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03/20/2012

Nokia's Marketing Strategy


Nokia's Marketing Strategy

 

1.0 Introduction

            This report focuses on Nokia’s marketing strategies. Strategies are critical for Nokia to defend its existing market leadership status within the mobile phone industry. Nokia deals with the manufacturing of mobile and converged devices; key products include mobile phones, Smartphones, mobile computers and networks. Within this marketing report, it was able to provide an in-depth description of Nokia through a product analysis as well as the concept, targeting and positioning strategies that Nokia converged into to market its prominent brand. It is the aim of this report to critically evaluate the marketing strategies employed. Discussion is arranged in a way that marketing elements are broken down into pieces to evaluate each of these elements.   

1.1 Company background

            Nokia Corporation (Nokia) refers to an international communications company that focuses on the key growth areas of wire line and wireless telecommunications. Operating as early as 1865, Nokia is now in the forefront of mobile technology and boasts for over 150 years of innovation. Today, the corporation produces an array of mobile devices and with services that enable users to experience music, navigation, video, television, imaging, games and business mobility among others. Nokia is now considered as the world’s largest manufacturer with a global market share on mobile devices (39%) and converged devices (40%) on Q4 2009 (Nokia Corporation 2009).     

            Nokia’s mission is to provide consumers with innovative digital convergence products that possess exceptional technology, quality, features, performance and value. To wit, Nokia purports to connect people to each other and the information that matters to them with easy-to-use, and modern products that include mobile phones, devices and solutions for imaging, games, media and businesses. Its simple mission: to “connect people” in every-time, everywhere, everyplace and every day (Nokia Corporation 2008). 

            To generally evaluate Nokia’s marketing strategy, the overall marketing strategy always aimed at being strategic and will provide the corporation the competitive edge through 100% market share. Because competition is very strong, saturation of target market is not an option for Nokia instead new target markets are penetrated. Also, Nokia understands the need of the people hence launched products depending on these needs. As much as possible, Nokia products need to be technically advanced but are uncomplicated and easy to use. Product and research development therefore is tied with market research which is critical for Nokia because its products are highly consumer-oriented. Listening to the voice of the consumers thus means profitability for Nokia.

1.2 Product analysis

            Nokia depends on marketing intelligence throughout the lifecycle of its products since they can predict market trends and counter the strategies that competitors will employ. Product and market information are considered as the lifeblood of Nokia especially since generating income or profit relies on these endeavors. For one, Nokia should be aware whether its products are developing along with the market. Product development at Nokia involves keeping up to date with the latest technologies. And two, Nokia must be always aware of what is happening within their designated market. For Nokia, market development means to research and sell to new markets and make the products appeal to a broader whole new market segments.

In marketing mobile phones specifically, each mobile phone has a product lifecycle. Almost all of the mobile phone’s life is 1 year but depending on the features, functions and professional style Nokia could extend the product’s life to 2 years (Nokia Corporation 2003).  During the introductory phase, Nokia requires a lot of advertising and promotion, making the consumers aware of the new product. Expectedly, advertising and promotional costs will be as high especially when other mobile companies will spontaneously launch their products, capturing and dividing the market share in the process. Nevertheless, advertising is a proven powerful tool to promote technological advances.

            Subsequently, in the 4th month onwards, Nokia will start to generate profit through the combination of good market research, strong sense of branding and successful marketing scheme. While this stage also involves high promotional costs, consumer acceptance is also likely to be developed which could then command higher prices. Once the necessity for a mobile phone is established among the minds of the consumers, consumers are now willing to pay higher prices for phones that will emerge in the market, a situation that Nokia takes advantage of (Viardot 2004).

            Advertising and promotions decreases when Nokia products enter near-maturity phase. This is the stage that is most favorable to Nokia since they typically have the most money to develop new mobile phone models/units compared to their rivals. With the first-in strategy that Nokia always converged into, less popular manufacturers of phones will struggle to survive and will eventually drop out in the market. When Nokia introduces a new mobile model at this point, secondary players will also seriously struggle in the decline stage. This is more so when the new mobile phone to be introduced has features and functions that are better and more advanced (Viardot 2004).

            In the final phase, the sales of the mobile phone will be decreasing and same goes with promotion and advertising costs. Nokia, when launching new mobile phones, has the choice of bundling old units/models as part of the package (buy new model, get old model, that is). Such a process will develop into new competition and with rivals lagging behind trying to fight for the remaining market share and struggle to make profit. When this process was exhausted, Nokia could then re-launch old models and units in different parts of the world (Viardot 2004).

2.0 Concept

            Nokia’s marketing strategy evidently starts with a product marketing concept wherein the underpinning is that consumers will favor those products which offer the most quality, performance and features (Kotler and Armstrong 2004). With its converged devices, Nokia has now also embraced product dematerialization that entails the change from the sales of goods to the sales of the services. This means that Nokia products, to fully realize their functionality, must connect with other devices for added features such as the Internet and other communication devices; applications must not be confined on mobile phones.

