International Marketing Mix of Nokia - Essay Example

An Examination of Nokia’s International Marketing Mix. The purpose of this paper is to conduct an analysis of the international marketing mix as utilized by Nokia. The format of this paper will first involve a brief history of the company followed by a snapshot of the current operations of the company. The next section of this paper will outline a detailed explanation of the international marketing mix as utilized by Nokia, followed by an explanation behind the choices that the company has made. Lastly some suggestions for changes that Nokia may apply to their international marketing mix will be put forward. History of Nokia According to the company website (2009) it is the case that the origins of Nokia date back to 1865 when founder Fredrik Idestam founded a wood pulp company in Finland. The second mill built by the company as constructed along the Nokianvirta river hence the name ‘Nokia’. The company went through several different operational directions, first as a pulp mill, and then in 1898 the company founded their rubber business. 1912 marked the year when the company founded their cable electronics business. The company experienced a major shift in their operations from an industrial company to a more technical company by adding an electronics division in the early sixties. It was from these humble beginnings that the modern image of Nokia arose, first by developing handheld radio communication devices in the 1970’s to analog cellular telephones in the 80’s. From this position, the transition to the digital communication and Services Company we see today had begun. An Overview of the Current Operations According to the ‘Nokia Company in Brief’ (2009) brochure, Nokia is the world’s largest mobile device manufacturer but also provides a full range of software solutions for communications networks through Nokia Siemens Networks. According to the company’s estimates Nokia holds about 39% share of the global market share with an estimated 468 million units overall. They currently have sales in over 150 countries with a strong research and development presence in 16 countries operating on a budget of just over 6 billion euros. The organization and structure of the company is focused on four major functions underneath the group executive board. These functions are directed towards devices (Managing the mobile device portfolio), services (Consumer internet services) markets (supply chains and marketing), and corporate development office (Strategy and future growth opportunities). While the company may be Finish in origins, Nokia is a truly global company. In a McKinsey Quarterly interview with Keith Pardy, Nokis’s senior marketer (Knudsen 2007) it is the case that the company has a strong presence everywhere. With roughly 38% of sales in Europe, 33% percent in east Asia, 16% in North and South America, and 13% in Africa and the Middle East. It was espoused by Pardy that the company faces unique marketing challenges by having a marketing portfolio that tries to accommodate all people in all markets, while giving consistent service and support from rural to highly urbanized areas. As of the end of last year it Nokia employed 112,262 people across the globe including people employed in the Nokia Siemens network. The International Marketing Mix For the purposes of this paper, the Marketing mix mind map as demonstrated by Bized.co.uk (2009) will be used. Furthermore, In terms of the actual marketing mix format that will be examined some modifications must be made to the traditional marketing mix in order for it to be relevant to the international scope of the operations. As such the focus of this paper will incorporate the following categories. Product: The subjects that will be examined under this category that are applicable to Nokia will be product variation, product differentiation, product innovation, product elimination. Finally it will be the cast that a brief examination of Nokia’s business model and how it applies to usefulness, convenience, and value will be covered in brief. Price: In regards to how the pricing strategy is employed by Nokia, several individual considerations must be made. For the purposes of this essay, special consideration will be given to international pricing specifically, fixed vs. variable cost, competition, company objectives, positioning strategies as well as willingness to pay. Place: Because of the global distribution network that is to be examined several different distribution methods will be looked at. Special consideration will be given to retail operations; internet based sales, direct sales, peer to peer methods as well as multi channel sales will also be covered. As the company offers a large breadth of products it is the case that in some markets with some products, several different methods may be employed for the sale of goods. Promotion: It should be highlighted again that because the company operates in several different markets with several different products, consideration must be given to special offers, advertising strategies and campaigns, endorsements, user trials, direct marketing, leaflets/posters, as well as associated extra value accessories. Furthermore special attention will be given to other methods of sales competition, joint ventures. The fact that Nokia promotes its products all around the globe it is simply the case that a non-standardized promotion policy is in place to accommodate the local needs of consumers. People: As mentioned earlier, Nokia employs over 100,000 people across the globe with approximately a third of employees in the research and development sector of the company. As such special consideration will be given to the how Nokia utilizes their human resources. In