Marketing Strategies Used By Nokia Marketing Essay
In order to execute the project on hand I have select Nokia. Nokia was founded by Fredrik Idestamin in 1865 as public limited company. Nokia is leading the cellular phone industry with around 38% of the market share, while Motorola, which is American based is having 12% of total market share. Nokia used be a diversified conglomerate up till 1980 with business includes pulp, rubber tire production, paper, telecommunication equipment, cable manufacturing, and consumer electronics. The geographic target market of Nokia was mainly limited to Scandinavia (70% market share) and US (33% market share) (123helpme, 2010). It should be noted that Nokia had never enjoy monopoly in any market including Finland and the company share is due to its competitive marketing strategy, state of the art product designing and manufacturing, pricing strategies and creative marketing campaigns. The company has constant record of launching new product that either low costs or cutting-edge technology, and flair have not yet been stopped. These two characteristics of the firm are giving it competitive advantage and the company is still the most profitable company of the mobile-phone manufacturing industry (Kumar, Banthia, & Sharma, 2010).
Nokia headquarter in situated in Espoo, Finland. The Research and Development wings of the company are situated in 10 countries around the globe. The device manufacturing factories of the company are located in nine countries while the company transacts its business in more than 150 countries of the world. In this paper we going to investigate that how does a Finnish organization become a world leader in the highly sophisticated cutting-edge industry from the marketing viewpoint?
Importance and the use of Information in their Marketing Strategies of Nokia:
In the decade 1990s the telecommunication industry around the globe experience three significant positive changes that sets the foundation for future growth. These three trends were increase in the use of internet, deregulations of the market that led to easy access for new competitor and the advent and popularization of wireless services. Nokia then adapted the three strategies in its marketing program. This was a mega turn in the history of Nokia.
In order to get the exploit the opportunities provided by the environmental factors and decrease the potential demerits of changes that might have impact on the business, Nokia initiated an information system project. It has decided to install an information system that will facilitate decision maker across the organization in its various functional departments. For this sake Nokia takes advantage of Management Information System (MIS), Decision Support System (DSS), Executive Information System, Transaction Processing System (TPS) etc. Through the use of these systems the organization not only was able to manage the organization effectively and efficiently but was also able to coordinate its different R&D departments (that are situated in 10 countries), its manufacturing facilities (that are situated in 9 different countries) and its distribution networks that situated in 150 countries.
Organizational & Marketing Strategy Used by Nokia:
Nokia historical logo was "three arrows" that were created in 1966, the company then devise it's presently used organizational slogan "connecting people". This slogan was design by Ove' Strandberg. The company is the world 6th "most loved and fastest growing brand of the world". All this was possible due to Nokia consistent organization wide supportive culture, shared values and vision.
The vision statement of Nokia is "our vision is a world where everyone is connected", and its promise is "Our promise is to help people feel close to what is important to them". The approach the company used for to achieve this objective is "Trusted consumer relationships", "Best mobile devices everywhere", and "Context enriched services" (Nokia, 2010).
In order to achieve its organizational objectives, the marketing wing of the Nokia is doing remarkable job. In the following we explored different aspects of the marketing strategy used by Nokia.
Geographic: Both Rural and Urban areas
Demographic: Male and Female
Age: 22-50 (almost 80% of the sales comes from this segment
Consumer Segments: All the three types of users including high-users, medium users and light-users. (Kumar, Banthia, & Sharma, 2010)
The focus of the marketing efforts of Nokia is mostly on handset manufacturing only. The company is constantly enhancing its product portfolio by inventing constantly new models. The mobile phones that are manufactured by Nokia have two diverse focuses: either low costs or cutting-edge technology. The products of the company are adopted as per the specific markets situation. For example handsets distributed in Middle East have an Arabic language function, while in France the language is tailored as French.
Nokia use two types of branding strategies. It is due to the fact that its target market consumer consists of two types of customers: Upscale buyers and Economy seeker. For upscale buyer the company built its brand with high-end multimedia handsets, while for economy seeker in emerging markets its branding strategy focuses on providing economical handsets (123helpme, 2010).
The pricing strategies used by Nokia vary from situation to situation and from product to product. For cutting-edge technological products that are newly designed by the company R&D, the company use first the skimming marketing strategy, and then decrease the price. While for cost-effective products that focus on economy, the company use penetrating pricing strategy.
The company success can be traced to the excellent promotion activities carried out by the organization. The company use integrated marketing communication to promote its various products in different region of the world. The promotion activities are directed toward replacement
The company distribution network is situated in 150 countries, and the company is still using its aggressive marketing strategy to boost its network, and market development strategy to target new markets from around the world. Nokia has come up with new place strategy by opening of the retail outlets known as "Nokia Priority".
Nokia: in the Global Context:
Nokia has successfully used its marketing strategy to target diverse customers from around the world. Its products are equally used by rural as well as people belong to the urban areas. The company is using the right blend of standardization and adaptation. By studying the global market strategy of Nokia one can argue that Nokia standardized its products when possible and customize its products when needed. For example Nokia introduced its dust-resistant mobile phone with anti-slip grip and flash light in less developed markets including India, Pakistan, Bangladesh etc. the product was customized according to the needs and wants of the rural market of the people living in these countries. Such sort of commitment to the needs and wants satisfaction of the target market by Nokia shows Nokia genuine commitment towards the local customers needs.
The competition in the global market for Nokia is increasing with the passage of time. As the market for cellular phone is passing through the growth stage of product life cycle, constant entrance of new cellular phone manufacture is continued. The competition for Nokia includes: Motorola, Sony Ericson, Samsung, Siemens, Panasonic, NEG, Toplux and Sagem and many more. In order to keep its share in the international market Nokia must continue to exploit its competitive advantage to get ahead of competitors. It needs to have more focused marketing strategy.
