Words: 5216
EXECUTIVE SUMMARY: The report on Marketing Strategy of Nokia India is an overview of Nokia’s entry and expansion strategies in India. Nokia Corporation a Finnish multinational communications corporation, headquartered in Keilaniemi, Espoo, a city neighboring Finland’s capital Helsinki. Nokia is focused on wireless and wired telecommunications. Nokia India is a subsidiary of Finland-based Nokia Corporation. Nokia has played a pioneering role in the growth of cellular technology in India.
In the past one decade, Nokia has emerged as one of the most recognized brands in India, surpassing some of the Indian business conglomerates in terms of revenues. The case describes the marketing strategies of Nokia in India and examines how the Nokia brand has become synonymous to mobile phones in the country. While Nokia considers India as one of the most important markets for its future growth, the company has been facing stiff competition in the recent years from Sony Ericsson, Korean players like Samsung and LG.
The report highlights Nokia’s strategies to compete with its close rivals. The report gives analysis of research done by us about its marketing strategies in India. We conducted the survey of handset users and retailers. INTRODUCTION: By most accounts, India is among the world’s fastest-growing markets for mobile phones. The country has some 170 million subscribers and adds 6 million to 7 million more each month. (China, in contrast, adds 5 million subscribers, and the U. S. 2 million subscribers a month. Recognizing this potential, several global telecom giants jumped into the fray when the Indian government first opened up the country’s telecom market to private enterprise in 1994. Among them, one company — Finland-based Nokia — forged ahead of rivals and today commands a lead position in market share for mobile phones (also called “handsets”). In specific segments, such as GSM telephony, Nokia’s market share in India is as high as 70%. (GSM, which stands for Global System for Mobile, is the world’s most popular standard for mobile communications. ) Nokia Corporation: VISION:
Voice goes Mobile…If it can go Mobile ??? it will MISSSION: Connecting People. Nokia is a Finnish multinational communications corporation, headquartered in Keilaniemi, Espoo, a city neighboring Finland’s capital Helsinki. Nokia is focused on wireless and wired telecommunications, with 112,262 employees in 120 countries, sales in more than 150 countries and global annual revenue of 51. 1 billion euros and operating profit of 8. 0 billion as of 2007. It is the world’s largest manufacturer of mobile telephones: its global device market share was about 38% in Q3 of 2008, down from 39% in Q3 2007 and down from 40% sequentially.
Nokia produces mobile phones for every major market segment and protocol, including GSM, CDMA, and W-CDMA (UMTS). Nokia’s subsidiary Nokia Siemens Networks produces telecommunications network equipments, solutions and services. Nokia has sites for research and development, manufacturing and sales in many continents throughout the world. As of March 2008, Nokia had R&D centers in 10 countries and employed 30,415 people in research and development, representing approximately 27% of Nokia’s total workforce.
The Nokia Research Center, founded in 1986, is Nokia’s industrial research unit of about 800 researchers, engineers and scientists. It has sites in seven countries: Finland, Denmark, Germany, China, Japan, United Kingdom and United States. Besides its NRCs, in 2001 Nokia founded (and owns) INdT ??? Nokia Institute of Technology, a R&D institute located in Brazil. Nokia’s production facilities are located at Espoo, Oulu and Salo, Finland; Manaus, Brazil; Beijing, Dongguan and Suzhou, China; Fleet, England; Komarom, Hungary; Chennai, India; Reynosa, Mexico; Jucu, Romania and Masan, South Korea.
Nokia’s Design Department remains in Salo, Finland. The Nokia brand, valued at $35. 9 billion, is listed as the 5th most valuable global brand in Interbrand/BusinessWeek’s Best Global Brands list of 2008 (1st non-US company). It is the number one brand in Asia (as of 2007) and Europe (as of 2008), the 23rd most admirable company worldwide in Fortune’s World’s Most Admired Companies list of 2008 (tied with Exxon Mobil; 2nd in Network Communications, 5th non-US company), and is the world’s 88th largest company in Fortune Global 500 list of 2008, up from 119 of the previous year.