            With respect to the corporate agility of Nokia, to complement the rapid technological changes, it continuously innovates to create more market share. This is in line with Nokia’s simple mission to ‘connect people.’ Connecting with the overall strategy of connecting the people, the marketing strategy aims to understand the consumer needs and offer products complementary to these needs even exceeding these needs. Nokia believes that the company excels in product design, services that include mobile Internet, messaging and network security, and state of the art technology (Jorstad, Dustdar and Van Do 2007).

            Having said that, the overall marketing strategy is met by with Nokia’s branding strategy. Nokia believes that the basis of marketing is the idea of having an image to go with the product. While connecting people, what goes with Nokia products is buying a lifestyle or an image. Nokia’s advertising can make the people believe that aside from connecting with others quality of the produce will make for consistent and spontaneous connection with people. Nokia brand therefore connects marketing strategy with the overall strategy through personalized communication technology, enabling people to shape their own mobile world.

3.0 Targeting

When it comes to integration of global context into the marketing strategy, Nokia links with the universalities which are the need to connect hence belong and the need to communicate as well. Nokia has a global reach but it would be difficult if advertising will be localized. To resolve, Nokia makes use of marketing symbols, messages that connects with broader audience without the need to localize advertising initiatives, for instance. Messages to be used therefore are those that can be understood by people of all ages, races, religion and gender like that of message of love, friendship and family.

Basically, any individual who needs to communicate with others is the target of Nokia. As such, Nokia targets consumers who need to communicate and store information as well as those people who want entertainment on the go. Specifically, for consumers with busy lifestyles and those in the corporate world, they require function of recording information as well as inputting and accessing data. Nonetheless, Nokia also understands that not all people are attracted to buy hence they are hesitant because of the hefty prices. Nokia addresses this buying dilemma through its pricing strategies that will be discussed in 4.2.

4.0 Positioning

4.1 Product

            Nokia’s objective is extended on the Nokia brand name that is linked to the established meaningful positioning. The corporation has invested heavily on the diverse mobile phone and plans to capitalize on the brand. Designing professional mobile phones, for example, with suitable size that fits the requirement of the user and high technology-enablement is what defines the Nokia brand. Using the two-win method, Nokia was able to gain the public confidence through its product innovation.  

            What is good about Nokia is that it catered to the different customers’ needs and wants wherein the corporation has designed different models/units to provide consumers with a choice. For instance, not all people require Internet, camera, video, games, online TV and PDA features which comes in high prices. Further, Smartphones are still in the market although this segment is relatively smaller compared to the general phone market.

            Nokia is thus considered as a big brand in the world wherein the product is enough to make a consumer confident in buying. Nokia have product strengths than other companies such as: most popular mobile communications company, excellent marketing and promotion, solid manufacturing, best research and development facilities, high quality product and variety of products to keep them in the game.

            From a personal standpoint, Nokia products especially the mobile phones are iconic devices that enable consumers to mobilize communication-related needs and pleasure from one place to another. This is particularly sensible since the demands of the consumers today require that lifestyle should be diverse and responsive enough to cater to those needs.  

4.2 Price

            Although Nokia understands that most of the consumers demand for portable multifunction device since diversity is the key, the budget of the target consumer for specific model/unit is considered. Nokia priced its products comparable to other mobile products with similar function and features in the market. Having said this, Nokia achieves supremacy in pricing and eventually delivers profitability because of its combined skimming, penetration and competitor-based pricing strategies. Through skimming, Nokia initially sells its products at a higher price to gain higher profits in the process. Nokia implements such in order to reimburse the cost of investment put in the research and development processes. Because Nokia is a well-known brand for its quality, there is no need for the company to risk a depressed sales volume (Nokia Corporation 2000).

            Because of the higher introductory price, sales could be initially limited also but Nokia makes a big profit in each sale. When it comes to lowering the prices, Nokia will have more sales. In the surface, this could mean less profit for Nokia but looking deeper sales will build up and a large profit because of the volume of sales could materialize. Other than this, Nokia is already an established brand that offers high quality products. Nokia has the power to sell products at the price they want or even lower prices when the competition requires, building up higher market share (Nokia Corporation 2000).

4.3 Place

            Viardot (2004, p. 196) noted that for products that are neither entirely standard nor truly non-standardized but rather in between these two categories, a marketing channel should be selected depending upon the technical complexity of the product and the need for customer service depending upon the distributor’s ability. What Nokia did was to sell their phones in their website. E-marketing is the primary channel that Nokia chooses. Limited editions at first are offered in the website so that the company can increase the willingness of consumers to transact online and then view other products. This is a sound strategy since there are converged devices that are complementary to the functions of mobile phones (Nokia Corporation, 2009).

            E-business strategies are embraced to keep up with the competition and defend the existing leadership status of Nokia in the mobile industry. Nokia is currently creating and applying innovative technology to allow people to access Internet applications, devices and services instantly, irrespective of their locations and time. The aim is to achieve interoperability of network environments. Improvement of operational efficiency is achieved through layers of researching on how the Internet could be of direct advantage to Nokia especially since the reach is global.

