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832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 144
Marketing Strategy for Nokia
For this project I have been instructed to come up with a marketing
strategy for an existing companyproduct I have chosen to do Nokia
communications particularly the mobile phone sector of Nokiasbusiness To do this properly I will need to
Appropriately identify collect and use primary and secondary data
that is relevant to the marketing strategy of Nokia
Produce a clear analysis of the external influences affecting the
development of a marketing strategy
Complete a realistic rationale for the development of a coherent
marketing mix for Nokia communications
Show a full understanding of a marketing strategy for Nokia with a
clear understanding of marketing principles
Produce a full well-balanced marketing strategy that reflects
appropriate use of marketing models and tools
Introducing the product-----------------------
Nokia is a communications based company which focuses on mobile
telephone technology When mobile phones first became available on the
market the models were very basic with the best technology being SMS
messaging (sending written text messages from one phone to another)
Then the next advance in technology was being able to put different
faces on your phone (different style covers for the front and back of
your mobile device) and after that the technological advances have
come thick and fast with advances such as
MMS
WAP (internet)
Polyphonic ringtones
Predictive SMS (where the phone will finish off a word for you if
it can guess what you are typing)
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Camera phones and
Video recorders
Competition in the market
-------------------------
With all this technology available in the communications market it is
obvious that Nokia will have lots of competition they include
Sony Ericsson
Samsung
Motorola
Siemens
Panasonic
NEG
Sagem and
Toplux
With all of these competitors in the market Nokia must keep ahead of
the game by running successful marketing strategies to do this Nokia
must focus on the principles of marketing At the moment Nokia are the
worlds best selling phone company (see table below which shows market
share) Nokia strengthened its lead as the No 1 vendor in the market
during 2000 with shipments growing 66 percent over 1999 Some of the
companys success was attributed to a strong second half in 2000 when
59 percent of sales occurred
1 Nokia 372 (347 1Q02)
2 Motorola 173 (155)
3 Samsung 98 (96)
4 Siemens 85 (88)
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5 Sony-Ericsson 52 (64)
Marketing principles====================
There are many priorities within a business but in a marketing
orientated company like Nokia many of the following principles will
be high on the agenda
1 Customer satisfaction Market research must be used to find out
whether customers expectations are being met by current products
or services
2 Customer perception this is based on the images consumers have
of the organization and its products this can be based on value
for money product quality fashion and product reliability
3 Customer needs and expectations This is anticipating future
trends and forecasting for future sales This is vital to any
organization if they wish to keep their entire current market
share and develop more
4 Generating income or profit This principle clearly states that
the need of the organization is to be profitable enough to
generate income for growth and to satisfy stakeholders in the
business Although satisfying the customer is a big part of a
companies plans they also need to take into account their own
needs such as
5 Making satisfactory progress Organizations need to make sure
that their product is developing along with the market if a
product is developing well then income should increase if not
then the marketing strategy should be revised
6 Be aware of the environment An organization should always know
what is happening within their designated market if it is
changing saturation technological advances slowing down or
rapidly growing being up to date on this is essential for
companies to survive
There are also certain external factors that a company should be veryaware of such as PEST factors (political environmental social
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and technological) and also SWOT (strength weakness opportunity
and threat) A business must take into account all these constraints
when designing and introducing a marketing strategy
PEST
Political factors- Legal constraints (such as the G3 technology
constraints that Nokia have to take into consideration) must be taken
into account because many businesses aim to make a profit so they may
be tempted to mislead their customers about prices quality of
products and the availability of their products They may also try to
cut expenditure by using lesser quality materials in their products
(such as weaker materials for Nokia cases and batteries) also some
companies may also dispose their waste in ways that damage the
environment (pollution) and not ensuring high standards of hygiene and
safety in the workplace and outlet stores all of these are illegal
and can leave companies in big legal trouble
The governmental bodies in the UK have introduced new laws into the
business environment which ensure that none of these procedures take
place if a company is to be successful they must follow all of these
laws
Environmental social and ethical factors- some businesses view profitsare more valuable then a strong ethical code and this can govern
behaviour and business conduct Some un-ethical practices are against
the law and companies can not become involved in them (I have
mentioned these above) but there are also some practices that arent
illegal by law but are considered highly un-ethical by the consuming
public companies who engage in these practices can lose a lot of
market share if they are found out An example of this is cosmetic
testing on animals it is legal but some of the consuming public are
not happy about it and boycott Certain products because of it
companies must be very careful about how they conduct themselves
Nokia have managed to be quite environmentally friendly and have not
done anything that the consuming public have taken huge offence to
they have been very careful about this and this is one of the reasons
they are such a popular brand of mobile phones
Technological- In the communications market technology is perhaps the
most important factor that companies like Nokia have to take into
consideration They have to keep up to date with all the newesttechnological advances (like camera and motion capture phones) if they
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are going to capture the biggest market share and stay ahead of their
competitors (Sony and Seimens)
SWOT
SWOT analysis is also another way of deciding on a successful
marketing scheme we must look at strength weakness opportunity and
threat
Strength (internal factors)- Is looking at the companies current
market share and researching how recognised Nokia is amongst consumers
in the target market Nokia is currently one of the most popular
Mobile communications companies in the industry generating over
52000 sales in 1997 which was a 34 increase from 1996 Nokias net
sales for the October-December period in 1997 came to a total of FIM
15 857 million (FIM 12 669 million in 1996)
Weakness (internal factors)- This is basically looking at where the
product is failing or not doing as well as it should in the market
Nokias problems are that
1 They are currently aiming their products at a saturated market
segment
2 Their wage costs are forever rising
3 Higher import charges have now been put into place
4 There are some quite high supply chain costs that Nokia are
currently paying
Opportunity (external factors)- This is the area in which Nokia can
make more profit or gain more market share There are 2 ways in which
Nokia can currently do this
1 Improve the technology that they are using to make their phones and
use in their products for example camera phones and advanced picture
messaging would attract new consumers to purchase phones under the
Nokia brand name
2 Using innovation to re-invent their products change and develop
within the market to offer something none of the competitors have
Also the fact that phone call charges are being forced to fall shouldprove to be an opportunity for Nokia to sell to the people who
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previously may have not purchased a phone because of higher call
charges
Threat (external factors)- This is looking mainly at the competition
that are taking away Nokias current market share and also governmentlegislations (the total costs of 3G licensing in Europe is 110 billion
euros) that could hinder Nokias development as a company
For an existing product it is often useful to draw up an Ansoffs
matrix in order for Nokia to grow as a business we must look at
middot Market penetration
middot Market development
middot Product development and
middot Diversification
Market penetration- the aim of market penetration is to sell existing
products to an existing market to do this Nokia must do a few things
1 Change the pricing scheme (for example penetration or competitor
based)
2 Introduce discounting
3 Start up a different advertising campaign or consider changing an
existing one
Market development- To complete market development successfully Nokia
must look into the following
middot Researching and selling to a different market (in case of saturation
or poor market share)
middot Change times that television adverts are aired at and alter the
places in which print adverts are being displayed (this can help your
products appeal to a whole new market segmentation)
middot Lower current prices to help the products appeal to a wider range of
consumers
Product development- This area of the Ansoffs matrix involves keeping
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up to date with the latest technologies available in your chosen
market and using them to appeal to different people (for example WAP
phones are aimed at more professional people while Camera phones are
aimed at the youth market)
Diversification- This refers to developing technology that offers
consumers something new or different this is the most common way of
companies trying to gain greater market share and increase their
profits
Market research
A businesses success is based on whether they can give the customer
what they want and when they want it Market research involves the
collection collation and analysis of data relating to the consumption
and marketing of relevant goods and services
The purpose of market research is really to find out whether there is
a gap in the market for your product or service or whether you can
make customers want your product through persuasive adverting We
already know that there is a market for mobile phones but the current
market gap has become saturated (or if not saturated almost
saturated) so Nokia need to find a new market segment to aim their
products at In order to classify the wants and needs of the consumingpopulation companies need to gather information on the following
middot Consumer behaviour- How do customers react to advertising Whether
they are partial to prize give-aways or free gifts What are their
reactions to new and developed products
middot Buying patterns and sales trends- Organizations need to look at how
buying trends and patterns are affected by class gender religion and
region They also need to understand how buying patterns change over
time and what markets are expanding and are worth trying to enter and
obviously which markets are contracting and companies shouldnt aim to
enter into
middot Consumer preferences- What customers are looking for in a product
for example style colour technology amount of outlets customer
service and promotional styles
middot Activities of competitors in the market- Nokia need to examine how
their rivals are adapting their prices and products to meet theconsumers needs how well the rivals are selling and what marketing
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strategies they are using
Market research should supply the company with all the information
they require about consumers preferences whether they buy certain
products what design features are preferable and what kind of retailoutfits are most frequently used for purchasing certain products
Sources of marketing information
The information that companies collect through market research can be
in one of two forms either quantitative or qualitative data
1 Quantitative data refers to data presented in numerical form
usually figures for example Nokias operating profit in the 4th
quarter of 1997 was 830 million
2 Qualitative data is the information concerning the motives and
attitudes of consumers for example more people buy Nokia phones then
Sony phones because Nokia phones are more reliable
The two main sources of market research information are primary
research (where the company has gathered the information about the
markets themselves) and secondary research (when researchers use
information that has been discovered by other companies)
Methods of collecting primary data
middot Face to face survey
middot Open ended interview
middot Telephone survey
middot Postal surveys
middot Consumer panels
middot Observations
middot Experiments
Methods of collecting secondary data
Internal sources
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middot Existing reports
middot Distribution data
middot Shopkeepers opinions
middot Stock records
middot Sales records
middot Accounting records
External data
middot Government statistics
middot Specialist business organization for example Mintel or Neilsons
retail audit
middot Consumer databases
To help decide what market segment to aim at companies can also look
at the buying habits of customers In order to make decisions aboutthe type of products to make what advertising to use promotional
tactics pricing and packaging Nokia will need to know about the
following
1 The types of goods customers buy
2 How much they buy
3 How often they buy
There are also certain variables that can affect peoples buying
habits they include
1 Age
2 Gender
3 Area they live in
4 Religion
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5 Lifestyle
6 Taste
7 Fashion and preferences
Market segmentation
In order to plan their product Nokia must look at what area of the
market they want to aim the products at as the current youth market
is more or less saturated Nokia will have to research into a new
market I suggest the 55+ market as they will have lots of disposable
income and my research shows that most people aged 55+ do not
currently own a mobile device and could be persuaded to buy one by
certain promotions and a good advertising campaign also the drop in
call prices should attract a lot of people who may have previously
been hesitant due the high costs
Below is a table showing the population in terms of social grouping of
the UK in 1999
Socio-economic group
Of population
A-Upper class
28
B- Middle class
186
C1- Lower middle class
275
C2- Skilled working class
221
D- Working class
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176
E-Low income earners
114
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they arent the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities an important part of this research must be to track
sales in order to identify those products which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall
Changes in customer demand which continue in the same direction for
more then 2 years show a long-term trend or saturation is occurring
within the market This is definitely a bad market for businesses to
be in (the mobile phone market is in the first year of a continuing
trend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwards
trend
The marketing mix
-----------------
The marketing mix refers to the combination of elements within a
companies marketing strategy these are designed to give the customer
what they want and in the long term are designed to maximise profits
The marketing mix is based around the idea of the 4 Ps
Product-The product is the centre of the marketing mix and the other
three Ps are based around it Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
research)
Price-Is a key factor in the selling of a product and is usually theone that is open to the most change based on different pricing
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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Camera phones and
Video recorders
Competition in the market
-------------------------
With all this technology available in the communications market it is
obvious that Nokia will have lots of competition they include
Sony Ericsson
Samsung
Motorola
Siemens
Panasonic
NEG
Sagem and
Toplux
With all of these competitors in the market Nokia must keep ahead of
the game by running successful marketing strategies to do this Nokia
must focus on the principles of marketing At the moment Nokia are the
worlds best selling phone company (see table below which shows market
share) Nokia strengthened its lead as the No 1 vendor in the market
during 2000 with shipments growing 66 percent over 1999 Some of the
companys success was attributed to a strong second half in 2000 when
59 percent of sales occurred
1 Nokia 372 (347 1Q02)
2 Motorola 173 (155)
3 Samsung 98 (96)
4 Siemens 85 (88)
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5 Sony-Ericsson 52 (64)
Marketing principles====================
There are many priorities within a business but in a marketing
orientated company like Nokia many of the following principles will
be high on the agenda
1 Customer satisfaction Market research must be used to find out
whether customers expectations are being met by current products
or services
2 Customer perception this is based on the images consumers have
of the organization and its products this can be based on value
for money product quality fashion and product reliability
3 Customer needs and expectations This is anticipating future
trends and forecasting for future sales This is vital to any
organization if they wish to keep their entire current market
share and develop more
4 Generating income or profit This principle clearly states that
the need of the organization is to be profitable enough to
generate income for growth and to satisfy stakeholders in the
business Although satisfying the customer is a big part of a
companies plans they also need to take into account their own
needs such as
