Nokia marketing analysis - Essay Example

Principles of Marketing Contents Contents 2 NOKIA 3 PESTLE Analysis for Nokia 3 Porters Five Forces of Competition 7 SWOT Analysis 9 Two Elements of NOKIA’s Marketing Mix 10 References 12 NOKIA Nokia is telecommunication organisation headquartered in Keilaniemi, Finland. This multinational company was founded by Leo Mechelin and his partner Fredrik Idestam in 1865. The company had started as paper manufacturing company but they changed their business process after World War II. They started telecommunication operation after 1960 and they have achieved the top spot in telecommunication industry within next 40years. This Finnish telecommunication giant has developed expertise in transmission system manufacturing. They are the largest selling mobile phone company across the globe (Younis, 2009). In modern era telecommunication industry has created a lot of interest among people. People use mobile for daily communication purpose. This report will try to throw light on different marketing models used by Nokia to sustain in market. These marketing models include PESTLE (considering political, economical, social, technological, legal, environmental condition of a particular country), Porters Five Forces of Competition and SWOT (strength, weakness, opportunity and threats) for Nokia. PESTLE Analysis for Nokia Nokia has emerged as international telecommunication company in last 50 years. They need to focus on macro environment of a particular country to expand their business. The company must have clear knowledge about market condition of origin country in terms of macro environment (Political condition, Economic situation, social factors, technological aspects, environmental condition and legal structure of the country). Political Political policies of a country help any company to set business strategy to expand business. Companies set marketing strategy according to government law and sometimes they get help from different policies set by government. Different policies set by Finland government are important for Nokia. Finnish government is trying to reduce unemployment rate of the country and they also support this telecom company to establish new manufacturing plant in different cities. Finnish government is trying to develop a strong national technology system and information society inside major cities of country. They are taking help from Nokia on this project. Political environment in the country has many positive factors like stable currency conditions and low interest rate. This mobile company is the major company in the country and they are the largest employer. Finland government also helps this telecommunication giant to expand their business in the country. Economical Russian federation was crashed down in 1990s and this incident also affected Finnish economy in 1996. GDP growth rate is more than 5% for last few years. Industrial production level is showing an increasing trend. Exports contribute 32% of GDP and trade surplus is also very strong. Many foreign companies are trying to enter in the country via Foreign Direct Investment (FDI). Government Debt is decreased to 50% within last 5years (Milken Institute, 1999). These are positive aspect of Finnish economy and Nokia is a major contributor to the economy. Strong economical condition of Finland helps Nokia to expand their business internationally. Society In modern era environment friendly aspects of any product has emerged as a major trend. Nokia offers a sustainable development programme in many countries. They have developed many programs (like child education program, food for African children etc) for various nations. Customer requirement for mobile phone has changed within last few years. Customers in Finland and other countries want a mobile phone that has many applications (like internet, social networking, GPRS and many more). Nokia has changed their manufacturing process to match customer needs. There are income inequalities in Finland (Mäntysaari, n.d). At least 5 % of the population do not have residence and they take shelter under bridge, corridors of houses and tents. This telecom company is focussing on overall improvement of the country. They need to create a sustainable development program for city dwellers. Income level of many young people is not sufficient to purchase high priced mobile phones. Nokia has started to manufacture low priced mobile phones for low income group. Many corporate visit Finland every year and they use to purchase high priced mobile phones. They are the potential customers for Nokia. Technology Finland is a small economy. Government supports different technical institutes to innovate state of art technology. Finland shares 48% of patent protected research and development activities of Europe in the field of telecommunication (Yrkkö, 2010). Currently Nokia acts as major technical advisor for Finnish government. The company has launched their N95 model with specially designed integrated circuit (IC) and many electronic companies in the country are following Nokia to improve their IC making techniques. Finnish government is trying to establish national technology system and information society for betterment of country. Government is taking help from Nokia to position Finland as a technically advanced nation. Environment Air and water pollution are major concern for government. Nokia uses recycling techniques for their batteries and for this reason environment pollution caused by battery parts (pollution due to lithium) is minimal. Environment issues are important for car manufacturing companies (car manufacturers need to control carbon emission rate of engine) but not an important factor for companies like Nokia Legal Finland has civil law system. Government laws are enacted both in Swedish and Finnish. They need to maintain a dualist system of law. Dualist system means practicing international law in domestic legal purpose. Nokia is a multinational company and any patent for their model is legally protected in Finland. Finland ministry has decided to establish Intellectual Property (IP) court very soon and IP court will deal with all cases regarding patent protection act (International Law Office, n.d). IP act is mainly designed to protect research and development in the field of technology. Nokia gives importance on product innovation and above mentioned legal structure will help them to expand research and development in the field of telecommunication. Porters Five Forces of Competition Customers In modern days customer want a mobile phone with many applications. Apple, Blackberry and other companies are offering new application like GPRS system, internet facility and many more with their mobile phones. Nokia failed to understand current market demand of multi application phones and they have created a negative brand image in the mind of customers. Nokia failed to give response quickly with respect to competitor’s product. Changing customer demand is a major area of concern for Nokia (Kilde, 2005). Suppliers Nokia maintains supply chain network with limited number of vendors and suppliers. This model helps them to provide timely service to customers. Limited number of suppliers is more organized and they charge much for components and sub-assemblies. As a result, this Finnish organisation needs to do premium pricing to maintain profit margin. Competitors of the company are able to price their product much lower due to strong control over suppliers. Barriers to Entry Entry barrier in telecommunication industry is high. Nokia is the largest player in the area of telecommunication with strong distribution network. New companies need large amount of capital to set a distribution channel like them. New entrants also need to compete with global brand image of This Finnish telecommunication. These are the barriers for any new entrants want to compete with Nokia. Substitutes Nokia has the risk to lose market share when it comes to new product development. Competitors like Samsung, Motorola, Apple and Blackberry are able to manufacture substitutes. Apple’s iphone, Motorola’s motorazor, Samsung’s galaxy tab are substitutes available in the market. Nokia has now launched windows phone and currently it has no competitor in market. This company can overcome threat from substitutes with product innovation. Competition Competition in telecom industry is extremely intense. Chinese companies are offering low priced mobile phones with longer battery backup. Compete with other mobile brands in terms of manufacturing ability, design, product portfolios are important to stay in market competition. Motorola, Samsung, Sony Ericsson are the age old competitors for Nokia but Apple has emerged as new threat with iphone (Agbese, 2011). SWOT Analysis Strength Nokia is a global brand. Nokia has been acted as pioneer in the field of mobile technology. Nokia has maintained product quality in terms of battery backup, durability of the phone and features for many years. Nokia has established a strong service centre network across the world and customer can avail international warranty facility. Customer base has rose up to 700 million within few years. Wide range of product offering segregates Nokia from its competitors. Nokia offers at least 10 different models for their each brand. They want to capture each segment of market from poor to rich. Recently Nokia launched Windows phone with operating system (econ, n.d.). Weakness Nokia price their product higher with respect to competitors. Many Chinese companies started entering telecommunication industry with low priced mobile phones. Premium pricing technique might not work well in developing nations. Nokia has to update product model with respect market demand. They are using age old operating system in windows phone. Rival companies like Apple and Blackberry has already revolutionized mobile phone market with their state of art technology. Nokia needs to update windows phone with better operating