Marketing Strategy for Nokia
For this project I have been instructed to come up with a marketing
strategy for an existing company/product I have chosen to do Nokia
communications, particularly the mobile phone sector of Nokia's
business. To do this properly I will need to:
* Appropriately identify, collect and use primary and secondary data
that is relevant to the marketing strategy
* Produce a clear analysis of the external influences affecting the
development of a marketing strategy.
* Complete a realistic rationale for the development of a coherent
marketing mix for Nokia communications.
* Show a full understanding of a marketing strategy for Nokia with a
clear understanding of marketing principles.
* Produce a full, well-balanced marketing strategy that reflects
appropriate use of marketing models and tools.
Introducing 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:
* WAP (internet)
* Polyphonic ringtones
* Predictive SMS (where the phone will finish off a word for you if
it can guess what you are typing)
* Camera phones and
* Video recorders
Competition in the market
With all this technology available in the communications market it is
obvious that Nokia will have lots of competition, they include:
* Sony Ericsson
* Sagem and
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 table below which shows market
share). Nokia strengthened its lead as the No. 1 vendor in the market
during 2000 with shipments growing 66 percent over 1999. Some of the
company's success was attributed to a strong second half in 2000 when
59 percent of sales occurred.
1. Nokia 37.2% (34.7% 1Q02)
2. Motorola 17.3% (15.5%)
3. Samsung 9.8% (9.6%)
4. Siemens 8.5% (8.8%)
5. Sony-Ericsson 5.2% (6.4%)
There are many priorities within a business, but in a marketing
orientated company like Nokia, many of the following principles will
be high on the agenda:
1. Customer satisfaction: Market research must be used to find out
whether customers' expectations are being met by current products
2. Customer perception: this is based on the images consumers have
of the organization and its products, this can be based on; value
for money, product quality, fashion and product reliability.
3. Customer needs and expectations: This is anticipating future
trends and forecasting for future sales. This is vital to any
organization if they wish to keep their entire current market
share and develop more.
4. Generating income or profit: This principle clearly states that
the need of the organization is to be profitable enough to
generate income for growth and to satisfy stakeholders in the
business. Although satisfying the customer is a big part of a
companies plans they also need to take into account their own
needs, such as:
5. Making satisfactory progress: Organizations need to make sure
that their product is developing along with the market, if a
product is developing well, then income should increase, if not
then the marketing strategy should be revised.
6. Be aware of the environment: An organization should always know
what is happening within their designated market, if it is
changing, saturation, technological advances, slowing down or
rapidly growing, being up to date on this is essential for
companies to survive.
There are also certain external factors that a company should be very
aware of, such as P.E.S.T factors (political, environmental, social
and technological) and also S.W.O.T (strength, weakness, opportunity
and threat). A business must take into account all these constraints
when designing and introducing a marketing strategy.
Political factors- Legal constraints (such as the G3 technology
constraints that Nokia have to take into consideration) must be taken
into account because many businesses aim to make a profit so they may
be tempted to mislead their customers about prices, quality of
products and the availability of their products. They may also try to
cut expenditure by using lesser quality materials in their products
(such as weaker materials for Nokia cases and batteries), also some
companies may also dispose their waste in ways that damage the
environment (pollution) and not ensuring high standards of hygiene and
safety in the workplace and outlet stores, all of these are illegal
and can leave companies in big legal trouble.
The governmental bodies in the U.K have introduced new laws into the
business environment, which ensure that none of these procedures take
place; if a company is to be successful they must follow all of these
Environmental social and ethical factors- some businesses view profits
are more valuable then a strong ethical code and this can govern
behaviour and business conduct. Some un-ethical practices are against
the law and companies can not become involved in them (I have
mentioned these above) but there are also some practices that aren't
illegal by law but are considered highly un-ethical by the consuming
public, companies who engage in these practice's can lose a lot of
market share if they are found out. An example of this is cosmetic
testing on animals, it is legal but some of the consuming public are
not happy about it and boycott Certain products because of it,
companies must be very careful about how they conduct themselves.
Nokia have managed to be quite environmentally friendly and have not
done anything that the consuming public have taken huge offence to,
they have been very careful about this and this is one of the reasons
they are such a popular brand of mobile phones.
Technological- In the communications market technology is perhaps the
most important factor that companies like Nokia have to take into
consideration. They have to keep up to date with all the newest
technological advances (like camera and motion capture phones) if they
are going to capture the biggest market share and stay ahead of their
competitors (Sony and Seimens).
SWOT analysis is also another way of deciding on a successful
marketing scheme, we must look at strength, weakness, opportunity and
Strength (internal factors)- Is looking at the companies current
market share and researching how recognised Nokia is amongst consumers
in the target market. Nokia is currently one of the most popular
Mobile communications companies in the industry, generating over
52,000 sales in 1997, which was a 34% increase from 1996. Nokia's net
sales for the October-December period in 1997 came to a total of FIM
15 857 million (FIM 12 669 million in 1996).
Weakness (internal factors)- 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
2. Their wage costs are forever rising.
3. Higher import charges have now been put into place.
4. There are some quite high supply chain costs that Nokia are
Opportunity (external factors)- This is the area in which Nokia can
make more profit, or gain more market share. There are 2 ways in which
Nokia can currently do this:
1. Improve the technology that they are using to make their phones and
use in their products, for example, camera phones and advanced picture
messaging would attract new consumers to purchase phones under the
Nokia brand name.
