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How Successful Nokias Entry Strategy Been Case India Marketing Essay

Since the late 1990’s the cellular phone market of India has recorded significant amount of growth and has become the fastest growing in the world. The entry of Nokia in the Indian market was in the year 1994 [1] . When Nokia entered the Indian market the policies of telecommunication industry were not conducive to the growth and development of the mobile phone industry. The tariffs imposed on mobile phones were as high as 27% and the usage charges were Rs. 16 per minute [2] . Due to these high rates the customers were not able to go for mobile phones and mobile phones remained a symbol of luxury and high society among Indian people. Also, Nokia faced tough competition for the other powerful mobile global players like Siemens, Ericsson, Sony, Motorola etc.

Nokia learned from its mistakes quickly and then went on adopting strategies which helped it regain its lost market share. Globally, the sales of the company reached to 7.4 billion Euros in the first quarter of the year 2005 and the company sold 54 million phones during that period [3] . Since 2004 the brand Nokia gained wide acceptance and was growing steadily in the Indian market. In 2008, Nokia share in global market was around 30% out of which 59.5% was the contribution from Indian markets [4] making it a profit sanctuary for Nokia.

Research Intention

It is always difficult for a company to successfully enter into a foreign market because of various issues like cultural differences, entry barriers created by domestic competition of that country, difference in political and economic scenario and differences in regulations & policies of government related to telecommunication sector for foreign players. The diverse nature of Indian market and unconventional approaches to business makes India a special case and difficult task for foreign players to enter and establish themselves. The main intention of the research is to critically examine and evaluate the importance of entry strategy in context of India keeping the success story of Nokia as the centre of study and thus defining the parameters to be kept in mind while designing an entry strategy for India.

Research Justification

A company can opt to enter into foreign markets for various reasons like to expand the customer base, to spread its business risk across a wider market base, to increase the market share and to tap new markets and thus increase sales [5] but often a company fails to successfully enter and establish itself, the major reason being cultural differences and new market conditions. Thus, it becomes extremely important to know the key issues and conditions that may prevent a company from entering into a country.

The literature regarding the entry strategy of Nokia which is based on the two main approaches it has followed which are the market-led and the resource based approach. These two approaches are to be viewed as complementary to each other [6] . This research analyses Nokia’s strategies along with the complementary and reciprocal relationship between the two approaches. Nokia was able to achieve tremendous success due to the balance it has maintained between the two approaches. In 2004, Nokia was unable to maintain this balance and it immediately suffered resulting in decreased revenue and reduced market share [7] . However, Nokia was quickly able to recover from the slowdown because of the overall market boom and corrective strategies it followed. Simultaneously its strong internal strengths were quite enough to neutralize its external threats. Nokia was able to maintain leadership position due to capitalization of the good opportunities prevailing in the mobile market and the strong internal base of resources.

One can learn from the difficulties and challenges faced by Nokia and the strategies employed by the company to tackle those challenges. Thus, analyzing the strategies of Nokia will give a better insight in framing, planning and designing the strategies for entering into Indian market. It will be useful for companies which are planning to enter Indian market or similar other market to understand various issues to keep in mind while building a strategy.

Research Position

For the purpose of this research study, the particular area in which Nokia excels is its business in telecommunications and mobile phones. The aim is to demonstrate how Nokia adapted itself to the Indian culture and brought changes according to customer needs in its strategy due to which the customers were deliberately and emotionally attached with the brand of Nokia and the company was successfully able to generate trust among the customers.

Research Aims

The aim of the research is to understand the entry strategies of Nokia in India and analyze on the basis of different marketing principles.

Nokia in India is the focus of this research study. This research is based on the required competencies Nokia possess with an aim of providing generalized suggestions for the other organizations to follow similar practices. Other organizations may not have the similar internal competencies as that of Nokia so they need to follow “me-too” approach in the long term [8] . For the reasons the research perspective is to propose the entry strategy of Nokia in India as a major contributing factor of the considerable success.

Research Objectives

The objectives of this study are:

To study and analyze the entry strategies of Nokia in India.

To analyze the role of the brand image in sustaining the market leadership.

To analyze the localization strategy of Nokia (this acted as a major tool for gaining leadership in the market).

To analyze the competitive scenarios in the mobile market of India.

It is very important to understand the market along with strengths and weaknesses of a company before designing strategy for the company. Hence, as a background work it is important to first study the Indian mobile handset market scenario and factors affecting it. Also, it is important to analyze the competencies of Nokia and its use in planning and designing the strategy. This will help us to understand the strategies adopted by Nokia.

Structure

The structure of the dissertation is as follows: Literature in context to the topic will be discussed and reviewed and thus evaluating the strategy being employed by Nokia compared with the general strategies used for entering into a foreign market. The detail methodology will be discussed based on which the strategy of Nokia and the effectiveness of the strategy will be examined which will be further followed by the recommendation and conclusion.

Approach

The methodology followed is research using secondary data. The data are mostly taken from the books, journals, magazines, report published by official agencies and government and other trusted resources and databases. As the basic nature of the project is study and exploration, the dissertation will try to identify various issues related to entry strategy of Nokia and critically review every aspect related to it with the help of various examples and secondary data.

Summary

It is always useful to analyze and study the strategy followed by various companies and the market itself before building or designing a strategy for a company. This helps to identify major issues related while designing and implementing the strategy and thus saves time and effort and also prevents from committing same mistakes. Also if a company has been successful then it helps to identify the factors that make a successful strategy.

Nokia used various strategy to enter into Indian market like customization according to needs of people, pricing and marketing innovation keeping in mind the culture of the people, product innovation, opening up of manufacturing plant in India by selecting strategic location of setting up the plant thus reducing manufacturing cost, wide distribution network and emphasis on post sale services. All of this made it possible for Nokia to capture more than 50% of market share in India.

In 2005, Nokia was recognized as the “Brand of the year” by India’s Apex industry association. Nokia was chosen for this award due to its high brand recall, distribution channels which are well established and also being preferred by the consumers. Even Harvard University invited Nokia India to talk about its success in Indian Market. Thus one can say that Nokia was successful in entering the Indian market and establishing itself as a brand. Though competency of company varies which results in different strategy for each company but one can build up strategy along the line of Nokia to enter into Indian market or at least learn from the Nokia story.

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