5 Making satisfactory progress Organizations need to make sure
that their product is developing along with the market if a
product is developing well then income should increase if not
then the marketing strategy should be revised
6 Be aware of the environment An organization should always know
what is happening within their designated market if it is
changing saturation technological advances slowing down or
rapidly growing being up to date on this is essential for
companies to survive
There are also certain external factors that a company should be veryaware of such as PEST factors (political environmental social
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and technological) and also SWOT (strength weakness opportunity
and threat) A business must take into account all these constraints
when designing and introducing a marketing strategy
PEST
Political factors- Legal constraints (such as the G3 technology
constraints that Nokia have to take into consideration) must be taken
into account because many businesses aim to make a profit so they may
be tempted to mislead their customers about prices quality of
products and the availability of their products They may also try to
cut expenditure by using lesser quality materials in their products
(such as weaker materials for Nokia cases and batteries) also some
companies may also dispose their waste in ways that damage the
environment (pollution) and not ensuring high standards of hygiene and
safety in the workplace and outlet stores all of these are illegal
and can leave companies in big legal trouble
The governmental bodies in the UK have introduced new laws into the
business environment which ensure that none of these procedures take
place if a company is to be successful they must follow all of these
laws
Environmental social and ethical factors- some businesses view profitsare more valuable then a strong ethical code and this can govern
behaviour and business conduct Some un-ethical practices are against
the law and companies can not become involved in them (I have
mentioned these above) but there are also some practices that arent
illegal by law but are considered highly un-ethical by the consuming
public companies who engage in these practices can lose a lot of
market share if they are found out An example of this is cosmetic
testing on animals it is legal but some of the consuming public are
not happy about it and boycott Certain products because of it
companies must be very careful about how they conduct themselves
Nokia have managed to be quite environmentally friendly and have not
done anything that the consuming public have taken huge offence to
they have been very careful about this and this is one of the reasons
they are such a popular brand of mobile phones
Technological- In the communications market technology is perhaps the
most important factor that companies like Nokia have to take into
consideration They have to keep up to date with all the newesttechnological advances (like camera and motion capture phones) if they
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are going to capture the biggest market share and stay ahead of their
competitors (Sony and Seimens)
SWOT
SWOT analysis is also another way of deciding on a successful
marketing scheme we must look at strength weakness opportunity and
threat
Strength (internal factors)- Is looking at the companies current
market share and researching how recognised Nokia is amongst consumers
in the target market Nokia is currently one of the most popular
Mobile communications companies in the industry generating over
52000 sales in 1997 which was a 34 increase from 1996 Nokias net
sales for the October-December period in 1997 came to a total of FIM
15 857 million (FIM 12 669 million in 1996)
Weakness (internal factors)- This is basically looking at where the
product is failing or not doing as well as it should in the market
Nokias problems are that
1 They are currently aiming their products at a saturated market
segment
2 Their wage costs are forever rising
3 Higher import charges have now been put into place
4 There are some quite high supply chain costs that Nokia are
currently paying
Opportunity (external factors)- This is the area in which Nokia can
make more profit or gain more market share There are 2 ways in which
Nokia can currently do this
1 Improve the technology that they are using to make their phones and
use in their products for example camera phones and advanced picture
messaging would attract new consumers to purchase phones under the
Nokia brand name
2 Using innovation to re-invent their products change and develop
within the market to offer something none of the competitors have
Also the fact that phone call charges are being forced to fall shouldprove to be an opportunity for Nokia to sell to the people who
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previously may have not purchased a phone because of higher call
charges
Threat (external factors)- This is looking mainly at the competition
that are taking away Nokias current market share and also governmentlegislations (the total costs of 3G licensing in Europe is 110 billion
euros) that could hinder Nokias development as a company
For an existing product it is often useful to draw up an Ansoffs
matrix in order for Nokia to grow as a business we must look at
middot Market penetration
middot Market development
middot Product development and
middot Diversification
Market penetration- the aim of market penetration is to sell existing
products to an existing market to do this Nokia must do a few things
1 Change the pricing scheme (for example penetration or competitor
based)
2 Introduce discounting
3 Start up a different advertising campaign or consider changing an
existing one
Market development- To complete market development successfully Nokia
must look into the following
middot Researching and selling to a different market (in case of saturation
or poor market share)
middot Change times that television adverts are aired at and alter the
places in which print adverts are being displayed (this can help your
products appeal to a whole new market segmentation)
middot Lower current prices to help the products appeal to a wider range of
consumers
Product development- This area of the Ansoffs matrix involves keeping
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up to date with the latest technologies available in your chosen
market and using them to appeal to different people (for example WAP
phones are aimed at more professional people while Camera phones are
aimed at the youth market)
Diversification- This refers to developing technology that offers
consumers something new or different this is the most common way of
companies trying to gain greater market share and increase their
profits
Market research
A businesses success is based on whether they can give the customer
what they want and when they want it Market research involves the
collection collation and analysis of data relating to the consumption
and marketing of relevant goods and services
The purpose of market research is really to find out whether there is
a gap in the market for your product or service or whether you can
make customers want your product through persuasive adverting We
already know that there is a market for mobile phones but the current
market gap has become saturated (or if not saturated almost
saturated) so Nokia need to find a new market segment to aim their
products at In order to classify the wants and needs of the consumingpopulation companies need to gather information on the following
middot Consumer behaviour- How do customers react to advertising Whether
they are partial to prize give-aways or free gifts What are their
reactions to new and developed products
middot Buying patterns and sales trends- Organizations need to look at how
buying trends and patterns are affected by class gender religion and
region They also need to understand how buying patterns change over
time and what markets are expanding and are worth trying to enter and
obviously which markets are contracting and companies shouldnt aim to
enter into
middot Consumer preferences- What customers are looking for in a product
for example style colour technology amount of outlets customer
service and promotional styles
middot Activities of competitors in the market- Nokia need to examine how
their rivals are adapting their prices and products to meet theconsumers needs how well the rivals are selling and what marketing
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strategies they are using
Market research should supply the company with all the information
they require about consumers preferences whether they buy certain
products what design features are preferable and what kind of retailoutfits are most frequently used for purchasing certain products
Sources of marketing information
The information that companies collect through market research can be
in one of two forms either quantitative or qualitative data
1 Quantitative data refers to data presented in numerical form
usually figures for example Nokias operating profit in the 4th
quarter of 1997 was 830 million
2 Qualitative data is the information concerning the motives and
attitudes of consumers for example more people buy Nokia phones then
Sony phones because Nokia phones are more reliable
The two main sources of market research information are primary
research (where the company has gathered the information about the
markets themselves) and secondary research (when researchers use
information that has been discovered by other companies)
Methods of collecting primary data
middot Face to face survey
middot Open ended interview
middot Telephone survey
middot Postal surveys
middot Consumer panels
middot Observations
middot Experiments
Methods of collecting secondary data
Internal sources
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middot Existing reports
middot Distribution data
middot Shopkeepers opinions
middot Stock records
middot Sales records
middot Accounting records
External data
middot Government statistics
middot Specialist business organization for example Mintel or Neilsons
retail audit
middot Consumer databases
To help decide what market segment to aim at companies can also look
at the buying habits of customers In order to make decisions aboutthe type of products to make what advertising to use promotional
tactics pricing and packaging Nokia will need to know about the
following
1 The types of goods customers buy
2 How much they buy
3 How often they buy
There are also certain variables that can affect peoples buying
habits they include
1 Age
2 Gender
3 Area they live in
4 Religion
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5 Lifestyle
6 Taste
7 Fashion and preferences
Market segmentation
In order to plan their product Nokia must look at what area of the
market they want to aim the products at as the current youth market
is more or less saturated Nokia will have to research into a new
market I suggest the 55+ market as they will have lots of disposable
income and my research shows that most people aged 55+ do not
currently own a mobile device and could be persuaded to buy one by
certain promotions and a good advertising campaign also the drop in
call prices should attract a lot of people who may have previously
been hesitant due the high costs
Below is a table showing the population in terms of social grouping of
the UK in 1999
Socio-economic group
Of population
A-Upper class
28
B- Middle class
186
C1- Lower middle class
275
C2- Skilled working class
221
D- Working class
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176
E-Low income earners
114
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they arent the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities an important part of this research must be to track
sales in order to identify those products which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall
Changes in customer demand which continue in the same direction for
more then 2 years show a long-term trend or saturation is occurring
within the market This is definitely a bad market for businesses to
be in (the mobile phone market is in the first year of a continuing
trend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwards
trend
The marketing mix
-----------------
The marketing mix refers to the combination of elements within a
companies marketing strategy these are designed to give the customer
what they want and in the long term are designed to maximise profits
The marketing mix is based around the idea of the 4 Ps
Product-The product is the centre of the marketing mix and the other
three Ps are based around it Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
research)
Price-Is a key factor in the selling of a product and is usually theone that is open to the most change based on different pricing
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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5 Sony-Ericsson 52 (64)
Marketing principles====================
There are many priorities within a business but in a marketing
orientated company like Nokia many of the following principles will
be high on the agenda
1 Customer satisfaction Market research must be used to find out
whether customers expectations are being met by current products
or services
2 Customer perception this is based on the images consumers have
of the organization and its products this can be based on value
for money product quality fashion and product reliability
3 Customer needs and expectations This is anticipating future
trends and forecasting for future sales This is vital to any
organization if they wish to keep their entire current market
share and develop more
4 Generating income or profit This principle clearly states that
the need of the organization is to be profitable enough to
generate income for growth and to satisfy stakeholders in the
business Although satisfying the customer is a big part of a
companies plans they also need to take into account their own
needs such as
5 Making satisfactory progress Organizations need to make sure
that their product is developing along with the market if a
product is developing well then income should increase if not
then the marketing strategy should be revised
6 Be aware of the environment An organization should always know
what is happening within their designated market if it is
changing saturation technological advances slowing down or
rapidly growing being up to date on this is essential for
companies to survive
There are also certain external factors that a company should be veryaware of such as PEST factors (political environmental social
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and technological) and also SWOT (strength weakness opportunity
and threat) A business must take into account all these constraints
when designing and introducing a marketing strategy
PEST
Political factors- Legal constraints (such as the G3 technology
constraints that Nokia have to take into consideration) must be taken
into account because many businesses aim to make a profit so they may
be tempted to mislead their customers about prices quality of
products and the availability of their products They may also try to
cut expenditure by using lesser quality materials in their products
(such as weaker materials for Nokia cases and batteries) also some
companies may also dispose their waste in ways that damage the
environment (pollution) and not ensuring high standards of hygiene and
safety in the workplace and outlet stores all of these are illegal
and can leave companies in big legal trouble
The governmental bodies in the UK have introduced new laws into the
business environment which ensure that none of these procedures take
place if a company is to be successful they must follow all of these
laws
Environmental social and ethical factors- some businesses view profitsare more valuable then a strong ethical code and this can govern
behaviour and business conduct Some un-ethical practices are against
the law and companies can not become involved in them (I have
mentioned these above) but there are also some practices that arent
illegal by law but are considered highly un-ethical by the consuming
public companies who engage in these practices can lose a lot of
market share if they are found out An example of this is cosmetic
testing on animals it is legal but some of the consuming public are
not happy about it and boycott Certain products because of it
companies must be very careful about how they conduct themselves
Nokia have managed to be quite environmentally friendly and have not
done anything that the consuming public have taken huge offence to
they have been very careful about this and this is one of the reasons
they are such a popular brand of mobile phones
Technological- In the communications market technology is perhaps the
most important factor that companies like Nokia have to take into
consideration They have to keep up to date with all the newesttechnological advances (like camera and motion capture phones) if they
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are going to capture the biggest market share and stay ahead of their
competitors (Sony and Seimens)
SWOT
SWOT analysis is also another way of deciding on a successful
marketing scheme we must look at strength weakness opportunity and
threat
Strength (internal factors)- Is looking at the companies current
market share and researching how recognised Nokia is amongst consumers
in the target market Nokia is currently one of the most popular
Mobile communications companies in the industry generating over
52000 sales in 1997 which was a 34 increase from 1996 Nokias net
sales for the October-December period in 1997 came to a total of FIM
15 857 million (FIM 12 669 million in 1996)
Weakness (internal factors)- This is basically looking at where the
product is failing or not doing as well as it should in the market
Nokias problems are that
1 They are currently aiming their products at a saturated market
segment
2 Their wage costs are forever rising
3 Higher import charges have now been put into place
4 There are some quite high supply chain costs that Nokia are
currently paying
Opportunity (external factors)- This is the area in which Nokia can
make more profit or gain more market share There are 2 ways in which
Nokia can currently do this
1 Improve the technology that they are using to make their phones and
use in their products for example camera phones and advanced picture
messaging would attract new consumers to purchase phones under the
Nokia brand name
2 Using innovation to re-invent their products change and develop