2. 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 call 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
Threat (external factors)- 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.
For an existing product it is often useful to draw up an Ansoff's
matrix, in order for Nokia to grow as a business we must look at:
· Market penetration
· Market development
· Product development and
Market penetration- the aim of market penetration is to sell existing
products to an existing market, to do this Nokia must do a few things:
1. Change the pricing scheme (for example, penetration or competitor
2. Introduce discounting
3. Start up a different advertising campaign or consider changing an
Market development- To complete market development successfully, Nokia
must look into the following:
· Researching and selling to a different market (in case of saturation
or poor market share)
· Change times that television adverts are aired at and alter the
places in which print adverts are being displayed (this can help your
products appeal to a whole new market segmentation)
· Lower current prices to help the products appeal to a wider range of
Product development- This area of the Ansoff's matrix involves keeping
up to date with the latest technologies available in your chosen
market and using them to appeal to different people (for example, WAP
phones are aimed at more professional people while Camera phones are
aimed at the youth market)
Diversification- This refers to developing technology that offers
consumers something new or different, this is the most common way of
companies trying to gain greater market share and increase their
A businesses success is based on whether they can give the customer
what they want and when they want it. Market research involves the
collection, collation and analysis of data relating to the consumption
and marketing of relevant goods and services.
The purpose of market research is really to find out whether there is
a gap in the market for your product or service or whether you can
make customers want your product through persuasive adverting. We
already know that there is a market for mobile phones but the current
market gap has become saturated (or if not saturated, almost
saturated) so Nokia need to find a new market segment to aim their
products at. In order to classify the wants and needs of the consuming
population, companies need to gather information on the following:
· Consumer behaviour- How do customers react to advertising? Whether
they are partial to prize give-aways or free gifts? What are their
reactions to new and developed products?
· Buying patterns and sales trends- Organizations need to look at how
buying trends and patterns are affected by class, gender, religion and
region. They also need to understand how buying patterns change over
time and what markets are expanding and are worth trying to enter and
obviously which markets are contracting and companies shouldn't aim to
· Consumer preferences- What customers are looking for in a product,
for example, style, colour, technology, amount of outlets, customer
service and promotional styles.
· Activities of competitors in the market- Nokia need to examine how
their rivals are adapting their prices and products to meet the
consumers need's, how well the rivals are selling and what marketing
strategies they are using.
Market research should supply the company with all the information
they require about consumers preferences, whether they buy certain
products, what design features are preferable and what kind of retail
outfits are most frequently used for purchasing certain products.
Sources of marketing information
The information that companies collect through market research can be
in one of two forms, either quantitative or qualitative data.
1. Quantitative data refers to data presented in numerical form,
usually figures, for example, Nokia's operating profit in the 4th
quarter of 1997 was 830 million.
2. Qualitative data is the information concerning the motives and
attitudes of consumers; for example, more people buy Nokia phones then
Sony phones because Nokia phones are more reliable.
The two main sources of market research information are primary
research (where the company has gathered the information about the
markets themselves) and secondary research (when researchers use
information that has been discovered by other companies).
Methods of collecting primary data:
· Face to face survey
· Open ended interview
· Telephone survey
· Postal surveys
· Consumer panels
Methods of collecting secondary data:
· Existing reports
· Distribution data
· Shopkeepers opinions
· Stock records
· Sales records
· Accounting records
· Government statistics
· Specialist business organization, for example, Mintel or Neilsons
· Consumer databases.
To help decide what market segment to aim at companies can also look
at the buying habits of customers. In order to make decisions about
the type of products to make, what advertising to use, promotional
tactics, pricing and packaging. Nokia will need to know about the
1. The types of goods customers buy
2. How much they buy
3. How often they buy
There are also certain variables that can affect peoples buying
habits, they include:
3. Area they live in
7. Fashion and preferences.
In order to plan their product Nokia must look at what area of the
market they want to aim the products at, as the current youth market
is more or less saturated Nokia will have to research into a new
market, I suggest the 55+ market as they will have lots of disposable
income and my research shows that most people aged 55+ do not
currently own a mobile device and could be persuaded to buy one by
certain promotions and a good advertising campaign, also the drop in
call prices should attract a lot of people who may have previously
been hesitant due the high costs.
Below is a table showing the population in terms of social grouping of
the U.K in 1999:
% Of population
B- Middle class
C1- Lower middle class
C2- Skilled working class
D- Working class
E-Low income earners
I think that Nokia should aim their products at the socio-economic
group B (middle class) event though they aren't the biggest group they
are the group that is most likely to spend their money on a mobile
telephone as my questionnaire results showed.
Investigating consumer trends
As the main aim of market research is to develop an idea of market
opportunities, an important part of this research must be to track
sales in order to identify those products, which are likely to
experience a rise in sales and to look at those in which the sales are
likely to fall.
Changes in customer demand, which continue in the same direction for
more then 2 years, show a long-term trend or saturation is occurring
within the market. This is definitely a bad market for businesses to
be in (the mobile phone
market is in the first year of a continuing
trend) and the company must consider changing their market or product
to a market or product that is currently showing a continuing upwards
The marketing mix
The marketing mix refers to the combination of elements within a
companies marketing strategy, these are designed to give the customer
what they want and in the long term are designed to maximise profits.