more specific terms this essay will give focus to the employees, management, managerial culture, as well as how the organization approaches customer service. Process: While this process is especially relevant to the service industries eg; how are the services consumed. It is the case that special consideration must be given to Nokia and its business model. As it is the case that with the digital handheld technology that the company offers relies heavily on a service component. In more specific terms it is not entirely the physical product it is the functions on the product that matter, such as the ability to access the internet, or communicate with friends. Physical Evidence: While this consideration is often given to the location where a product is consumed it can be considered a significant component of the actual product. For example, is the interface of the product easy to use or access, is it comfortable, is it easy to access all the ancillary functions, are the functions compatible with other software providers. Nokia’s International Marketing Mix Before beginning this section it is important to emphasize that for the purposes of this paper the focus will entirely be on Nokia’s operations as they exist today and in the not too distant past. The reasoning behind this decision is that while the company has a very long history it is the case that a number of the handheld communication devices and software solutions that were sold by Nokia in the past are no longer serviced or on offer. At lease in the case of some of the earliest handheld devices it may be that they may no longer be able to function on some of today’s networks. Keeping these research limitations in mind, it is still difficult to describe exactly what Nokia’s marketing mix strategy is because of the unique nature of the company because its presence is felt in so many different regions. Furthermore, the focus of this dissemination will be primarily on mobile handheld devices and associated software solutions for the company. Building on this idea, the focus of this section will be to dissect the product price, place, and promotion utilized by the company in the different markets in which they operate. Product While over the years Nokia has had a number of different products for sale, their current physical line is broken into three categories which are physical products (devices, accessories and mini laptops), software solutions (Audio themes, messaging etc.) as well as a services (Maps, photography, media sharing, gaming etc.). For the purposes of this section we will focus on the actual hand held devices. Product Variation: According to the Nokia International Markets Website (2009) the company has 138 models currently on offer in Europe. In Nokia Asia Pacific there are 165 models for sale; Nokia Canada has 31 models, America 42, Middle East and Africa 137 phones, and finally Latin America 143. While it would be futile to give a description of every product on offer from Nokia, the company breaks down its mobile division into the following categories; Smart phones, mobile devices, E-series, and N-series. It is no secret that there is a very wide variation of the product offerings as they appear in the different markets but it is the case that some models are sold the world over with software modifications made to accommodate preferences such as providing an interface in local languages, games, etc. Product differentiation: Whilst, many different mobile communication companies offer similar features, Nokia seeks to differentiate their product offerings from many of their competitors by offering a very wide product offering to accommodate many tastes. One function available on their website allows users to type in their preferences in design categories, and function categories and the website will generate several phones to accommodate your tastes. Smart phones such as the E72 (soon to be released in Europe but already on offer in much of Asia) have remote device management options that protect from lost information, as well as offering full internet browsing capabilities. These devices are expected to be a major growth sector for Nokia. Building on this idea is a ‘basic’ phone such as the Nokia 6230i which offers texting, some games, regular telephone options but that’s about it. For thee reasons, it could be argued that Nokia seeks to differentiate themselves by offering devices that are capable of accommodating every taste Product Innovation: It was argued by Chesbrough (2006) that Nokia’s direct competitors watched helplessly as the company was able to catapult themselves to the forefront of the industry in the last twenty years and this success owes entirely to the culture of innovation and continual learning in the organization. As part of the process on continual leaning the company also keeps a division that focuses on future trends. In an article in the Washington Post, Kaiser (2005) had highlighted that the company was ‘Betting’ that the future of handheld devices would no longer simply incorporate a camera but would also incorporate games, internet and music. As anybody with a cellular device made in the last few years would tell you that these features are pretty much standard on most new models. It is for these reasons that Nokia has been able to propel themselves to the forefront of industry and has an excellent record of product innovation. Product Elimination: As part of Nokia’s business model it is the case that as technologies become obsolete the firm tries to eliminate models that are not just unpopular or unprofitable but also models that not longer meet the technological requirements as demanded by consumers. In the international scope in some countries where the competitive environment is quite high (Such