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Mobile Phones

1. INTRODUCTION

Day by day, mobile phones are turning into more of necessity then a luxury. The benefits of the mobile phone are far too many. Ease of communication, the anywhere, anytime contact - with friends, relations, colleagues and in theory at least the efficiency brought to busy lives. Nokia's growth in Mauritius has been substantial. They have been the market share leader for long time now. What is interesting is that there is further scope of improvement in sales. It is a high technology market and Mauritius being a developing country, will see more and more subscribers to this technology in the future.

This research aims at studying the strategies applied by Nokia in Mauritius, and analyzing the effects of these strategies on the sales of the company. The objective was to study the main reasons of success of the market leader Nokia, and also to study the drawbacks of the company. It was intended to study the areas where there was scope of improvement and note down some recommendations.


1.1. TITLE OF DISSERTATION:

Evaluating the marketing strategies of Nokia mobile phones in Mauritius.

Assessing the marketing strategies of the Mobile phone Industry in Mauritius : a case study of Nokia.


1.2. RESEARCH OBJECTIVES:

The main objective of the research is to evaluate the marketing strategies of "Nokia" mobile phones on the Mauritian mobile phone market in order to provide suggestions to H.M Rawat group to increase its market share. In more concrete terms, the research objectives of this study are:

  • To assess the level of brand awareness, usage and loyalty for Nokia Mobile phones in Mauritius;
  • To define the segment of Mauritians who use Nokia mobile phones and identify their purchasing and media habits;
  • To determine consumers' perception and attitude towards "Nokia" mobile phones in the local market;
  • To examine the diffusion and penetration of promotional strategies, such as advertising, sales promotion, direct marketing, publicity and sponsorship, of Nokia mobile on the local market, and assessing their effectiveness on consumers.
  • Provide strategic recommendations based on findings that can help H.M Rawat group to improve over "Nokia" mobile phones.

1.3. CHAPTER OUTLINE


1.4. THE GLOBAL MOBILE PHONE MARKET

Despite a looming global recession, financial crises in rich nations, and soaring food prices in poor countries, worldwide shipments of cell phones have soared in 2008. This may be due to the surging demand of mobile phones in Asia, Africa and the rest of the emerging world. Indeed, in 2008, Nokia remains the world's largest manufacturer of mobile phones, with the a staggering global device market share of 39.4%, followed by Samsung (17.3%), Sony Ericsson (8.6%), Motorola (8.5%) and LG Electronics (7.7%). These manufacturers accounted for over 80% of all mobile phones sold at that time.

The spread of mobile cellular services and technologies has made great pace towards connecting the previously unconnected, with growth most significant in developing regions, where, by the end of 2007, mobile cellular penetration had reached close to 40 per cent. By the end of 2007, 64 per cent of the world's mobile subscriptions were from developing countries. Five years earlier, in 2002, they represented only 44 per cent.

Among the developing regions, Africa continues to have the highest mobile growth rate of 32 per cent in 2006/2007, and mobile penetration has risen from just one in 50 people at the beginning of this century to over one fourth of the population today. Africa's mobile penetration of 28 per cent compares to 38 per cent in Asia, 72 per cent in the Americas, 79 per cent in Oceania, and 111 per cent in Europe.


2. LITERATURE REVIEW


2.1. DEFINITION OF STRATEGIES


2.1.1. Business strategy


2.1.2. Marketing strategy


2.2. MARKETING MIX

The marketing mix is a set of controllable tactical marketing that the firm blends to produce the response it wants in the target market (Porter, 1999).

Marketing strategies are general concerned with the four 'P's of the marketing mix to meet the needs of the target market (McCarthy, 1960).

  • Product
  • Price
  • Place
  • Promotion

The 4Ps must work together in a single marketing plan to satisfy the customer's needs and allow the firm to make a reasonable profit. Marketing mix elements are often viewed as controllable variables because they can be changed. They also describe the result of the management's efforts to creatively combine marketing activities (Zineldin and Philipson, 2007).