The marketing mix is based around the idea of the 4 P's:
Product-The product is the centre of the marketing mix and the other
three P's are based around it. Consumers purchase goods and services
for a variety of individual reasons and a company must be aware of all
of these when selling a product (that is why they conduct market
Price-Is a key factor in the selling of a product, and is usually the
one that is open to the most change based on different pricing
strategies, for example, competitor based, penetration or skimming.
The three main factors affecting the amount charged for a product or
service, are; the cost of production, customer demand and competition.
Place-This refers to the chosen outlets for a product or service, for
a product to be very successful it must be easy to access, Mobile
phones are very easy to access nowadays, they are sold in
supermarkets, specialised outlets (either by network or brand) and all
major department stores.
Promotion-This involves providing information to the customer over a
variety of media platforms, using radio, television and print
advertising as well as using other promotional tools such as "money
off deals" and "free giveaways".
The stages of marketing
1. Market and product research:
* Finding out what your customers want
* Technical research
2. Product launch
* Test market
3. Product promotion
* Publicity and P.R
* Sales promotion
4. Sales and distribution
* Managing the sales force
* Type and amount of sales outlets
* Local, national or international sales?
* Transportation of goods
5. Monitoring and analysing the sales
* Meeting customer satisfaction?
* Does the product need modifying or replacing?
* Is a profit being made?
* Is customer service satisfactory?
* Have the sales targets been met?
* Is the promotion and distribution policy effective?
If a company gets to section 5 of the marketing cycle and a
substantial amount of the goals haven't been met then they will have
to consider re-launching the product or taking it out of the market
completely and placing it in a different market or changing it to meet
the needs of the current market.
Product life cycle- Mobile phones
When mobile phones where first introduced they were low quality
technology (bad reception, poor reliability and had a short battery
life), high priced (around £100 for a basic model) and consumers had
to be persuaded to buy mobile telephones, as they were not yet
established as a necessity. When products are first released,
companies can expect high promotion fee's as the public are probably
not yet familiar with the product.
Also when mobile phones were first released they were bulky and hard
to use, as product design and development are a key figure in success,
Nokia had to design phones that were smaller and simpler for consumers
to use. As people had paid a lot for earlier, more primitive products
they were obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less
and would last longer, this is where companies can expect to pay high
When Mobile phones were first introduced they were not such a popular
item and there weren't as many competing companies in the market. So
Nokia and a few other companies (Sony and Panasonic) could charge
higher prices then they would in the highly competitive market that
they are in today, as there aren't so many companies competing for
In the growth stage of the product life cycle companies can expect
advertising and promotional costs to be as high as in the introduction
stage as more companies will enter the market and competition for
market share will increase. Advertising is a proven way of promoting
technological advances within a market (as with the new company 3
promoting their new technology that allows people to watch video's on
their handsets) so higher advertising costs can be expected as the
technologies available get better and more advanced.
The growth stage is also the stage that companies will (hopefully)
start to make a profit, based on good market research and a strong
sense of branding and a successful marketing scheme. In the growth
stage profit isn't the only thing that will start to develop, as there
are more companies in the market it is obvious that more technology
will be developed and that will drive prices higher, this is how
companies start to make profits (because consumers have accepted the
product, in Nokia's case, mobile phones, as a necessity they will be
more willing to pay higher prices for new phones that emerge in the
When a product enters the maturity stage, advertising and promotional
prices should decrease, as consumers are more aware of the product and
will research new additions to the market instead of being told what
is new (this is because phones have been promoted as fashion items and
will be desired by the consumers). At this point in the product life
cycle the main producers (Nokia, Siemens, Sony etc) should be clear as
they will have the most money to develop and promote their phones
while the other, less popular producers of phones (Panasonic, Toplux
and NEC) will be struggling to survive and will drop out of the market
either here or they will seriously struggle in the next stage,
This is the stage that Mobile phones have entered (Nokia had recorded
their first drop in sales earlier this year), and all the remaining
companies are trying to re-launch their products by either developing
their products or entering new markets. At this point phone sales will
be decreasing and promotion and advertising costs will start to rise
again as companies fight for the remaining market share and struggle
to make a profit.
Below is a graph showing the product life cycle
With successful re-launching the product life cycle should look like
the one above.
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 (Pepsi and
Coke) 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.
Types of pricing strategies
Cost based pricing
This involves calculating the cost of production for the product and
then adding a mark-up for profit, usually 10% so a company can make
enough profit to re-invest into the business so they can grow.
Marginal cost pricing
This is the addition to total cost resulting from the production of an
additional unit of output. If a decision is made to expand by one or
more units it will be based on an assumption that the price of each
unit will be least sufficient to cover marginal costs, so that the
profit earned on all previous units is not lower then it previously
Demand based pricing
This is usually pricing products based around the customer demand for
a product, if the demand is high, the prices will rise. This is
usually used when the product is unique, for example, a football match
or concert. To use this strategy companies must carry out detailed
market research to find out what prices the consumers are willing to
pay so they don't over price their product.