systems to remain in market competition. Opportunity Nokia uses Total Quality Management to improve product quality. Nokia has the opportunity to establish a research and development unit and it will help them to manufacture mobile phones with latest technologies. They need to manufacture low priced product to enter into developing nation. Number of mobile phone user is increasing every year and Nokia has the opportunity to capture large number of potential user in future. Different software application in mobile phones is a latest trend. This Finnish telecommunication giant has the opportunity to launch new product line with different software application. Nokia has already entered in computer industry via partnership with Hewlett Packard (HP). They can develop their market presence into those users who prefer a PC compatible mobile phone. Threats Apple has launched their iphone in market with multiple applications. Blackberry has changed text messaging concept with revolutionary blackberry messenger and Samsung has launched galaxy tab for users like to use PC inside mobile. These are recent development in the field of mobile technology. Many customers of Nokia have already shifted to brands like Apple, Samsung and other companies. This is a critical situation for Nokia. They need to manufacture a product with better texting facility and applications to outclass competitors. Two Elements of NOKIA’s Marketing Mix Product Depth and height of Nokia product portfolio is large. Nokia has launched different models for their each brand. N series of Nokia has transformed itself as an iconic model in terms of camera resolution, features and design. Nokia launched Windows phone with additional operating system. Nokia always give importance on maintaining product quality. Battery backup and durability of their product is an added advantage. In Asian market this Finnish telecommunication company launched low priced models like Nokia 1100, Nokia 3135, Nokia 3250 and other models to capture market. Nokia has captured more than 30% of market share with their product quality and service. They have established international service network and customer can avail global warranty for any models. Nokia was successful with their N series phones (like N95, N73, N80 etc). Promotion Nokia uses television commercial to promote products. They also use Posters Dummies, Bill boards, Sign boards and Display Stands to highlight products. Print advertisement in news paper plays a vital role to promote a product. This Finnish organisation uses print media to promote various models of phone. Celebrity endorsement has been used for their windows phone. This mobile company uses public relationship activity to promote their product. Nokia spot light was a public relationship activity. They use Sales promotional technique which includes distributing gifts with single purchase. Gift like, Philips TV, Yamaha bike, digital diary, Mitsubishi split AC, watches and many others are used by them to promote product. TV shows like football crazy by Nokia is popular worldwide. They use football game as promotional medium and many international football events have been sponsored by them. They launched game show like N-gage.com for people like adventure sports. This mobile company use Facebook as digital marketing medium with online forums, online games and customer feedback polls. This Finnish telecom company normally uses different promotional tools for various models and designs promotional strategy according to demand of customers. References Agbese, Y., 2011. Apple, Inc. [pdf] Available at:< http://tippie.uiowa.edu/henry/reports11/aapl_f11.pdf> [Accessed 14 August 2012]. Econ., No Date. SWOT Analysis. [pdf] Available at:< http://www.econ.ucla.edu/sboard/teaching/tech/swot.pdf> [Accessed 14 August 2012]. International Law Office., No Date. Delivering Expert Knowledge to Global Counsel. [Online] Available at :< http://www.internationallawoffice.com/Account/Login.aspx?ReturnUrl=http%3a%2f%2fwww.internationallawoffice.com%2fnewsletters%2fDetail.aspx%3fg%3d5cff7fe1-a710-4d42-a482-108306649b02> [Accessed 14 August 2012]. Kilde, J.H., 2005. Porters Five Forces Assessing the Balance of Power in a Business Situation. [pdf] Available at:< http://research3.bus.wisc.edu/pluginfile.php/1196/mod_page/content/1/Toolkit/Content/Porter_forces_1.pdf> [Accessed 14 August 2012]. Mäntysaari, M., No Date. Social Problems in Finland [pdf] Available at:< http://users.jyu.fi/~mmantys/soc-prob-kalvot-4.pdf> [Accessed 14 August 2012]. Milken Institute., 1999. Finland: Current Economic Conditions. [Online] Available at :< http://www.milkeninstitute.org/pdf/europe_finland.pdf> [Accessed 14 August 2012]. Younis, K., 2009. Nokia: Business Strategy [pdf] Available at:< http://web.njit.edu/~kmy3/Nokia_Strategey.pdf> [Accessed 14 August 2012]. Yrkkö, J., 2010. Nokia and Finland in a Sea of Change [pdf] Available at:< http://www.etla.fi/files/2585_nokia_kirja_8_v2_kansineen.pdf> [Accessed 14 August 2012]. Read More