Marketing Strategy Report for Nokia Corporation - Case Study Example

Marketing strategy report- Nokia By Student’s name Code+ course name Professor’s name University name City, State Date Executive Summary Nokia Corporation is a multinational mobile communication company that was incorporated by Fredrik Idestam in 1865. It has invested in areas of both wireless telecommunications and wire line. After its inception in 1865, Nokia has grown over time to become a leader in mobile phone technology. The company celebrates over one hundred and fifty years of innovation and presently manufactures an array of mobile phone devices besides offering other numerous services including navigation, television, music, imaging, business mobility among others. All over the world, Nokia is celebrated as the largest mobile device producer with a global market share of forty per cent for converged devices and about thirty nine per cent for mobile devices. Basically, Nokia’s overall objective is to produce digital products with exceptional technology, performance, features, value and quality for their consumers. This report focuses on marketing strategies and contemporary marketing tools used by Nokia not only in defending its existing market share, but also in exploring new markets across the globe. As mentioned earlier, other than concentrating on the key product line, mobile phone devices, Nokia also produces other products such as mobile computers and networks. This report gives an in-depth analysis of Nokia and critically evaluates the contemporary marketing tools employed to enhance promotion of its product brands. TABLE OF CONTENTS Executive Summary 2 Introduction 5 SWOT Analysis 6 Strengths 6 Scale of operations 7 Acquisitions 7 High product quality and a wide range of product line 8 Extensive market share 8 Wider geographical reach 8 Weaknesses 9 Weaknesses entail the business features that pose a disadvantage to the firm. The following are some of the business aspects that pose a disadvantage to Nokia; 9 Loss of market share 9 Ineffective research and development investments 9 Opportunities 10 Smartphone market 10 Evolution of LTE platform 11 Feature phones 11 Threats 12 Threats refer to the external factors that hinder a firm form achieving its objectives. Threat has the effect of hindering the firm’s growth and profitability. With regards to Nokia, the following are the main threats that prevent it from achieving its set goals; 12 Stiff competition 12 Decline in margins 12 Global recession 13 Environmental Analysis 13 Political factors 13 Economic Factors 14 Social factors 14 Technological factors 14 Environmental factors 14 Legal factors 15 Situational Analysis 15 Differential advantage/ Competitive edge 15 Segmentation, Targeting & Positioning (STP) 16 Market targeting 16 Market positioning 17 Marketing objectives and goals (SMART) 17 Marketing strategies and programs (7P’s) 18 Place 18 Promotion 18 Price 18 Product 19 People 19 Processes 19 Physical evidence 19 Conclusion 20 References 21 Introduction Nokia is widely known as a successful mobile phone manufacturer all over the world. Notably, the company has been a leader in mobile phone telecommunications due to its vast experience in mobile telephony, innovations and its robustness in scientific marketing strategies. According to institutional theory of marketing, the actions of the organization and the resultant outcomes are heavily influenced by the rules, knowledge systems and beliefs that reflect what the organization advocate. Nokia has been pursuing its concept of; “technology connecting people” which has positively impacted on many consumers (Nokia Corporation, 2009). According to Viardot (2004), Nokia’s mission is to connect people everywhere, every time and every day by use of friendly and modern mobile phone devices. Nonetheless, Nokia’s marketing strategy aims at being strategic in order to help the corporation maintain a competitive edge. However, due to market saturation, Nokia continues to target other markets. In this vein, Nokia is launching different products that match the needs of their consumers. Notably, Nokia’s products are technologically advanced and user friendly compared to others offered by their competitors. Therefore, continued investment in both product and market research enables Nokia to produce customer-oriented products that are crucial in achieving overall company’s profitability. SWOT Analysis SWOT analysis is a strategic planning method which evaluates the strengths, threats weaknesses and opportunities faced by a company. The main aim of carrying out a SWOT analysis is to determine the manner in which an organization can deal with the dynamic nature of businesses. Strengths The strengths involve the characteristics of an organization that provides it with an advantage as compared to the other firms in the entire industry. The strengths thus entail something that a firm is good at doing and that which provides the firm with a chance to compete with other firms in the industry. The following are the greatest strengths for Nokia; Scale of operations Nokia’s global presence and market share enable it to conduct large scale operations. After losing part of its market share to the competitors such as Apple and Samsung, the company still remains the third largest mobile phone handset manufacturer. According to Royer (2005), Nokia enjoyed 39% market share in the sale of mobile phone handsets by the year 2010. The company, however, commands a global presence with investments in Africa, Europe, Middle East and the greater pacific. Notably, its geographical spread enables it to effectively serve the entire larger market. Compared to its competitors, Nokia enjoys the largest distribution network which is well supported by online advertising and