as Japan) it may be that newer models such as the E72 (presently on offer only in Asia) may be rushed to market while older and more basic phones are quickly take off shelves. Price Market Segmentation: There is little question that the handheld device market is highly competitive in many different countries. Much like many of their competitors, Nokia employs a strategy of high introductory pricing to help segment their market. An example of this is the latest models with the newest features are sold at a premium, as time goes on the price of the phone will go down. However that is not to say that the company employs this strategy in every county. In an article by Joshi for the India Brand Equity Foundation the author had argued that Nokia was employing an aggressive introductory pricing strategy, which offered sales through 30,000 individual outlets (Double that of competitors). The firm was able to gain further success by offering a plethora of phones at different price points to accommodate consumers with all types of budgets. It was for these reasons that the author had argued that Nokia was able to grab 70% of the market share of India. Furthermore as Nokia partners with different service providers in different nations and as such, the firm is able to further accommodate buyers with different requirements such as offering pay as you go plans right through to offering premium services such as instant messaging and internet browsing. The reasoning behind this pricing strategy is because the demand for mobile telephones is very high. However consumer tastes across even a single nation can be vast. By offering a range of models, features, pricing and service plans, Nokia is able to accommodate all customers. Furthermore it may be the case that the company objectives may be different from market to market. As was demonstrated in the case of India, it is probably the case that the company is looking employing a strategy of Market Penetration. However in well established and saturated markets it may be the case that the company makes a big push for introducing new product lines such as smart phones. Positioning. It is difficult to determine what the positioning strategy of Nokia’s brand may be in every single country the operating in simply because their different product lines are positioned in different ways. In the case of Nokia’s simple mobile devices, Ease of use seems to be the common thread throughout the organization; Smart phones as well as ‘E’ and ‘N’ Series phones seem to highlight the expanded functionality of the product lines. Place It is no secret that the demographics and buying power of the global market is undergoing some serious changes. It has been argued by Wall et al. (2010) that in the time between 2002 and 2012 World GDP is likely to double, and it was further estimated by the World Bank Global Economic Prospects Report as espoused by Wall et al. (2010), that by 2020 economies such as China, India, Indonesia, South Korea, Thailand and Taiwan will all be represented in the top ten global economies. Because of these changing demographic trends, it is the case that by being early entrants in many global markets, Nokia is perfectly poised to capitalize on the growth of these areas. In terms of distribution, Nokia offers most of their products for sale directly from its website. Building on this idea, Nokia offers much of its products through retail locations as well as through service providers. By extension many service providers offer direct sales insofar as they outfit whole companies with Nokia technology. Lastly it may be the case that combination method of selling may be employed as it is the case that the product may be sold directly to the consumer vie the internet but accessories, service and pay-as-you-go plans are sold directly to the consumer via retail outlets. By offering a multi channel opportunity for point of sale it can be the case that the company is able to further accommodate customers with a plethora of different purchasing requirements. Promotion As mentioned earlier, Nokia operates in many different markets so it is the case that the company employs several promotion strategies, both standardized as well as directed. In the case of standardized promotion strategy the company operates a single global direct slogan, “Connecting People.” (See Appendix #1) The reasoning behind this that the company offers a number of different software applications for entertainment and convenience, however this should not detract from the primary focus of the organization which is arguably that the company offers products that facilitate communication. In terms of a non-standardized approach to promotion it is the case that the company pursues a number of different mediums such as sponsorship, celebrity endorsements as well as advertisements that promote functionality. As for sponsorship, the company has a number of endorsements and direct sponsorship programs as well as events in different nations. For example the company is a major sponsor of everything from the Bangladeshi Football Federation National Team (Financial Express, 2009), to being an active sponsor of the Australian Moto-Cross National Championships (Nokia.au, 2007). The company also sponsors events such as concerts (See appendix #2). By being an active participant in regional activities, theoretically, Nokia is able to better associate with regional athletic tastes in an effort to gain positive local recognition. Furthermore it is the case that different mediums that the company sponsors are an excellent forum for promoting the functions of the devices. For example by sponsoring concerts the company has the opportunity to promote the music functions available on devices, or by being a major sponsor of