“Branding of Nokia”
Background
These days, it has not only become a necessity but a need for all the competitive companies to build around a brand image. Branding in fact is something that companies have to strive if they need to capture a certain share of the market place. “Branding is basically the process of creating a strong identity for an organization and it applies to both product manufacturers and companies that provide a service”. We see all sorts of companies around use these days whether they have to do with the transportation sector, the services sector, the hospitality sector or some other part of the economy. Everything from house tissues to the airlines we choose to fly on are, to a great extent based on brand names and brand images. Since the market competition has become so stiff and concentrated these days, the only successful companies are those who have applied branding strategies in a very remarkable fashion and are able to fully utilize their brand name for gaining competitive advantage.
Nokia had been a dominant player in the mobile phone market ever since it entered the market. It quickly established itself as a strong brand by focusing on branding. The company’s philosophy the ‘Nokia Way’ called for four brand values – creative, inspiring, human, and accessible.
For this reason I prepare my report about branding strategy of No
History of Nokia
Vision
Nokia will empower everyone to share and make the most of their life by offering irresistible personal experiences.
The convergence of the mobile, internet and PC are a reality. Consumers want complete solutions not just devices, and technology to be invisible. Consumer relationships are the new unit of value in this converged industry as consumers “consume” services as they are created.
Vision of the future
“Connecting people” is now connecting people to what matters – whatever that means for each person – giving them the power to make the most of every moment, everywhere, any time. Connecting the “we” is more powerful than just the individual. That’s how Nokia is needed to help make the world a better place for everyone.
Strategy
To do this we will become the leading provider of mobile solutions. Our solutions strategy leverages one of our greatest assets – a portfolio of outstanding devices, with unmatched scale and geographic reach. We couple them with smart services, integrated via an intuitive and seamless user experience. We differentiate these solutions offerings based on our in-depth consumer understanding, with a strong focus on social location (people and places) In a world where connecting people to what matters, empowers them to make the most of every moment. Our ambition is to become the leading provider of mobile solutions
From roots in paper, rubber, and cables, in just over 100 years Nokia becomes a powerful industrial conglomerate…
The newly formed Nokia Corporation is ideally positioned for a pioneering role in the early evolution of mobile communications…
As mobile phone use booms, Nokia makes the sector its core business. By the turn of the century, the company is the world leader…
Nokia sells its billionth mobile phone as the third generation of mobile technology emerges…
The Nokia Way and values
A flat, networked organization and speed and flexibility in decision-making characterize the Nokia Way of working. Equal opportunities and openness towards people and new ideas are also key elements we want to nourish.
· Engaging you
For us, ‘engaging you’ incorporates the ‘customer satisfaction’ value and deals with engaging all our stakeholders, including employees, in what Nokia stands for in the world.
· Achieving together
‘Achieving together’ is more than collaboration and partnership. As well as trust, it involves sharing, having the right mind-set and working in formal and informal networks.
· Passion for innovation
‘Passion for innovation’ is based on a desire we have to live our dreams, to find courage and make the leap into the future through innovation in technology, ways of working and through understanding the world around us.
· Very human
Being ‘very human’ encompasses what we offer customers, how we do business and the impact of our actions and behavior on people and the environment. It is about being very human in the world – making things simple, respecting and caring. In short, our desire is to be a very human company.
What is Brand?
American Marketing Association defines Brand as “Name, term, symbol, sign, or design or a combination of them, intended to identify a seller or a group of sellers and to differentiate them from those of competitors”. Thus a brand identifies the seller or maker.
A brand is a complex symbol that can convey up to six levels of meaning viz. Attributes, Benefits, Values, Culture, personality and User. Scott Davis suggests visualizing a Brand Pyramid in constructing the image of brand. At the low level are brand attributes, at the next level are the brand’s benefits, and at the top are beliefs and values as shown below.
Brand pyramid
Brand building:
It is one of the most important activities to be performed for the lifecycle of any brand. Some of the various tools used by Nokia include:
• Public relations and press releases
• Sponsorships
• Events marketing
• High value for money
Brand Value:
It is the job of estimating the total financial value of the brand. The brand valuation is done on yearly basis for all ht global brands that have value greater than $ 1 billion.
