Consumer Behavior for Nokia Product - Essay Example

Consumer Behaviour: Nokia Introduction: suggestion of a new product at Nokia Nokia is the market leader in mobile telephone device manufacturing industry in the world. Its manufacturing and related service operations span the entire globe covering all continents. However diverse and complex the product range of Nokia might be, it hasn’t been able to launch a game console so far. Despite its mammoth product range in mobile telephones and connected paraphernalia including the new series of notebooks, the Company has not been able to identify the niche market capabilities that can be developed in response to an ever growing demand trend for more sophisticated gaming devices. Microsoft’s Xbox, Sony’s PlayStation Series and Nintendo’s GameCube games all have been around for a number of years though still these big market players have failed to identify sizeable niche market segments game consoles that exist to date in the industry. Nokia has both the resource capability and technology to enter this market segment with ease in design and planning (Gale Reference Team, 2008). For instance all three game console manufacturers mentioned above along with a sundry of other small and medium companies have been able to increase their market shares despite an ongoing global economic recession. Nokia’s existing resource and technology capabilities would need proper directional guidance from trained hands, especially the technical and managerial staff. Already the above three market leaders’ status has been challenged by many small and medium scale manufacturers whose ability to identify niche market segments in keeping with consumer demographics is said to be one of the reasons for their success (Development and Learning in Organizations, journal, 2003). For instance Nokia’s success in mobile telephone device manufacturing can be utilized to produce a game console that successfully incorporates some of its already tried and abandoned mobile game features (Gale Reference Team, 2007). So far game consoles haven’t been integrated with mobile telephony technology except at random inclusions carried out by Sony in its PlayStation Series. Consumer perceptions of and issues related to new game consoles Most of the current literature and discourse on game consoles are characterized by four basic classes of issues – technological issues, pricing issues, quality issues and safety issues. It’s thus an industry that is ever increasingly being marked by competition and reorientation. Against this backdrop of stiffer competition it’s essential to identify the various issue related outcomes in the industry thus focusing attention on the strategically significant variables that have an impact on a new product launching effort in particular and the whole gamut of services related to such a newcomer’s effort (Development and Learning in Organizations, journal, 2003). Technology related issues connected with the launching of a new game console by Nokia include the relative perception of the consumer as to what unique features that are not found in competitors’ products, have been embodied in the new product (Heinonen, Koivula, Jarenko & Otala, 1989). Nokia might as well claim that technology in its product is far more advanced and user-friendlier than the rivals’ consoles. Consumers of game consoles in North America and Europe have, particularly, been demanding the integration of highly advanced technological features in consoles so that the performance enhanced gaming environment would produce a more pleasant experience for the gamer. Seamless integration of new gaming features into the console is determined by the degree of flexibility of technology and the variability parameters of the design and planning process (www.nokia.com). Despite conflicting claims made by Sony, Nintendo and Microsoft about the performance enhancing features in their game consoles, the average consumer still feels that there is a considerable gap between those claims and the performance of consoles. For instance Sony’s Blu-ray has not been taken in so well by customers. In fact it would not be found in the PlayStation 4 device. Pricing issues involve not only the strict pricing strategy of the leading sellers of game consoles in the market but also the very economic implications arising from the price related outcomes. For instance the price cutting wars that the average consumer has been witnessing involve regulatory issues too (http://online.wsj.com). Such regulatory regimes as prevalent in North America and EU necessarily have a bearing on the organizational outcomes and goals. Consumers are influenced by pricing strategies of new game console sellers as much as they tend to compare prices of existing market leaders. The current developments in the pricing sphere of the industry show that Sony’s efforts at cutting prices on its PlayStation 2 and 3 have been matched by both Nintendo and Microsoft Nokia might be able to take advantage of these developments in the pricing sphere and push its new product into the market with a cost effective marketing proposition on inherent advantages that center on prices rather than any other characteristic (Asia Africa Intelligence Wire, 2002). The pricing strategy for Nokia on a probable new game console could be based on market penetration rather than market skimming. Thus Nokia will have to adopt a lower price irrespective of the cost and revenue outcomes. Consumers of game consoles in North America and Europe have been noticed to prefer low price high tech products that enable them not only to be totally involved in the game but also switch over to alternative more advanced products with much less ease. Quality issues that have affected consumers’ attitudes towards new game consoles being introduced by newcomers like Nokia have to be studied under the current consumer perception of quality as the ultimate proposition because newcomers into the market have been putting out consoles that very barley meet the industry standards at even the bottom level (Ahearn, 2002). While regulators have been careful enough to monitor the standards there is very little done by way of quality specifications. Quality of game consoles depends on a number of factors like the current industry standards, consumers’ perceptions of quality and manufacturers’ ability or inability to implement quality management procedures and processes in keeping with the current developments. Thus Nokia would