cricket it is the case that the company can promote real time cricket scores or cricket video games available on some devices (See appendix #2). With celebrity endorsements it is the case that the company is able to further accommodate local tastes as it is the case that regional stars often dominate the advertisements, from Shakira in Latin America, Paris Hilton in the United States as well as soap opera stars in Bangladesh (See Appendix #3). In terms of standardized promotion strategies the company offers posters and commercials that emphasize the functionality of new models and software applications but still tries to cater to local tastes in some promotional campaigns (See Appendix #4). The reasoning behind this decision is to accommodate the desires of the more tech saavy consumers who demand information on the functionality of the devices. People As mentioned earlier, the company employs over 100,000 people across the globe with strong R&D centers in over 16 countries. The strategy behind keeping a diverse workforce the theory is that the company is better prepared to accommodate the diverse communities in which they are operating. According to Mintel Telecoms Retail Report (2007) Nokia is often cited as a leader of telecom retailers in terms of employment rights. One could argue that these policies are an excellent way to attract talent across their HR departments. For these reasons Nokia has the tools to adequately implement any new changes to the company processes whilst being prepared to adapt their business model for local tastes. Process With Nokia the method employed for offering their goods and services closely mirrors that of their competitors. While there is not such a great deal of product differentiation between comparable competitive products it is still the case that that the company is able to differentiate themselves from their competitors by their innovation in the service components. As mentioned earlier, Nokia was an innovator for gaming, music, and camera functions and is still an industry leader in added internet browsing capabilities. For these reasons Nokia is able to differentiate themselves from competitors by offering any and every function that a potential customer would desire. However Nokia is an innovator when it comes to compatibility and offers a number of Microsoft office functions on many of smart phones. Physical Evidence Nokia is unique in that the company has a similar operating platform across most of their product lines. While there may be added functionality to some models over others, anybody with experience using a Nokia phone will be familiar with the interface used on most of Nokia’s phones on offer. Whilst the products come in a variety of shapes and sizes, the company always aims for a product that offers ease of use and reliable access to its functionality. The reasoning behind this is so that customers do not get turned away by a complicated interface. Reasoning and Recommendations The reasoning behind why Nokia has made some of the choices for utilizing the marketing mix as espoused above is almost certainly because the company is truly global. It is the case that the needs of some groups will be different from others. In terms of software functionality, the requirements and desires of the youth market will be different from the business professional market, or the needs of consumers in Japan may be different from the needs of consumers in Guatemala. The company offers a diversified product line, functionality, software applications, pricing, and promotion strategy because the diversified consumer base has different needs. Having said this there are still a couple of changes that can be made to the marketing mix over the next few years. Product: It is clear that the company can place more focus on constant innovation in the smart phone sector. With Research-in-motion’s Blackberry and the Apple iPhone holding a significant market share in this segment and with changing demographics and consumer tastes, it could be that this sector may offer the highest level for growth. Whilst the company is already entrenched in this sector there is room for improvement in terms of grabbing market share. Furthermore Nokia often tests new products out in some markets before releasing them globally. While this may prove to be a safe way to test consumer reaction it may also be that the company is aggravating consumers in other markets that want to capitalize on the latest technology. Lastly, Nokia phones have a fairly simple interface. While this may be good at attracting new customers who are intimidated by technology the company may be ostracizing the increasingly tech savvy consumer base. Price: Because the company offers so many different pricing options for their many different models and policies it is simply the case that consumers may simply be confused by pricing. Furthermore as the company operates globally the pricing differs from nation-to-nation and with an increasingly transparent economy this may further frustrate customers. For these reasons it may be the case that adopting a universal pricing policy may make the products more appealing and easy to access. Promotion: Whilst it is the case that the company already accommodates local markets by sponsoring major sports in separate regions. This decision may aggravate consumers who associate the brand with rival sports franchises. For this reason it may be beneficial if the company were to sponsor stadiums or events rather than individual teams. Building on this argument rather than having Nokia using a specific celebrity to endorse the product it may be beneficial to sponsor a specific event such as a ‘Celebrity golf tournament.’ Conclusion The reasoning behind Nokia’s international product offerings is that the firm hopes that by having a plethora of different phones several different design, style and functionality features, they will always have a phone with a feature that a customer would be interested in. Rather than transplanting a single model into a foreign market, the company simply has differentiates themselves by always having a good fit. By constantly adding new phones with new features, the company is both poised to keep abreast of modern trends whilst ensuring the strictest quality controls by discontinuing outdated models. The reasoning behind the pricing strategy as utilized by Nokia, the company is able to offer newer phones with more features at a higher price and older phones with reduced functionality at a lower price they are again poised to accommodate a customer with any budget. The reasoning behind Nokia operating in nearly every market, and employing people from across the globe the company is better able to capitalize in exponential growth in emerging markets. Nokia utilizes a standardized as well as non standardized promotion model. The reason why the company uses this strategy is because by using a standardized model they are able to communicate a unified message of serve, but by accommodating local tastes in their marketing they can better appeal to local expectations As a global company Nokia employs people from all over the globe in many different business sectors. The reason why the company does this is they may be better suited to understand local tastes and have their employee base communicate that message to corporate. Nokia’s process strategy is to foster an environment of constant innovation and continual learning. The reasoning behind this strategy is so that the company can be better positioned to meet the future demands of customers as well as find new ways to provide services that their competitors are not able to accommodate. Lastly Nokia’s Physical evidence strategy emphasizes ease of use. The reasoning may be that the company wants to attract new customers that may be intimidated by new technology. Nokia has a long history of adapting their business model and product offerings. The transition from a pulp mill to an international telecommunications company has required over a century of innovation and adaptation. For this reason Nokia is well equipped to meet the demands of customers in the future A Summary of the Marketing Mix. Product Wide global product differentiation and variation. Strong level of innovation with a constant displacement of older models for newer models. Price Segmented market: Latest models are sold at a premium, older models sold at a discount. Many different models offered at many different price points to accommodate all budgets. Place Many different point-of-sale possibilities ie. through the website, individual retailers, direct sales etc. Promotion Standardized unified global message “Connecting People”. For every market different advertising techniques are utilized to accommodate local tastes. People Diverse workforce of more than 100,000 people with 16 major R&D facilities. The company promotes a HR policy that attracts the best talent. Process Company offers a number of different configurations but offeres compatibility with different operating software ie. Microsoft office, skype etc. as well as additional functions such as messaging, text, Nokia maps, games, music etc. Physical Evidence Similar operating platform across all models, and easy to operate interface. Designs to accommodate all tastes such as durable, simple, full ‘QWERTY’ keyboard, sleak, slim etc. Reference List Bized.co.uk (2009) Marketing Mind Map. Available online at http://www.bized.co.uk/educators/16-19/business/marketing/presentation/mix_map.htm Accessed on November 27th 2009. Chesbrough, H.W. (2006) The Era of Innovation. Chapter 11. As it occurs in Mayle, D: Managing Innovation and Change 3rd Edition. Sage Publications London The Financial Express (2009) Available online at http://www.thefinancialexpress-bd.com/2009/04/24/64710.html Accessed on November 27th. Joshi, A. (Date Unknown) In The Top Spot. India Brand Equity Foundation Available online at http://www.ibef.org/download/inthetopspot.pdf Accessed on November 27th. Kaiser. R.G. (2005) Hoping to Dial Into Cell Phones’ Future: Nokia, Finland’s Biggest Company, Betting on Music, TV, Games and Internet. The Washington Post OnlineAvailable at http://www.washingtonpost.com/wp-dyn/content/article/2005/07/21/AR2005072102399.html Accessed on November 27th, 2009. Knudsen, T.R (2007) Confronting proliferation ... in mobile communications: An interview with Nokia's senior marketer. Mckinsey Quarterly. Available online at http://www.mckinseyquarterly.com/Telecommunications/Confronting_proliferation__in_mobile_communications_An_interview_with_Nokias_senior_marketer_2003 Accessed on November 27th 2009. Mintel Telecoms Retailing report 05/07 Nokia.au (2007) Nokia Announced As Naming Rights Sponsor 2006 and 2007 MX Nationals. Available online at http://www.nokia.com.au/about-nokia/press/press-releases/archive/archiveshowpressrelease?newsid=-7295 Accessed on November 27th, 2009. Nokia.com (2009) Story of Nokia. Available online at http://www.nokia.com/about-nokia/company/story-of-nokia/nokias-first-century Accessed on November 27th 2009. Nokia.Com (2009) Company in Brief. Available online at http://www.nokia.com/NOKIA_COM_1/About_Nokia/Sidebars_new_concept/Nokia_in_brief/InBrief_08.pdf Accessed on November 27th, 2009. Nokia.com International Markets (2009) Available online at http://www.nokia.com/locations Accessed on November 27th 2009. Wall, S. Minocha, S and Rees, B. (2010) International Business, 3rd edition, Financial Times/Prentice Hall. Appendix #1. Appendix #2 Appendix #3 Appendix #4 Read More