Market Segmentation of Nokia - Case Study Example

Market Segmentation & Consumer Behaviour - Nokia - Table of Contents I. Introduction ………………………………………………………………. 3 II. Importance of Marketing Concept ……………………………………… 3 III. Target Market of Nokia within UK ………………………………………. 4 a. Demographic Segmentation …………………………………... 4 b. Psychographics Segmentation ……………………………….. 6 c. Geographic Segmentation ……………………………………… 6 IV. Nokia’s Consumer Behaviour ……………………………………………. 6 V. Discussion …………………………………………………………………. 7 VI. Conclusion ………………………………………………………………… 8 Table I – Market Segment of Nokia within UK ……………………………….. 10 References ……………………………………………………………………… 12 - 13 Introduction Established back in 1865, Nokia was founded by Fredrik Idestam a paper mill. (Nokia, 2008a) When Nokia decided to merge with Finnish Rubber Works and Finnish Cable back in 1967, the company was called Nokia Corporation. Considering that Nokia was able to set-up a strong electronics department, the company eventually shifted its focused on mobile communication. (Nokia, 2008b) Since then, Nokia continued innovating new mobile communication devices in order to capture a bigger share in the market. For this study, the student will first discuss the importance of marketing concepts such as market segmentation and marketing mix in the role and responsibilities of marketing managers. Aiming to examine Nokia’s target market in UK, marketing concepts particularly the market segmentation such as demographic, psychographic, and geographic segmentation including consumer behaviour will be utilized and applied in the case of Nokia. Eventually, several ways wherein Nokia managers could maximize the use of market segment and marketing mix will be tackled prior to conclusion. Importance of Marketing Concept Increasing the company’s sales and profitability is the main goal of each business. Given the fact that all humans have their own specific needs and wants, the study of marketing is focused on enabling a company to address these concerns. Some products could satisfy the specific need of consumers. In line with this matter, the product preferences of each consumer are usually guided by marketing variables such as the product value, cost, customer(s) satisfaction, and market distribution which is included in the study of marketing mix or the 4 P’s known as price, product, promotion (marketing communication), and place (distribution). (Kotler & Armstrong, 1997: p. 52; McCarthy & Perreault, 1993: p. 46; Stanton, Etzel & Walker, 1991: p. 13) The study of marketing is a very broad subject that aims to improve the company’s financial performance not only through selling and advertisements but also in finding ways to develop and establish a good relationship with the target customers. For this reason, it is wrong to believe that the study of marketing is focused only on selling and advertising. Target Market of Nokia within UK It is very difficult on the part of marketing managers to identify the target market of Nokia without dividing the consumer subgroups. (Rogers, 2005: 15) Therefore, marketing managers should carefully identify the target market of Nokia by developing specific market segmentation. In general, market segmentation is important decision-making tool since Nokia’s marketing managers could develop strategic decisions based on the market segment analysis. In line with this matter, the marketing manager of Nokia should create market segmentation by identifying and examining the market segment of consumer characteristics related to demographic, psychographic, and geographic factors. (Kotler, 2000: 8, 263) Demographic Segmentation Demographic segmentation actually examine variables related to the target consumers’ age, size of family, family life cycle, gender, income, occupation, educational attainment, religion, race, generation, nationality, and social class. (Kotler, 2000: 263 – 266; Rogers, 2005: 19) Specifically the socio-economic factors such as the family income, educational attainment, and occupational status determines the capability of the Nokia’s target market to purchase mobile communication gadgets. (Rogers, 2005: 22) The use of mobile communication devices is a necessity for both professionals and non-professionals. Considering the continuously increasing demand for mobile communication and the economic condition of the country, Nokia’s marketing manager should carefully analyze the demographic variables of its target buyers since this will enable them to have a clear vision on what its target consumers are expecting from the company. (See Table I – Market Segment of Nokia: Demographic on page 6) For example: Since not all individuals above the age of 16 are currently employed and/or receiving a high salary from their jobs, there will always be the need for Nokia to continue manufacturing low-cost mobile phones in order to capture a large portion of its target market. On the other hand, individuals who personally consider mobile devices as a necessity and has a limited income are most likely to purchase the simpliest and cheapest mobile devices Nokia is offering. Regardless of gender, race, profession, educational attainment; nationality, religion and/or social class; people in UK can purchase Nokia’s mobile devices. One of the major variable that affects the purchasing behaviour of Nokia’s target consumer is related to each individual’s financial capability to purchase mobile phones. Psychographics Segmentation When it comes to psychographic segmentation, Nokia’s marketing manager should examine its target buyers’ lifestyle, personality and values. (Kotler, 2000: 266 – 267) Upon analyzing the case of Nokia, the lifestyle of its target buyers are socially active and outgoing. Aside from having a positive attitude and buying behaviour on mobile phone technology, the personality of these individuals are expected to be price conscious, compulsive buying attitude, and are technology inclined. (See Table I – Market Segment for Low Cost Generic Laundry Detergent Sold in Grocery Stores: Psychographic on page 6) Geographic Segmentation Geographic segmentation basically enable managers to divide