comparison with Nokia. This would help in understanding the reasons as to why there is a need of moving to the current marketing mix practices, to new strategies that would improve the performance of the company. For purposes of understanding the macro-economic environment of Nokia, their will be the use of the Pestel analysis (Barnes, 2011). SWOT Analysis of Nokia: Strengths: Nokia commands the largest distribution network of mobile phones around the world (Barnes, 2011). It is the biggest manufacturer and producer of cell phones. The products of the company are durable, creative, as well as reliable. The company has a strong research and development capabilities. It has an advanced technological innovation, and a diverse work force. Weaknesses: As of 2010, the profits of the company dropped by 40%. The prices of Nokia handsets are more expensive, when compared to the prices of other handsets. Closure of its Japanese distribution network because of low demands for the handsets of Nokia. Opportunities: The mobile phone industry is the fastest growing industry, with potential new markets in China, Asia and Africa (Barnes, 2011). Opportunities of partnership with mobile phone companies, such as Siemens of Germany. Changes in consumer needs, where youths require stylish and fashionable mobile phone handsets. Threats: Extensive competition from Chinese mobile handsets, which are cheap, and stylish. Difficulty in retaining loyalty amongst its customers because of poor marketing strategy. Extensive competition from companies such as Apples, Samsung, RIM, etc. PESTEL Analysis of Nokia: This PESTLE analyzes, gives an analysis of the macro environment of Nokia Company. These are external forces that are out of the control of Nokia. However, they have a great significant effect on the manner in which Nokia operates, and the various strategic decisions that Nokia makes. Steinbock (2010) explains that to have a good understanding on the Macro-environment of Nokia, then it is essential to have a complete understanding of the PESTLE analysis of Nokia. Political Rice and Galvin (2006) explain that political factors normally relate to the factors whereby the government also plays a role in affecting the manner in which the organization conducts its business affairs. This includes the rules that Nokia has to follow while carrying out its business operations, as well as the stability of the government. It is important to explain that there must be a stable government, for business organizations to have efficiency in carrying out their operations in a given economy (Steinbock, 2010). For instance, Nokia has one of the manufacturing equipments in India. To achieve success in the Indian market, there is a need of following the regulations and rules of India, and this is for the main purpose of ensuring that they operate in an efficient manner (Steinbock, 2010). The issues that Nokia has to be aware of includes the minimum wage rate, the maximum hours that an employee can work, the safety and health regulations, etc. Furthermore, it is important for Nokia to have a good working relationship with their home government that is the government of Finland (Barnes, 2011). This is because any political changes, may lead to the introduction of new laws that may have a negative effect on the operations of Nokia. Furthermore, there are some laws that can affect Nokia negatively, specifically laws that do not promote liberalization of trade. For instance, during the period of cold war, it was difficult for Nokia to invest its operations in communist countries allied to USSR (Steinbock, 2010). But with the fall of the cold war, communist countries began opening up their economies, allowing multi-national companies to invest in them. Economics The activities of Nokia are very vital for the Finnish economy, and this is because the company currently controls a third of the market in the stock exchange of Helsinki (Sundback, 2008). Nokia is very important to the Finnish economy that the government decided to get involved with the operations of the company, when it had planned to conduct a series of job cuts in Finland. Furthermore, for the fear of such kind of repercussion, the government of Finland decided to help the employees who were laid off by the company, to find new jobs. Sundback (2008) further explains that Nokia will have to be aware of the various changes in the exchange rates of the countries in which they operate. This is because Nokia operates in the international arena, and any drastic changes in exchange rates can result to a devastating effect on its financial operations. This is in case the business organization does not initiate appropriate measures that can help to ensure the effects of the drastic changes in exchange rates are minimized. Furthermore, Lindholm, Keinonen and Kiljander (2003) explain that the threat of the recession that occurred in western territories also had an adverse effect on the interest rates of various banks. This therefore means that the cost of borrowing money for business purposes had increased. On this note, Nokia had to be aware of these changes in interest rates, for purposes of ensuring that its operations are not adversely affected. Social Lonchampt (2000) explains that Nokia mainly operates in the Western countries, and on this basis, it is very essential for the company to have an understanding of the social elements in these markets. Kronvall