within the market to offer something none of the competitors have
Also the fact that phone call charges are being forced to fall shouldprove to be an opportunity for Nokia to sell to the people who
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previously may have not purchased a phone because of higher call
charges
Threat (external factors)- This is looking mainly at the competition
that are taking away Nokias current market share and also governmentlegislations (the total costs of 3G licensing in Europe is 110 billion
euros) that could hinder Nokias development as a company
For an existing product it is often useful to draw up an Ansoffs
matrix in order for Nokia to grow as a business we must look at
middot Market penetration
middot Market development
middot Product development and
middot Diversification
Market penetration- the aim of market penetration is to sell existing
products to an existing market to do this Nokia must do a few things
1 Change the pricing scheme (for example penetration or competitor
based)
2 Introduce discounting
3 Start up a different advertising campaign or consider changing an
existing one
Market development- To complete market development successfully Nokia
must look into the following
middot Researching and selling to a different market (in case of saturation
or poor market share)
middot Change times that television adverts are aired at and alter the
places in which print adverts are being displayed (this can help your
products appeal to a whole new market segmentation)
middot Lower current prices to help the products appeal to a wider range of
consumers
Product development- This area of the Ansoffs matrix involves keeping
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up to date with the latest technologies available in your chosen
market and using them to appeal to different people (for example WAP
phones are aimed at more professional people while Camera phones are
aimed at the youth market)
Diversification- This refers to developing technology that offers
consumers something new or different this is the most common way of
companies trying to gain greater market share and increase their
profits
Market research
A businesses success is based on whether they can give the customer
what they want and when they want it Market research involves the
collection collation and analysis of data relating to the consumption
and marketing of relevant goods and services
The purpose of market research is really to find out whether there is
a gap in the market for your product or service or whether you can
make customers want your product through persuasive adverting We
already know that there is a market for mobile phones but the current
market gap has become saturated (or if not saturated almost
saturated) so Nokia need to find a new market segment to aim their
products at In order to classify the wants and needs of the consumingpopulation companies need to gather information on the following
middot Consumer behaviour- How do customers react to advertising Whether
they are partial to prize give-aways or free gifts What are their
reactions to new and developed products
middot Buying patterns and sales trends- Organizations need to look at how
buying trends and patterns are affected by class gender religion and
region They also need to understand how buying patterns change over
time and what markets are expanding and are worth trying to enter and
obviously which markets are contracting and companies shouldnt aim to
enter into
middot Consumer preferences- What customers are looking for in a product
for example style colour technology amount of outlets customer
service and promotional styles
middot Activities of competitors in the market- Nokia need to examine how
their rivals are adapting their prices and products to meet theconsumers needs how well the rivals are selling and what marketing
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strategies they are using
Market research should supply the company with all the information
they require about consumers preferences whether they buy certain
products what design features are preferable and what kind of retailoutfits are most frequently used for purchasing certain products
Sources of marketing information
The information that companies collect through market research can be
in one of two forms either quantitative or qualitative data
1 Quantitative data refers to data presented in numerical form
usually figures for example Nokias operating profit in the 4th
quarter of 1997 was 830 million
2 Qualitative data is the information concerning the motives and
attitudes of consumers for example more people buy Nokia phones then
Sony phones because Nokia phones are more reliable
The two main sources of market research information are primary
research (where the company has gathered the information about the
markets themselves) and secondary research (when researchers use
information that has been discovered by other companies)
Methods of collecting primary data
middot Face to face survey
middot Open ended interview
middot Telephone survey
middot Postal surveys
middot Consumer panels
middot Observations
middot Experiments
Methods of collecting secondary data
Internal sources
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middot Existing reports
middot Distribution data
middot Shopkeepers opinions
middot Stock records
middot Sales records
middot Accounting records
External data
middot Government statistics
middot Specialist business organization for example Mintel or Neilsons
retail audit
middot Consumer databases
To help decide what market segment to aim at companies can also look
at the buying habits of customers In order to make decisions aboutthe type of products to make what advertising to use promotional
tactics pricing and packaging Nokia will need to know about the
following
1 The types of goods customers buy
2 How much they buy
3 How often they buy
There are also certain variables that can affect peoples buying
habits they include
1 Age
2 Gender
3 Area they live in
4 Religion
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5 Lifestyle
6 Taste
7 Fashion and preferences
Market segmentation
In order to plan their product Nokia must look at what area of the
market they want to aim the products at as the current youth market
is more or less saturated Nokia will have to research into a new
market I suggest the 55+ market as they will have lots of disposable
income and my research shows that most people aged 55+ do not
currently own a mobile device and could be persuaded to buy one by
certain promotions and a good advertising campaign also the drop in
call prices should attract a lot of people who may have previously
been hesitant due the high costs
Below is a table showing the population in terms of social grouping of
the UK in 1999
Socio-economic group
Of population
A-Upper class
28
B- Middle class
186
C1- Lower middle class
275
C2- Skilled working class
221
D- Working class
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176
E-Low income earners
114
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they arent the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities an important part of this research must be to track
sales in order to identify those products which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall
Changes in customer demand which continue in the same direction for
more then 2 years show a long-term trend or saturation is occurring
within the market This is definitely a bad market for businesses to
be in (the mobile phone market is in the first year of a continuing
trend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwards
trend
The marketing mix
-----------------
The marketing mix refers to the combination of elements within a
companies marketing strategy these are designed to give the customer
what they want and in the long term are designed to maximise profits
The marketing mix is based around the idea of the 4 Ps
Product-The product is the centre of the marketing mix and the other
three Ps are based around it Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
research)
Price-Is a key factor in the selling of a product and is usually theone that is open to the most change based on different pricing
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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and technological) and also SWOT (strength weakness opportunity
and threat) A business must take into account all these constraints
when designing and introducing a marketing strategy
PEST
Political factors- Legal constraints (such as the G3 technology
constraints that Nokia have to take into consideration) must be taken
into account because many businesses aim to make a profit so they may
be tempted to mislead their customers about prices quality of
products and the availability of their products They may also try to
cut expenditure by using lesser quality materials in their products
(such as weaker materials for Nokia cases and batteries) also some
companies may also dispose their waste in ways that damage the
environment (pollution) and not ensuring high standards of hygiene and
safety in the workplace and outlet stores all of these are illegal
and can leave companies in big legal trouble
The governmental bodies in the UK have introduced new laws into the
business environment which ensure that none of these procedures take
place if a company is to be successful they must follow all of these
laws
Environmental social and ethical factors- some businesses view profitsare more valuable then a strong ethical code and this can govern
behaviour and business conduct Some un-ethical practices are against
the law and companies can not become involved in them (I have
mentioned these above) but there are also some practices that arent
illegal by law but are considered highly un-ethical by the consuming
public companies who engage in these practices can lose a lot of
market share if they are found out An example of this is cosmetic
testing on animals it is legal but some of the consuming public are
not happy about it and boycott Certain products because of it
companies must be very careful about how they conduct themselves
Nokia have managed to be quite environmentally friendly and have not
done anything that the consuming public have taken huge offence to
they have been very careful about this and this is one of the reasons
they are such a popular brand of mobile phones
Technological- In the communications market technology is perhaps the
most important factor that companies like Nokia have to take into
consideration They have to keep up to date with all the newesttechnological advances (like camera and motion capture phones) if they
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are going to capture the biggest market share and stay ahead of their
competitors (Sony and Seimens)
SWOT
SWOT analysis is also another way of deciding on a successful
marketing scheme we must look at strength weakness opportunity and
threat
Strength (internal factors)- Is looking at the companies current
market share and researching how recognised Nokia is amongst consumers
in the target market Nokia is currently one of the most popular
Mobile communications companies in the industry generating over
52000 sales in 1997 which was a 34 increase from 1996 Nokias net
sales for the October-December period in 1997 came to a total of FIM
15 857 million (FIM 12 669 million in 1996)
Weakness (internal factors)- This is basically looking at where the
product is failing or not doing as well as it should in the market
Nokias problems are that
1 They are currently aiming their products at a saturated market
segment
2 Their wage costs are forever rising
3 Higher import charges have now been put into place
4 There are some quite high supply chain costs that Nokia are
currently paying
Opportunity (external factors)- This is the area in which Nokia can
make more profit or gain more market share There are 2 ways in which
Nokia can currently do this
1 Improve the technology that they are using to make their phones and
use in their products for example camera phones and advanced picture
messaging would attract new consumers to purchase phones under the
Nokia brand name
2 Using innovation to re-invent their products change and develop
within the market to offer something none of the competitors have
Also the fact that phone call charges are being forced to fall shouldprove to be an opportunity for Nokia to sell to the people who
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previously may have not purchased a phone because of higher call
charges
Threat (external factors)- This is looking mainly at the competition
that are taking away Nokias current market share and also governmentlegislations (the total costs of 3G licensing in Europe is 110 billion
euros) that could hinder Nokias development as a company
For an existing product it is often useful to draw up an Ansoffs
matrix in order for Nokia to grow as a business we must look at
middot Market penetration
middot Market development
middot Product development and
middot Diversification
Market penetration- the aim of market penetration is to sell existing
products to an existing market to do this Nokia must do a few things
1 Change the pricing scheme (for example penetration or competitor
based)
2 Introduce discounting
3 Start up a different advertising campaign or consider changing an
existing one
Market development- To complete market development successfully Nokia
must look into the following
middot Researching and selling to a different market (in case of saturation
or poor market share)
middot Change times that television adverts are aired at and alter the
places in which print adverts are being displayed (this can help your
products appeal to a whole new market segmentation)
middot Lower current prices to help the products appeal to a wider range of
consumers
Product development- This area of the Ansoffs matrix involves keeping
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up to date with the latest technologies available in your chosen
market and using them to appeal to different people (for example WAP
phones are aimed at more professional people while Camera phones are
aimed at the youth market)
Diversification- This refers to developing technology that offers
consumers something new or different this is the most common way of
companies trying to gain greater market share and increase their
profits
Market research
A businesses success is based on whether they can give the customer
what they want and when they want it Market research involves the
collection collation and analysis of data relating to the consumption
and marketing of relevant goods and services
The purpose of market research is really to find out whether there is
a gap in the market for your product or service or whether you can
make customers want your product through persuasive adverting We
already know that there is a market for mobile phones but the current
market gap has become saturated (or if not saturated almost
saturated) so Nokia need to find a new market segment to aim their
products at In order to classify the wants and needs of the consumingpopulation companies need to gather information on the following
middot Consumer behaviour- How do customers react to advertising Whether
they are partial to prize give-aways or free gifts What are their
reactions to new and developed products
middot Buying patterns and sales trends- Organizations need to look at how
buying trends and patterns are affected by class gender religion and
region They also need to understand how buying patterns change over
time and what markets are expanding and are worth trying to enter and
obviously which markets are contracting and companies shouldnt aim to
enter into
middot Consumer preferences- What customers are looking for in a product
for example style colour technology amount of outlets customer
service and promotional styles
middot Activities of competitors in the market- Nokia need to examine how
their rivals are adapting their prices and products to meet theconsumers needs how well the rivals are selling and what marketing
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strategies they are using
Market research should supply the company with all the information
they require about consumers preferences whether they buy certain
products what design features are preferable and what kind of retailoutfits are most frequently used for purchasing certain products
Sources of marketing information
The information that companies collect through market research can be
in one of two forms either quantitative or qualitative data
1 Quantitative data refers to data presented in numerical form
usually figures for example Nokias operating profit in the 4th
quarter of 1997 was 830 million
2 Qualitative data is the information concerning the motives and
attitudes of consumers for example more people buy Nokia phones then
Sony phones because Nokia phones are more reliable
The two main sources of market research information are primary
research (where the company has gathered the information about the
markets themselves) and secondary research (when researchers use
information that has been discovered by other companies)
Methods of collecting primary data
middot Face to face survey
middot Open ended interview
middot Telephone survey
middot Postal surveys
middot Consumer panels
middot Observations
middot Experiments
Methods of collecting secondary data
Internal sources
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middot Existing reports
middot Distribution data
middot Shopkeepers opinions
middot Stock records
middot Sales records
middot Accounting records
External data
middot Government statistics
middot Specialist business organization for example Mintel or Neilsons
retail audit
middot Consumer databases
To help decide what market segment to aim at companies can also look
at the buying habits of customers In order to make decisions aboutthe type of products to make what advertising to use promotional
tactics pricing and packaging Nokia will need to know about the
following
1 The types of goods customers buy
2 How much they buy
3 How often they buy
There are also certain variables that can affect peoples buying
habits they include
1 Age
2 Gender
3 Area they live in
4 Religion
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5 Lifestyle
6 Taste
7 Fashion and preferences
Market segmentation
In order to plan their product Nokia must look at what area of the
market they want to aim the products at as the current youth market