Nokia is one of the top 10 brands in the world for past several years here is the brand value of Nokia in past 5 years:
Year Position Brand Value
In $ millions % change
w.r.t. previous year
2001 35,035
2002 6 29,970 -14%
2003 6 29,440 -1.2%
2004 8 24,041 -2%
2005 6 26,452 10%
Good chunk of the brand value comes from the marketing budgets, and different business models require different marketing approaches. It is interesting to note that in the top valued brands 6 out of 10 are technology companies
A strong correlation exists between the brand value and the innovation factor, which means their innovative efforts were correctly communicated and, moreover, there is a strong consistency between what the company judge as operational efficiency and delivers as a consequence and what the market accordingly perceives.
Nokia Brand Positioning
Nokia was named the 5th Best Global Brand in 2007 and has been one of the 10 best global brands for almost a decade. So what makes Nokia Brand so valuable and what is Nokia’s value proposition? As Tam Harbert of Electronic Business magazine has put it: “If Nokia Corp. were a person, it would be young, sexy, sophisticated, hip and generally “with it””. Nokia newly released high-end phones aimed at both the consumer and business user and is showing strength in both emerging and mature markets.
Nokia has been successful in differentiating itself in the crowed and highly competitive mobile communication industry and its newly targeted battle of internet industry. Nokia emphasizes technology innovation, fun spirit, design, and ease of use to build a “trusted relationship” with customers . The brand has lived up to the vision of its “Connecting people” and “Human technology” slogan. Nokia’s strategy can be easily spotted on company’s corporate website: Nokia’s strategy is to build trusted consumer relationships by offering compelling and valued consumer solutions that combine beautiful devices with context enriched services . Example would be Nokia phone’s faceplates and different colors that suit user’s personality, mood and lifestyle. By owing the “human” dimension of mobile communications, Nokia has taken the best position for itself, leaving its competitors behind pondering what to own to position themselves .
According to PerttiKorhonen, Chief Technology Officer, Nokia, a ‘consumer-first mindset’ remains at the core of everything at Nokia. This approach is communicated down to Nokia’s employees including designers who sketch a new mobile phone concept and hardware engineers who design complex technology enablers such as multiradio and video sharing.
Nokia offers mobile phones in five categories: broad appeal, lifestyle products, entry, CDMA and Vertu. Nokia ensures that every phone it offers can answer customers’ needs…
Dominating the Mobile Phone Market
The Nokia Brand
Nokia had been a dominant player in the mobile phone market ever since it entered the market. It quickly established itself as a strong brand by focusing on branding. The company’s philosophy the ‘Nokia Way’ called for four brand values – creative, inspiring, human, and accessible. The importance of branding was drilled into everyone in the organization through training programs…
Brand Strategy
The image and value of the brand is critical in consumer markets and a strong one is invaluable to an organization especially in today’s global economy, where the battle for customers is intensified each day. It isn’t just about the color of the logo, the type face used or even the images used. A brand is the source of a promise to a consumer of what a company is all about when it comes to its products and operations. Thus, it is a foundational piece in any marketing communication and one a company does not want to be without if it wants to stay competitive and successful. This is the reason why it is imperative for organizations to spend time investing in researching, defining, and building the brand. Developing a brand strategy can be one of the most difficult steps in the marketing plan process. It’s often the element that causes most businesses the biggest challenge, but it’s a vital step in creating a company identity.
This paper will take a look at the branding strategy for Peejay Engineering Co. Ltd as a way of all about understanding the elements that give the brand its strength and position in the market in Ghana and provides a review of its brand development strategy.