This pricing strategy is also known as price creaming and is usually
put into place in markets where the competition is limited. Market
skimming pricing involves charging a high price for new products
because the customer is new and unique so (hopefully) the consumers
will be willing to pay higher prices for them. This is the most common
strategy in the mobile phone market, as consumers will pay the higher
prices for phones that have the newest technology.
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.
The organization may also boost sales by lowering prices if demand is
price elastic. One problem with this strategy in the mobile
communications market (or any other highly competitive markets) is
that price wars will often develop with rival companies and this can
limit to the amount of profit that can be made, and also generate
losses due to under-pricing in an attempt to hold onto market share.
This is where companies can charge different prices in different
markets, because of the consumers they are aiming at, for example,
rail companies charge different prices for peak and off-peak travel
cards and fares. This strategy is only available for use when the
consumers are unable to undercut higher prices by reselling their
products from low priced markets to high priced markets.
This is a more drastic and aggressive form of penetration pricing,
used when a company's objective is to get rid of competition
completely by lowering their prices to levels that other companies
cannot afford to drop to. The down side to this strategy is that
consumers may see the low price as a reflection of the quality of the
product and stick to the higher priced products because they offer a
product of higher quality.
External factors affecting pricing decisions
Setting a price with regards to only production costs ignores the
influence of external factors, such as:
* Market conditions- how much are the customers willing to pay? Can
advertising increase product image and price? Is the product aimed
at a mass market or a niche market? (a niche market refers to when
a company aims a product at a very small, select segment of the
* Production costs- Prices must cover the costs spent in production
if a profit is to be made. The price must cover variable costs
(for the short term) and fixed costs (for the long term) otherwise
a company will face closing.
* Taxes and subsidies- VAT and customs duties will raise the price
of a product. Government subsidies will allow businesses to charge
* Business objectives- Is the business looking to maximise profits?
Or is the company looking to increase its market share?
* Marketing mix- What stage is the product at in the life cycle?
What forms of promotion are being used? Where is the product being
* Marketing structure- How much competition is there in the market?
What prices is the competition charging?
Nokias current marketing strategy
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 £200+, if
they carry the latest technology). 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 such as Carphone Warehouse and The Link, although they are
also sold at other retailers such as Dixon's and other electrical
suppliers. The products are only sold in the electrical suppliers and
stores other then dedicated phone dealerships after the introductory
period so the phones can remain limited edition, as this will
encourage younger consumers to buy them.
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.
Product- 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.
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
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.
As a big company Nokia are able to do a lot of promoting and
advertising that smaller, less successful companies, may not be able
to afford, such as television advertising and sponsoring lots of
events that will be viewed or heard by large amounts of people in
their chosen market segment (events such as music festivals and music
awards are a goldmine for companies as they are viewed by millions of
people worldwide). Adverts such as television and print adverts will
be put into certain areas so that they can attract their chosen market
segment, Nokia tend to put a lot of their print adverts in men's
magazines such as FHM and Loaded so they can appeal to all of their
readers instead of a smaller percentage of the readers they would
attract in magazines such as Lifestyle and Good Housekeeping. I think
Nokia's way of promoting is very good as they can appeal to mass
markets and large amounts of people in their chosen market
segmentation with certain advertisement's and with sponsoring large
events like the ones I have previously mentioned.
Nokia's current pricing strategy is based on 2 main theories:
1. Penetration pricing- 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 37.2% of the mobile phone
market share and are the biggest selling mobile phone company in the
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.
Product life cycle-Nokia
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.
Also when mobile phones were first available there were only a few
companies as well as Nokia in the market (Sony e.t.c) so they could
charge higher prices then they can at the present time in the product
life cycle because no companies would dare to enter a price war with
such a new product.
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.
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.
This is the stage that the mobile communications market, including
Nokia, have recently entered (Nokia had reported the first drop in
sales in the first quarter of 2002), and companies are now promoting,
heavily, their new MMS products to the market in an attempt to get out
of decline and back into growth, with a new generation of
technologically advanced phones that offer motion picture capture,
camera technology and the opportunity to watch television on your
If a company has entered decline it needs to look at the S.W.O.T forms
of analysing their market strategy, which I have fully evaluated on
page's 3 and 4.
What I have found out by analysing S.W.O.T is that Nokia's main
1. They are currently promoting their products to a market that is
verging on saturation- Nokia need to re-launch some of the older
models to a different market and only promote new products to the
existing market segment.
2. Their wag costs are already high, and are always rising-
To solve this they can try and invent or discover machines that can
increase productivity so that the number of staff currently employed
(The average number of employees in 2002 was 52714 and this was a
decrease from 57716 in 2001).
3. High import charges are being implemented by the government-
To counter this Nokia need to set up factories in more companies, this
will have high start up costs but will eventually start to save Nokia
money on import and export charges.
I have also discovered that Nokia have established themselves as one
of the most popular mobile communications companies in the market with
a total of over 52000 sales in 1997 which was a 34% increase from
There are many external factors that can affect a marketing strategy
from developing; this is where you must use P.E.S.T analysis. I have
outlined P.E.S.T analysis on pages 2 and 3 but have further analysed
the effect of these external factors on the development of Nokia's
marketing schemes below:
Political factors- Legal factors, such as the G3 technology licensing
which has cost companies a total of 110 billion euros so far, are
always around to stop Nokia from properly developing strategies and
further conquering the communications market. Also taxes such as
import and export have an affect on Nokia's development and these are
more-or-less impossible to avoid unless a company can afford to run
factories in every country and continent in the world.