have a fairer chance of success if it were to introduce a game console with greater focus on quality. Safety issues have become very important in the recent past (www.firingsquad.com). For instance Nintendo’s Wii comes with wireless applications that have an advantage over Xbox 360 and PlayStation 3 and is currently the market leader despite safety concerns expressed by parents from time to time. Wireless game consoles are much safer than those without such applications because a simple power search is enough to put the gamer at risk (Tele-Service News (Newsletter), 2001). Thus regulators and governments are highly concerned about safety features incorporated in to the console. Nokia’s new product ought to take these new trends in to consideration before actually designing and developing the product and its dimensions. Game console consumer blogs have been increasingly targeting safety issues involving the game consoles of the above three game console manufacturers in the recent years (Lillie, 2008). The most recent concern expressed by bloggers revolves around not only Xbox 360 but also PlayStation 3. Both Microsoft and Sony Corporation have received a lot of complaints about the reliability of their gadgets in extreme situations such as those associated with hard core gamers’ behaviors (Steinbock, 2001). Finally it is more than appropriate for Nokia to identify and address safety related concerns of game console consumers with specific focus on marketing outcomes because any marketing strategy ought to identify the existing vacuums left behind by first movers who might have concentrated more on market demographics and less on safety related issues. Discussions with target market consumers (a). The first consumer The first consumer’s response to Nokia’s probable foray in to the highly competitive game console market was characterized by both disbelief and faint hope. This consumer is a college undergraduate with a particularly strong penchant for risk-prone gaming (Ellis, 2004). For instance it is his desire to mimic the level of super duper intelligence displayed by characters in these games. In other words this consumer is technically inclined so that the gaming experience would enable him to master certain techniques to overcome day-to-day challenges in the lecture room. This consumer’s perception of Nokia’s new product is highly influenced by what a new comer like Nokia can do against the almost decided market monopoly of a three firm concentration ratio. Between Microsoft’s Xbox 360, Nintendo’s Wii and Sony’s PlayStation 3 almost 80% of the market share is taken (Chronis, 2001). Thus fighting for the remaining 20% is left for thousands of small firms. That is why this consumer was baffled by the Nokia’s decision to enter the game console market especially during a global economic recession. Being a college undergraduate in natural sciences he felt that technology mattered as much as the price because technology was the main factor behind the success of Microsoft’s Xbox in the initial stages. As for the price he felt since these three firms are dominating the game console market in the world, a price cutting exercise by a few newcomers would be an effective challenge to the threesome. (b). The second consumer This consumer was met at a down town shopping mall and is 16 years of age with very little experience in operating game consoles. Thus his worry was all about the user friendly technology that enabled gamers to interface with the characters without much trouble. He was articulate about Nokia’s probable entry in to the market but hesitated when he was asked if there was any reason to be jubilant about Nokia’s entry when some of the existing game console manufacturers are faced with virtual closure. Indeed this consumer felt that market forces, i.e. demand and supply have gone awry in the game console market probably because the technology advantage is not a permanent feature. In other words technology in the game console market is fluid. According to him Nokia has the best advantage in its current mobile phone marketing network. For example it is in a better position vis-à-vis its rivals in the game console market because the existing market network would help it to achieve both horizontal and vertical aggregation of synergies such as sales volumes and market penetration (Hay, Hay & Giannoulis, 2008). Though he had not been exposed to high density gaming environments, he felt that Nokia was right in its decision to launch its own gaming device. His argument was based on the Nokia’s mobile game technology. In fact it is not a secret that Nokia’s technology advantage in the game console manufacturing sphere is minimal though it might be able to make use of its network security solution technology to integrate some high advanced gaming features in to a new console. (c). The third consumer This consumer is a mature gamer with a casual approach to the new gaming devices that are coming in to the market on a daily basis without famous names. In other words he used to buy those not so popular gaming devices manufactured by less known names including the Chinese manufacturers. He is in his late 30’s and has a very liberal attitude to gaming. While his level of intelligence was sufficient testimony to his experience, he did not emphasize the need for technologically sophisticated game consoles because according to him technology was there to marvel at and not to make the experience quite varied. His assertion that Nokia would not be able to survive in a highly competitive gaming console market because any strategic move by Nokia to place a gaming device in a particular market segment can be as disastrous as venturing in to an uncharted territory of complex technology based game console manufacturing, is highly acceptable though he had failed to notice the fact that even the big three firms are right now struggling to maintain their sales. Technology factor has been highly emphasized by market watchers because it is technology that plays a pivotal role in the global game console market. He further pointed out that Nokia would have much less an opportunity by way of tax related benefits. (d). The fourth consumer This particular consumer was a teenage girl who regarded gaming devices as some technical pieces that kept her occupied while she did not have school work to do. Her attitude to game consoles marketed by the big three companies was marked by expectation. In other words she was anticipating a series