Nokia late arrival of can-bar phone and missed design trends like clamshell phones are some of the factors that has led to decrease in the market share of the company (Kiley, 2007). Nokia market share was 66% in 1999, which now stood at 38% (2009), it means that although in terms of sales its revenue is increasing with the passage of time, but in terms of market share, competitors are capturing niche from Nokia.
Nokia is using aggressive marketing strategy in the global market. Since 1997, the company has acquired 37 companies around the world. The acquisition includes, Cellity--- a mobile software company, OZ Communications of Canada, Navteq which is a U.S. base supplier for a price of $8.1 billion, and Enpocket supplier of mobile advertising technology and many more (Kumar, Banthia, & Sharma, 2010). These acquisitions have strengthened the market standing of Nokia, and help the company to boost its competitive advantage.
The global sales of Nokia are increasing and the organization is constantly using four types of strategies to increase its sales in the global market. Nokia is increasing its sales in its existing market of already available products through increase strong positioning strategy, promotion activities, and competitive pricing strategies, and thus company is able to increase the sales for its products. The company has constant record of launching new product that is either low costs (that target low-income group) or cutting-edge technology (that target upper-upper and upper-middle class of the market), and flair have not yet been stopped. New market offer exciting opportunities to Nokia and the company is continuing to explore new market in the world. Currently the distribution network of the company has been established in 150 countries in all the continents of the world.
The company now developed multifunctional cell phones, and continued to put up its business in significant on the rise markets such as India, China, Middle East and Indonesia where the target market are still looking for reliable hardware. The strategy is working for Nokia and over the year it has been able to launch series of new version in the global market. And Nokia is now looking to target 200 million middle class population of China for whom the company has developed customized products that costs under 63$ (Kiley, 2007).
On the other hand, the situation in US is quite different. That's why the company is using different strategy to target that market. In US market growth is tough because the market is driven by cell-service provider. For example Verizon Communication sell phone to customer at subsidized rate to its target market. Nokia's relations in US with cell phone operator are not as strong as those of competitors that are why the company is suffering in this front.
To tackle this trend, Nokia have reportedly spends $5.4 million in 2007 and $2 million in 2008 on lobbying in the U.S. market to hold its market share. The strategy was very successful for the firm, as it resulted in favorable political environment for the company. Had the company adopted the same strategy in before the results for the company must have been quite different and it must have not lost its market share in the US market? On the other hand the condition is quite change as compared to condition in US and the consumers can buy the cell-phone of one's own choice, and then shop for their service.
In order to take advantage of favorable market conditions Nokia has joined hands with Siemens Networks and formed a joint venture in 2006. Nokia Siemens Networks services are available in 150 countries around the world. Both the companies have merged their fixed line and mobile phone network equipment business to create the world's biggest network. This has resulted in 1.5 billion Euros for Nokia in year 2009.
Nokia e-Business Strategy:
For Nokia e-business is not just limited to web presence to make easy buying selling. Nokia is exploiting the collective power of the internet and IT to vitally convert its strategic business strategies and business processes. Nokia is one of the successful ventures of the world that is using the e-commerce and e-business solution in its flair to build successful relation with its target market. Nokia e-business is known as Nokia Payment Solution that was initiated in 2001 (Nokia, 2010). The Nokia Payment Solution is unique program that enables payment service providers to mediate payments between three parties including financial institutions, distributor and consumers. This platform allow Nokia to collect, manage and clear payment initiated from mobile phone and other web-enabled terminals all the way through different payments methods including debit cards, credit cards, operator's prepaid and postpaid system.
Nokia provides Nokia Signet Server that serves the purpose of verification and payment transaction of non-repudiation through digital signatures. The verification and digital signature connecting the client and server are satisfied using the wireless Public Key Infrastructure (PKI) technology.
On the other hand Nokia is using its e-Business strategy to successfully integrate its various divisions across the world. Nokia factories are situated in 10 countries, and its R&D wings are situated in 9 countries. E-business provides an opportunity to Nokia to cut its costs dramatically through e-procurement, which is as a way for Nokia to better track and manage their purchasing.
Nokia also provides various blogs in an effort to know its target market. This e-chat provides Nokia a form of technical and customer support is an excellent example of its customer focused e-business strategy. This e-business strategy that supplement Nokia traditional phone support is a system that saves precious time for Nokia while providing opportunities to know its customer more deeply.
Nokia e-business strategy has helped the marketing strategist to better plan their product offerings, keeping in view the latest trends of the market. The products are designed and manufactured keeping in view the needs and wants of its target market. Through the use of e-business the marketing department is able to develop and retain its valued customers. Nokia website provides online support to its valued customer in the form of free download (music, video, themes, etc), software solution, and integration of different task related to products. . This had helped the company not only in creation long-lasting, and satisfied customer creation but also helped the company to prolong the product life cycle of its various products.
On the other hand Nokia has formed strategic partnership with Facebook. Facebook is a social network website that connects people and work as link between them. This had provided remarkable opportunity to Nokia, because the Facebook application for Nokia is available for download in more than 150 countries. Nokia is the only mobile company of the world whose handsets can be connected to Facebook. This has created a world of opportunities for both Nokia and Facebook. (Nokia, 2010)
Over the last two decades the mobile-phone market has gone through tremendous changes, with unbelievable products and rapid growth in the market. The growth of the market is still continued. Nokia is using its creative marketing strategies to hold its market share through strong positioning and competitive strategy in order to beat the competition. The company sales performance has been increase dramatically in the past few years, although it has lost a portion of its market share to new rivals in the market. If the company continue to tailor its marketing strategies according to the needs and wants of the target market, its chances for success in the market will increase even more.
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