is more or less saturated Nokia will have to research into a new
market I suggest the 55+ market as they will have lots of disposable
income and my research shows that most people aged 55+ do not
currently own a mobile device and could be persuaded to buy one by
certain promotions and a good advertising campaign also the drop in
call prices should attract a lot of people who may have previously
been hesitant due the high costs
Below is a table showing the population in terms of social grouping of
the UK in 1999
Socio-economic group
Of population
A-Upper class
28
B- Middle class
186
C1- Lower middle class
275
C2- Skilled working class
221
D- Working class
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176
E-Low income earners
114
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they arent the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities an important part of this research must be to track
sales in order to identify those products which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall
Changes in customer demand which continue in the same direction for
more then 2 years show a long-term trend or saturation is occurring
within the market This is definitely a bad market for businesses to
be in (the mobile phone market is in the first year of a continuing
trend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwards
trend
The marketing mix
-----------------
The marketing mix refers to the combination of elements within a
companies marketing strategy these are designed to give the customer
what they want and in the long term are designed to maximise profits
The marketing mix is based around the idea of the 4 Ps
Product-The product is the centre of the marketing mix and the other
three Ps are based around it Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
research)
Price-Is a key factor in the selling of a product and is usually theone that is open to the most change based on different pricing
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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are going to capture the biggest market share and stay ahead of their
competitors (Sony and Seimens)
SWOT
SWOT analysis is also another way of deciding on a successful
marketing scheme we must look at strength weakness opportunity and
threat
Strength (internal factors)- Is looking at the companies current
market share and researching how recognised Nokia is amongst consumers
in the target market Nokia is currently one of the most popular
Mobile communications companies in the industry generating over
52000 sales in 1997 which was a 34 increase from 1996 Nokias net
sales for the October-December period in 1997 came to a total of FIM
15 857 million (FIM 12 669 million in 1996)
Weakness (internal factors)- This is basically looking at where the
product is failing or not doing as well as it should in the market
Nokias problems are that
1 They are currently aiming their products at a saturated market
segment
2 Their wage costs are forever rising
3 Higher import charges have now been put into place
4 There are some quite high supply chain costs that Nokia are
currently paying
Opportunity (external factors)- This is the area in which Nokia can
make more profit or gain more market share There are 2 ways in which
Nokia can currently do this
1 Improve the technology that they are using to make their phones and
use in their products for example camera phones and advanced picture
messaging would attract new consumers to purchase phones under the
Nokia brand name
2 Using innovation to re-invent their products change and develop
within the market to offer something none of the competitors have
Also the fact that phone call charges are being forced to fall shouldprove to be an opportunity for Nokia to sell to the people who
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previously may have not purchased a phone because of higher call
charges
Threat (external factors)- This is looking mainly at the competition
that are taking away Nokias current market share and also governmentlegislations (the total costs of 3G licensing in Europe is 110 billion
euros) that could hinder Nokias development as a company
For an existing product it is often useful to draw up an Ansoffs
matrix in order for Nokia to grow as a business we must look at
middot Market penetration
middot Market development
middot Product development and
middot Diversification
Market penetration- the aim of market penetration is to sell existing
products to an existing market to do this Nokia must do a few things
1 Change the pricing scheme (for example penetration or competitor
based)
2 Introduce discounting
3 Start up a different advertising campaign or consider changing an
existing one
Market development- To complete market development successfully Nokia
must look into the following
middot Researching and selling to a different market (in case of saturation
or poor market share)
middot Change times that television adverts are aired at and alter the
places in which print adverts are being displayed (this can help your
products appeal to a whole new market segmentation)
middot Lower current prices to help the products appeal to a wider range of
consumers
Product development- This area of the Ansoffs matrix involves keeping
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up to date with the latest technologies available in your chosen
market and using them to appeal to different people (for example WAP
phones are aimed at more professional people while Camera phones are
aimed at the youth market)
Diversification- This refers to developing technology that offers
consumers something new or different this is the most common way of
companies trying to gain greater market share and increase their
profits
Market research
A businesses success is based on whether they can give the customer
what they want and when they want it Market research involves the
collection collation and analysis of data relating to the consumption
and marketing of relevant goods and services
The purpose of market research is really to find out whether there is
a gap in the market for your product or service or whether you can
make customers want your product through persuasive adverting We
already know that there is a market for mobile phones but the current
market gap has become saturated (or if not saturated almost
saturated) so Nokia need to find a new market segment to aim their
products at In order to classify the wants and needs of the consumingpopulation companies need to gather information on the following
middot Consumer behaviour- How do customers react to advertising Whether
they are partial to prize give-aways or free gifts What are their
reactions to new and developed products
middot Buying patterns and sales trends- Organizations need to look at how
buying trends and patterns are affected by class gender religion and
region They also need to understand how buying patterns change over
time and what markets are expanding and are worth trying to enter and
obviously which markets are contracting and companies shouldnt aim to
enter into
middot Consumer preferences- What customers are looking for in a product
for example style colour technology amount of outlets customer
service and promotional styles
middot Activities of competitors in the market- Nokia need to examine how
their rivals are adapting their prices and products to meet theconsumers needs how well the rivals are selling and what marketing
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strategies they are using
Market research should supply the company with all the information
they require about consumers preferences whether they buy certain
products what design features are preferable and what kind of retailoutfits are most frequently used for purchasing certain products
Sources of marketing information
The information that companies collect through market research can be
in one of two forms either quantitative or qualitative data
1 Quantitative data refers to data presented in numerical form
usually figures for example Nokias operating profit in the 4th
quarter of 1997 was 830 million
2 Qualitative data is the information concerning the motives and
attitudes of consumers for example more people buy Nokia phones then
Sony phones because Nokia phones are more reliable
The two main sources of market research information are primary
research (where the company has gathered the information about the
markets themselves) and secondary research (when researchers use
information that has been discovered by other companies)
Methods of collecting primary data
middot Face to face survey
middot Open ended interview
middot Telephone survey
middot Postal surveys
middot Consumer panels
middot Observations
middot Experiments
Methods of collecting secondary data
Internal sources
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middot Existing reports
middot Distribution data
middot Shopkeepers opinions
middot Stock records
middot Sales records
middot Accounting records
External data
middot Government statistics
middot Specialist business organization for example Mintel or Neilsons
retail audit
middot Consumer databases
To help decide what market segment to aim at companies can also look
at the buying habits of customers In order to make decisions aboutthe type of products to make what advertising to use promotional
tactics pricing and packaging Nokia will need to know about the
following
1 The types of goods customers buy
2 How much they buy
3 How often they buy
There are also certain variables that can affect peoples buying
habits they include
1 Age
2 Gender
3 Area they live in
4 Religion
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5 Lifestyle
6 Taste
7 Fashion and preferences
Market segmentation
In order to plan their product Nokia must look at what area of the
market they want to aim the products at as the current youth market
is more or less saturated Nokia will have to research into a new
market I suggest the 55+ market as they will have lots of disposable
income and my research shows that most people aged 55+ do not
currently own a mobile device and could be persuaded to buy one by
certain promotions and a good advertising campaign also the drop in
call prices should attract a lot of people who may have previously
been hesitant due the high costs
Below is a table showing the population in terms of social grouping of
the UK in 1999
Socio-economic group
Of population
A-Upper class
28
B- Middle class
186
C1- Lower middle class
275
C2- Skilled working class
221
D- Working class
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176
E-Low income earners
114
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they arent the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities an important part of this research must be to track
sales in order to identify those products which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall
Changes in customer demand which continue in the same direction for
more then 2 years show a long-term trend or saturation is occurring
within the market This is definitely a bad market for businesses to
be in (the mobile phone market is in the first year of a continuing
trend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwards
trend
The marketing mix
-----------------
The marketing mix refers to the combination of elements within a
companies marketing strategy these are designed to give the customer
what they want and in the long term are designed to maximise profits
The marketing mix is based around the idea of the 4 Ps
Product-The product is the centre of the marketing mix and the other
three Ps are based around it Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
research)
Price-Is a key factor in the selling of a product and is usually theone that is open to the most change based on different pricing
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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previously may have not purchased a phone because of higher call
charges
Threat (external factors)- This is looking mainly at the competition
that are taking away Nokias current market share and also governmentlegislations (the total costs of 3G licensing in Europe is 110 billion
euros) that could hinder Nokias development as a company
For an existing product it is often useful to draw up an Ansoffs
matrix in order for Nokia to grow as a business we must look at
middot Market penetration
middot Market development
middot Product development and
middot Diversification
Market penetration- the aim of market penetration is to sell existing
products to an existing market to do this Nokia must do a few things
1 Change the pricing scheme (for example penetration or competitor
based)
2 Introduce discounting
3 Start up a different advertising campaign or consider changing an
existing one
Market development- To complete market development successfully Nokia
must look into the following
middot Researching and selling to a different market (in case of saturation
or poor market share)
middot Change times that television adverts are aired at and alter the
places in which print adverts are being displayed (this can help your
products appeal to a whole new market segmentation)
middot Lower current prices to help the products appeal to a wider range of
consumers
Product development- This area of the Ansoffs matrix involves keeping
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up to date with the latest technologies available in your chosen
market and using them to appeal to different people (for example WAP
phones are aimed at more professional people while Camera phones are
aimed at the youth market)
Diversification- This refers to developing technology that offers
consumers something new or different this is the most common way of
companies trying to gain greater market share and increase their
profits
Market research
A businesses success is based on whether they can give the customer
what they want and when they want it Market research involves the
collection collation and analysis of data relating to the consumption
and marketing of relevant goods and services
The purpose of market research is really to find out whether there is
a gap in the market for your product or service or whether you can
make customers want your product through persuasive adverting We
already know that there is a market for mobile phones but the current
market gap has become saturated (or if not saturated almost
saturated) so Nokia need to find a new market segment to aim their
products at In order to classify the wants and needs of the consumingpopulation companies need to gather information on the following
middot Consumer behaviour- How do customers react to advertising Whether
they are partial to prize give-aways or free gifts What are their
reactions to new and developed products
middot Buying patterns and sales trends- Organizations need to look at how
buying trends and patterns are affected by class gender religion and
region They also need to understand how buying patterns change over
time and what markets are expanding and are worth trying to enter and
obviously which markets are contracting and companies shouldnt aim to
enter into
middot Consumer preferences- What customers are looking for in a product
for example style colour technology amount of outlets customer
service and promotional styles
middot Activities of competitors in the market- Nokia need to examine how
their rivals are adapting their prices and products to meet theconsumers needs how well the rivals are selling and what marketing
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strategies they are using
Market research should supply the company with all the information
they require about consumers preferences whether they buy certain
products what design features are preferable and what kind of retailoutfits are most frequently used for purchasing certain products
Sources of marketing information
The information that companies collect through market research can be
in one of two forms either quantitative or qualitative data
1 Quantitative data refers to data presented in numerical form
usually figures for example Nokias operating profit in the 4th
quarter of 1997 was 830 million
2 Qualitative data is the information concerning the motives and
attitudes of consumers for example more people buy Nokia phones then
Sony phones because Nokia phones are more reliable
The two main sources of market research information are primary
research (where the company has gathered the information about the
markets themselves) and secondary research (when researchers use
information that has been discovered by other companies)
Methods of collecting primary data
middot Face to face survey
middot Open ended interview
middot Telephone survey
middot Postal surveys
middot Consumer panels
middot Observations
middot Experiments
Methods of collecting secondary data
Internal sources
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middot Existing reports
middot Distribution data
middot Shopkeepers opinions
middot Stock records
middot Sales records
middot Accounting records
External data
middot Government statistics
middot Specialist business organization for example Mintel or Neilsons
retail audit
middot Consumer databases
To help decide what market segment to aim at companies can also look
at the buying habits of customers In order to make decisions aboutthe type of products to make what advertising to use promotional
tactics pricing and packaging Nokia will need to know about the
following
1 The types of goods customers buy
2 How much they buy
3 How often they buy
There are also certain variables that can affect peoples buying
habits they include
1 Age
2 Gender
3 Area they live in
4 Religion
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5 Lifestyle
6 Taste
7 Fashion and preferences
Market segmentation
In order to plan their product Nokia must look at what area of the
market they want to aim the products at as the current youth market
is more or less saturated Nokia will have to research into a new
market I suggest the 55+ market as they will have lots of disposable
income and my research shows that most people aged 55+ do not
currently own a mobile device and could be persuaded to buy one by
certain promotions and a good advertising campaign also the drop in
call prices should attract a lot of people who may have previously
been hesitant due the high costs
Below is a table showing the population in terms of social grouping of
the UK in 1999
Socio-economic group
Of population
A-Upper class
28
B- Middle class
186
C1- Lower middle class
275
C2- Skilled working class
221
D- Working class