Environmental, Social and ethical factors- Many companies may view
profit as more important then ethical practice and this can lead them
to making illegal decisions and this has been a big contribution to
many companies going out of business or loosing all their market share
to eco-friendly companies.
Technological factors- In the communications market this is probably
the most important external factor in affecting a companies
development of their marketing strategy as they must always keep up to
date with every change within the market if they are to be successful
and hold on to their market share ad hopefully gain more.
Nokia's current marketing strategy has helped them become the biggest
selling brand in the communications market to date, but now sales are
starting to decrease with the saturation of the current market segment
so Nokia will need to do one of the following; Re-launch their
products with an aggressive promotional scheme; Target a different
segment of the market that has not been entered so Nokia can instantly
gain 100% of the market share (although this is risky as the market
might not take to their products and the demand might be low, so sales
will also be low and prices will have to be high and this will further
stop people from purchasing Nokia's products); Differentiate their
products to offer something no other company can offer to the market
or simply try and offer a different product altogether, such as
landline phones or televisions.
Nokia's business strategy (statement taken from www.nokia.com)
"Our business objective is to strengthen our position as a leading
communications systems and products provider. Our strategic intent, as
the trusted brand, is to create personalised communication technology
that enables people to shape their own mobile world.
Nokia are currently creating innovative technology to allow people to
access Internet applications, devices and services instantly,
irrespective of time or place. Achieving interoperability of network
environments, terminals and mobile services is a key part of our
Nokia need to capitalise on our leadership role by continuing to
target and enter segments of the communications market that we believe
will experience rapid growth or grow faster then the industry as a
By expanding into these segments during the initial stages of their
development, Nokia have established themselves as one of the worlds
leading player's in wireless communications and significantly
influenced the way in which voice and other services have been
transferred to a wireless, mobile environment.
As demand for wireless access to an increasing range of services
accelerates, Nokia are planning to lead the development and
commercialisation of the higher capacity networks and systems required
to make wireless content more accessible and rewarding to the end
user. In the process, we plan to offer our customers unprecedented
choice, speed and value.
Nokia has a history of contributing to the development of new
technologies, products and systems for mobile communications. Recent
examples include: the commitment to the open mobile alliance; the
co-development of the new operating system for the future terminals
with symbian; short-range wireless connectivity with bluetooth; the
development of wireless LANs for enabling local mobility in fixed
LANs; and MMS for enabling mobile multimedia messaging.
In addition, Nokia have continued to be active in IP convergence. They
have established alliances with other service providers in order to
make mobile access services easier for the end user.
Nokia in 2002: IAS reported
Nokia's net sales in 2002 decreased by 4% compared with 2001 and
totalled EUR 30 016 million (EUR 31 191 million in 2001). Sales in
Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158
million) and decreased in Nokia Networks by 13% to EUR 6 539 million
(EUR 7 534 million). Sales decreased in Nokia Ventures Organization by
22% to EUR 459 million (EUR 585 million).
Their operating profit in 2002 increased by 42% and totalled EUR 4 780
million (EUR 3 362 million in 2001). Operating margin was 15.9% (10.8%
in 2001). Operating profit in Nokia Mobile Phones increased by 15% to
EUR 5 201 million (EUR 4 521 million in 2001). Operating loss in Nokia
Networks decreased to EUR 49 million (operating loss of EUR 73 million
in 2001). Operating margin in Nokia Mobile Phones was 22.4% (19.5% in
2001), while the operating margin in Nokia Networks was -0.7% (-1.0%
in 2001). Nokia Ventures Organization showed an operating loss of EUR
141 million (operating loss of EUR 855 million in 2001). Common Group
Expenses totalled EUR 231 million (EUR 231 million in 2001).
During 2002, the operating profit was negatively impacted by goodwill
impairments of EUR 182 million and net customer financing impairment
charges related to MobilCom of EUR 265 million.
Financial income totalled EUR 156 million in 2002 (EUR 125 million in
2001). Profit before tax and minority interests was EUR 4 917 million
in 2002 (EUR 3 475 million in 2001). Net profit totalled EUR 3 381
million in 2002 (EUR 2 200 million in 2001). Earnings per share
increased to EUR 0.71 (basic) and to EUR 0.71 (diluted) in 2002,
compared with EUR 0.47 (basic) and EUR 0.46 (diluted) in 2001.
At December 31, 2002, net-debt-to-equity ratio (gearing) was -61%
(-41% at the end of 2001). Total capital expenditures in 2002 amounted
to EUR 432 million (EUR 1 041 million in 2001).
By the end of 2002, outstanding long-term loans to customers totalled
EUR 1 056 million (compared with EUR 1 128 in 2001), while guarantees
given on behalf of customers totalled EUR 91 million (EUR 127
million). Nokia also had financing commitments totalling EUR 857
million (EUR 2 955 million) at the end of 2002. Of the total
outstanding and committed customer financing of EUR 2 004 million (EUR
4 210 million), EUR 1 573 million (EUR 3 607 million) related to 3G
In 2002, Europe accounted for 54% of Nokia's net sales (49% in 2001),
the Americas 22% (25%) and Asia-Pacific 24% (26%). The 10 largest
markets were US, UK, China, Germany, Italy, France, UAE, Thailand,
Brazil and Poland, together representing 60% of total sales.
