Marketing Planning-Nokia - Case Study Example

Table of Contents I. Introduction 2 II. The Marketing Plan 4 A. Current Situation 4 B. Where We Want to Be 5 B.1. Projections 5 B.2 New Product Requirements/ Description 8 C. How We Are Going to Get There 8 C.1 Future Activities 8 III. Implementation 9 A. Issues for Consideration, Possible Barriers to Implementation 9 IV. Appendices 10 A. Ethical Issues 10 B. Possible Problems 10 References 11 I. Introduction Nokia, known worldwide for its phones, and for its dominance of the smart phones market worldwide for many years, actually operates as a going concern with three different business lines or groups. These three business groups are NAVTEQ, which is its mapping arm; Nokia Siemens Network or NSN, which is in the business of providing the backbone infrastructure and technologies for telecommunications networks worldwide; and the most prominent group of the three, which is the Devices and Services business segment or group. NAVTEQ is about digital mapping properties utilized in its own smart phones as well as the mapping services used by many different concerns, such as auto manufacturers, online mapping services, businesses and governments in general. NSN includes providing the physical infrastructure of carriers, alongside the services and solutions tied to those. Mobile telephony products, including apps, software, content, and other vital components make up what is the most prominent business group that is Devices and Services (Google 2012; Reuters 2012). While the basic phones business of Devices and Services is still good, and while Nokia still has wide traction worldwide and especially in key areas around the world such as China, India and Asia, its smart phone business has largely fallen off a cliff in terms of market share, beaten in the market by the revolutionary introduction of touch screen phones by Apple, in the iPhone, with Android by Google and by the army of Android players top-billed by Samsung. The future of the firm, it is said, lies in its new Lumia smart phones, powered by the new Windows Phone operating system, and which is expected to be pushed very hard in the United States and other key developed markets around the world, in order to reverse the losses at the Devices and Services segment of the business. The plight of Nokia as it is reflected in the rapid decline of its smart phone b business, and the hope that Lumia phones bring to the company, is reflected in the following succinct summary (The Markets Are Open 2012): Nokia, once leading Smartphone manufacturer, is hoping to bounce back in Smartphone business with Lumia 920.This device comes at a critical time for Nokia which lost 969 million Euros ($1.24 billion) in the most recent quarter. Nokia's sales figure of 6.3 million smart phones in the third quarter has ranked itself out of top three smart phones shipment ranking for the first time. According to recent research, it is estimated that Nokia's smart phones market share at only 4% where rival Samsung market share has risen to 35%from 23% in the third quarter. (The Markets Are Open 2012) Without jumping the gun on Nokia's product marketing strategy, it is important to note that Nokia is entering the most premium segment of the smart phone business with the positioning of premium differentiation, which in the US market translates to making use of the operators' most advanced data networks, as well as making use of leverage from cutting edge innovations to get an edge over entrenched players. These entrenched players are Apple and Samsung, and to a lesser extent, the rest of the other Android phone manufacturers. With its Lumia 920 partner in the US being AT&T, the latest flagship smart phone is being positioned as on par with the best smart phones by competitors, but priced in such a way as to make them hard to resist, given that they are priced much cheaper than phones in the same league. The Nokia phones are also coming into the market with a considerable number of add-on accessories, by way of further inducing customers to purchase the products in place of what they would normally order, which are Apple and Samsung phones. The idea is simple enough, and takes a page from being able to penetrate a market by flipping the normal economics of differentiation. Nokia and AT &T are tweaking the marketing mix to offer a differentiated, premium product but pricing it so low as to place the Nokia products in a category that would be sure to sell. The further idea is that this would induce the market to take up Nokia Lumias in greater numbers, as seeds for the future traction of Nokia in this important smart phone space and market that is the United States (The Markets Are Open 2012; Tactical Investor 2012; Reuters 2012b): The low Nokia price shows that volumes are more important to the company than profits as it is hoping to re-build a U.S. customer base, Current Analysis analyst Avi Greengart said. And with such aggressive pricing, the only reason these phones could fail to sell well is if consumers decide they are not interested in the Microsoft software, Greengart said (Reuters 2012b). The idea, to reiterate, is to throw in every single differentiation in every aspect of the marketing mix, from product superiority, to additional free peripherals by way of promotions, to lowering the price to make the product more attractive, to increasing the efficiency of production and distribution, in order to ensure that the launch of the Lumia 920 is a success in the United States (The Markets Are Open 2012): With considerably cheaper price than rivals manufacturer could attract interest for Nokia smart phones in the vital US market.Lumia 920 comes with wireless charging pad, optical image stabilization camera with upgraded version of Microsoft Crop's operating