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176
E-Low income earners
114
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they arent the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities an important part of this research must be to track
sales in order to identify those products which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall
Changes in customer demand which continue in the same direction for
more then 2 years show a long-term trend or saturation is occurring
within the market This is definitely a bad market for businesses to
be in (the mobile phone market is in the first year of a continuing
trend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwards
trend
The marketing mix
-----------------
The marketing mix refers to the combination of elements within a
companies marketing strategy these are designed to give the customer
what they want and in the long term are designed to maximise profits
The marketing mix is based around the idea of the 4 Ps
Product-The product is the centre of the marketing mix and the other
three Ps are based around it Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
research)
Price-Is a key factor in the selling of a product and is usually theone that is open to the most change based on different pricing
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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up to date with the latest technologies available in your chosen
market and using them to appeal to different people (for example WAP
phones are aimed at more professional people while Camera phones are
aimed at the youth market)
Diversification- This refers to developing technology that offers
consumers something new or different this is the most common way of
companies trying to gain greater market share and increase their
profits
Market research
A businesses success is based on whether they can give the customer
what they want and when they want it Market research involves the
collection collation and analysis of data relating to the consumption
and marketing of relevant goods and services
The purpose of market research is really to find out whether there is
a gap in the market for your product or service or whether you can
make customers want your product through persuasive adverting We
already know that there is a market for mobile phones but the current
market gap has become saturated (or if not saturated almost
saturated) so Nokia need to find a new market segment to aim their
products at In order to classify the wants and needs of the consumingpopulation companies need to gather information on the following
middot Consumer behaviour- How do customers react to advertising Whether
they are partial to prize give-aways or free gifts What are their
reactions to new and developed products
middot Buying patterns and sales trends- Organizations need to look at how
buying trends and patterns are affected by class gender religion and
region They also need to understand how buying patterns change over
time and what markets are expanding and are worth trying to enter and
obviously which markets are contracting and companies shouldnt aim to
enter into
middot Consumer preferences- What customers are looking for in a product
for example style colour technology amount of outlets customer
service and promotional styles
middot Activities of competitors in the market- Nokia need to examine how
their rivals are adapting their prices and products to meet theconsumers needs how well the rivals are selling and what marketing
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strategies they are using
Market research should supply the company with all the information
they require about consumers preferences whether they buy certain
products what design features are preferable and what kind of retailoutfits are most frequently used for purchasing certain products
Sources of marketing information
The information that companies collect through market research can be
in one of two forms either quantitative or qualitative data
1 Quantitative data refers to data presented in numerical form
usually figures for example Nokias operating profit in the 4th
quarter of 1997 was 830 million
2 Qualitative data is the information concerning the motives and
attitudes of consumers for example more people buy Nokia phones then
Sony phones because Nokia phones are more reliable
The two main sources of market research information are primary
research (where the company has gathered the information about the
markets themselves) and secondary research (when researchers use
information that has been discovered by other companies)
Methods of collecting primary data
middot Face to face survey
middot Open ended interview
middot Telephone survey
middot Postal surveys
middot Consumer panels
middot Observations
middot Experiments
Methods of collecting secondary data
Internal sources
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middot Existing reports
middot Distribution data
middot Shopkeepers opinions
middot Stock records
middot Sales records
middot Accounting records
External data
middot Government statistics
middot Specialist business organization for example Mintel or Neilsons
retail audit
middot Consumer databases
To help decide what market segment to aim at companies can also look
at the buying habits of customers In order to make decisions aboutthe type of products to make what advertising to use promotional
tactics pricing and packaging Nokia will need to know about the
following
1 The types of goods customers buy
2 How much they buy
3 How often they buy
There are also certain variables that can affect peoples buying
habits they include
1 Age
2 Gender
3 Area they live in
4 Religion
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5 Lifestyle
6 Taste
7 Fashion and preferences
Market segmentation
In order to plan their product Nokia must look at what area of the
market they want to aim the products at as the current youth market
is more or less saturated Nokia will have to research into a new
market I suggest the 55+ market as they will have lots of disposable
income and my research shows that most people aged 55+ do not
currently own a mobile device and could be persuaded to buy one by
certain promotions and a good advertising campaign also the drop in
call prices should attract a lot of people who may have previously
been hesitant due the high costs
Below is a table showing the population in terms of social grouping of
the UK in 1999
Socio-economic group
Of population
A-Upper class
28
B- Middle class
186
C1- Lower middle class
275
C2- Skilled working class
221
D- Working class
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176
E-Low income earners
114
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they arent the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities an important part of this research must be to track
sales in order to identify those products which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall
Changes in customer demand which continue in the same direction for
more then 2 years show a long-term trend or saturation is occurring
within the market This is definitely a bad market for businesses to
be in (the mobile phone market is in the first year of a continuing
trend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwards
trend
The marketing mix
-----------------
The marketing mix refers to the combination of elements within a
companies marketing strategy these are designed to give the customer
what they want and in the long term are designed to maximise profits
The marketing mix is based around the idea of the 4 Ps
Product-The product is the centre of the marketing mix and the other
three Ps are based around it Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
research)
Price-Is a key factor in the selling of a product and is usually theone that is open to the most change based on different pricing
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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strategies they are using
Market research should supply the company with all the information
they require about consumers preferences whether they buy certain
products what design features are preferable and what kind of retailoutfits are most frequently used for purchasing certain products
Sources of marketing information
The information that companies collect through market research can be
in one of two forms either quantitative or qualitative data
1 Quantitative data refers to data presented in numerical form
usually figures for example Nokias operating profit in the 4th
quarter of 1997 was 830 million
2 Qualitative data is the information concerning the motives and
attitudes of consumers for example more people buy Nokia phones then
Sony phones because Nokia phones are more reliable
The two main sources of market research information are primary
research (where the company has gathered the information about the
markets themselves) and secondary research (when researchers use
information that has been discovered by other companies)
Methods of collecting primary data
middot Face to face survey
middot Open ended interview
middot Telephone survey
middot Postal surveys
middot Consumer panels
middot Observations
middot Experiments
Methods of collecting secondary data
Internal sources
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middot Existing reports
middot Distribution data
middot Shopkeepers opinions
middot Stock records
middot Sales records
middot Accounting records
External data
middot Government statistics
middot Specialist business organization for example Mintel or Neilsons
retail audit
middot Consumer databases
To help decide what market segment to aim at companies can also look
at the buying habits of customers In order to make decisions aboutthe type of products to make what advertising to use promotional
tactics pricing and packaging Nokia will need to know about the
following
1 The types of goods customers buy
2 How much they buy
3 How often they buy
There are also certain variables that can affect peoples buying
habits they include
1 Age
2 Gender
3 Area they live in
4 Religion
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5 Lifestyle
6 Taste
7 Fashion and preferences
Market segmentation
In order to plan their product Nokia must look at what area of the
market they want to aim the products at as the current youth market
is more or less saturated Nokia will have to research into a new
market I suggest the 55+ market as they will have lots of disposable
income and my research shows that most people aged 55+ do not
currently own a mobile device and could be persuaded to buy one by
certain promotions and a good advertising campaign also the drop in
call prices should attract a lot of people who may have previously
been hesitant due the high costs
Below is a table showing the population in terms of social grouping of
the UK in 1999
Socio-economic group
Of population
A-Upper class
28
B- Middle class
186
C1- Lower middle class
275
C2- Skilled working class
221
D- Working class
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176
E-Low income earners
114
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they arent the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities an important part of this research must be to track
sales in order to identify those products which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall
Changes in customer demand which continue in the same direction for
more then 2 years show a long-term trend or saturation is occurring
within the market This is definitely a bad market for businesses to
be in (the mobile phone market is in the first year of a continuing
trend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwards
trend
The marketing mix
-----------------
The marketing mix refers to the combination of elements within a
companies marketing strategy these are designed to give the customer
what they want and in the long term are designed to maximise profits
The marketing mix is based around the idea of the 4 Ps
Product-The product is the centre of the marketing mix and the other
three Ps are based around it Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
research)
Price-Is a key factor in the selling of a product and is usually theone that is open to the most change based on different pricing
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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middot Existing reports
middot Distribution data
middot Shopkeepers opinions
middot Stock records
middot Sales records
middot Accounting records
External data
middot Government statistics
middot Specialist business organization for example Mintel or Neilsons
retail audit
middot Consumer databases
To help decide what market segment to aim at companies can also look
at the buying habits of customers In order to make decisions aboutthe type of products to make what advertising to use promotional
tactics pricing and packaging Nokia will need to know about the
following
1 The types of goods customers buy
2 How much they buy
3 How often they buy
There are also certain variables that can affect peoples buying
habits they include
1 Age
2 Gender
3 Area they live in
4 Religion
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5 Lifestyle
6 Taste
7 Fashion and preferences
Market segmentation
In order to plan their product Nokia must look at what area of the
market they want to aim the products at as the current youth market
is more or less saturated Nokia will have to research into a new
market I suggest the 55+ market as they will have lots of disposable
income and my research shows that most people aged 55+ do not
currently own a mobile device and could be persuaded to buy one by
certain promotions and a good advertising campaign also the drop in
call prices should attract a lot of people who may have previously
been hesitant due the high costs
Below is a table showing the population in terms of social grouping of
the UK in 1999
Socio-economic group
Of population
A-Upper class
28
B- Middle class
186
C1- Lower middle class
275
C2- Skilled working class
221
D- Working class
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176
E-Low income earners
114
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they arent the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities an important part of this research must be to track
sales in order to identify those products which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall
Changes in customer demand which continue in the same direction for
more then 2 years show a long-term trend or saturation is occurring
within the market This is definitely a bad market for businesses to
be in (the mobile phone market is in the first year of a continuing
trend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwards
trend
The marketing mix
-----------------
The marketing mix refers to the combination of elements within a
companies marketing strategy these are designed to give the customer
what they want and in the long term are designed to maximise profits
The marketing mix is based around the idea of the 4 Ps
Product-The product is the centre of the marketing mix and the other
three Ps are based around it Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
research)
Price-Is a key factor in the selling of a product and is usually theone that is open to the most change based on different pricing
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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5 Lifestyle
6 Taste
7 Fashion and preferences
Market segmentation
In order to plan their product Nokia must look at what area of the
market they want to aim the products at as the current youth market
is more or less saturated Nokia will have to research into a new
market I suggest the 55+ market as they will have lots of disposable
income and my research shows that most people aged 55+ do not
currently own a mobile device and could be persuaded to buy one by
certain promotions and a good advertising campaign also the drop in
call prices should attract a lot of people who may have previously
been hesitant due the high costs
Below is a table showing the population in terms of social grouping of
the UK in 1999
Socio-economic group
Of population
A-Upper class
28
B- Middle class
186
C1- Lower middle class
275
C2- Skilled working class
221
D- Working class
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176
E-Low income earners
114
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they arent the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities an important part of this research must be to track
sales in order to identify those products which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall
Changes in customer demand which continue in the same direction for
more then 2 years show a long-term trend or saturation is occurring
within the market This is definitely a bad market for businesses to
be in (the mobile phone market is in the first year of a continuing
trend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwards
trend
The marketing mix
-----------------
The marketing mix refers to the combination of elements within a
companies marketing strategy these are designed to give the customer
what they want and in the long term are designed to maximise profits
The marketing mix is based around the idea of the 4 Ps
Product-The product is the centre of the marketing mix and the other
three Ps are based around it Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
research)
Price-Is a key factor in the selling of a product and is usually theone that is open to the most change based on different pricing
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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176
E-Low income earners
114
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they arent the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities an important part of this research must be to track
sales in order to identify those products which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall
Changes in customer demand which continue in the same direction for
more then 2 years show a long-term trend or saturation is occurring
within the market This is definitely a bad market for businesses to
be in (the mobile phone market is in the first year of a continuing
trend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwards
trend
The marketing mix
-----------------
The marketing mix refers to the combination of elements within a
companies marketing strategy these are designed to give the customer
what they want and in the long term are designed to maximise profits
