Key Market Segments for Nokia Lumia and Size of Market - Essay Example

?Report on the marketing of Nokia Lumia Smartphones Introduction - Nokia Lumia Nokia introduced its first smartphone, Nokia Lumia 700 and 800 in the year 2011 with the objective of reclaiming its declining market share (Cellan-Jones, 2011). In the past years, Nokia had faced tough competition from the Android based and Windows based smartphones and hence made the decision to expand in the smartphone market. Initially, the sale of Nokia smartphones reached 20 million in the year 2011-2012, but during the year 2012 it sold only 4.3 million (Garside, 2013). However, the due to the better quality of the smartphones produced, the overall price ranges has escalated too resulting in an ultimate profit for the company. In fact, Nokia Smartphones have pushed the company out of losses and set it on a path of reclamation and growth (Garside, 2013). 2. Key Market Segments for Nokia Lumia and Size of Market  2.1 Customer Segments Targeted Nokia smartphones are now available for many different customer segments as shown below: Lumia 920 and Lumia 820 These phones are based on the Windows 8 platform, are 4G enabled, and target customers who can purchase higher end products and who desire latest technology and a large variety of apps (Aulakh, 2013). Lumia 720 and Lumia 520 These smartphones target the price sensitive customer segment. These are priced at low and mid-range and provide almost similar hardware as its sophisticated higher end sets. However, the services provided are lesser. The concept behind these phones is to target customers who cannot afford high end phones but who still need cell phones for net connectivity and functional utility (Spence, 2013). Nokia Lumia 700 and 800 These are the low range of smartphones that were initially launched to create interest and awareness among the new customers (Spence, 2013). It can therefore be observed that Nokia Smartphones cover nearly all the customer segments with the variety of products that they have in the market. 2.2 Market Size and Growth The market for the smartphones is in the stage of rapid growth as can be seen from the growth statistics for the last year. In the second quarter of the year 2012, the mobile market grew at the rate of 1% with 406.0 million units of mobiles being shipped during the quarter (IDC Press Release, 2012). However, the smartphones market grew at a much higher rate of 42.1% in 2012 with 153.9 million units being shipped worldwide (IDC Press Release, 2012). The main competitors in the smartphone market are Samsung and Apple. These two players have captured diverse market segments ranging from low priced to high priced. Samsung focuses on a diverse strategy where it introduces smartphones for a variety of customer segments so that it covers all sections of the market. On the other hand, Apple targets only the high end customer segment with sophisticated and highly priced smartphones. Smartphones growth markets largely consist of the European countries as well as emerging economies of Asia and Latin America. There is a continuous rise in the demand of smartphones in countries like India and China which provide a huge market due to their large populations. However, in spite of the large growth and expected progression of the smartphone market, Nokia has fallen behind the two main competitors – Samsung and Apple. The reason is largely attributed to the introduction of the Microsoft Windows Phone 8 that prevented existing uses of Nokia Lumia to upgrade to the new operating system (Garside, 2013). This restriction led to a decline in the sales of the Nokia Lumia though it is expected that the upgradation will eventually happen for the existing users. Like Samsung, Nokia also follows the strategy of penetrating diverse customer segments and has developed smartphones of varying prices and sophistication. The following graph shows the BCG matrix for smartphone market and the market position of Nokia: Figure 1: BCG Matrix for Smartphone Market and Market Position of Nokia Lumia 3. Future Trends in Smart Phone Market  3.1 Technology and Innovation It is expected that technology and innovation will continue to play a crucial role in the smartphone market. The smartphone displays will be further improved, including the expanded use of the AMOLED technology that is already used by Samsung and in Nokia Lumia 920 handsets. Next, it is expected that the smartphones will be powered by more efficient processors like the ARM processor used by Windows 8. In addition, smartphones are expected to become smarter by imbibing the use of multi-sensor technology like biometrics, environmental sensors and pressure sensors. In addition, it is expected that the user interface will upgrade to gesture recognition and retina recognition (Venkat et al, 2012). 3.2 Market Growth It is expected that the smartphone market will grow by 43% by the year 2015. There is expected to be a continued increase in demand for mobile based video and audio content, which is considered to be the driving force behind the sale of smartphones and tablets. The 4G services and devices will continue to drive the growth of smartphone market. 3.3 Customer Segments The smartphones are traditionally used by professionals to support their work and to connect with the offices from anywhere anytime. The changing trend for smartphone is for video and audio streaming, largely for entertainment purpose. In addition, there is expected to be a substantial growth in the cloud based computing and corresponding mobile apps that allow the users to use a variety of services from diverse vendors using their smartphones. This trend is expected to make smartphones attractive to everybody from professionals and those who are looking for entertainment to those who are searching for information or content or who want to expand their creative businesses (Thiyagarajan, 2011). 