28920200 Nokia Company Analysis

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Guidelines Nokia as a Company Turnover Nokia in India

Market in India Segmentation Products (Signature Products, Milestone Products) Target Customers

Pricing Strategies Branding SWOT PEST Positioning


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Nokia as a Company Nokia was established in 1865 as a wood pulp mill by Knut

Fredrik Idestam. The company was later relocated to the town of Nokia by the

Nokianvirta river, which had better resources for hydropower

production. Finnish Rubber Works acquired Nokia Wood Mills as well as

Finnish Cable Works. These three companies were merged to form Nokia Corporation

in 1967.

The seeds of the current incarnation of Nokia were planted withthe founding of the electronics section of the cable division inthe 1960s. In the 1967 fusion, that section was separated into itsown division, and began manufacturing telecommunicationsequipment.


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Nokia in India Nokia entered the Indian market in 1994.

The first ever GSM call in India was made on a Nokia

2110 mobile phone on its own network in 1995. The tariffs levied on importing mobile phones were as

high as 27%, usage charges were at Rs.16 per minuteand, 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, Siemensand Ericsson.


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Market in India Initially tariff rates were extremely high in India.

Later on, even though the rates were slashed

considerably, mobiles were still considered to be aluxury.

The biggest breakthrough for mobile phones in Indiawas when incoming calls became free after the launch

of Airtel (GSM segment) and the CDMA segment(RIM).


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Market in India (Contd) When Nokia entered India, it concentrated on the high endsegment because of the tariff constraints in India. Only theaffluent could afford mobile phones.

Increase in purchasing power due to increase in income andstandard of living thanks to outsourcing, globalization and thenumber of educated and skilled people in India presented a goodopportunity for Nokia and others to expand.

Gradually, mobile phones started becoming necessities. The midand low-income segments also became targets for mobile phonecompanies.

In fact, many in India have made a direct transition, that ispeople who never owned a landline, went straight to mobilephones.

Therefore, we saw slow growth in the initial few years and aphenomenal growth in the past few years.


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Market in India (Contd.) Nokia chose to aim the youth market focusing on

students in the range 13-21 as their market researchshowed that youths were receiving large amounts of

pocket money and most have no real commitments tospend it on.

A good portion of the youth segment also startedearning well thanks to the BPO and call centre

explosion in India resulting in disposable income andneed for a higher standard of living.

Now, Nokia is trying to tap the potential of the lowerend and rural markets as well.


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Levels of Market SegmentationNokia engages in the following levels of marketing:

Segment Marketing

Nokia offers designs, features and functionality thatcaters to the demands of the market segment. E.g. NokiaNgage (gamers)

Niche Marketing

Nokia also has products for customer groups seeking adistinctive mix of benefits and are ready to pay a premiumprice for it. E.g. Nokia N96, E71


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Psychographic Segmentation

(Lifestyle) Live Customers - Looking for design and style, followers of trends and

fashion and have active lifestyle - Nokia 8800Sapphire Connect Customers - Combination of ease of use and elegant looks

.Want seamlessly connected and in best possible way Nokia 6110

Navigator Achieve Customers - Smart business people wanting smartest tools

for balancing work and life .E90 models use of e-mail, calendar,contacts , web browsing

Explore Customers - Want cutting edge technology for their stylishlife-styles - Nokia N-95 with 8 GB chip with multimedia devices ,that

snap, record ,browse and share contents all via internet. There exists another segment of consumers who rank price andfunctionality of the phone above the aesthetics and enhanced features.For these segments we have products like Ngage (gamers), Xpressmusic (music lovers), etc and 1100,2100,2300, etc


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Demographic Segmentation (Income)Nokia has managed to stay ahead of its competitors by

targeting consumers at the Bottom of Pyramid (BOP)along with other segments.

High Income Group Caters to the upper segment of the

society with high purchasing power.e.g. Nokia 8800Sapphire, N96, E71 etc

Medium Income Group Caters to that segment whichgives more importance to value for money

e.g. N72,N73,Nokia 6300,Nokia 5300 (Xpress Music)

Low Income Group Caters to the consumers in BOPsegment

Nokia 1100, Nokia 2100,Nokia 3310,Nokia 3315, Nokia 2300


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Nokia-Target market selection

M1 M2 M3

P1

P2

P3

P= Product M= Market

Selective specializationNokia has selected a number of segments

and has come out with products for eachof them thereby ensuring its presence inthe complete market.


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Pricing Strategy Penetration Pricing

1. Used to gain instant market share in a new market.

2. Well know companies like Nokia do it with new productsthat carry new technologies to take more market sharefrom competitors.

Competitor - based Pricing

1. Used when there is a lot of competition in the market.

2. When a company is looking to take another companysmarket share by offering similar products at a lower price.


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Nokias Pricing Strategy Nokia uses penetration pricing when it launches its

products.

This is down to the fact that they first sell their

products for high prices and have very limited salesbut make big profits on each sale.