The marketing mix is based around the idea of the 4 Ps
Product-The product is the centre of the marketing mix and the other
three Ps are based around it Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
research)
Price-Is a key factor in the selling of a product and is usually theone that is open to the most change based on different pricing
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
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Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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strategies for example competitor based penetration or skimming
The three main factors affecting the amount charged for a product or
service are the cost of production customer demand and competition
Place-This refers to the chosen outlets for a product or service fora product to be very successful it must be easy to access Mobile
phones are very easy to access nowadays they are sold in
supermarkets specialised outlets (either by network or brand) and all
major department stores
Promotion-This involves providing information to the customer over a
variety of media platforms using radio television and print
advertising as well as using other promotional tools such as money
off deals and free giveaways
The stages of marketing
-----------------------
1 Market and product research
Finding out what your customers want
Technical research
2 Product launch
Test market
Pricing
Branding
Packaging
3 Product promotion
Advertising
Merchandising
Publicity and PR
Sales promotion
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
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Sales
Time
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Sales
-----
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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4 Sales and distribution
Managing the sales force
Type and amount of sales outlets
Local national or international sales
Transportation of goods
5 Monitoring and analysing the sales
Meeting customer satisfaction
Does the product need modifying or replacing
Is a profit being made
Is customer service satisfactory
Have the sales targets been met
Is the promotion and distribution policy effective
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals havent been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market
Product life cycle- Mobile phones
---------------------------------
Introduction
When mobile phones where first introduced they were low quality
technology (bad reception poor reliability and had a short battery
life) high priced (around pound100 for a basic model) and consumers had
to be persuaded to buy mobile telephones as they were not yet
established as a necessity When products are first releasedcompanies can expect high promotion fees as the public are probably
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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not yet familiar with the product
Also when mobile phones were first released they were bulky and hard
to use as product design and development are a key figure in success
Nokia had to design phones that were smaller and simpler for consumersto use As people had paid a lot for earlier more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer this is where companies can expect to pay high
production costs
When Mobile phones were first introduced they were not such a popular
item and there werent as many competing companies in the market So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today as there arent so many companies competing for
market share
Growth
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition formarket share will increase Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch videos on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced
The growth stage is also the stage that companies will (hopefully)
start to make a profit based on good market research and a strong
sense of branding and a successful marketing scheme In the growth
stage profit isnt the only thing that will start to develop as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher this is how
companies start to make profits (because consumers have accepted the
product in Nokias case mobile phones as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
market)
Maturity
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
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Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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When a product enters the maturity stage advertising and promotional
prices should decrease as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers) At this point in the product lifecycle the main producers (Nokia Siemens Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other less popular producers of phones (Panasonic Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage
decline
Decline
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year) and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit
Below is a graph showing the product life cycle
[IMAGE]
Sales
Time
[IMAGE]
Sales
-----
[IMAGE]
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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Time
----
With successful re-launching the product life cycle should look like
the one above
--------------------------------------------------------------------
Branding
--------
Most forms of promotion are based around the idea of having an image
to go with the product Brand imaging plays a dominant part in an
organizations marketing strategy This is because people make a
purchase they arent just buying a product they are buying a
lifestyle or an image If branding can make people believe that the
branded product is better then an un-branded product more people will
buy it and they will also be willing to pay higher prices for the
extra quality and lifestyle they are receiving with the product
Because a lot of rival products are more or less the same (Pepsi and
Coke) the main way of making your product stand out is through
aggressive branding This is usually achieved by companies usingslogans logos and distinctive packaging
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit usually 10 so a company can make
enough profit to re-invest into the business so they can grow
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs so that the
profit earned on all previous units is not lower then it previouslywas
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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Demand based pricing
This is usually pricing products based around the customer demand fora product if the demand is high the prices will rise This is
usually used when the product is unique for example a football match
or concert To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they dont over price their product
Market skimming
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them This is the most common
strategy in the mobile phone market as consumers will pay the higher
prices for phones that have the newest technology
Penetration pricing
Firms who are trying to establish themselves in a new market and gain
instant market share usually use this strategy It is a high-risk
high cost strategy that is only an available option to the bigger
companies (like Nokia) who supply to mass markets Penetration pricing
is based around the idea that a company will set their prices low to
encourage customers to buy their products instead of higher priced
more established brands
The organization may also boost sales by lowering prices if demand is
price elastic One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made and also generate
losses due to under-pricing in an attempt to hold onto market share
Price discrimination
This is where companies can charge different prices in different
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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markets because of the consumers they are aiming at for example
rail companies charge different prices for peak and off-peak travel
cards and fares This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets
Destroyer pricing
This is a more drastic and aggressive form of penetration pricing
used when a companys objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality
External factors affecting pricing decisions
--------------------------------------------
Setting a price with regards to only production costs ignores the
influence of external factors such as
Market conditions- how much are the customers willing to pay Can
advertising increase product image and price Is the product aimed
at a mass market or a niche market (a niche market refers to when
a company aims a product at a very small select segment of the
market)
Production costs- Prices must cover the costs spent in production
if a profit is to be made The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing
Taxes and subsidies- VAT and customs duties will raise the price
of a product Government subsidies will allow businesses to charge
lower prices
Business objectives- Is the business looking to maximise profits
Or is the company looking to increase its market share
Marketing mix- What stage is the product at in the life cycleWhat forms of promotion are being used Where is the product being
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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sold
Marketing structure- How much competition is there in the market
What prices is the competition charging
Nokias current marketing strategy
The marketing mix
Price- The phones that Nokia produce are usually sold at high prices
(new phones can be expected to enter the market at around pound200+ if
they carry the latest technology) The price of the new phones usually
decreases after an introductory period which is usually around 2
months long Nokias prices are usually competitor based in such a
way as they try to keep their prices a bit lower then those of the
closest competitors but not as low as the smallest competition as
consumers do not mind paying the extra money for the extra quality
they will receive with a well known brand such as Nokia
Place- Nokia phones are generally sold at all established mobile phone
dealerships such as Carphone Warehouse and The Link although they are
also sold at other retailers such as Dixons and other electrical
suppliers The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductoryperiod so the phones can remain limited edition as this will
encourage younger consumers to buy them
Promotions- Nokia tend to promote the new technologies and mobile
devices they create using one big advertising campaign that focuses on
a singular technology instead of each individual handset so they can
appeal to a lot of different markets with one campaign
Product- Nokia phones tend to include all the latest technology and a
lot of the consumers favourite aspects such as text messaging and
games like Snake and Memory When the phones came out they were big
and bulky and quite unattractive but now they are all quite sleek and
stylish with phones now getting small enough to fit in the palm of
your hand as standard Most of the phones produced nowadays have
accessories that consumers must buy with them (carry cases hands free
kits and in-car chargers) these generate Nokia a lot of profit as
they are very high priced
Nokias marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and after
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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looking at all the mobile phone sales figures it looks as if the
phone companies can aim at this same youth market for about another 2
years until they need to change but they should change sooner so they
can start making a bigger profit and get a head start on the
competition who will also have to change the market they are aimingat Nokias current promotional strategy is working very well as they
are able to talk to a large number of consumers in different markets
rather then the niche markets the old promotional strategies where
restricted to
Market segmentation
Market segmentation refers to the different areas of the population
that companies can aim their products towards The market segment that
Nokia has chosen to aim is the youth market focusing on students aimed
13-19 as market research has shown that some of the youth market are
receiving large amounts of pocket money and most have no real
commitments to spend it on and that means they have lots of disposable
income and will be able to spend a lot money on new mobile phones
As a big company Nokia are able to do a lot of promoting and
advertising that smaller less successful companies may not be able
to afford such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide) Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment Nokia tend to put a lot of their print adverts in mens
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping I think
Nokias way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisements and with sponsoring large
events like the ones I have previously mentioned
Pricing strategy
Nokias current pricing strategy is based on 2 main theories
1 Penetration pricing- although this strategy is usually for
companies that are trying to gain instant market share in a newmarket companies who are already well known in the market still
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
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Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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do it with new products that carry new technologies so they can
take more market share form their competitors
2 Competitor based pricing- this is used when there is a lot of
competition in the market and a company is looking to take anothercompanies market share by offering the same or similar products
for a lower price this happens a lot in the communications market
and this strategy is used by every mobile phone producing company
that is still in business
Nokias pricing strategy has proven very effective this is down to
the fact that they first sell their products for high prices and have
very limited sales but make big profits on each sale they then lower
the price of their product and have lots more sales but they make less
profit but they still make a large profit due to the amount of sales
the other reason that they are so successful is that they offer high
quality products and they sell them for the same price and sometimes
even lower prices then the competition and have now built up the
highest market share they currently have 372 of the mobile phone
market share and are the biggest selling mobile phone company in the
world
Branding
Nokia phones are seen as being of the highest quality and this is
reflected in their massive sales figures The fact that they are seen
to be such high quality products is partly down to successful
branding they have a highly recognisable packaging style and the
style of their handsets is similar in every line of production with
the company name printed just above the screen and just below the
earpiece The fact that Nokia operate such an aggressive marketing
strategy has elevated them above the competition as consumers are
fooled into believing that branded products are better then
un-branded products or products produced by lesser-known brands such
as One Tel and other lesser-known phone producers in the market
Product life cycle-Nokia
Introduction
When Nokia phones were first introduced they required a lot of
promoting and advertising as they werent established enough to sellbased on their quality and what they offer to the consumer so this is
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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where Nokia spent the largest amount of money promoting their products
and establishing their brand as a leader in the communications market
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony etc) so they could
charge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war with
such a new product
Growth
This stage of the life cycle also has high promotion costs involved in
it this is due to the fact that mobile phones are becoming
established as a consumer necessity and lots of other companies decide
to enter the growing market although companies do not need to assure
customers that they need a mobile phone Nokia have to assure the
customers that they want a Nokia phone and this is where the high
promotional costs come from
Maturity
In this stage the promotional costs do decrease as the more popular
brands such as Nokia and Samsung have gathered the majority of the
market share and only have to show customers that they have a new
model out and it will sell well as they have been established as aquality brand and customers no-longer need to be persuaded to buy
Nokia brand technology
Decline
This is the stage that the mobile communications market including
Nokia have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002) and companies are now promoting
heavily their new MMS products to the market in an attempt to get out
of decline and back into growth with a new generation of
technologically advanced phones that offer motion picture capture
camera technology and the opportunity to watch television on your
handset
If a company has entered decline it needs to look at the SWOT forms
of analysing their market strategy which I have fully evaluated on
pages 3 and 4
What I have found out by analysing SWOT is that Nokias mainweaknesses are
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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1 They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment
2 Their wag costs are already high and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001)
3 High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies this
will have high start up costs but will eventually start to save Nokia
money on import and export charges
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34 increase from
1996s sales
There are many external factors that can affect a marketing strategy
from developing this is where you must use PEST analysis I have
outlined PEST analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokias
marketing schemes below
Political factors- Legal factors such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far are
always around to stop Nokia from properly developing strategies and
further conquering the communications market Also taxes such as
import and export have an affect on Nokias development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world
