Marketing and Globalization - Essay Example

Ethical Issues Associated with Marketing Practices, Marketing and Globalization May 5, 2008 I. Introduction A. Ethics Marketing, like any other discipline, must be governed by regulations dictated by ethics. For it to be recognized as truly effective, it still needs to agree to certain standards and norms dictated by society. This is why Marketing practices are being analyzed and criticized. The study of marketing is not complete without an analysis of the ethical issues surrounding this discipline. As quoted in Wikipedia, “Marketing Ethics is the area of applied ethics that deals with the moral principles behind the regulations and operations of Marketing” (Marketing Ethics 2008). There are several frameworks for analysis for Marketing. One framework tackles issues on the basis of the values that they infringe, another analyzes ethical concerns on the basis of who it affects, while the last one categorizes the terms used by marketing professionals. Each framework categorically analyzes the social responsibility of Marketing to be bound by ethics in its pursuit of its objectives. While it is often argued that Marketing is always evil, being one-sided and aims only at product promotion and sales, in reality, it is not often the case. Marketing, in its quest to gather a huge amount of profits from the various strategies involved, basically aims to bring to the consumers the benefits of a particular product or service. In the process, it establishes two types of relationship between message sender/ producer to message receiver/ consumer. It could either be cooperative, in which both benefits from the communication process, or adversarial in which a power struggle is developed between the two parties (Marketing Ethics 2008). Among other ethical issues concerning Marketing, there are three primary negative results being argued as consequences of the marketing process. First is the fact that the producer always ends up influencing the choices of the consumers to the point of manipulating values so it can sell its products. Second is the idea that the consumer’s right to decide for himself is violated because marketing damages personal autonomy. Lastly, in a producer’s effort to get the largest possible market share, it consequently damages competitors through fierce rivalry. Various Codes of Ethics are recognized in the process of analyzing Marketing. All of which aim at being vigilant in ensuring that Marketing efforts are being implemented without violating ethical rules. B. Globalization Globalization refers to the process of increasing integration between units around the world. It is term that encompasses a broad area, which includes economics, trade, social, technological, cultural and political aspects. Through this process, producers and manufacturers are allowed to trade goods in various parts of the world. However, since each culture is unique and marketing strategies need to adapt to the distinctiveness of each culture despite its common goal which is to generate sales, there are certain universal guidelines that marketing practitioners need to adhere to. These guidelines have something to do with marketing ethics and there are regulations that each country implements to ensure that foreign marketing practices would not, in any way, infringe local rules and cultures. II. Discussion Nokia is one of the leading handset manufacturers today. At the time and age of advanced mobile communications, Nokia competes fairly well in the worldwide market against other companies such as Motorola, Sony Ericsson, Samsung, among others. It ranks first in many countries and has a great market share in first world countries such as the United States and the United Kingdom. Nokia is a Finnish company that had a head start in the market. In the 1960s and 1970s, there were two major areas in which telecommunications technology was advancing: digitalization and wireless. Nokia’s fledging telecommunications business was an early entrant and successful innovator in both. In 1969, Nokia was the first company to introduce digital transmission equipment that conformed to international standards (Nokia: Integrating Risk Into Corporate Strategy. 2008). Fast forward four decades later, the world is enjoying continuous innovation as far as mobile telecommunications is concerned. The market has become a playground for top handset manufacturers competing for the largest share while offering the most advanced technologies that man could ever think of. Enter 3G technology, video calls and other technological advances. Alongside these technologies are manufacturers that create phones to suit the market needs. And this is where Nokia comes in. Nokia one of the first mobile manufacturers to realize the importance of the design element in mobile phones and its phones were more aesthetically designed than those of competitors. In 1998, Nokia overtook Motorola to become the largest mobile manufacturer in the world (Entry and Competitive Dynamics in the Mobile Telecommunications Market. 2008). Nokia was the first mobile phone manufacturer to realize in the late 1990s that phones no longer played only a functional role; they were also becoming fashion symbols. Until Nokia began emphasizing the design aspect, mobile phones were bulky, bricklike devices with an external antenna and a standard keypad. Manufacturers emphasized functionality over aesthetic appeal. Nokia also gave fair emphasis on design and was known for handsets that are very user friendly. Nokia has remained to be the world’s leading handset manufacturer over the years, with a 35% market share in 2006 (Quarterly and annual information 2006). The brand has continued to dominate the global market with its effective marketing strategies and strategic brand positioning, endearing almost each and every Nokia handset model to the market. Nokia has become influential in such a way that it continues to create trends in the market. It manages to cater to the needs of the fast-changing