retailing. Joshi (2007) asserts that Nokia enjoys larger customer care and has a widespread distribution network especially in China, Africa, and India. According to Niccolai (2007), Nokia has a considerable bargaining muscle which is facilitated by its cost efficiency advantage. Nonetheless, the company should utilize its widespread network to gain greater exposure to a large customer base. Acquisitions In recent times, Nokia has been engaging in several acquisitions. For instance, in the year 2010, the company acquired stakes in Meta Carta, which was intended to boost its expertise and geographical intelligence. Another notable acquisition is Novarra which was intended to boost its mobile service platform and browser in order to enhance the delivery of superior mobile internet services. In the year 2010, Nokia signed an agreement with Motorola that led to the acquisition of a significant stake. In this vein, the company plans to enhance its network capabilities in wireless technologies including CDMA and Wi MAX that would in turn enable it to gain an edge over its competitors. In addition, Nokia looks forward to strengthening its relationship with the largest service providers globally. Nokia is also known to have acquired Motally whose mobile phone analysis on customer desires in terms of mobile phone features enables both publishers and developers to enhance the development of mobile phone applications. To gain industry mileage and enhance its products, Nokia should focus on inorganic growth through strategic acquisitions. Through these steps, the company will strengthen its market share not only in their present markets, but also in new potential geographical markets. High product quality and a wide range of product line Nokia remains committed to offering quality products and services to its customers. In addition, the company offers its products at reasonable prices. Moreover, compared to its competitors, Nokia offers a wide range of product line and in every year, it is committed to continue extending its product line. Extensive market share Compared to its competitors, Nokia has a large market share in the mobile phone handset sector. Therefore, the company should capitalize on its image to also gain success in the service provision market. However, to match the stiff competition, Nokia should invest and focus on research and development that could help in designing better network coverage for both its cell phones and SIM cards. Wider geographical reach Unlike other competitors, Nokia boasts of its wider network. Its presence in the global market is felt everywhere, and therefore, should utilize such wider network coverage to reach many customers. Weaknesses Weaknesses entail the business features that pose a disadvantage to the firm. The following are some of the business aspects that pose a disadvantage to Nokia; Loss of market share Regrettably, Nokia is rapidly losing its market share following erosion of its price competitiveness and lackluster in product portfolio (Kotler & Armstrong, 2004). Notably, Symbian operating system commonly used in Nokia’s mobile handsets is outdated and has been negatively impacting on its product sales. According to industry estimates, Nokia mobile phone handset market share dropped to 24.5% in the second quarter of year 2011 from the high of 34.7% in the year 2010. Other factors such as dwindling inventory collection, unexciting touchscreen phone portfolio, limited presence in the United States market and wavering demand for the Symbian operating system platform continues to negatively affect the Nokia brand of mobile phones. Disappointingly, Nokia used to be the leader in mobile phone device manufacture, but has of late conceded to its main competitors who continue to launch most technologically advanced devices. However, the dwindling market share has resulted to revenue decline. Ineffective research and development investments It is disappointing to note that Nokia has over time made ineffective investments. For instance, in the year 2010, the company resolved to invest 13.8% of its revenue on research and development compared to the previous year budget of 14.4%. Apple, one of the key competitors invested a mere 2.7% in 2010 and 3.1% in 2009. This massive investment in research and development and the failure to command a significant market share indicate a failure on the part of Nokia. Further, it shows that Apple was more focused on its research and development principally in the IOS operating system which is more advanced when compared to Symbian OS. Regrettably, Nokia pursued many strategies at the same time including launching Meego operating system which was poised to replace the former, but never appeal to customers. Opportunities Opportunities relates to chances that enable a firm to perform exceedingly well and achieve its objectives. These chances are crucial as far as the firm’s growth and profitability are concerned. The following are the main opportunities of Nokia; Smartphone market Nokia believes that the evolution of the Smartphone and their rapid growth will considerably drive their revenues. According to industry estimates, the Smartphone market grew by 49.2% in 2011. Further, Smartphone market is widely expected to triple by the year 2015. To brace for the expected growth, Nokia continues to launch a series of Smartphone brands in conjunction with Microsoft. Luckily, Microsoft accepted to commit billions of dollars on both advertising and development which will help Nokia effectively penetrate the global market. Following the failure of both Symbian and Meego operating system, Nokia is currently working in partnership with Microsoft which is providing its expertise in developing operating systems that are more appealing to customers. For instance, after