Research and development
In 2002, Nokia continued to invest in its worldwide research and
development network and co-operation. At year-end, Nokia had 19 579
R&D employees, approximately 38% of Nokia's total personnel. Nokia has
R&D centres in 14 countries. Investments in R&D increased by 2% (16%
in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001),
representing 10.2% of net sales (9.6% of net sales in 2001).
The average number of personnel for 2002 was 52 714 (57 716 for 2001).
At the end of 2002, Nokia employed 51 748 people worldwide (53 849 at
year-end 2001). In 2002, Nokia's personnel decreased by a total of 2
101 employees (decrease of 6 440 in 2001).
Employee Value Proposition-
In a move to further attract and retain a skilled workforce, this year
Nokia developed an employee value proposition framework. The
adaptation of this has already started at country levels to reflect
and respond to local employee needs and expectations. The four
fundamentals of the proposition are (1) the Nokia Way and Values, (2)
performance-based rewarding, (3) professional and personal growth, and
(4) work-life balance.
Nokia Mobile Phones in 2002
Nokia Mobile Phones continued to renew its industry-leading product
line-up, launching a record 33 new products during 2002, incorporating
colour, imaging, multimedia, mobile games and polyphonic ring tones.
Of the total new phones launched, 14 had colour screens and multimedia
capability. This attests to the growing share of feature-rich phones
offering advanced mobile services in the company's product portfolio.
During the year, Nokia launched its first WCDMA mobile phone, the
Nokia 6650, which began deliveries to operators for testing in October
2002. The company also commenced shipments of its first CDMA2000 1X
mobile phones in the Americas. These included the Nokia 6370, the
Nokia 6385, the Nokia 3585, and the Nokia 8280.
In imaging, Nokia began shipping its iconic camera phone, the Nokia
7650, expanding the scope of the mobile market from voice to visual
communications. Feedback from customers and users across the board has
been extremely positive.
In the enterprise segment, the company expanded its product offering
from the Nokia Communicator 9200 series to include the Nokia 6800
messaging device, with full QWERTY keypad optimised for personal and
enterprise mobile e-mail.
In entertainment, Nokia announced it would bring mobility to gaming by
offering console quality games for its new mobile game deck device
category. Under a collaboration agreement with world leading games
publisher, Sega, the two companies will develop games for the new
Nokia N-Gageâý¢ mobile game deck, which will run on the Nokia Series
60 platform and the Symbian operating system.
For the full year 2002, Nokia volumes reached a record level of 152
million units, representing faster than market growth of 9%, compared
with 2001. Backed by Nokia's ongoing product leadership and user brand
preference, Nokia has again increased its market share for the fifth
consecutive year reaching about 38% for the full year 2002, bringing
the company closer to its target of 40%.
During the year, Nokia Mobile Phones took steps to accelerate growth
and enhance both agility and scale benefits with the introduction of a
new operational structure. From May 1, nine new business units were
each made responsible for product and business development within a
defined market segment. This allowed Nokia to optimise its activities
in these vertically focused areas, while continuing to achieve broad
economies of scale from horizontal functions such as application
software development and the company's market-leading demand-supply
Nokia Networks in 2002
During the year, Nokia Networks signed 20 GSM network deals in Asia,
China, Europe and the US, including three new customers.
Mobile Multimedia Messaging Services (MMS) became a reality in 2002,
with its rapid implementation into most GSM operator networks. By
year-end, Nokia Networks had delivered MMS solutions to well over 40
WCDMA 3G technology implementation moved to pre-commercial and
commercial phase towards the end of 2002. Nokia signed 10 new 3G deals
in Austria, Belgium, Germany, Ireland, Japan, the UK and Taiwan. In
September, Nokia became the first vendor to commence volume deliveries
of EDGE hardware across all major GSM bands and in all continents.
In broadband access, Nokia signed nine new contracts in 2002, and
launched the Nokia D500 next generation multiservice broadband access
platform for the US and ETSI markets.
The company also further strengthened its GSM/EDGE/WCDMA product
family with several new products and solutions. Key launches included
a high-availability server platform for use in All-IP mobility
networks, and the Nokia LTX, a linear transceiver product family of
base station modules that support the definition of Open IP Base
During the year, Nokia took measures to align its operations to better
reflect current market capacity and conditions, reducing the number of
employees in its delivery and maintenance services as well as in
production. Nokia also streamlined its professional mobile radio unit
to reflect the slower than expected take-off of this market.
Nokia Ventures Organization in 2002
Despite overall flat IT spending and slow growth in the corporate
network security market throughout 2002, Nokia Internet Communications
maintained the same level of sales and market share in the enterprise
firewall/VPN appliance segment as the previous year, as well as
significantly improving its operational efficiency.
Highlights for the year include the introduction of a record number of
new products and solutions that both expand Nokia's network security
appliance portfolio and respond to emerging market opportunities.