Unlike other industries such as the service and product manufacturing, the value of the brand tends to be undervalued. This company, like many others coming up has found that there is an essential need for brand development for three reasons:
• There are myriad of small and medium size business that provide architectural, engineering and construction services in various forms and variations. With is comes the difficulty of clients differentiating among these organization. Thus the better your brand the less confused clients are about your services. This enables you to get short listed
• The competition for talented and highly skilled professionals (of various aspects in the field) has been steadily increasing as…
Nokia Brand Marketing
Has the brand done a great job wit relationship marketing: marketing, experiential marketing to one-to-one marketing?
What did the brand do? Why was it effective?
Could others learn from that?
Nokia has done a really great job with relationship to marketing. In order to explain this, we will explain the general strategy that this Brand uses for its products, then the activities they have taken along with some specific examples. Later on we will see the results of this marketing, its effectiveness and either success or failure. Finally, we’ll comment about the possibility of other companies learning from Nokia.
The Product that the Brand offers has already been mentioned. However, in the marketing part it’s important to state that what characterizes Nokia is phones that tend to include all the latest technology and a lot of the consumers favourite aspects (here we have to write the special features that Nokia has). They offer also accessories like carry cases, hands free kits and in-car chargers, which generate Nokia a lot of profit, as they are very high priced.
Phones produced by Nokia are usually sold at high prices (introduction of new phones with the latest technology to the market can be expected at around ?280). This price usually decreases after an introductory period, around 2 months later. They try they try to keep their prices a bit lower than those of the closest competitors, but not as low as the smallest competition.
Generally, Nokia phones are sold at all established mobile phone dealerships such as Carphone Warehouse and The Link, although they are also sold at other retailers such as Dixon’s and other electrical suppliers.
Nokia’s tendency is to promote new technologies and mobile devices they create with one big advertising campaign, focused on a singular technology instead of each individual handset so they can appeal to a lot of different markets with one campaign. As the leader Brand in communications technology, Nokia is able to do…
The Use Of Brand Name As A Strategy For Gaining Competitive Advantage
These days, it has not only become a necessity but a need for all the competitive companies to build around a brand image. Branding in fact is something that companies have to strive if they need to capture a certain share of the market place. “Branding is basically the process of creating a strong identity for an organization and it applies to both product manufacturers and companies that provide a service” (Khan, 1). We see all sorts of companies around use these days whether they have to do with the transportation sector, the services sector, the hospitality sector or some other part of the economy. Everything from house tissues to the airlines we choose to fly on are, to a great extent based on brand names and brand images. Since the market competition has become so stiff and concentrated these days, the only successful companies are those who have applied branding strategies in a very remarkable fashion and are able to fully utilize their brand name for gaining competitive advantage. It is essentially through the practice of branding that a company is able to provide a meaningful framework by which it can establish an active relationship with its new and old customers. By having a successful branding strategy, customers are able to remember a particular company and what it stands for, what type of products it sells, the quality of those products and also what to expect when using its products. Branding indeed is the key to develop and maintain competitive advantage in today’s marketplace.
Marketing Strategy For Nokia
For this project I have been instructed to come up with a marketing strategy for an existing company/product I have chosen to do Nokia communications, particularly the mobile phone sector of Nokia’s business. 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)
* 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 world’s 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 company’s success was attributed to a strong second half in 2000 when 59 percent of sales occurred.
1. Nokia 37.2% (34.7% 1Q02)
2. Motorola 17.3% (15.5%)
3.Samsung 9.8% (9.6%)
4.Siemens 8.5% (8.8%)
5. Sony-Ericsson 5.2% (6.4%)
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 plan 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.
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 U.K 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 profits are more valuable then a strong ethical code and this can govern behavior 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 aren’t illegal by law but are considered highly un-ethical by the consuming public, companies who engage in these practice’s 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 publicis 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 newest
technological advances (like camera and motion capture phones) if they are going to capture the biggest market share and stay ahead of their competitors (Sony and Seimens).
Market development–
To complete market development successfully, Nokia must look into the following:
· Researching and selling to a different market (in case of saturation or poor market share)
· 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)
· Lower current prices to help the products appeal to a wider range of consumers.
Product development-
This area of the Ansoff’s matrix involves keeping 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 consuming population, companies need to gather information on the following:
· Consumer behavior-
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?