Environmental Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more
Nokias current marketing strategy has helped them become the biggest
selling brand in the communications market to date but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following Re-launch their
products with an aggressive promotional scheme Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100 of the market share (although this is risky as the market
might not take to their products and the demand might be low so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokias products) Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether such as
landline phones or televisions
Market research
Nokias business strategy (statement taken from wwwnokiacom)
Our business objective is to strengthen our position as a leading
communications systems and products provider Our strategic intent as
the trusted brand is to create personalised communication technology
that enables people to shape their own mobile world
Nokia are currently creating innovative technology to allow people to
access Internet applications devices and services instantly
irrespective of time or place Achieving interoperability of network
environments terminals and mobile services is a key part of our
intent
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
whole
By expanding into these segments during the initial stages of their
development Nokia have established themselves as one of the worlds
leading players in wireless communications and significantlyinfluenced the way in which voice and other services have been
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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transferred to a wireless mobile environment
As demand for wireless access to an increasing range of services
accelerates Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems requiredto make wireless content more accessible and rewarding to the end
user In the process we plan to offer our customers unprecedented
choice speed and value
Nokia has a history of contributing to the development of new
technologies products and systems for mobile communications Recent
examples include the commitment to the open mobile alliance the
co-development of the new operating system for the future terminals
with symbian short-range wireless connectivity with bluetooth the
development of wireless LANs for enabling local mobility in fixed
LANs and MMS for enabling mobile multimedia messaging
In addition Nokia have continued to be active in IP convergence They
have established alliances with other service providers in order to
make mobile access services easier for the end user
Nokia in 2002 IAS reported
Nokias net sales in 2002 decreased by 4 compared with 2001 andtotalled EUR 30 016 million (EUR 31 191 million in 2001) Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13 to EUR 6 539 million
(EUR 7 534 million) Sales decreased in Nokia Ventures Organization by
22 to EUR 459 million (EUR 585 million)
Their operating profit in 2002 increased by 42 and totalled EUR 4 780
million (EUR 3 362 million in 2001) Operating margin was 159 (108
in 2001) Operating profit in Nokia Mobile Phones increased by 15 to
EUR 5 201 million (EUR 4 521 million in 2001) Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001) Operating margin in Nokia Mobile Phones was 224 (195 in
2001) while the operating margin in Nokia Networks was -07 (-10
in 2001) Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001) Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001)
During 2002 the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001) Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001) Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001) Earnings per shareincreased to EUR 071 (basic) and to EUR 071 (diluted) in 2002
compared with EUR 047 (basic) and EUR 046 (diluted) in 2001
At December 31 2002 net-debt-to-equity ratio (gearing) was -61
(-41 at the end of 2001) Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001)
By the end of 2002 outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001) while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million) Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002 Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million) EUR 1 573 million (EUR 3 607 million) related to 3G
networks
Global Reach
In 2002 Europe accounted for 54 of Nokias net sales (49 in 2001)the Americas 22 (25) and Asia-Pacific 24 (26) The 10 largest
markets were US UK China Germany Italy France UAE Thailand
Brazil and Poland together representing 60 of total sales
Research and development
In 2002 Nokia continued to invest in its worldwide research and
development network and co-operation At year-end Nokia had 19 579
RampD employees approximately 38 of Nokias total personnel Nokia has
RampD centres in 14 countries Investments in RampD increased by 2 (16
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001)
representing 102 of net sales (96 of net sales in 2001)
People
The average number of personnel for 2002 was 52 714 (57 716 for 2001)
At the end of 2002 Nokia employed 51 748 people worldwide (53 849 at
year-end 2001) In 2002 Nokias personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001)
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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Employee Value Proposition-
In a move to further attract and retain a skilled workforce this year
Nokia developed an employee value proposition framework The
adaptation of this has already started at country levels to reflectand respond to local employee needs and expectations The four
fundamentals of the proposition are (1) the Nokia Way and Values (2)
performance-based rewarding (3) professional and personal growth and
(4) work-life balance
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up launching a record 33 new products during 2002 incorporating
colour imaging multimedia mobile games and polyphonic ring tones
Of the total new phones launched 14 had colour screens and multimedia
capability This attests to the growing share of feature-rich phones
offering advanced mobile services in the companys product portfolio
During the year Nokia launched its first WCDMA mobile phone the
Nokia 6650 which began deliveries to operators for testing in October
2002 The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas These included the Nokia 6370 the
Nokia 6385 the Nokia 3585 and the Nokia 8280
In imaging Nokia began shipping its iconic camera phone the Nokia
7650 expanding the scope of the mobile market from voice to visual
communications Feedback from customers and users across the board has
been extremely positive
In the enterprise segment the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device with full QWERTY keypad optimised for personal and
enterprise mobile e-mail
In entertainment Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category Under a collaboration agreement with world leading games
publisher Sega the two companies will develop games for the new
Nokia N-Gageacircyacutecent mobile game deck which will run on the Nokia Series
60 platform and the Symbian operating system
For the full year 2002 Nokia volumes reached a record level of 152million units representing faster than market growth of 9 compared
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
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with 2001 Backed by Nokias ongoing product leadership and user brand
preference Nokia has again increased its market share for the fifth
consecutive year reaching about 38 for the full year 2002 bringing
the company closer to its target of 40
During the year Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure From May 1 nine new business units were
each made responsible for product and business development within a
defined market segment This allowed Nokia to optimise its activities
in these vertically focused areas while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the companys market-leading demand-supply
network
Nokia Networks in 2002
During the year Nokia Networks signed 20 GSM network deals in Asia
China Europe and the US including three new customers
Mobile Multimedia Messaging Services (MMS) became a reality in 2002
with its rapid implementation into most GSM operator networks By
year-end Nokia Networks had delivered MMS solutions to well over 40
operators
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002 Nokia signed 10 new 3G deals
in Austria Belgium Germany Ireland Japan the UK and Taiwan In
September Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents
In broadband access Nokia signed nine new contracts in 2002 and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets
The company also further strengthened its GSMEDGEWCDMA product
family with several new products and solutions Key launches included
a high-availability server platform for use in All-IP mobility
networks and the Nokia LTX a linear transceiver product family of
base station modules that support the definition of Open IP Base
Station Architecture
During the year Nokia took measures to align its operations to betterreflect current market capacity and conditions reducing the number of
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employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
832019 Marketing Strategy for Nokia
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
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likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
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to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
832019 Marketing Strategy for Nokia
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
832019 Marketing Strategy for Nokia
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 2944
employees in its delivery and maintenance services as well as in
production Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002 Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewallVPN appliance segment as the previous year as well as
significantly improving its operational efficiency
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokias network security
appliance portfolio and respond to emerging market opportunities
Extending mobility to enterprise workforces protecting corporate
e-mail content and providing firewallVPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia To help foster the creation of new security applications to
complement Nokias own solutions the Nokia Security Developers
Alliance was launched in July Looking forward to 2003 Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
enterprises
For Nokia Home Communications sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets providing digital viewers access to a broad range
of digital services Products such as the Nokia Mediamaster 230 S
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year
Dividend
Nokias Board of Directors will propose a dividend of EUR 028 per
share in respect of 2002
Net sales by business group Jan 1-Dec 31
2002
832019 Marketing Strategy for Nokia
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2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
832019 Marketing Strategy for Nokia
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
832019 Marketing Strategy for Nokia
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3344
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3444
6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3544
likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3644
to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
832019 Marketing Strategy for Nokia
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My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
832019 Marketing Strategy for Nokia
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Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
832019 Marketing Strategy for Nokia
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Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3044
2001
Change
EURm
EURm
Nokia Mobile Phones
23 211
77
23 158
74
Nokia Networks
6 539
22
7 534
24
-13
Nokia Ventures Organization
459
1
585
2
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3144
-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3244
224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3344
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3444
6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3544
likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3644
to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3744
My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3844
Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3944
Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
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the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
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market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
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The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
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Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
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-22
Inter-business
group eliminations
- 193
- 86
Nokia Group
30 016
100
31 191
100
-4
Operating profit IAS
Jan 1-Dec 31
2002
of
2001
of
EURm
net sales
EURm
net sales
Nokia Mobile Phones
5 201
832019 Marketing Strategy for Nokia
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224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
832019 Marketing Strategy for Nokia
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[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
832019 Marketing Strategy for Nokia
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6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3544
likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3644
to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3744
My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3844
Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3944
Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4044
the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4244
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3244
224
4 521
195
Nokia Networks
-49
-07
-73
-10
Nokia Ventures Organization
-141
-307
-855
-1462
Common Group Expenses
-231
-231
Nokia Group
4 780
159
3 362
108
Primary research results
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3344
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Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3444
6
Picture messaging
8
Organiser
7
Ringtone features
4
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Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3544
likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3644
to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3744
My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3844
Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3944
Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4044
the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4244
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3344
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[IMAGE]
[IMAGE]
Average Rating (from 1-10 1 being the best and 10 being the worst
Battery life
1
Exchangeable covers
5
WAP
9
MMS
10
The style of the phone
3
SMS
2
Games
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3444
6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3544
likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3644
to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3744
My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3844
Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3944
Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4044
the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
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In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3444
6
Picture messaging
8
Organiser
7
Ringtone features
4
[IMAGE]
Analysis of my research
-----------------------
For my primary research I handed out 30 questionnaires but only 20 of
them got answered and above I have compiled all the quantitative data
into the Bar and pie charts When giving out my questionnaire I had to
be very selective about who I asked questions to as I had to makesure that I had a representative sample population so I can make
generalisations about the entire consuming population
From my research I have found out that 55 of people do already own a
mobile phone but I also found out that 100 of the student population
(aged 11-21) did already own a mobile phone and the majority of the
older people in the sample (aged around 40 and 50) didnt own a mobile
phone and I found out that everyone over 65 did not own a mobile
phone My results show that the current youth market has already been
capitalised on by the communications companies and the market has
become saturated or is definitely near saturation This is reflected
in the fact that Nokias sales have decreased by 4 and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised
The majority of the people who answered my questionnaire had an income
of pound30000-pound40000 and this shows that the current market certainly has
enough money to purchase a new phone the youth market had an averageof under 10000 but as they have the most disposable income are more
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3544
likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3644
to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3744
My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3844
Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3944
Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4044
the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4244
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3544
likely to buy new models of mobile phones but if the majority of the
population has a large income they can afford mobile phones but as a
lot of them have families and other financial commitments they may be
a bit apprehensive about spending a large amount of money on a new
mobile phone so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market
My research also showed that pay as you go was the most popular
pricing option for the entire population especially the youth in
which 100 of people had chosen this plan but in the more mature
consumers they said that they would probably choose a pay monthly
system as they would not be bothered with the hassle of toping up