However, in recent years, the popular version of this concept McCarthy's (1964) 4Ps (product, price, promotion and place) has increasingly come under attack with the result that different marketing mixes have been put forward for different marketing contexts (Rafiq and Ahmed, 1995). According to Ivy (2008), tangible products have traditionally used a 4Ps model, the services sector on the other hand uses a 7P approach in order to satisfy the needs of the service provider's customers: product, price, place, promotion,

  • people,
  • physical facilities and
  • processes.

2.3. PRODUCT STRATEGIES

The product is what is being sold. It is more than a simple set of tangible features; it is a complex bundle of benefits that satisfy customer needs (Ivy, 2008).

It is generally accepted that marketing, for example, is primarily concerned with the needs of customers and therefore stresses the importance of product differentiation. These policies are said to favour the existence of a relatively broad and constantly renewed product mix. Production, in turn, is supposed to emphasise the smooth operation of the manufacturing process, which implies a narrower and more standardised product mix (Eriksson and Räsänen, 1998).

Kotler (1997) identifies 5 levels of a product and suggested that such level adds more customer value:

  • The core benefit - what the customer is really buying.
  • The basic product - the physical product.
  • The expected product - the set of attributes the customer is expecting.
  • The augmented product - attributes that meet the customer's desire beyond expectations.
  • The potential product - encompasses all augmentation and transformation.

2.3.1. New product development

According to Yang and Yu (2002), NPD process may be viewed as a series of activities, including idea generation, product development and product commercialization. The development of outstanding products not only opens new markets and attracts new customers, but also leverages existing assets and enlarges an organization's capabilities (Zhang, 1998).

However, new product introduction in today's technology-driven markets carries significant risk. The rapid rate of technology development, change of customer's needs, shortened product life cycles, integration of global markets pose a tremendous challenge to NPD processes (Yang and Yu, 2002). Therefore, without the introduction of new products, deterioration of the firm's market position is inevitable.

Initial or early entry of new products, on the other hand, can result in new market development, long-term market dominance, and foreclosure of competitors' responses. Failure to respond to competitive new product introductions with appropriate speed can result in late market entry, a permanent loss of market share and dissipated profits (Yelkur and Herbig, 1996).


2.3.2. Branding

The American Marketing Association defined a brand in the early 1960s as:

A name, term, sign symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors (Charters, 2009).

However, according to Vukasovic (2009), a brand is much more than just an element of attraction. A brand is a sum of all perceptions, notions, and associations about a product or a service that is being formed in consumers' heads. It is all about emotional comprehension of goods that the consumer requires or seeks on the market. The primary importance of the brand is in establishing an emotional relationship between the consumer and the product. In any case, the consumers encroach upon products with good quality; however, the quality of the product is but a prerequisite for forming a brand. The latter has to have its own personality, its identity, an image and character.

As a matter of fact, Aaker (1997) defined brand personality as 'the set of human characteristics that consumers associate with a brand'. According to Aaker, brands possess personalities: sincerity (wholesome, honest, down-to-earth), excitement (exciting, imaginative, daring), competence (intelligent, confident), sophistication (charming, glamorous, smooth), and ruggedness (strong, masculine). Consumers might search for brands with a personality that coincides with and reinforces the self-concept they wish to project, offering additional considerations for the impact of the brand personality concept (Arora and Stoner, 2009).


2.3.3. Packaging

According to Lee & Lye, (2003) product packaging is the science, art and technology of protecting products for the purposes of containment, protection, transportation/storage and information display.

Packaging is essentially a marketing function which relates most directly to sales packaging: as well as attracting attention to a product and reinforcing a product's image, packaging provides an attractive method to convey the virtues of the product. This function is reinforced when one considers that packaging is the single most important factor in purchasing decisions made at the point of sale. Therefore packaging has a strategic purpose also since it helps a product stand out from competition (Prendergast and Pitt, 1996).

The package's overall features can underline the uniqueness and originality of the product. Quality judgments are largely influenced by product characteristics reflected by packaging, and these play a role in the formation of brand preferences. If the package communicates high quality, consumers frequently assume that the product is of high quality. If the package symbolizes low quality, consumers transfer this "low quality" perception to the product itself (Silayoi and Speece, 2007).