system . To make  Lumia 920 more appealing to masses, AT&T has announced that early buyers will get wireless Charging absolutely free, for a limited time while it will take pre-orders for Lumia 920 from Wednesday itself. (The Markets Are Open 2012). II. The Marketing Plan A. Current Situation The current situation, as partially discussed above, is that Nokia is coming into the smart phone market badly beaten to the punch by swifter and more innovative rivals in Apple and Samsung, the former with iterations of the iPhone, and the latter with iterations of its Galaxy line of Android phones and tablets that have come to take the world by storm, leaving Nokia struggling and losing money in their wake. From the top of the worldwide smart phone market, its situation has come to be characterized by a tightening of belts, uncertain future prospects, and being relegated to the role of a player who has to catch up with the new leaders, just to stay afloat (Weissman 2012): These days, though, it seems as if that iconic jingle is in danger of being switched to silent. Nokia announced yesterday that it would cut 10,000 jobs following one of its worst quarterly results in company history. Moody's has downgraded its bond to junk status. Samsung passed it in sales last month. And Business Insider's Henry Blodget had begun speculating that Nokia might face bankruptcy in the near future. (Weissman 2012). In other words, Nokia is coming from a position of weakness, and the current situation is one where Nokia has to continue innovating and hoping that its new line of smart phones, powered by software from Microsoft, would help it reverse profound market share losses in the smart phone space, and help it regain its footing financially and operationally (Weissman 2012). B. Where We Want to Be B.1. Projections Much of the projections on the fate of the company and the future of its products are tied to the projections on the success of its smart phone business, and of its Devices and Services business segment in general. In this sense, it is important to take a step back and to factor in analyses that look at future prospects in line with such views, and in addition looking at the status of Nokia's finances and product lines, as well as its other assets, such as patents, in order to make more credible prognoses and projections about the future prospects of the firm. Going by the recent performance of Nokia's stock price in the market, and using that as a gauge of investor confidence on the future prospects of the firm, then one can say that Nokia's prospects are not very good. The stock is down to just a small fraction of what it used to be at the height of Nokia's power, and has trended lower for much of the time that the new management has been in place. Looking at the share price and the overall prognoses of the market over the past few years, the overall picture is not very good. Nokia's debt has been rated to be junk, and in the absence of any positive boost from the Lumia line of phones, Nokia may run out of cash by burning through its stockpile of money, as it continues to operate on a loss, hoping to buy time until the much-expected recovery takes place. From this point of view therefore the stock and the future projections of the fate of the company is grim. On the other hand, success in the smart phone space can quickly turn this grim prognosis and projection around (Google 2012; Weissman 2012). `Meanwhile, more nuanced analyses of the situation Nokia is in, taking into consideration its various assets and the potential of its various lines of businesses, the projections for Nokia and for its Lumia line of smart phones is not so grim, and even cautiously optimistic. There are several grounds for such optimism. The stock, while down, has been inching up over the past few weeks, and up from its six-month lows. Moreover, its patent trove, built up over many years and funded with one of the most massive budgets for research and development in the industry back when Nokia was flush with cash, is considered to be an ace up the sleeve of Nokia, something that it can continue to leverage in order to shore up its finances and its market position in smart phones. Thirdly, while diminishing, the observation is that Nokia is still sitting on a lot of cash, that it can use to continue to wage battles in the smart phone space, with Microsoft. Moreover, while lagging behind its rivals, some analysts are cautiously cheerful that the Lumia 920 and its kin within Nokia will be a long-term slow-boil smash hit (Google 2012; Weissman 2012; The Markets Are Open 2012; Tactical Investor 2012). To explore the positive projections further, the overall prognosis is that Nokia is now better positioned to regain some market share in smart phones, that it had lost since the introduction of the iPhone. Prospects are further buttressed by the fact that its patent hoard is formidable and will remain to be relevant in the future, and at present is generating in excess of $600 million that goes back to Nokia as revenues and as further ammunition to shore up its prospects and continue to do battle for profitability and increased share of the spending on the most advanced phones worldwide. The projections here can rapidly evolve into a virtuous cycle, where the Lumia line takes off, and Nokia is then better able to manage its cash flow and further improve on its operations, while fueling further innovation to further boost its product lines and market share. A lot hinges on the success of the Lumia (Tactical Investor 2012): The stock has taken a beating because management simply failed to realize how important smart phones would be to their bottom line. Instead of leading they lagged, but it now appears that the worst may be behind the company. The new Lumia phones have received