            Multimedia is the basic functionality that is offered in Nokia and with the help of specific plug-ins that Nokia also offers. As such, the Internet is an important distribution channel for Nokia because there are post-sale services in the website in relation to the physical product which is the mobile phone. Marketing of converged devices are then reduced the website serves as basic distribution of web goods (Royer 2005). This is Ovi.com which is the personal dashboard of Nokia users. Through Ovi, people can share photos with friends, download music, maps and games directly to the phones while also access third-party services such as Flicker and Yahoo. My.nokia.com, which is a free personalized service to subscribers, is another important post-sale service realized through online channel (Niccolai 2007, Nokia Corporation, 2009).

            Further, Nokia also sells products in Nokia specialty shops to conveniently buy phones and with which provide professional advice to consumers as well. With this, Nokia sells products in the introductory phase in these specialty shops so that it can remain limited edition prior to moving down in the pipeline. Such a strategy entices consumers who are willing to pay higher prices. After 2 weeks to 1 month, all the products are sold in dealerships. Established mobile phone dealers as well as in electric equipment retailer shop and small business shops are other channels. For larger retailer shop, Nokia aimed at distributing retail shops in various regions (Nokia Corporation, 2009).

4.4 Promotion

            To promote Nokia products, the corporation is using the AIDA concept or where attention, interest, desire and action shall tool place. Excessive advertisements on TV, magazines or the Internet are used to create awareness of the products. Tapping on the interest of the people of multifunction handsets, for example, is the core of these advertisements. Advertisements are usually targeted to innovators and early adopters prior to the general public. Nokia tends to promote the new technologies and mobile devices by creating one big advertising campaign for the purpose of appealing to different market segments (Viardot 2004; Royer 2005).

            Nokia builds desire by convincing potential consumers that Nokia is the best solution to meet such desires of a multifunction mobile phone. Afterward, target customers are now actually convinced to buy the product. This was made possible by the continued advertising to more effectively communicate the features and benefits and also used promotions and price discounts. With every stage of the process, consumer involvement with the product message is aimed at. Lamb, Hair and McDaniel (2008, p. 497) described this as the process of tapping on the responsiveness of the consumers to marketing messages.

5.0 Communications

            Astute marketing is the core of Nokia’s marketing communication plans. This means that the corporate Nokia is endorsing the mobile phones through the human angle than the technical aspects of the phone. Although there are high-end products, advertising strategies inherent to Nokia is always aimed at the low end consumers. The appeal therefore is human technology that is intended for the consumers. Speaking of brand, Nokia has a branding strategy that focuses on the emotion. Nokia’s character is of providing power to the people through technology, excluding complexity from people’s lives. As such, Nokia embraced people from all walks of life (Joshi 2007).

            Going back to advertising, Nokia integrates messages of revolutionary communications and audio/visual experience together in all media advertisements. Prominently featured in the advertisement is how different Nokia products are to other products to entice interesting consumers. What makes advertisements original is its humane angle which is original and done in tasteful way. For the purpose of         retaining and motivating channel partners to push Nokia products, personnel are sent to inform the consumer (Joshi 2007).

6.0 Conclusion

            In sum, Nokia is the brand to topple because of how its marketing strategies deliver profitability. As it incurs revenues incomparable to its nearest rival, Nokia has established a brand that is based on functionality and features. Nokia follows and lives its mission of connecting people by providing them malfunction products and outstanding post-sale services for instance. Product desirability and its prices are its main persuasion component.

References

Jorstad, I, Dustdar, S & Van Do, T 2007, ‘An analysis of current mobile services and enabling technologies,’ International Journal of Ad Hoc and Ubiquitous Computing, vol. 1, nos. 1/2, pp. 92-102.

Joshi, F 2007, ‘In The Top Spot,’ Strategy Magazine.

Kotler, P & Armstrong, G 2004, Principles of Marketing, 10th edition, Pearson.

Lamb, C W, Hair, J R & McDaniel, C 2008, Essentials of Marketing, 6th edn, Cengage Learning.

Niccolai, J 2007, ‘Nokia Lays Plan for More Internet Services,’ New York Times.

Nokia Corporation 2009, Interim Report, retrieved on 3 March 2010, from http://www.nokia.com.   

Nokia Corporation 2008, Nokia in Brief, retrieved on 3 March 2010, from http://www.nokia.com.  

Nokia Corporation 2009, Nokia – My Nokia, retrieved on 3 March 2010, from http://www.nokia.com.

Nokia Corporation 2003, Nokia phone offers reliable and affordable mobile communications for new growth markets, retrieved on 3 March 2010, from http://press.nokia.com.  

Nokia Corporation 2009, Nokia towards Telecommunications, retrieved on 3 March 2010, from http://www.nokia.com.

Nokia Corporation 2009, Ovi store opens for business, retrieved on 3 March 2010, from http://www.nokia.com.  

Royer, S 2005, Strategic management and Online selling: creating competitive advantage with intangible Web goods, Routledge.

Viardot, E 2004, Successful marketing strategy for high-tech firms, Artech House. 

 

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