development of Windows 7, Nokia market share for Smartphones rose to 20.9% and is expected to second Android by the year 2015. Nonetheless, the robust market for Nokia’s Smartphone will continue to drive the company revenues. Evolution of LTE platform The evolution of LTE has contributed to a positive demand for 4G internet infrastructure. Basically, LTE technology is quite popular as it enhances data efficiency compared to the current 3G networks. Based on the industry estimates, the global population using the LTE technology is significantly rising. Consequently, this mobile platform is not new to many users as it is currently used by other large telecommunication firms such as TeliaSonera of Sweden and Deutsche Telekom of Germany (Nokia Corporation, 2011). Therefore, Nokia should consider investing in LTE technology as it continues to acquire more technology savvy companies in order to boost its technology and achieve sustainable top-line growth. Feature phones Feature phone production continues to be relevant in the lower end markets. Therefore, as the company recognizes the need of availing more services to its customers, it should also continue with the manufacture of low end mobile phones with the capacity to access the internet as well as accessing maps and other applications. According to industry estimates, unlike Smartphones, feature phones continue to represent a significant number of mobile phone shipments. Nonetheless, feature phones demand continues to increase due to demand emanating from emerging markets, which are yet to catch up on internet speeds and mobile internet connectivity. Threats Threats refer to the external factors that hinder a firm form achieving its objectives. Threat has the effect of hindering the firm’s growth and profitability. With regards to Nokia, the following are the main threats that prevent it from achieving its set goals; Stiff competition It is unquestionable that, in the mobile phone production market, there has been stiff competition. In this vein, the price competition is poised to intensify as some of the manufacturers such as Apple flood the market with low cost Android phones. According to (Nokia Corporation, 2009), cheap mobile phone handsets from India Micromax and China’s ZTE are increasingly offering stiff competition to Nokia products in emerging markets. Moreover, handset manufacturers from Asia are using Google’s free Android software that is popular with many customers across the global market. Similarly, further research has indicated that Nokia is even losing market share it previously enjoyed in the lower end markets as competitors continues to release cheaper Smartphones. Notably other companies such as Huawei and ZTE which were earlier focusing on network equipment business are currently also diversifying into the mobile device production market. More so, these companies are quite familiar with customers’ needs, and therefore, easier for them to penetrate the market easily. Decline in margins As prices and revenues of mobile phone handsets continues to decline, the profits are similarly dwindling. For instance, Nokia reported a decline in profits from $ 9.3 billion in 2009 to $ 8.8 billion in 2010 (Nokia Corporation, 2009). This decline was attributed to general price pressures and increased material cost. Nonetheless, as other mobile phone device makers brace for declining prices, Nokia will not be an exception. Notably, the wireless mobile phone device industry is heavily influenced by technological changes, frequent product introductions, changing industry standards, and therefore, Nokia’s operational performance will be determined by its ability to keep pace with modern technological developments and competitiveness of their prices. According to Nokia Corporation (2008), developing new technology is quite a complex process, and thus, Nokia’s business will be at great risk if it fails to predict and keep pace with consumer preferences and emerging technological patterns. In addition, if competitors meet the industry demands at the expense of Nokia, then the demand for Nokia’s products will also be heavily affected. Global recession Following the effects of economic recession, the amount of disposable income held by customers’ however, dips forcing them to scale down their budgets and hence remaining with less money to spend on items such as mobile phones. Environmental Analysis Environmental analysis deals with the scanning of the business environment through collecting, analyzing and implementing information to come up with a more viable marketing plan. The tools used to scan the environment are referred to as the PESTEL factors. Political factors It comprises among others government regulations and rules within which a business operates. In this regard, Nokia is a multinational company operating in different markets, and therefore, should familiarize with the rules and regulations governing different markets. This will ensure that the company meets the set standards and provide customers with better products and services. Economic Factors Economic factors influence the buyers’ purchasing power and also affect the company’s cost of capital. For instance, Nokia should know that, during the economic recession periods, most customers opt for service plans with cheaper rates (Nokia Corporation, 2009). In addition, the company should consider introducing SIM-cards that have cheaper call rates, better coverage, internet connectivity and additional services that will be more appealing to customers. Social factors Social factors concerns customer profile including occupation, demographics, culture among others. In this regard, Nokia should consider penetrating different markets by offering service plans according to customer service usage. Moreover, the company should