the target market based on geographic units such as the nations, states, regions, countries, cities, local government areas, or community area. (Kotler, 2000: 263; Rogers, 2005: 24) Regardless of the metro size, Nokia’s mobile communication devices will be distributed throughout the European Region. Depending on the monthly and annual sales performance in each region, Nokia’s sales and marketing manager will be conducting further market study in order to determine the rough estimate of demand for Nokia’s product line within the urban, suburban or rural areas of European Region. (See Table I – Market Segment for Low Cost Generic Laundry Detergent Sold in Grocery Stores: Geographic on page 7) Nokia’s Consumer Behaviour Consumer behaviour of Nokia’s target consumers highly depends on how the company satisfy the specific needs and wants of its customers. Aside from the fact that having strong brand equity positively affects consumers’ buying behaviour (Yoo et al., 2000; Pitta & Katsanis, 1995; Barwise, 1993), developing an effective marketing communication for Nokia is equally important when it comes to developing a positive relationship between the company and its target consumers. In line with this matter, Hoegl & Gemuenden (2001) stated that marketing communication is useful in terms of developing a customer value. Since open communication plays an important role in a successful marketing communication, Nokia’s marketing managers should understand the basic structure of communication channel as well as the relevance of an effective communication style. Aside from the use of traditional marketing communication techniques such as the typical face-to-face communication or public relations (Fulk, Schmitz, & Steinfield, 1990: pp. 117 – 140), Nokia’s marketing manager should consider integrating the traditional marketing communication strategies with modern ones particularly the use of the online marketing. (Misloski, 2005) Discussion Most of the marketing managers who are able to develop effective marketing management campaign believe that the key to increase the consumers’ choice in terms of consumption categories is highly dependent on the managers’ ability to: (1) analyze and interpret the market segmentation; (2) utilize the concept of marketing mix when positioning the company’s product and services in its chosen domestic and international markets; as well as (3) the ability of the managers to persuade its target consumers to purchase the company’s product and services with the use of marketing communication. Aside from considering market segmentation as one of the best marketing strategies today, market segmentation is considered as a powerful marketing tool in enabling the Nokia innovate new product lines based on the specific needs of its target consumers. Based on information gathered with regards to Nokia’s target buyers, it would be so much easier on the part of the company to repackage and/or redesign its existing product lines to enable them to capture as much market share as possible. For this reason, the ability of Nokia’s marketing manager to accurately determine the specific needs and wants of their target consumers within each geographic region is important since this information enables the company to have a competitive edge against Nokia’s competitors. Since product, price, promotion, and place (4 P’s) is inter-related with one another, Nokia’s marketing manager should carefully analyze each variable in relation to the other variables of the marketing mix. When necessary, marketing managers of Nokia could effectively increase the company’s profitability by promoting the need for product modification or determining the market price of its product based on its target geographic market. Conclusion It is a challenge on the part of Nokia’s marketing manager to satisfy the specific needs and wants of its target customers. To do so, marketing managers should be familiar with the marketing concept and its functions in order to accurately identify what Nokia’s target buyers’ preferences in terms of the product quality, market price, and services offered by the company. Since there is no single marketing concept that could make marketing managers meet the specific demand of its target buyers, marketing managers should make use of several marketing theories and concepts in order to achieve a better result. *** End *** Table I – Market Segment of Nokia within UK Demographic: Age Family Size Family Life Cycle Gender Income Occupation Education Religion Race Generation Nationality Social Class 16 years old and above 1 – 2; 3 – 4; 5+ Young & single; young & married; with or without children; old & single; old & married Male, female Under £9,999; $10,000 – 14,999; £15,000 – 19,999; £20,000 – 29,999; £30,000 – 49,999; £50,000 – 99,999; £100,000 and up Professional and technical; managers, officials and proprietors; clerical, sales; craft people; forepersons; operatives; farmers; retired; students; homemakers; unemployed. Grade school or less; some high school; high school graduate; some college; college graduates, under graduates. Catholic, Jewish; Muslim; Hindu; Protestant; Others. White; Black; Asian; Hispanic Baby boomers; Generation X and Y. Americans, British; French; German; Italian; Japanese; etc. Lower-lower; upper lower; working class; middle class; upper middle; lower upper; upper-upper. Psychographic: Lifestyle Personality Values Socially active / outgoing. Price conscious individuals; compulsive buyers; technology inclined. Positive attitude and buying behaviour on mobile phone technology Demographic: European Region UK Region City or Metro Size Density Belgium, Bosnia & Herzegovina, Czech Republic, France, Germany, Hungary, Ireland, Italy, Netherlands, Poland, Scotland, Slovakia, Spain, & Switzerland. East Midlands, East of England, London, North East, North West, South East, South West, West Midlands, & Yorkshire and the Humber. Under 4,999; 5,000 – 19,999; 20,000 – 49,999; 50,000 – 99,999; 100,000 – 249,999; 250,000 – 499,999; 500,000 up. Urban, suburban, rural. References: Barwise, Patrick T. 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