The package becomes the symbol that communicates favourable or unfavourable implied meaning about the product. Underwood et al. (2001) suggest that consumers are more likely to spontaneously imagine aspects of how a product looks, tastes, feels, smells, or sounds while viewing product pictures on the package.


2.3.4. Innovation

There are many companies that depend for their survival and prosperity on the ability either to radically improve existing products and services or, better still, develop new ones, and then deliver them to their customers in a timely manner. Companies operating in high technology fields such as computing and biotechnology are particularly faced with this imperative. In this sense, one could think of these firms as having an existential dependency on innovation (Bernstein and Singh, 2008).

Bernstein and Singh (2008) have suggested that innovation is "a complex process with multiple, cumulative and conjunctive progressions of convergent, parallel and divergent activities".

Eisenhardt and Tabrizi (1995) conceptualize this view of innovation as an uncertain process that relies on improvisation, real-time experience and flexibility. Innovation in this context follows a very uncertain path through fast-changing markets and technologies. To speed up the innovation process, it is not only necessary to exercise intuition and flexibility, but simultaneously, have enough structure for sense making, avoidance of procrastination and confidence to act decisively.


2.4. PRICING STRATEGIES

For many organizations price is potentially the most controllable and flexible element of the marketing mix. A number of different authors have underlined the importance of pricing decisions for every company's profitability and long-term survival.

For instance, Nagle and Holden (1995, p.42) point out:

"…if effective product development, promotion and distribution sow the seeds of business success, effective pricing is the harvest. Although effective pricing can never compensate for poor execution of the first three elements, ineffective pricing can surely prevent those efforts form resulting in financial success."

Moreover, it have suggested that pricing is the only element of the marketing mix that produces revenues for the firm, while all the others are related to expenses (Avlonitis et al, 2005).

Despite this significance of pricing as an element of the company's marketing strategy, there seems to be a lack of interest among marketing academics on this issue, which has brought Nagle and Holden (1995) to suggest that pricing is the most neglected element of the marketing mix. Research has been conducted on the field of pricing is very limited, while this is even more evident in the case of services. However, the distinctive characteristics of services (intangibility, heterogeneity, perishability and inseparability) necessitate a closer look at the way at which services are priced (Avlonitis and Indounas, 2005).


2.4.1. Pricing objectives

Pricing objectives provide directions for action. To have them is to know what is expected and how the efficiency of the operations is to be measured. Not to have them is a lack of direction. (Avlonitis and Indounas, 2005). These objectives should be consistent with and advance corporate and marketing objectives", which may vary from company to company (Kehagias et al, 2009).


2.5. PLACING STRATEGIES

Place, or distribution, is the term used to present the task of making products and services available to customers. Kucuk (2008) emphasizes the importance of distribution according to marketing theory as follows:

"A strong but hidden assumption behind marketing decisions is the availability of the product being offered at a time and place relevant to the buyer. Every program to introduce new products, build brand loyalty, and maintain market share implies a high level of distribution-system performance, an assumption not always warranted."


2.6. PROMOTION STRATEGIES

Promotion is a vital part of business and is an integral ingredient of the total marketing process. It helps to make potential customers aware of the many choices available regarding products and services. Typically, this task can be accomplished through print and broadcast advertising, direct mail, sales promotion, public relations and personal selling (Fam and Merrilees, 1998).

An appropriate promotional mix must be created in order to meet the promotional objectives of any given promotion strategy. The promotional mix is the combination of different promotional channels that is used to communicate a promotional message. This will involve an appropriate selection from the range of tools that are available for use as part of the promotional mix (Rowley, 1998). The tools in the promotional mix include:

  • Advertising
  • Direct marketing
  • Sales promotion
  • Public relations and publicity
  • Sponsorship

According to Peattie and Peattie (1994), promotion can be used as a tool to develop new customers from among the potential users and some poached from competitors, and this will provide long-term benefits of an increased customer base and an expanded market. This is possible because consumers who try a promoted brand and are satisfied with it have an increased probability of a repeat purchase.

However, Fam and Merrilees (1998) argues that the growing expense involved in promotion plus their relatively limited financial resources and managerial expertise prohibit many businesses especially the small businesses, from utilising some of the promotion tools.