and Törnroos (1998) further explains that the main issue that they need to understand is the culture of their market, as this would help them to develop an efficient and effective marketing strategy. For instance, having the latest mobile phone is an issue that is considered fashionable amongst the youths, and people living in the western world. Furthermore, consumers are always looking at the most innovative smart phones, and ones that are better looking. On this basis, the company will have to develop their products for purposes of satisfying these needs (Steinbock, 2010). Nokia will have to spend a considerable amount of time in research and development, for the main purpose of developing smart phones that serves the needs of their Western market. Technological Funk (2002) explains that technological advances in the telecommunications industry are very important for the success of any mobile phone in the market. On this basis, Sundback (2008) explains that Nokia has to make sure that their mobile phones are of highest quality, and they encompass new technology, that satisfies their target market. Innovation is the key to technological growth, as this would ensure that Nokia focuses on improving the quality of their products. It is important to understand that most telecommunication companies are constantly involved in improving their gadgets (Sundback, 2008). An example is Apples, Samsung, as well as the numerous Chinese telecommunication companies. On this basis, to be competitive, there is a need of Nokia ensuring that they continually innovate, and this will be made possible through the creation of a strong research and development department. Possessing functions such as the internet, camera, emails, social networking, Nokia will have to develop its smart phones in other methods that would help it to differentiate it from smart phones of other mobile companies. This would make the company to stand out, against its rivals, making it experience a growth in their profitability, as well as market. Furthermore, Sundback (2008) explains that majority of consumers are always seeking to identify a soft ware that runs the key functions of a company. This will indicate whether the company is successful, or not. On this basis, the alliance of Nokia, with Microsoft for the production of their latest smart phones is an indication of success. This is because people are aware of the technological capabilities of Microsoft, and their ability to add value to any piece of technology that they came across (Aspara, Lamberg, Laukia and Tikkanen, 2011). During the later years, Nokia was a market leader in innovating mobile phones. However, in the current years, Nokia has struggled to be innovative, making its competitors to outpace them in the market. This is the major reason as to why Nokia has to consider its market strategies, and hence develop a marketing strategy that promotes innovation (Barnes, 2011). This would help the company to be ahead of its rivals, and hence achieve profitability and market growth. Legal Barnes (2011) explains that intellectual property is very important to any technological company. On this basis, this intellectual property has to be protected, and cared for, as this would ensure that the business organization does not lose its customers to its competitors. Schrempf (2011) explains that Nokia operates in a business environment whereby it is very difficult to manufacture and produce a product that is different from competing companies. On this basis, when Nokia releases a product that is innovative, there is a need of protecting the products under consideration through trademarks, patents, and copyrights. This would ensure that the product under consideration is safe, and they are not stolen by their main competitors. Kotler and Armstrong (2012) explains that competitors are not the only threat to the intellectual property of Nokia. Nokia has to ensure that the intellectual property of the company does not fall to counterfeiters, who may make these products, but of low quality, and cheaper. Masalin (2003) explains that because Nokia has so many manufacturing factories in different parts of the world, it is very important for the company to abide by the regulations and laws that govern these countries. It is important to understand that different countries have different laws that govern the operations of the business (Steinbock, 2010). For instance, the minimum wage rate applied in India, is not applicable in United States, etc. It is these laws that Nokia has to abide with, when they are seeking to invest in other countries of the world. Environmental Ropponen (2008) explains that in the business culture of today, it is extremely important for business organizations to be viewed as environment friendly by its customers. This is because of the global environmental problem referred to as global warming. On this basis, there is a need of Nokia ensuring that they operate in a manner that is environmental friendly. Organizations responsible for the recycling of mobile handsets have become popular, and this is a clear illustration on how people view environmental conservation as an important issue (Aspara, Lamberg, Laukia and Tikkanen, 2011). It is important to understand that the main issue dealing with the recycling of mobile handsets is the disposal of the mobile phones batteries. This is mainly because they can be very dangerous in case they are not