pretty good reviews and in some aspects, they even challenge Apple's new iPhone...Let's not forget that it also has a massive patent portfolio that generates $600 million a year in revenues. The current price action suggests that the worst news might already be priced in the stock and given that the reviews are pretty good on its new Lumia phones, the long-term outlook looks much better than it did earlier this year (Tactical Investor 2012). B.2 New Product Requirements/ Description The success of the smart phone business rests on the success of the Lumia 920 and its relatives moving forward. The plan rests on Lumias succeeding, and being iterated forward with better and better specs, and better and better crafted marketing mix elements, to cater to various market segments by price, by geography, by feature set, by need, and by other relevant market segments as has been explored and will be updated by Nokia moving forward. The iteration of the current generation of Lumias is expected to be rapid and fierce, with the strategy being one of partnering with individual major telecommunications carriers around the world with specific, tailored products. It is noteworthy, for instance, that variants of the Lumia 920 are selling well in France and in other parts of the world, including China, auguring well for the success of this product development strategy (Google 2012; Weissman 2012; The Markets Are Open 2012; Tactical Investor 2012; Lee 2012). C. How We Are Going to Get There C.1 Future Activities The core of future activities is iteration as far as product development is concerned. As has been discussed above, the near-term goal is to gain substantial traction for Nokia Lumia phones in the US and in key markets around the world, and to then rapidly iterate and come out with new products that address the needs of various existing and new market segments by the segmentation variables of price, product features, specific geographic-sensitive needs, and various other relevant segmentation variables. Iteration in this sense means iterative market research also, with sales data as a key input to tweaking the marketing mix to continue to improve that mix and to continue to improve traction and sales of future Nokia Lumia smart phones. The ability to move fast, to iterate quickly, and to bring new products out to market will be a key leg of the strategy to produce new products that will get Nokia back on its feet in the smart phone space (Google 2012; Weissman 2012; The Markets Are Open 2012; Tactical Investor 2012; Lee 2012). III. Implementation A. Issues for Consideration, Possible Barriers to Implementation The strategy is rapid iteration, fueled by iterative and quick market research and product development and production, as well as distribution. This strategy has those legs: market research, product development, product production, and distribution: Production on a massive scale, and on quick turnaround times for new models, requires excellent logistics, procurement, and related aspects of the supply chain. Each of these complicated components of the vast product development infrastructure of Nokia can go awry. Problems at each of these can present barriers to the successful implementation of the product development and marketing plan (Google 2012; Weissman 2012; The Markets Are Open 2012; Tactical Investor 2012; Lee 2012). IV. Appendices A. Ethical Issues As with other competitors in this space, ethical issues are tied to respecting patent rights by the players, as well as playing by the fair rules of international trade. This means adhering to the rule of law. Ethics here are tied to being legal and above-board, as well as fair, in all of Nokia's dealings with competitors, partners, contract manufacturers, employees, and customers (Google 2012; Weissman 2012; The Markets Are Open 2012; Tactical Investor 2012; Lee 2012).. B. Possible Problems The way to surmount and prevent the problems relating to the minute aspects of the product development and product marketing infrastructure discussed above is to pay attention to details, and to develop small teams that can rapidly prototype and simulate all of the aspects of that infrastructure. The latter is to be able to ferret out problems as they occur, so that they can be solved prior to the process for new products being scaled up in response to increases in product demand (Google 2012; Weissman 2012; The Markets Are Open 2012; Tactical Investor 2012; Lee 2012).. References Google, 2012. Nokia Corporation (ADR). Google Finance. [Online] Available at: http://www.google.com/finance?cid=657729 [Accessed 11 November 2012] Reuters, 2012. Nokia Oyj. Reuters.com. [Online] Available at: http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=NOK [Accessed 11 November 2012] Reuters, 2012b. Nokia Lumia 920 gets price advantage over HTC 8X in US Windows Phone 8 battle. NDTV Gadgets. [Online] Available at: http://gadgets.ndtv.com/mobiles/news/nokia-lumia-920-gets-price-advantage-over-htc-8x-in-us-windows-phone-8-battle-289519 [Accessed 11 November 2012] Tactical Investor, 2012. Is It Time To Get on the Nokia Train? Seeking Alpha. [Online] Available at: http://seekingalpha.com/article/981461-is-it-time-to-get-on-the-nokia-train [Accessed 11 November 2012] The Markets Are Open, 2012. Nokia Corporation (NOK) Lumia 920 to sell for $100 on AT&T Inc. (NYSE:T) network in the US. TheMarketsAreOpen;blogspot.com. [Online] Available at: http://themarketsareopen.blogspot.com/2012/11/nokia-corporation-nok-lumia-920-to-sell.html [Accessed 11 November 2012] Weissman, Jordan, 2012. Death of a Ringtone: The Rise and Fall of Nokia. The Atlantic. [Online] Available at: http://www.theatlantic.com/business/archive/2012/06/death-of-a-ringtone-the-rise-and-fall-of-nokia/258562/ [Accessed 11 November 2012] Read More