of positive outcomes related to Microsoft’s and Sony’s research efforts to outsell Nintendo’s Wii in the global market. She was not so eager about Nokia’s entry in to the market but nevertheless was aware of the firm’s technological prowess to a certain extent. She felt that Nokia could develop a customer oriented strategic advantage against its big rivals if and only if it had thought of parents’ worries about the price and safety of these devices. She particularly identified the economic argument that gaming devices are becoming more and more expensive despite the entry of many new firms almost on a daily basis. She felt that Nokia would not commit the same mistake that many others before it committed, viz. launching the product in the intended market segments only to abandon a few months later because demand is highly down. Recommendations & Conclusions In the first instance Nokia ought to pay attention to the fact that unlike mobile gaming, game console market and industry are highly characterized by the presence of technology leaders rather than market or price leaders. As a result it is essential that it incorporates the existing technological features in to a new gaming device without delaying its decision further (Lindholm & Keinonen, 2003). In fact Nokia ought to enter the game console industry and the market with or without a big bang. However its current mobile phone manufacturing operations must be separated from this new effort. As for its network security applications and related services the company can effectively integrate them in to the new gaming device because they have the technical and digital environmental architecture necessary for the initial stages of operations. Above all Nokia needs the backup services for revolutionary applications including digital environmental architecture and application design and planning. Application design and planning in game console technology development processes require highly impervious security environmental applications. In the absence of flawless design and planning applications, the environmental architecture of the new device can be open to security breaches by rivals. Nokia must act sooner or later irrespective of the current economic downturn in the world. In the first instance such economic and financial crises are much less likely to bottom out in the short run. Already the American economy is showing the signs of recovery, though it is difficult to predict how long it will take for the global economy in general to be fully recovered (Merriden, 2001). After all economic recessions are not new phenomena and are more likely to last little longer than being predicted by economists. Nokia has to factor in the level of market concentration ratio of its rivals, especially that of Microsoft, Sony and Nintendo. The game console market is essentially influenced by governments’ economic policies such as fiscal, monetary, national minimum wage, structural and demand management. Big manufacturers have successfully been operating in the global market despite the recession. Above all their global strategies are determined by highly flexible inter-market operations (European Telecom, Newsletter, 2001). For example they apply selective market principles in each geographical region. The current level of competition in the global game console market is a sufficient indicator of the principle of “survival of the fittest”. In other words Nokia must recognize the existence of global competition as predominantly in favor of the big companies. Therefore its entry in to the game console market might be interpreted as a challenge by the rest, especially the big firms. It is desirable that Nokia undertake a thorough market research study in to the possibility of its entry with emphasis on existing niches, especially in low price medium technology game consoles. However it must be noted here that this market segment is already saturated by Japanese and Chinese small firms. According to independent analysts there is still enough market share left behind to be taken by serious new comers in the game console market. For example consumers of game consoles are influenced by not only their incomes and prices but also alternative forms of entertainment. While mobile telephony was experiencing a spurt of growth in the past, all that has come to a virtual stop now due to consumers’ changing demand patterns. Consumer perception of Nokia’s entry in to the highly competitive game console market is decidedly in favor of it (Nokia) because Nokia is in a position to seamlessly integrate its existing technologies in to a liberal operational environment where application architecture will carry much greater weight with the fence sitting consumer. Nokia’s current operations involving its mobile telephone business places it ahead of many other rivals in the game console market because market networks enable new comers to integrate easily in to the new device market while costs are still manageable. Therefore Nokia must launch a new gaming device with greater focus on identifying the weaknesses of existing manufacturers. While Microsoft, Nintendo and Sony, all three have considerable strengths arising from their ability to minimize research and development (R&D) expenditure, Nokia does not have the same technical advantage. However Nokia has developed a considerable strategic advantage over its rivals in being able to integrate its mobile telephone application related environmental architecture in to the highly sophisticated design and planning models. In other words Nokia can effectively carry out its operations within a very short period of time. Different price and income elasticities of demand for game consoles can be made use of by Nokia to launch its own device in highly competitive market segments in North America and Europe and then expand in to the rest of the world. This is probably the best product launching strategy that Nokia can adopt with much less anticipated trouble. Right now Microsoft and Sony are battling it out against Nintendo’s market dominance for its Wii. REFERENCES 01. Ahearn, L 2002, 3D Game Art f/x and Design, Para glyph Press, Arizona. 02. 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Steinbock, D 2001, The Nokia Revolution: The Story of an Extraordinary Company That Transformed an Industry ,Dan Steinbock (Author) › Visit Amazons Dan Steinbock Page Find all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central AMACOM, New York. Read More