Extending mobility to enterprise workforces, protecting corporate
e-mail content and providing firewall/VPN benefits to remote offices
were promising growth areas addressed with new product offerings from
Nokia. To help foster the creation of new security applications to
complement Nokia's own solutions, the Nokia Security Developers
Alliance was launched in July. Looking forward to 2003, Nokia Internet
Communications remains committed to building a leading position in the
corporate network security market and extending mobility to
For Nokia Home Communications, sales in 2002 clearly declined as the
unit began a migration towards emerging horizontal markets with the
launch of new types of terminals focused on horizontal terrestrial and
satellite markets, providing digital viewers access to a broad range
of digital services. Products, such as the Nokia Mediamaster 230 S,
introduced Bluetooth-enabled interoperability to the home environment
in the second half of the year.
Nokia's Board of Directors will propose a dividend of EUR 0.28 per
share in respect of 2002.
Net sales by business group Jan. 1.-Dec. 31
Nokia Mobile Phones
Nokia Ventures Organization
Operating profit, IAS,
Jan. 1-Dec. 31
Nokia Mobile Phones
Nokia Ventures Organization
Common Group Expenses
Primary research results
Average Rating (from 1-10. 1 being the best and 10 being the worst
The style of the phone
Analysis of my research
For my primary research I handed out 30 questionnaires but only 20 of
them got answered, and above I have compiled all the quantitative data
into the Bar and pie charts. When giving out my questionnaire I had to
be very selective about who I asked questions to, as I had to make
sure that I had a representative sample population so I can make
generalisations about the entire consuming population.
From my research I have found out that 55% of people do already own a
mobile phone, but I also found out that 100% 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 I found out that everyone over 65 did not own a mobile
phone. My 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 by 4% and this has been
said by many Wall Street writers to be the tip of the iceberg and they
are prophesising that sales will continue to decrease until the
marketing strategy is revised.
The majority of the people who answered my questionnaire had an income
of £30000-£40000 and this shows that the current market certainly has
enough money to purchase a new phone, the youth market had an average
of under 10000, but as they 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 may be
a bit apprehensive about spending a large amount of money on a new
mobile phone, so if a phone was launched at this market it should be a
available at a lower price then the phones aimed at the youth market.
My research also showed that "pay as you go" was the most popular
pricing option for the entire population, especially the youth in
which 100% of people had chosen this plan, but in the more mature
consumers they said that they would probably choose a "pay monthly"
system as they would not be bothered with the hassle of "toping up"
every time they ran out of call time. Also I found out that some 75%
of the youth market will change their payment plan to a "pay monthly"
system as the "pay as you go" system had proven to be very expensive,
due to the high call rates to other mobile networks, and because on
the "pay monthly" system you can get free text messages (SMS) and free
call time, but the amount depended on the network you had a contract
My primary research backed up my secondary research and showed that
Nokia was the biggest selling brand of mobile phones, with 75% of my
participants claiming that they owned a Nokia phone, compared to a
very small 7% for Nokia's closest rivals, Sony. This has shown me 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
My research showed that the most popular places that mobile phones are
bought in are Carphone warehouse and The link which accounted for 85%
of the sales of mobile phones to the people I questioned. Small
dealerships such as selective network outlets and major household
appliance stores, like John Lewis or the O2 stores accounted for a
very small amount of sales (less then 10%). If a phone is to be
successfully distributed it is only logical that it should be released
in the main dealerships before the other smaller outlets if it is
going to reach its maximum selling potential.
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 good SMS (text messaging) features. 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 should try and promote through
advertising and not just the brand name.
I have found out that most people do not conduct heavy research, if
they do any research at all (only 65% did research into mobile
phones), and the most common forms of research are magazines and
window-shopping. This means that it is important for a product to
stand out to the consumer and look good statistically in a magazine so
that it will stand out to the consuming population who research in
magazines, and the people who ask floor sales people for advice on
which handset to purchase.
Price was a difficult variable to analyse as my 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 most people would not like to spend over £175 on a handset,
but could be persuaded to pay a little more by a strong advertising
campaign or a good all-round package, that includes; cheap call rates,
free text messages and some free accessories, for example, a hands
free kit or an in car charger.
I have also found out that the most popular food shops are Sainsbury's
and Marks & Spencer, this 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 2 main supermarkets tend to be either middle or
upper class and will pay extra for "quality" in brand name products.
Revised marketing strategy
As Nokia's current sales figures are decreasing and they show no sign
of increasing again
In the near future, I have come up with a revised marketing strategy
that will re-launch Nokia and its products and increase sales to what
they have been in the past, and probably higher then they have been
since they were first released.
My marketing mix
Product- The phones will continue to be of a high quality, but will
not be as technologically advanced as the recent phones that have been
released. The phones will be easier to use and carry the less advanced
technology with WAP being the most advanced feature available in the
new range of phones that will be released, as my market research
showed that most of the people aged 40+ were technophobes or wanted
mobile technology to be easier to use if they were going to purchase a
Price- If the technology released with the phones is not as advanced,
the price does not need to be as high as the prices of the phones in
the market at the moment, as less money is being spent on product
development and the phones wont cost as much to produce, there is no
need to keep the prices so high. I have decided to lower the price due
to production costs, and it is also down to the fact that nearly all
of the people who I intend to have set as the new target market (the
40+ market) said that phones cost to much and so did call rates, but
if phones were a lot cheaper (around £125 per phone on "pay as you go"
and free if a contract method of payment is selected).