properly disposed off. Marketing Strategy of Nokia: It is now possible to identify the macro and micro environment of Nokia, based on the identified SWOT, and PESTEL analysis. Goggin (2011) explains that the main reason as to why there is a drop in the business performance of Nokia is based on the fact that Nokia has pursued a poor marketing strategy of the last ten years. Neophytou (2007) denotes that the messaging system of Nokia is poor, mainly because they are not consistent. On this basis, people are not aware of the features of Nokia that makes it to be more competitive, against its competitors. On this basis, Lawler, Worley and Creelman (2011) explains that the marketing strategy of Nokia will not work, unless the company understands the kind of message needed for purposes of convincing the target market on the quality and usefulness of the product under consideration. For instance, the use of television for advertisement is a great method of advertising. However, when there is lack of consistency in the TV advertisements, then chances are high that this marketing strategy will fail (Aspara, Lamberg, Laukia and Tikkanen, 2011). Nokia faces extensive competition from Chinese companies, as well as from Apples, and Samsung. However, in their advertisement campaigns, Nokia has been unable to explain why its products are better off than that of its main competitors. This is a strategy that is effectively used by Samsung, and Apples. For instance, Apples has been able to build a brand name, whereby its products are associated with class, and prestige (Barnes, 2011). Recommendations: The following are the recommendations necessary to improve the marketing strategy of Nokia. Haddon and Green (2009) explain that the creation of a strong proposition should be the marketing strategy that Nokia should adopt. All the marketing practices of Nokia should be developed, and adopted based on the proposition of the company. For instance, Nokia has to identify one of the stronger features of its mobile and smart phones, and communicate this message to its target customers. The communication should be consistent, and the right channels of advertising should be used. For example, Nokia should use the phrase “Simple to use, and highly innovative smart phones”. Through this slogan, target customers of the organization would know what to expect from Nokia, as well as the philosophy that the company stands for. It is important to understand that the marketing strategy of Nokia failed, mainly because it was unable to develop a strong proposition that was communicated constantly to its target market. This is what Apples and Samsung have managed to achieve, therefore out pacing Nokia in their markets of operation. Apples have managed to create a market proposition in which it stands for class, and prestige. On the other hand, the market proposition of Samsung is that, it is convenient and easy to use. In developing a marketing proposition, Nokia should look for a consistent slogan that better describes its products, and use them for purposes of developing advertisements. The channels of advertisement are also important in developing the marketing strategy of the company (Aspara, Lamberg, Laukia and Tikkanen, 2011). Because the company is a multi-national organization, the best strategy to use is the use of the internet and the social media to advertise the products of the company. The internet and the social media have the capability of reaching a large number of people, within a very short period of time. The internet is a cheap method of advertising, when it is compared to the television. It is important to understand that Nokia will be advertising constantly, and hence there is a need of using cost effective measures, which are also efficient in reaching the target market of Nokia (Lee, 2001). In coming up with a market proposition, the company has to follow five major steps, namely; thinking in terms of the needs of customers, how unique the products of the company are, identifying the weaknesses in the industry, being specific and having the capability of proofing the proposition developed, and finally create a short marketing phrase that highlights the proposition of the company. In thinking about the needs of the customers, no one can buy a product that they do not need. On this basis, the market proposition of the company must reflect this need. The company must also identify how unique it is. This is essential in making gains over its competitors. For instance, the smart phones of Nokia are always easy to use, and very innovative. An example is the Nokia N Series mobile phones. Identification of the industries weaknesses will be able to make the company to come up with a solution on how to exploit the various weaknesses identified (Yuan, 2005). For instance, in the mobile industry, there are a variety of phones which are cheap, but do not last long. The company can exploit on this weakness by developing a marketing proposition that highlights the quality of its products, relative to its prices. There will be a need of being specific, on the philosophy of the company, and creating a simple phrase or sentence that identifies the values of the company. On this basis, the recommended marketing philosophy is, “simple to use, and highly innovative smart phones”. Bibliography: Aspara, J., Lamberg, J., Laukia, A., & Tikkanen, H. 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