· 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 shouldn’t aim to enter into.
·
Consumer preferences-
What customers are looking for in a product, for example, style, color, technology, amount of outlets, customer service and promotional styles?
· Activities of competitors in the market-
Nokia need to examine how their rivals are adapting their prices and products to meet the consumersneeds, how well the rivals are selling and what marketing 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 retail outfits 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, Nokia’s 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:
· Face to face survey
· Open ended interview
· Telephone survey
· Postal surveys
· Consumer panels
· Observations
· Experiments
Methods of collecting secondary data:
Internal sources:
· Existing reports
· Distribution data
· Shopkeepers opinions
· Stock records
· Sales records
· Accounting records
External data:
· Government statistics
· Specialist business organization, for example, Mintel or Neilsons retail audit.
· 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 about the 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
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 U.K in 1999:
*Socio-economic group
% Of population
*A-Upper class
2.8%
*B- Middle class
18.6%
*C1- Lower middle class
27.5%
*C2- Skilled working class
22.1%
*D- Working class
17.6%
*E-Low income earners
11.4%
I think that Nokia should aim their products at the socio-economic group B (middle class) event though they aren’t 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 product to a market or product that is currently showing a continuing upwards trend.
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 P.R
* Sales promotion
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 analyzing 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 haven’t 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.
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 previously was.
*Demand based pricing
This is usually pricing products based around the customer demand for a 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 don’t 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 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 company’s 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 maximize profits? Or is the company looking to increase its market share?
* Marketing mix-
What stage is the product at in the life cycle? What forms of promotion are being used? Where is the product being 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 £200+, if they carry the latest technology). The price of the new phones usuallydecreases after an introductory period, which is usually around 2 months long. Nokia’s 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 Dixon’s and other electrical suppliers. The products are only sold in the electrical suppliers and stores other then dedicated phone dealerships after the introductory period 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 favorite 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.
Nokia’s marketing mix has worked very well until recently as the market they are aiming at has become more and more saturated and after 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 aiming at. Nokia’s 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 in their 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 men’s 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 Nokia’s 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 advertisement’s and with sponsoring large events like the ones I have previously mentioned.
Pricing strategy
Nokia’s 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 new market, companies who are already well known in the market still 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 another companies 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.
Nokia’s 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 37.2% 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 recognizable 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 weren’t established enough to sell based on their quality and what they offer to the consumer, so this is 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 e.t.c) so they could charge higher prices then they can at the present time in the product life 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 a quality 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.
What I have found out by analyzing S.W.O.T is that Nokia’s main weaknesses are:
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 1996’s sales.
There are many external factors that can affect a marketing strategy from developing; this is where you must use P.E.S.T analysis. I have outlined P.E.S.T analysis on pages 2 and 3 but have further analyzedthe effect of these external factors on the development of Nokia’s marketing schemes below:
Political factors-
Legal factors, such as the G3 technology licensing which has cost companies a total of 110 billion euro’s 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 Nokia’s 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 loosingtheir entire market share to eco-friendly companies
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.
Nokia’s 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 Nokia’s 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
Nokia’s business strategy
“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 personalized 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 capitalize 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 player’s in wireless communications and significantly influenced the way in which voice and other services have been 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 commercialization of the higher capacity networks and systems required to 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 sambaing; 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.
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 R&D employees, approximately 38% of Nokia’s total personnel. Nokia has R&D centers in 14 countries. Investments in R&D increased by 2% (16% in 2001) and totaled EUR 3 052 million (EUR 2 985 million in 2001), representing 10.2% of net sales (9.6% 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, Nokia’s personnel decreased by a total of 2 101 employees (decrease of 6 440 in 2001).
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 reflect and 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.
*Dividend
Nokia’s Board of Directors will propose a dividend of EUR 0.28 per share in respect of 2002.
Revised marketing strategy
As Nokia’s 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.
*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 advanced technology 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 £125 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 also be sold at the three main supermarkets; Sainsbury’s, 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 to buying a magazine regularly. The most popular newspapers were The 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