every time they ran out of call time Also I found out that some 75
of the youth market will change their payment plan to a pay monthly
system as the pay as you go system had proven to be very expensive
due to the high call rates to other mobile networks and because on
the pay monthly system you can get free text messages (SMS) and free
call time but the amount depended on the network you had a contract
with
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones with 75 of my
participants claiming that they owned a Nokia phone compared to a
very small 7 for Nokias closest rivals Sony This has shown me thatNokia are already a very well established brand amongst the consumers
and that they do not need to spend any money (or a small amount if
entering a new market) on promoting the brand as a whole and should
concentrate the majority of their promotional expenditure on singular
models or new technologies that are being discovered or being
released
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85
of the sales of mobile phones to the people I questioned Small
dealerships such as selective network outlets and major household
appliance stores like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10) If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential
According to my research the three most important things that
consumers are looking for in a mobile phone are long battery life astylish casing and good SMS (text messaging) features If a phone is
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3644
to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3744
My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3844
Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3944
Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4044
the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4244
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3644
to be successful in the market environment it must include all of
these but the consumers have to be told that your product has these
available this is what the company should try and promote through
advertising and not just the brand name
I have found out that most people do not conduct heavy research if
they do any research at all (only 65 did research into mobile
phones) and the most common forms of research are magazines and
window-shopping This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines and the people who ask floor sales people for advice on
which handset to purchase
Price was a difficult variable to analyse as my research has shown
that it was a 50-50 split between people who said price was a key
factor and those who didnt really care about the price as long as
the phone was offering everything they wanted although upon further
inspection most people would not like to spend over pound175 on a handset
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package that includes cheap call rates
free text messages and some free accessories for example a hands
free kit or an in car charger
I have also found out that the most popular food shops are Sainsburys
and Marks amp Spencer this gives us an idea of where to put promotional
fliers and leaflets about up and coming releases into the market and
as people are usually bored while waiting in lines for a till they
will want something to look at and if a flier is conveniently placed
near in the lines then that could get more customers interested in a
Nokia mobile phone instead of one of their competitors also people
who shop in these 2 main supermarkets tend to be either middle or
upper class and will pay extra for quality in brand name products
Revised marketing strategy
As Nokias current sales figures are decreasing and they show no sign
of increasing again
In the near future I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past and probably higher then they have been
since they were first released
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3744
My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3844
Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3944
Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4044
the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4244
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3744
My marketing mix
Product- The phones will continue to be of a high quality but will
not be as technologically advanced as the recent phones that have been
released The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in the
new range of phones that will be released as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
mobile phone
Price- If the technology released with the phones is not as advanced
the price does not need to be as high as the prices of the phones in
the market at the moment as less money is being spent on product
development and the phones wont cost as much to produce there is no
need to keep the prices so high I have decided to lower the price due
to production costs and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates but
if phones were a lot cheaper (around pound125 per phone on pay as you go
and free if a contract method of payment is selected)
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets Sainsburys Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations and Nokia
could have 100 of the shoppers business and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market there would be high promotion costs involved
as there is at the introduction stage of any product life cycle The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone Also print adverts
should be placed in magazines and newspapers where the target market
will see them my market research showed that the most read magazines
by people aged 40+ was Lifestyle and Vogue for the women and the
most read by men was the observer magazine as not many men admitted tobuying a magazine regularly The most popular newspapers were The
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3844
Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3944
Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4044
the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4244
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3844
Observer and The Guardian on weekends and the Evening standard during
the week so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market Because we do not want to cancel out any people outside
our target market (avoiding a niche market) Nokia should continue toplace poster adverts in places that will be viewed by a massive
selection of people (such as Londons West End and other popular
shopping centres)
Marketing principles
Any marketing scheme that has been developed must be based around the
principles of marketing and my revised Nokia strategy is no
different below I have analysed how I have followed each marketing
principle
Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted I found out that they
wanted phones that were high quality (with long battery life
good reception and good SMS features) low priced (priced lower
then pound150 but could be higher if call charges dropped) and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
technology)
Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications and it was
also the most trusted brand 8 out of 10 people said that they
would look for a Nokia phone that they liked before they would
look at another brand Nokias prices were considered a bit
expensive and this was partly why I have decided to decrease the
prices of the new range of phones although people said they
didnt mind paying the extra money for the quality they think they
will receive with a branded item
Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would likeNokia to make to them
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3944
Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4044
the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4244
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 3944
Generating income or profit- This is the reason why I had to
review Nokias current strategy the sales were starting to
decrease and this was starting to reflect in the income and
profits and decreases in these will not satisfy the mainstakeholders in Nokia
Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle Nokia
are actually achieving this with their current marketing scheme
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development
Awareness of the surrounding environment- This is the reason ever
company must complete market research from my research I know
what the customers want where they shop what they watch on
television what radio stationsprograms they listen to what the
average income is and what features people rate highest in phone
technology
There are also many external factors that can affect your marketing
style and the decision of which strategy to use we can evaluate these
using PEST
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing or
marketing choices made The only legal constraint that my new strategy
dodges is the G3 licensing as the new style of Nokia product
doesnt need any of the newest technologies under the G3 frame
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users but this has not
been highly documented and hasnt affected how Nokia have conducted
themselves
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly what
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4044
the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4244
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4044
the target market does not want they want phones that are simpler to
use
Pricing strategy
As Nokia will be entering a new market as part of the new market
strategy I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one As Nokia will be entering a new market we will be
able to choose whatever price we want to start selling mobile phones
at and I think they should first be introduced at around pound150 as my
market research showed that consumers in the new target market would
be hesitant to pay any higher and this is the part that relates to
demand based pricing
Market segmentation
The market segment the Nokia was previously aiming at had become
saturated my research showed that 100 of students already owned a
mobile phone and where not about too buy another one in the nearfuture Due to the fact that this youth market is saturated I
analysed the Ansoffs and Boston matrixes and decided to undertake in
market penetration The new market that I am aiming Nokias products
is the middle aged people because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right and
of those people who said that that didnt want a phone most of them
said they could be persuaded by strong advertising and branding
Evaluation
My revised strategy has a lot of advantages over Nokias previous
strategy and I have listed them below
middot My target market is one that has never been entered before so Nokia
will instantly gain 100 market share whereas the current target
market is saturated and competition for market share is very strong
middot The products that are being released do not need to be astechnically advanced as the ones in the current market because my
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4244
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4144
market research showed that the 40+ market do not want phones that are
to complicated and hard to use
middot If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year
middot When entering a new market with no competition a company can charge
whatever prices they want Nokias prices can be higher then they
currently are and this will increase income and profitability
End
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4244
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4244
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that it wassetting up a manufacturing facility for mobile devices in Chennai the state capital of TamilNadu in southern India Nokia planned to invest US$ 100-150 million in the facility wherethe production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia Corporationsaid Establishing a new factory in India is an important step in the continuous developmentof our global manufacturing network4 India was ideal for Nokias new production facilityEach mobile handset has more than 400 parts and the average production capacity of eachmanufacturing unit of Nokia is around 20 million units This level of manufacturing involvesa total of 8 billion components per annum requiring strong logistical support Nokiasmanufacturing facility needed to be located close to a major international airport or sea portfor quick supply of components India met all these requirements and also enjoyed cheapmanpower costs and proximity to the rapidly growing Asia Pacific markets Besides Nokiawas the market leader in mobile communication devices in India The company has beencarrying out sales amp marketing customer care and research amp development activities in the
country Nokia considers India to be one of its most important markets The companys CodeDivision Multiple Access (CDMA)5 facility is located in Mumbai and provides software andtechnical support to CDMA consumers in India and other Asia Pacific countries In 2004Nokia was chosen as the most respected consumer durables companyby Businessworld6 The magazine wrote This Finnish companys debut at the top of the heap says two things One that its strategies - including ones like developing a phone specifically for India - arerespected But more importantly Nokias win is also an endorsement of the importance of the ubiquitous cell phone as a durable in todays world After all unlike its competitors mostof which offer a slew of durables Nokia is mostly a cell phone company7
In 2005 Nokia was recognized as the Brand of the Yearby the Confederation of IndianIndustry Indias apex industry association The company was chosen for this award becauseof its high brand recall well established distribution channels and being most preferred bythe consumers
Enamored of Nokias success in the Indian market Harvard University had invited NokiaIndia to talk on How Nokia cracked open the Indian market
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995 Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
policies of the Indian government high licensing fees and absence of a proper telecom
regulatory body The growth in the subscriber base of mobile phones remained sluggish
initially reaching the 1 million milestone in 1998 In 1999 the Government of India
announced a new telecom policy This policy planned to provide telephones on demand by
2002 Among other things the policy allowed unrestricted private entry into almost all mobile
service sectors The government allowed cellular mobile service providers to share
infrastructure with other operators It also allowed existing operators to migrate from fixed
license fee to one-time entry fee with revenue sharing This policy helped many privateoperators to break even faster By 2001 the demand for mobile services was growing well
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4344
The private companies concentrated on providing basic telephone services to consumers The
number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002
Excerpts
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing
company In 1920 Finnish Rubber Works became a part of the company and later on in
1922 Finnish Cable Works joined them All the three companies were merged in 1967 to
form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and electronics
businesses and by 1987 consumer electronics became Nokias major business Nokia created
the NMT mobile phone standard in 1981 and launched the first NMT phone Mobira
Cityman in 1987 The company delivered the first GSM network to Radkilinia a Finnish
company in 1991 and in 1992 Nokia 1011 - a precursor for all Nokias current GSM phones
- was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world Anothersignificant move of the company during this period was the divestment of its non-coreoperations like IT The company focused on two core businesses - mobile phones andtelecommunications networks Between 1992 and 1996 the company exited from the rubber
and cable businesses as well
Nokia in India
Nokia entered the Indian market in 1994 The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995 When Nokia entered India the
telecom policies were not conducive to the growth of the mobile phone industry
The tariffs levied on importing mobile phones were as high as 27 usage charges were at
Rs16 per minute and at these high rates consumers did not take to mobile phones Nokia
also had to face tough competition from other powerful global players like Motorola SonySiemens and Ericsson The Problems
In spite of its strong marketing Nokias problems at the global level had an impact on the
companys Indian venture Globally Nokia had been experiencing tough times with revenues
falling to 29 billion euros in 2004 from 32 billion euros in 2001 The companys operating
profits decreased from 5 billion euros in 2003 to 43 billion euros in 2004
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership
832019 Marketing Strategy for Nokia
httpslidepdfcomreaderfullmarketing-strategy-for-nokia 4444
Bouncing Back
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share Globally during the first quarter of 2005 the companys sales reached 74 billion
euros with the company selling 54 million phones during the period In India Nokia
continued its leadership in GSM with a market share of 74 in March 2005 Nokia alsosurpassed Samsung in color mobiles in the GSM segment recording a share of 55 in the
same month (Refer Table VIII for share of major mobile phone brands in the GSM segment
and their market shares)
Nokia reorganized itself at the global level in 2004 At this point a multimedia division was
formed
The divisions Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities The marketing
division of the company concentrated on making distributors in small towns sell high-end
products Though the distributors were skeptical to start with by the end of 2004 the process
was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be driven
by voice multimedia and mobile services for organizations The teledensity in India was
estimated to increase to 182 by March 2009 with mobile subscription rising to 14877
million by that time In many instances the cell phone has become the only basic telephone
link of a householdenterprise in India rather than a landline phone It was turning out to be
more economical and efficient than fixed line telephones So there was great scope for
further expansion with reduction in the cost of ownership