segment the market according to population, region and so on. Technological factors With intense competition witnessed from serious competitors, Nokia should be focused on research and development. This is because, the more technologically advanced a company is, and the easier it will be to capture a significant market. Therefore, Nokia which is widely known to provide strong network coverage should also invest more in technology and other areas such as internet connectivity. Environmental factors The environment is what surrounds us. With the advent of corporate social responsibility, people are nowadays evaluating different companies based on how they are socially responsive. In this regard, it is evident that Nokia has embraced social responsibilities, which have been witnessed in areas such as sponsorship of bright students particularly those in Engineering field (Nokia Corporation, 2003). In addition, we have also witnessed sponsorship of technological seminars, which have also been instrumental in tapping the greatest brains in the field of technology. Legal factors As a company operating in different markets, Nokia should familiarize with laws governing different markets. In this regard, the company will be able to survive in different global markets. Situational Analysis Nokia, as a leading producer of mobile phone devices, carries out large scale operations that are cost efficient in terms of both production and bargaining capacity. In this vein, the competitors exert stiff competition, and this has considerably affected Nokia’s market share and revenue streams. Differential advantage/ Competitive edge Nokia Corporation competence is highly attributable to the experience and knowledge in wireless, network and cellular service industry. Notably, Nokia has been awarded both international and national awards as a result of its superior products and services. Nonetheless, technological enhancements and the introduction of new products forms part of the company’s product leadership. Nokia has also participated in crafting new global standards for future telecommunication needs. Nevertheless, such participation in the development of future technologies has enabled Nokia to produce excellent products that meet the present demands (Lamb, Hair & McDaniel 2008). It is evident that the design of Nokia portable mobile phone handsets is highly characterized by people’s lifestyle, opportunities of choice, freedom, urbanization and technology. Basically, their product design meets technical industry standards and consumer demands. Notably, Nokia was the first mobile phone manufacturer to adopt new ways of thinking into marketing operations. This lead to the production of superior brands that later on gained control of the majority of their consumer segments. Segmentation, Targeting & Positioning (STP) For every company, market segmentation, targeting the potential customers and product positioning helps in moving the company products. Market segmentation refers to dividing the market based on different platforms such as demographic and psychographics. Nokia divides its market based on customer service usage or product purchase. However, in line with the current industry trends, Nokia should consider availing packages such as a faster internet connection for business professionals and cheaper call rates for college students. Market targeting A target market is a group of customers that a company targets through its marketing strategies in order to effectively sell its services and products. In this case after market segmentation, Nokia should target its potential clients based on the service needs. For instance in upcoming markets, Nokia should produce and sell low cost modern handsets that are easily affordable. Similarly, in urban areas, the company should produce stylish modern handsets that meet the demands of both the youthful and other urban customers (Jorstad, Dustdar & Van Do, 2007). Nokia has been placing adverts in both print and electronic media and is also focusing on business people who require cellular phones with modern features that meet their day to day business needs. Market positioning Market positioning refers to positioning the company’s products in such a way to make them easily differentiable by customers. Nokia has positioned its SIM-cards and mobile phone handsets in terms of cheaper call rates, network coverage and good customer service. This has proved to hold their customers by making them emotionally connect with both their products and services. Nonetheless, Nokia product positioning and customer targeting has been good. This is due to a mix of promotional strategies that attract a wide group of viewers while at the same time reaching specific groups. Marketing objectives and goals (SMART) Marketing objectives are defined as those goals that a company pursue to meet its wider business objectives. The most common marketing objectives that every company wishes to achieve includes; to differentiate its products from those of competition, increase its market share, develop a strong brand value and the introduction of new superior products in the market. Nonetheless, Nokia has been striving to satisfy their customers by producing mobile devices that meet their customers’ day to day needs, enhancing customers’ perception mainly by keeping pace with new technologies and lastly engaging in corporate social responsibilities which has proven to be a barometer of rating organization's performance. All these aspects have helped the company maintain a positive margin streams despite the effects of global economic crisis and stiff competition. Marketing strategies and programs (7P’s) Marketing strategies refers to a group of elements which include; place, product, price, promotion, people, physical evidence