2.6.1. Advertising

Advertising is pervasive, intrusive and, at times, pernicious and the purveyors of the art have been known to be mischievous in their attempts to reach and persuade their target markets (Harker, 1998).

The source of most bad advertising is not a lack of creativity, entertainment value or money for production. Just because a slickly produced commercial is part of an expensive campaign by a large firm does not mean that the campaign is based on a good marketing strategy, or, for that matter, that it had any strategy behind it. In reality, many companies employ advertising tactics without a strategy, or if a strategy exists at all, it is presented without reference to consumer views. Millions of dollars are often spent on commercials that never had the consumer in focus (Rotfeld, 2002).


2.6.2. Sales promotion

Sales promotion, a key ingredient in marketing campaigns, consists of a collection of incentive tools, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade (Kotler, 2006). It is a short-term strategy to stimulate demand (Banerjee, 2009).

Sales promotions can offer many consumer benefits, the most obvious being monetary savings, although consumers also may be motivated by the desire for quality, convenience, value expression, exploration and entertainment (Kwok and Uncles, 2005).

According to Chandon et al., (2000), these benefits are further classified as either utilitarian or hedonic. Utilitarian benefits are primarily functional and relatively tangible. They enable consumers to maximise their shopping utility, efficiency and economy. In general, the benefits of savings, quality and convenience can be classified as utilitarian benefits. By contrast, hedonic benefits are more experiential and relatively intangible, associated as they are with intrinsic stimulation, fun and pleasure. Consistent with this definition, the benefits of value expression, exploration and entertainment can be classified as hedonic benefits.

However, it is also important to note that studies of price promotions also show that customers who take advantage of a price promotion often return to their favourite brands (Gilbert & Jackaria, 2002). Moreover, according to Lee (2002), sales promotion are not used strategically but are used as panic measures, adding that this 'addiction' damages the brand and actively undermines longer-term objectives.


2.7. SEGMENTATION

According to Kotler (1999), market segmentation is dividing a market into distinct groups of buyers with different needs, characteristics or behavior, who might require separate produces or marketing mixes.

Lin et al. (2004) defines market segmentation as the division of a potential market into several subsets, with each subset of consumers having common needs or characteristics, and that one or several subsets are selected as the enterprise's target market and a specific marketing mix is developed with which to cater to the needs of these target markets.

Market segmentation has always had a very important place in the marketing literature. Besides being one of the ways of operationalizing the marketing concept, market segmentation provides effective guidelines for firms' marketing strategy development and resource allocation among their diverse product markets (Kara and Kaynak, 1997).

The customer and competitor analyses which a segmentation approach require, allow the business to become more in tune with the behaviour of both. The result can be a better understanding of customers' needs and wants, allowing greater responsiveness in terms of the product on offer. The enhanced appreciation of the competitive situation also allows the business to better understand the appropriate segments to target and the nature of competitive advantage to seek (Dibb, 1998). Another advantage offered by market segmentation is that it provides a structured means of viewing the marketplace confronting the firm (Minhas and Jacobs, 1996).


2.7.1. Issues with the segmentation concept

The major issues in segmentation studies centre on the bases on which the segmentation should be conducted and the number of segments relevant to a particular market. The selection of the basis for segmentation is crucial to gaining a clear picture of the nature of the market. In addition to choosing the relevant bases for segmentation, to make the segments more accessible to marketing strategy, the segments are typically described further on common characteristics (Dibb and Wensley, 2002)

According to Quinn et al. (2007), consumers are abandoning predictable patterns of consumption. Changes in lifestyle, income, ethnic group and age are further increasing the diversity of customer needs and buying consequently meaning that marketing segmentation approaches are arguably becoming less effective and less efficient than they are often perceived to be.

Moreover, difficulties sometimes arise when strategies and marketing programs have been devised with little or poorly structured background marketing analysis. Even where the background analysis is thorough, the strategies devised may not translate into modified marketing programs. Altered segmentation strategy may require far-reaching organization and marketing changes, which are difficult to undertake and which may not be attractive to sales and marketing executives (Dibb and Simkin, 1997).


2.8. TARGETING


2.9. PRODUCT POSITIONING


1. INDUSTRY ANALYSIS


1.1. COMPANY BACKGROUND



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