3.4 New Markets It is also expected that smartphones will continue to foray into newer markets as more countries enter economic development phases. Currently the focus is on the emerging economies in Asia, but Latin American countries like Brazil too are expected to become substantial markets. As the purchasing power of the middle classes in the emerging economies increases, it can be expected that the demand for mid to high end smartphones will also increase. 4. SWOT Analysis for Nokia Lumia  4.1 Strengths Nokia hardware is its forte and it expects to provide more reliable and sturdy handsets for its smartphones (Cellan-Jones, 2011). In addition to the hardware excellence, Nokia smartphones also come with a range of services that can distinguish it from its competitors. For example, Nokia Lumia allows streaming of sports through ESPN and it also provides the service of music streaming through Nokia Music (Cellan-Jones, 2011). 4.2 Weaknesses Nokia uses Windows OS in spite of the fact that Android is considered to be a more sturdy and reliable system. In addition, it is also a fact that Microsoft has had little experience in the phone sector, which makes the partnership vulnerable to any problems that Microsoft may face in it OS. 4.3 Opportunities The developing countries in Asia, especially India and China provide an extensive market for a range of Nokia phones. It’s almost smart phones (the Asha Phones) provide net connectivity at a very low cost, and are expected to provide the Internet access to the next billion customers in the coming future. It can therefore be expected that Nokia’s smartphones will too receive the same welcome in India and China as did its other products. 4.4 Threats The smartphone market is already crowded with a variety of phones based on android, Apple and Blackberry. Its Windows phone is therefore at a threat of being compared with a diverse set of competitors who have the capabilities of innovation and market penetration (Cellan-Jones, 2011). The European and the American market seems to prefer Samsung and Apple phones over Nokia owing to their better service support and distribution networks (Aulakh, 2013). 5. Advertising Plan for Nokia Lumia 920 5.1 Advertising Objective: To expand the market share of Nokia Lumia 920 in the emerging economy, India 5.2 Advertising Strategy: The strategy includes developing a media campaign for creating awareness and generating sales of Nokia Lumia in India. However, the product requires to be positioned as an ‘exclusive’ and ‘high end’ smartphone. The target audience is affluent, upper middle class, professionals with high disposable incomes. 5.3 Media Selection: TV, Print and Billboards are to be selected. 5.3.1 TV TV spots on prime time television are to be chosen so that maximum exposure of the new product can be made. 5.3.2 Print – Newspapers; Magazines Newspaper front page ads are to be used to generate exposure and awareness about the product features and appearance. High end magazines, like business magazines or interior designing/lifestyle magazines are to carry full page ads that extol the features and the appearance of the phone. 5.3.3 Billboards Billboards located at red lights and next to malls are to be targeted. 5.4 Advertisements 5.4.1 TV The ad should emphasise the technical features of the product and show how it can be used for both professional and entertainment purpose. It should also show how everyone and anyone can make his or her life easy by purchasing Nokia Lumia 920. The theme could be how intelligent (and affluent) people opt for Nokia Lumia 920 and simplify their lives – be it professional or social life. 5.4.2 Print Newspaper ads need to carry full description of the features, technical details and applications and services that the phone provides. These ads can be comparative in nature and can show competitors’ products’ description Vis a Vis Nokia Lumia. Magazine ads need to give details and information, but these can further include celebrity endorsements. 5.4.3 Billboards The billboards need to focus on the appearance and emphasize one unique feature of the smartphone. For example, the advertisements can highlight the 4.5-inch and 1,280-by-768 display of the phone and also highlight the slender appearance. Or they can highlight the variety of apps that a user can access using the phone. In addition to the above, the all the advertisements need to display the price of he product. This is essential to exhibit the exclusivity of the product. References Aulakh, G. (2013, January 11). Nokia takes a dig at competition at Lumia 920 launch. The Economic Times Retrieved from: http://articles.economictimes.indiatimes.com/2013-01-11/news/36279846_1_lumia-vipul-mehrotra-nokia-india Cellan-Jones, R. (2011, October 26). Nokia's first Windows Phone 7 handset: Is it enough?. BBCNews. Retrieved from: http://www.bbc.co.uk/news/technology-15460569 Garside, J. (2013, January 24). Nokia bounces back to profit on smartphone demand. The Guardian. Retrieved from: http://www.guardian.co.uk/technology/2013/jan/24/nokia-returns-to-profit-smartphones IDC Press Release (2012, July 26). Strong Demand for Smartphones in Second Quarter Continues to Drive the Worldwide Mobile Phone Market. IDC. Retrieved from: http://www.idc.com/getdoc.jsp?containerId=prUS23624612 Spence, E. (2013, February 25)Nokia Expand Windows Phone To Mid And Low Range Price Points With Lumia 520 and 720. Forbes. Retrieved from: http://www.forbes.com/sites/ewanspence/2013/02/25/nokia-expand-windows-phone-to-mid-and-low-range-price-points-with-lumia-520-and-720/ Thiyagarajan, A. (2011, November 11)The Future of Mobility – Six Trends to Look for in 2012. Retrieved from: http://www.wirelessweek.com/articles/2011/11/future-mobility-%E2%80%93-six-trends-look-2012 Venkat, A., Cakmak, U., Lee, R. and Varanasi, S. (2012). Making Smartphones Brilliant: Ten Trends. NY: Telecommunications Media and Technology Practice, Mckinsey and Company Inc. Read More