and processes. Place In marketing, place refers to the geographical area in which the product in question is available. Nokia SIM cards and handsets are available in both urban and rural settings. However, the company should intensify its rural presence in order to increase product availability as the rural setting still remains unexploited by competitors. Notably, the company has utilized customer care centers, dealers and retailers for its product distribution across the markets. Promotion The promotion includes all marketing activities that a company engages in to market the product. As a means of promotion, Nokia carries out advertisements and hoarding for its various brands of mobile phones. Commonly, Nokia uses celebrities to convey messages about their new brands. However, to target the youthful generation that nowadays forms the highest percentage of mobile phone purchasers, the company should consider erecting canopies outside colleges and other conspicuous places. Price Basically, price refers to the amount that customers are willing to pay for the given product. However, product price is largely determined by a couple of factors including competitor pricing, market share and the growth rate. In this regard, Nokia has maintained its prices down with the intention of penetrating the mobile phone devices market. In addition, the company is planning to offer service plans to its clients, which is also expected to increase mobile handset sales (Nokia Corporation, 2010). For instance, the company can come up with a plan for corporate and youngsters and more so keep on reviewing their prices in order to maintain a sustainable competitive advantage. Product Product refers to the tangible item sold by a company in order to get a market share. Nonetheless, to obtain a market share, a company needs to differentiate its products from those of competitors by enhancing innovativeness, and eliminating products that are not performing well. To enhance its customer base and market share, Nokia is diversifying into Mobile Phone handsets and also differentiating their products from those of competitors. People People refer to company employees, management and customers. However, it is very important for every person involved in product manufacture to ensure that the brand reputation persists. Processes Processes refer to the methods followed in production of goods in question. Therefore, it is essential to ensure that production processes results to quality products. Physical evidence Physical evidence refers to customer experience in using a product. For instance, the company needs to produce pamphlets, brochures that would help the customer familiarize with what the company is offering. Conclusion In sum, Nokia remains a brand that is hard for many competitors to topple. This is because of its robust marketing strategies that guarantee profitability. Unlike other mobile phone manufacturers, Nokia lives and follows its mission of connecting people by offering super functioning products with a wide range of features. Nonetheless, according to many, product prices and desirability remains the main persuasion component. Nokia is using its image as a leading mobile phone manufacturer to diversify into the mobile device sale market. Basically, Nokia has over time built loyalty among its mobile phone users, and therefore, can use this strength to attract customers to purchase its devices. Further, by enhancing its research and development, Nokia can also offer numerous services to its customers, which will help in differentiating their products and services from those of competitors. The rural market still remains largely untapped, and by putting more emphasis, Nokia can satisfy many clients whose needs have not been fully met by other service providers. Undeniably, offering customized service plans such as an unlimited internet package, SMS package, and free hello tune and so on can enhance ties with existing service providers such as Vodafone, Airtel and Aircel which can also help to expand its market share. More importantly, the company can also offer better deals for its handset, which will drive sales hence expanding its customer base. This will significantly help in developing customer loyalty. Notably, to keep pace with the increased competition leveled by competitors, Nokia has resulted to mass marketing where it is implementing different promotional strategies including hoarding, advertisements, sponsoring events and erecting canopies in different locations among many others. Not to forget, Nokia is also enhancing its distribution strategy to ensure that their product reaches a wider range. Notably, the company is also utilizing their “connecting people” tagline to give their promotion activities more meaning. Therefore, Nokia diversification from the handset market to SIM cards has also been instrumental in increasing its revenues and market share. This has also helped in expanding its customer base. References Jorstad, I., Dustdar, S. & Van Do, T. 2007. An analysis of current mobile services and enabling technologies. International Journal of Ad Hoc and Ubiquitous Computing, 1(1/2): 92-102. Joshi, F. 2007. In The Top Spot. Strategy Magazine. Kotler, P. & Armstrong, G. 2004. Principles of Marketing, 10th edition. Cambridge: Pearson Press. Lamb, C. W., Hair, J. R. & McDaniel, C. 2008. Essentials of Marketing, 6th edn. London: Cengage Learning. Niccolai, J. 2007. Nokia Lays Plan for More Internet Services. New York Times. Nokia Corporation. 2009. Interim Report. Retrieved on 3 March 2010, from .    Nokia Corporation. 2008. Nokia in Brief, retrieved on 3 March 2010, from .   Nokia Corporation. 2009. Nokia – My Nokia, retrieved on 3 March 2010, from . Nokia Corporation. 2003. 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