times, with its hippest designs and innovative features. Its wide array of handset models gives consumers the liberty to choose which among the cellular phone units suit their needs best. With the introduction of smart phones in the market, Nokia continues to take the lead, taking about 56.4% share of the 70.9 million units shipped in Europe in 2006. Nokia sold 40 million smart phones in 2006, reaffirming the fact that the success of the brand remains unscathed (Nokia leading phone market 2007). In fact, it has taken the brand to another level by making its phones highly competitive with the introduction of the Nokia N Series, a collection of smart phones that cater mainly to consumers who have requirements for a full-featured mobile phone with personal computer-like functionalities. These smart phones offer complete phone functionalities while alternately serving as personal data assistants. This “elite” group of high-end phones has created a stir in the market that the units instantly grew in popularity within a few months after being launched early 2005. The launch of the Nokia N series in 2005 created such a huge impact that sales of these products increased significantly since its launch. As of 2006, Nokia is recognized to be the worlds’ leader in smart phones sales, contributing to 42% market share (Smart phone sales are soaring 2006). This just goes to prove that Nokia has maintained its good relationship with the market as it has continuously managed to cater to the consumers’ needs despite the existence of other Personal Data Assistant (PDA) brands such as Palm and OS, and the emergence of new ones. Nokia aims to remain the leading handset manufacturer in the wireless technology business through the introduction of new, innovative products that evolves together with the ever-changing technology. Further, it believes that their edge over competitors is their human approach to technology. The brand gives to its consumers a chance to stay connected using the current technology. It transforms its products to maximize opportunities for people to communicate with each other and perform other tasks while being mobile. The mobile business continues to thrive as technology advances. People will always have a need to communicate through calls and texts. The need that this technology has created will continue to live through. And as this technology advances, handset manufacturers would continue to compete for the largest market share. Now that global connectivity is possible through cellular phones, people will clamor for more innovations. After the launch of the camera and walkman phones, the 3G phones and smart phones, and Personal Data Assistants, consumers will look forward to what other new things they can do with their mobile units. Nokia’s global success can be attributed mainly to its strong and tactical marketing efforts, focused advertising strategies and global approach to marketing its products and services. Its being a leader in the technology is a product of a genius way of penetrating the market. III. Ethical Issues and Globalization Nokia’s advertising campaigns focuses on “human technology”, appealing to the emotions of the market. It attaches certain human attributes to each phone model, endearing the phones to the market in the process. It makes use of a universal tagline “connecting people”. While it mainly features Caucasian people in its advertising campaigns, in never fails to feature other races as well, particularly in areas where culture is diverse and where people have different skin color. Nokia is mainly known to have direct-to-the point advertisements, highlighting the phone features and creating sub titles to its models for easier identification. Each product line caters to different market segments. While it is true that Nokia makes use less of Television Campaigns and more of below-the-line advertisements, it still managed to uphold its image in the market. Nokia produces TV advertisements that focus on the brand and not exactly on the phone models. Along the way, it creates advertisement on the products itself, but only after being able to establish brand strength in the market. A Nokia phone can probably sell by itself regardless of its features. As an icing on the cake, the well-blended ads on the handset models propels the brand into the market’s consciousness. Its global invasion seems effortless so to speak Having been a dominant player in the world market since the 1990s, Nokia launched its first global advertisement in 2004 with the slogan “1001 reasons to have a Nokia Imaging Phone’, which had print broadcast and websites across Europe, Asia, US and Africa. Zooming into different cultures and catering to local flavors, Nokia employed actors from different regions with the ads reflecting the look of the local population (Going Global 2008). Nokias key strategic element has been concentrating on those telecom areas that have the highest growth potential. Furthermore, unlike many firms, Nokia has largely gone global alone, with only one acquisition, choosing to boost speed, flexibility and focus. In the process of going global, Nokia also ensures that through their product lines, consumers would continuously purchase their models year by year, looking forward to innovations in the handset features. Through this tactic, Nokia owners are glued to the developments as their needs also evolve with the handset offers that Nokia brings. This is brand loyalty at work as consumers yearn for higher versions of their present handsets, following closely the development of each model being released by Nokia as years go by. Utilizing this strategy, Nokia ensures that it does not only influence its market’s preferences, but ultimately dictate what is fit for them. In this aspect, there may be ethical concerns raised given that Nokia advertisements appeal to emotion as it emphasizes both on design and functionality. As previously mentioned, producers tend to violate ethical standards by virtue of being too pushy