As of 2008, AMR Research ranks Nokia’s global supply chain number two in the world. Nokia India Nokia India is a subsidiary of Finland-based Nokia Corporation. Nokia has played a pioneering role in the growth of cellular technology in India, starting with the first-ever cellular call a decade ago, made on a Nokia mobile phone over a Nokia-deployed network. The first ever GSM call in India was made on a Nokia 2110 mobile phone on its own network in 1995. When Nokia entered India, the telecom policies were not conducive to the growth of the mobile phone industry.
The tariffs levied on importing mobile phones were as high as 27%, usage charges were at Rs. 16 per minute and, at these high rates, consumers did not take to mobile phones. Nokia also had to face tough competition from other powerful global players like Motorola, Sony, Siemens and Ericsson… Nokia started its India operations in 1995, and presently operates out of offices in New Delhi, Mumbai, Kolkata, Jaipur, Lucknow, Chennai, Bangalore, Hyderabad, Pune and Ahmedabad.
The Indian operations comprise of the handsets business; R facilities in Bangalore, Hyderabad and Mumbai; a manufacturing plant in Chennai and a Design Studio in Bangalore. Over the years, the company has grown manifold with its manpower strength increasing from 450 people in the year 2004 to over 15000 employees in March 2008 (including Nokia Siemens Networks). Today, India holds the distinction of being the second largest market for the company globally. Nokia has set up its mobile device manufacturing facility in Chennai, India to meet the burgeoning demand for mobile devices in the country.
The manufacturing facility is operational with an investment of USD 210 million and currently employs 8000 people. Nokia has recently announced fresh investments to the tune of US $ 75 million towards its manufacturing plant in Sriperumbudur, Chennai for the year 2008. 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: 1. MMS 2. WAP (internet) 3. Polyphonic ring tones 4. Predictive SMS (where the phone will finish off a word for you if it can guess what you are typing) 5. Camera phones 6. Video recorders Competition in the Market All this technology available in the communications market it is obvious that Nokia will have lots of competition, they include: . Sony Ericsson 2. Samsung 3. Motorola 4. Siemens 5. Panasonic 6. Sagem 7. L. G. 8. i-mate 9. htc 10. Spice 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 able below which shows market share in India). Nokia strengthened its lead as the No. 1 vendor in the market during 2000 with shipments growing 66 percent over 1999.
Current Market Share of leading Companies (in percent) Nokia71% Sony Ericsson11% Samsung7% Motorola5% LG3% Others3% S. W. O. T ANALYSIS SWOT analysis is also another way of deciding on a successful marketing scheme, we must look at strength, weakness, opportunity and threat. Strength: It is looking at the company’s current market share and researching how recognised Nokia is amongst consumers in the target market. 1. Nokia is currently one of the most popular Mobile communications companies in the industry 2.
It is a dominant player in the smart phone market via its majority ownership of Symbian and its proprietary Series 60 user interface which are projected to represent majority of the 100M smart phones sold in the next 4 years. 3. 33% market share still the largest cell phone vendor by far, with double the market share of nearest competitor. 4. Size should enable Nokia to amortize R costs and to get cost advantages. 5. Brand position: probably one of the top 20 brands in the world 6. These features reinforce the ‘customer oriented’ aspect of the company Weakness:
This is basically looking at where the product is failing or not doing as well as it should in the market. Nokia’s problems are that: 1. They are currently aiming their products at a saturated market segment. 2. Their wage costs are forever rising. 3. There are some quite high supply chain costs that Nokia are currently paying. 4. Lapse has opened up space for other operators 5. The N-gage is considered a flop because of its poor design. 6. Being the market leader and its increase role in Symbian is giving Nokia a bad image, much like Microsoft in the PC industry. 7. Slow to adopt new ways of thinking: e. . clamshell phones which are preferred by many customers. Nokia was reluctant to produce a clamshell until this year, when it launched its first model. 8. Declining R& D investment. Opportunity: This is the area in which Nokia can make more profit, or gain more market share. Nokia can currently do this: 1. Improve the technology that they are using to make their phones and use in their products, for example, high mega pixel camera phones and advanced picture messaging would attract new consumers to purchase phones under the Nokia brand name. . Using innovation to re-invent their products, change and develop within the market to offer something none of the competitors have. Also the fact that phone all charges are being forced to fall should prove to be an opportunity for Nokia to sell to the people, who previously may have not purchased a phone because of higher call charges. 3. Increase their presence in the CDMA market, which they are just entering, as well as 3G and Edge 4. New growth markets where cell phone adoption still has room to go, including India and other countries. 5.