Once the products have gained a foothold andpopularity in the market Nokia starts using

competitive based pricing. This way they lower their profits on each product and

increase the number of people who buy the productsthereby still making a considerable profit.


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Branding 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 qualityproducts is partly down to successful branding, theyhave a highly recognisable packaging style and thestyle of their handsets is similar in every line ofproduction with the company name printed just above

the screen and just below the earpiece. The Brand Nokia is associated with features such as

durability, quality and assurance of good after salesservices and support.


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Marketing Strategies As a big company Nokia is able afford more promoting and

advertising that smaller, less successful companies.

Mass marketing by sponsoring events that will be viewedby large amounts of people in their chosen marketsegment.

Effective use of print media : Advertisements for businessphones found in Economic Times. High end phone

advertisements found in magazines such as Lifestyle. Effective use of television : Advertisements that Indians can

identify with. Using Shahrukh Khan as Brand Ambassador.


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Marketing Strategies Blue Ocean Thinking

Innovative products launched in India

First phone with camera, Nokia 7650, first phone withradio Nokia 6510

Red Ocean Thinking

Engage in head to head competition with competitors.

Pro-active launch of N96 to counter the launch ofApple iPhone


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Products


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Products


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Products


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Competition The fact that Nokia operates a very aggressive

marketing strategy has elevated them above thecompetition.

Also, consumers are fooled into believing thatbranded products are "better" than un-brandedproducts or products produced by lesser-knownbrands such as One Tel/Sagem/Fly and other lesser-

known phone producers in the market. That is the reason why Nokia faces most competition

from Branded Competitors like Sony Ericsson,Motorola and Samsung.


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Major Competitors Sony Ericsson

In mid-income group and high-income groupN-series faced a lot of competition from the Sony Ericsson W-series.

MotorolaIn youth segment (MotoRazr, MotoYuva)MotoRazr appealed to the youth segment on account of its looksand MotoYuva on account of its features and low price.

SamsungIn mid-Income group segment.E-840, E-251 provided a tough competition to nokia phones inthe 5000-9000 price segment.


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Dealing with Competition Stress on Quality and Brand. Believe in providing excellent after sales customer support. Provides great functionality with the extra value of

customer support. Possession of the Nokia brand creates a sense of pride in its

owner. Nokia care centers

Crisis Management Nokia did an excellent job inmaintaining its goodwill during the battery overheatingcrisis.


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Dealing with Competition (Contd.) India recently ranked as second largest mobile market.

Nokia was the only one who recognized this Indianpotential and decided to invest extensively in India way

before its competitors. India has a voice in the design, marketing, sales and

promotion of Nokia products.

Nokia opened a design studio in Bangalore to explore newdesign for mobile phones targeted at Indian markets.

This is a satellite studio which will collaborate with localdesigners to get a better understanding of the culturalnuances relevant to mobile phone design.


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Dealing with Competition (Contd.)Availability is word for distribution and care system at

Nokia.

700 priority dealers and 11,000 authorized dealers andmany more in every nook and corner of country.

Conversion of mobile into FMCG category.

Till 2003 , bulk of mobile sales was thru grey market

only.


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SWOT AnalysisStrengths 70% Market share in India

Goodwill in India

Well known in rural segment as well.

Good battery life.

Detachable panel. Only changing the panel for a

fraction of the cost gives the phone a look of as goodas new.

Good reach as far as service centers are concerned.

Have mobile phones for all segments


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SWOT Analysis (Contd)Weaknesses High Import Tariff.

Aesthetics of Sony Ericsson and Motorola much better.

Not able to achieve Point of Parity (PoP) superiority ascompared to Sony Ericsson phones (Cybershot camera, W-series MP3 player)

OpportunitiesA huge rural market just waiting to be tapped.

Probable launch of 3G in India


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SWOT Analysis (Contd)Threats

Launch of Apples iPhone

Threat from Chinese made mobile phones (lower endsegment).

Probable launch of VOIP handsets in India.


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Point of Difference Excellent customer services.

Edge in mobile software.

Has set a benchmark in introduction of features likerobust design, longer battery life, facility of hindi SMS,torch in mobiles, etc.


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Future Plans As on June 2008 mobile penetration is about 28% -289

million. This means that 900 million of Indias population is yet to

be connected. According to statistics 11400 connections are sold per hour

in India ie about 8 million per month. Hugely untapped rural market. Strategy - entering in to partnerships ,building an

ecosystem with other players as agri-input providers andoperators to tap vast rural market.e.g. : Collaborating with ITCs e-Choupal to use theirdistribution system to their advantage.


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Future Plans (Contd.) TRAI has recently authorized the use of VoIP in India.

VoIP will decrease mobile tariffs to as less as 10 to 40pper minute for STD calls and free local calls.

VoIP handsets may be floated in India for as less as Rs.800 (Chinese make) to Rs. 15000 for high end modelsby leading players such as CISCO.

Low tariff rates and low cost handsets may result inhuge drift towards VoIP from GSM and CDMA,

Therefore, Nokia should think about positioning itselfin the VoIP handset segment as well.

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28920200 Nokia Company Analysis

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