and over-zealous on its products. Furthermore, it could be that Nokia has not really tackled cultural diversities despite going local on its campaigns. Even if they produced localized advertisements, Nokia remained “western” in its communication plan, depicting mainly the busy lives in the first world countries, not taking into consideration other scenarios at the local level. While the globe is indeed becoming a smaller place, marketers have to bear in mind national, local and cultural sensitivities. Very often, in the hope of tapping a larger consumer base, marketers jump headlong in new markets without keeping in mind ethnic and social issues typical to certain areas. Another strategy that Nokia employed in its effort to go global is through pricing. To penetrate international markets, Nokia offered its handsets a fraction lower than its standard pricing in the US and in Europe, hoping to get a large share of the market. Latest Nokia phones can be purchased at a much lower price in Africa, the Middle East, India and China. In the 2006 article featured in Telephony Online, margins from Nokia’s three handset divisions fell from 33% to 29% year over year, showing Nokia is recovering of its production costs. As a result, Nokia was able to dominate the global market, with market share rising to 36% in third quarter with most of its business coming from third world and developing countries with emerging markets. In these areas, handset prices are rapidly falling as penetration grows (Cheaper by the Globalization. 2008). Analyzing the ethical concerns regarding this strategy, Nokia may be seen to have employed predatory pricing while penetrating local markets – a tactic that may be unethical as it directly affected sales of competitors. In this case, however, Nokia competed with its very own pricing scheme in other areas, being forced to pull lower their gross margins at the areas they are targeting to penetrate. This resulted to lower profits but at the end of the day, they were still able to hit their objective, which is to dominate the market. Nokia’s main strategy as it goes global is through the internet. To reach the target market, Nokia has established a unique website per region which features the new and available phone model to choose from. Internet marketing is probably among the most popular marketing channel being criticized and regulated due to it wide audience reach. Now, with the new wireless web mail from cell phones and other communication devices, the Internet will be affecting more lives than ever before. Security and privacy concerns along with e-business regulatory issues will become more prevalent. Yet although the brand relies heavily on internet marketing as a tool, Nokia has been very careful not to violate any rule despite having access to a diverse crowd in the Internet. IV. Conclusion It is inevitable for a company who wishes to go global to raise ethical issues in its pursuit of its marketing objectives. After all, various strategies need to be employed to be able capture the target market and consequently sell. However, there are certain rules that marketing needs to adhere to in its quest to promote and sell its products. Nokia, despite its popularity in the United States and the US, undertook remarkable efforts to be able to penetrate other potential markets. At the time when mobile technology is still being introduced, it already established market presence in first world countries and competed with other equally popular brands such as Motorola, Samsung among others. But recognizing its potential in other markets, Nokia did not hesitate to implement changes and adapt to the call of globalization. Albeit difficult, it had to fit well into the various cultures that it aim to penetrate – cultures that are entirely different from western culture and have their own unique sociological make up. Among the top challenges that Nokia had to face was how to penetrate the target market. It had to address cultural and economic barriers, adapting into local trends. To address these, Nokia had to review its product positioning and pricing to blend into the local situation. While the Nokia brand can already sell by its own so to speak, the company recognizes the importance to utilize advertising channels and implement targeted communication plans to be able to convey to the target market its desired perception. It also had to regulate its pricing to the point of reducing its production and operational costs, resulting to having lower profits in the process. While it may seem to be a bad idea, Nokia was able to achieve its objective by being number 1 in most countries and establishing unbelievable customer loyalty in the process. Nokia’s market position remains to be on top and while advertising and marketing will remain to be dynamic and ever changing, the prevailing ethics concerning this discipline will always be an old-age rule to follow. References Cheaper by the Globalization. Retrieved May 5, 2008 from http://telephonyonline.com/mag/telecom_cheaper_globalization/ Entry and Competitive Dynamics in the Mobile Telecommunications Market. Retrieved May 5, 2008 from http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V77-4M3BC35-1&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=6321e19fc10c70196a8efbd0b8dd6c79 Going Global 2008. Retrieved May 5, 2008 from http://goingglobal.corante.com/archives/2004/10/01/nokia_going_global_with_ad_campaign.php Marketing Ethics 2008. Retrieved May 5, 2008 from http://en.wikipedia.org/wiki/Marketing_ethics Nokia: Integrating Risk Into Corporate Strategy. Retrieved May 5, 2008 from http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy3/BSTA038.htm Nokia leading phone market 2007. Retrieved May 5, 2008 from http://www.3g.co.uk/PR/March07/4469.htm Smart phones are selling 2006. Retrieved May 5, 2008 from http://news.com.com/Smart-phone+sales+are+soaring/2100-1041_3-6124049.html Quarterly and Annual Information 2006. Retrieved May 5, 2008 from http://www.nokia.com/A4132057 Read More