Leverage its infrastructure business to get preference and a stronger position with carriers. Threat: 1. Entry of new players like Microsoft 2. This is looking mainly at the competition that are taking away Nokia’s current market share and also government legislations (the total costs of 3G licensing in Europe is 110 billion euros) that could hinder Nokia’s development as a company. 3. Late in the game in 3G creates a risk to be displaced by leaders like Motorola, LG, NEC and others. 4. Asian OEMs who are entering the market very agressively (TCL, nGo Bird) . ODMs (HTC and others) enabling carriers to leverage their customer power bypassing the handset vendor. Operators want to lessen their dependency on handset vendors and the dominance of Nokia. Orange, O2, and many other operators globally are selling their own brand of phones. 6. Product recall NOKIA’S CURRENT MARKETING STRATEGY: A). 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 Rs. 15000+, if they carry the latest technology).
The price range is Rs 1200 to Rs 35000 which assures that all types of handsets suitable for individuals disposable income are available in Indian market. The price of the new phones usually decreases 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. Nokia has ensured that it has a presence in all 2,000 cities and towns that have cellular coverage. Nokia’s distribution network of over 1,30,000 outlets is roughly double that of its rivals, according to industry sources. The company also has Nokia Priority Dealers across the country and Nokia ‘Concept stores’ in Bangalore, Delhi, Jaipur, Hyderabad, Chandigarh, Ludhiana, Chennai, Indore and Mumbai to provide customers a complete mobile experience. 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. Nokia has ensured that its advertising ensures its phones stand out from the clutter of mobile phone advertising. Nokia’s advertising strategies are often aimed at the low end consumer. For instance, the Made For India advertisement for the Nokia 1100 is targeted at the entry-level phone user.
It showed the mobile tied to the fender of a truck that traverses the length of India. The implicit message is that phone still works at the end of the long, hot, dusty, journey. Nokia’s advertisements have dwelt on the human angle of mobile technology, rather than emphasise their technical aspects. Localised communications has helped reinforce the core brand strength of “human technology that appeals to consumers,” admits Sanjeev Sharma, CEO, Nokia. The Har Jeb Mein Rang (colour in every pocket) advertisement was created keeping in mind a market aspiring to go for colour displays.
As a market leader, Nokia’s advertising has also had to play the role of educator. During the days when phones in the grey market sold much more than legal phones, Nokia undertook a campaign to educate people about the advantages of going legit. Through its astute advertising, Nokia has sometimes been perceived as being the innovator even when it is not. It is not the first handset maker to have Hindi text display for SMS, but its hardsell campaign showing the Hindi text on a display has enabled it to usurp this position in the minds of the general consumer.
Product: The Nokia story in India has not been about grafting a model that has worked abroad. In fact some of its models — the handsets, not the strategies — are unique to India. Nokia phones tend to include all the latest technology and a lot of the consumers favourite 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. Today it has the largest range of handset models to choose from. Nokia has introduced phones at all price points, right from the mass market entry-level phones to the mid-market colour and camera phones and also the high-end exclusive phones. Word of mouth is also advantageous to Nokia.
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. B) 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. Age: Nokia has segmented market according to different age groups like youths who buy handsets which have style statement and features. Senior citizens use handsets which have basic features.
Middle age population determines its choice according to its disposable income. Social Class: The classes are based on economical conditions and nature of job they do. e. g. Upper class, Middle class, lower middle class, skilled working class, working class, low income class. Usage needs And Lifestyle Nokia manufactured handsets based on use by cosumers and features reouired by tthem. It has handsets which takes care of features like music, games, WAP, fashion, or entry level or basic features models. C) Pricing Strategy:
Nokia’s current pricing strategy is based on 2 main theories: 1. 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.
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. % of the mobile phone market share and are the biggest selling mobile phone company in the world. D) Branding: Most forms of promotion are based around the idea of having an image to go with the product. Brand imaging plays a dominant part in an organizations marketing strategy. This is because people make a purchase they aren’t just buying a product, they are buying a lifestyle or an image. If branding can make people believe that the branded product is better then an un-branded product, more people will buy it and they will also be willing to pay higher prices for the “extra quality” and lifestyle they are receiving with the product.
Because a lot of rival products are more or less the same the main way of making your product stand out is through aggressive branding, This is usually achieved by companies using slogans, logos and distinctive packaging. Among the more recent initiatives taken by the company to build up its brand further are things like using Shah Rukh Khan as brand ambassador. This is the first time something like this has been done for a brand that has all along talked leadership and technology. “He has a pan-India appeal and in smaller markets, a huge connect. We took a calculated shot on SRK helping us explode the rural market for us. as the Nokia management points out. Educating the rural masses about usage of various applications in Nokia handset is being done through Nokia vans. Also a new initiative of using Nokia handsets as substitutes of STD ??? PCOs in villages is being tried out. Nokia’s media planning tries to ensure that targeted category consumers get to see the ads meant for them, through a selection of different channel clusters. For entry level, they target a Doordarshan sponsorship on one-day cricket. For N95 they target Discovery, English movie channel and news channels.
Beyond advertising, Nokia is trying to create more touch points through its concept stores, already opened across several major metros and cities, and a showcasing of its higher end products via malls and road shows. 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 recognisable 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. Nokia brand is the perfect example of “REAPS” model, which takes into account five needs — rational, emotional, aspirational, physical and spiritual — of the Indian consumer.
Nokia as a brand has been able to address all the five needs to various degrees at various stages. The rational need of quality versus price has been met across price segments with options. The emotional need of being able to keep in touch with near and dear ones during times of joy and sorrow is being adequately fulfilled. The aspirational need with the new models and features and the look-good approach has helped the brand become a sought-after, must-have brand. The physical need has been taken care of through size and comfort.
And, finally, the spiritual need has been met through (local) languages and people –whether they are 18 or 80 — being able to greet one another via SMS [text messages] during religious festivals. ” 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.
Nokia 3110 and Nokia 3115 were Nokia’s introductory product into Indian market. 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. Nokia 1100 give Nokia a real strength in Indian market. 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. Nokia’s advance technology enabled handsets like N-series mobiles came in its maturity phase. Decline: This is the stage that the mobile communications market, including Nokia, have recently entered, Nokia is now promoting heavily their new products e. . E- series, GPS enabled handsets, opportunity to watch television on your handset; to the market in an attempt to get out of decline and back into growth. Research Primary Data (Consumer and Customer Survey) Secondary Data (Company Website and various market surveys) Results of Survey Average Rating (from 1-5. 1 being the best and 5 being the worst) Battery life – 1 Exchangeable covers – 3 WAP -1 MMS -3 The style of the phone – 2 Games – 3 Ring tone features 3 Colour of Handset 1 Camera 1 ANALYSIS OF OUR RESEARCH:
From our research we found out that 55% of people do already own a mobile phone, but we also found out that 70% of the student population (aged 11-21) did already own a mobile phone and the majority of the older people in the sample (aged around 40 and 50) didn’t own a mobile phone, and we found out that everyone over 65 did not own a mobile phone. Our results show that the current youth market has already been capitalised on by the communications companies, and the market has become saturated or is definitely near saturation.
This is reflected in the fact that Nokia’s sales have decreased. The majority of the people who answered our questionnaire had an income of Rs- 4500- 45000 and this shows that the current market certainly has enough money to purchase a new phone, the youth market have the most disposable income are more likely to buy new models of mobile phones, but if the majority of the population has a large income they can afford mobile phones but as a lot of them have families and other financial commitments they were a bit apprehensive about spending a large amount of money on a new mobile phone.
Our primary research backed up our secondary research and showed that Nokia was the biggest selling brand of mobile phones, with 75% of our participants claiming that they owned a Nokia phone, compared to a very small 11% for Nokia’s closest rivals, Sony Ericsson.
This has shown us that Nokia are already a very well established brand amongst the consumers and that they do not need to spend any money (or a small amount if entering a new market) on promoting the brand as a whole and should concentrate the majority of their promotional expenditure on singular models or new technologies that are being discovered or being released. Our research showed that the most popular places that mobile phones are bought in are small dealerships such as selective network outlets and major household appliance stores.
According to my research the three most important things that consumers are looking for in a mobile phone are; long battery life, a stylish casing, and FM radio feature. The second preference is given to Camera, MMS, MP3 player and its sound clarity. If a phone is to be successful in the market environment it must include all of these, but the consumers have to be told that your product has these available, this is what the company is trying and promoting through advertising.
Price was a difficult variable to analyse as our consumer research has shown that it was a 50-50 split between people who said price was a key factor, and those who didn’t really care about the price as long as the phone was offering everything they wanted, although upon further inspection of customers showed that most people would not like to spend over Rs14000 on a handset, but could be persuaded to pay a little more. We found out that the most popular visiting places are malls like Big Bazar, Shoppers’ Stop etc and multiplexes like Inox, Adlabs, Fame etc. his gives us an idea of where to put promotional fliers and leaflets about up and coming releases into the market, and as people are usually bored while waiting in lines for a till, they will want something to look at and if a flier is conveniently placed near in the lines then that could get more customers interested in a Nokia mobile phone instead of one of their competitors, also people who shop in these supermarkets and malls tend to be either middle or upper class and will pay extra for “quality” in brand name products.
THE FUTURE PROSPECTS According to industry analysts, by 2010, the mobile phones industry in India will be driven by voice, multimedia and mobile services for organizations. The tele density in India was estimated to increase to 18. 2% by March 2009, with mobile subscription rising to 148. 77 million by that time. In many instances, the cell phone has become the only basic telephone link of a household/enterprise in India, rather than a landline phone. It was turning out to be more economical and efficient than fixed line telephones.
So, there was great scope for further expansion with reduction in the cost of ownership. RECOMMENDATIONS: Considering the future prospects discussed earlier Nokia should focus on its pricing policies. Nokia handset prices are higher as compared to its closer competitors. It should come up with 3G service enabled handsets where it will not loose market to Apple. Nokia should concentrate on CDMA market as it is gaining popularity in Indian market because rivals are pricing their services at much lower costs as compared to Nokia.
Nokia should come up with new strategies to market their tie-up products with service providers like Airtel and Vodaphone. Nokia should take care of its component manufacturers as it should not get involved in controversies as like battery explosions. For that they should build their own manufacturing units. LIMITATIONS OF THE STUDY The study was done in a short span of time. The information could not be discussed with representatives from the company as they were busy.
Consumer survey was limited to a small place. Limited numbers of retail stores were covered. LEARNING OUTCOME: The basic drivers for success of Nokia in India have been its adaptation backed by strong skills and experience it gained. The various campaigns like human technology made for India etc which actually got reflected in the product, promotion and the pricing and together with a sound distribution system have been the reasons for its success.
These actually resulted in building up a great brand Nokia which almost every Indian considers to be his trusted and understanding friend. Nokia are already a very well established brand amongst the consumers and that they do not need to spend any money (or a small amount if entering a new market) on promoting the brand as a whole and should concentrate the majority of their promotional expenditure on singular models or new technologies that are being discovered or being released.
Nokia has established itself as the market and brand leader in the mobile devices market in India. The company has built a diverse product portfolio to meet the needs of different consumer segments and therefore offers devices across five categories ie. Entry, Live, Connect, Explore and Achieve. These include products that cater to first time subscribers to advanced business devices and high performance multimedia devices for imaging, music and gaming. BIBLIOGRAPHY: www. nokia. com www. wikipedia. org