Place- Nokia phones will continue to be sold at the main
communications outlets (Carphone warehouse and The link) but will also
be sold at the three main supermarkets; Sainsbury's, Safeways and
Tesco as my market research has shown that this where my new target
market do the majority of their food shopping at these outlets, it
would be an excellent place to sell phones as there is also no
competition distributing their products in these locations, and Nokia
could have 100% of the shoppers business, and it would also be a way
of promoting Nokia for free as people will look at almost anything
while waiting in supermarket queues.
Promotion-As Nokia would be aiming their new line of mobile phones at
a completely new market; there would be high promotion costs involved
as there is at the introduction stage of any product life cycle. The
best places to put print advertisements would be in supermarkets near
the tills so people in the queue can read them and hopefully become
interested in buying a Nokia brand mobile phone. Also print adverts
should be placed in magazines and newspapers where the target market
will see them, my market research showed that the most read magazines
by people aged 40+ was Lifestyle, and Vogue for the women, and the
most read by men was the observer magazine as not many men admitted to
buying a magazine regularly. The most popular newspapers were The
Observer and The Guardian on weekends and the Evening standard during
the week, so it is obvious that these are the magazines and newspapers
that adverts should be placed in as they would be seen more by the new
target market. Because we do not want to cancel out any people outside
our target market (avoiding a niche market), Nokia should continue to
place poster adverts in places that will be viewed by a massive
selection of people (such as London's West End and other popular
Any marketing scheme that has been developed must be based around the
principles of marketing, and my revised Nokia strategy is no
different, below I have analysed how I have followed each marketing
* Customer satisfaction- Before developing my strategy I had to
found out exactly what the consumers wanted, I found out that they
wanted phones that were; high quality (with long battery life,
good reception and good SMS features), low priced (priced lower
then £150, but could be higher if call charges dropped), and I
have offered this in the new line of phones that are being
specially developed to meet the needs of the 40+ market (simpler
* Customer perception- I had found out that Nokia was viewed as the
highest quality brand name in mobile communications, and it was
also the most trusted brand, 8 out of 10 people said that they
would look for a Nokia phone that they liked, before they would
look at another brand. Nokia's prices were considered a bit
expensive, and this was partly why I have decided to decrease the
prices of the new range of phones, although people said they
didn't mind paying the extra money for the quality they think they
will receive with a branded item.
* Customer needs and expectations- This is where you companies need
to anticipate future trends and forecast for future sales. In my
market mobile phones are not considered a necessity yet so it is
hard to anticipate future trends as no company has yet created a
foothold in the market and the customers cant say what they would
like to see in future products if they do not have any at the
moment, so a good thing to do would be to create a feedback group
with some prototype phones and see what changes they would like
Nokia to make to them.
* Generating income or profit- This is the reason why I had to
review Nokia's current strategy, the sales were starting to
decrease and this was starting to reflect in the income and
profits, and decreases in these will not satisfy the main
stakeholders in Nokia.
* Making satisfactory progress- If a product is developing with the
market then they are fulfilling this marketing principle, Nokia
are actually achieving this with their current marketing scheme,
but they are spending huge amounts of money on product development
and the sales are not currently reflecting well on the decisions
to spend that amount of money on product development.
* Awareness of the surrounding environment- This is the reason ever
company must complete market research, from my research I know
what the customers want, where they shop, what they watch on
television, what radio stations/programs they listen to, what the
average income is and what features people rate highest in phone
There are also many external factors that can affect your marketing
style and the decision of which strategy to use, we can evaluate these
Political factors- Legal constraints are the hardest external factor
to try and avoid making any serious impact on any pricing, or
marketing choices made. The only legal constraint that my new strategy
"dodges" is the G3 licensing, as the new style of Nokia product
doesn't need any of the newest technologies under the G3 frame.
Environmental and Social factors- Nokia have never really had any of
these affect the way in which they operate because they have never
done anything that is really anti-environmental, the only problem is
the fact that the mobile phones let of radiation and has been said to
increase the risk of cancer in mobile phone users, but this has not
been highly documented and hasn't affected how Nokia have conducted
Technological factors- This is the most important external factor in
the communications as mobile phones are based around technology and
new discoveries. The new strategy does have to be careful with
technological advances as Nokia do not want to make the new phones to
complicated as my market research discovered that this is exactly what
the target market does not want, they want phones that are simpler to
As Nokia will be entering a new market as part of the new market
strategy, I have decided to change the current pricing plan to a
mixture of two theoretical pricing approaches:
Market skimming and demand based pricing- Market skimming is where the
competition in a market is slim or non-existent and a company can
charge what ever price they want because there is no other company to
offer a lower one. As Nokia will be entering a new market, we will be
able to choose whatever price we want to start selling mobile phones
at, and I think they should first be introduced at around £150, as my
market research showed that consumers in the new target market would
be hesitant to pay any higher, and this is the part that relates to
demand based pricing.
The market segment the Nokia was previously aiming at had become
saturated, my research showed that 100% of students already owned a
mobile phone and where not about too buy another one in the near
future. Due to the fact that this youth market is saturated, I
analysed the Ansoffs and Boston matrixes, and decided to undertake in
market penetration. The new market that I am aiming Nokia's products
is the middle aged people, because my research showed that very few
middle aged people owned mobile phones and could be persuaded to buy a
phone if the product was what they wanted and the price was right, and
of those people who said that that didn't want a phone, most of them
said they could be persuaded by strong advertising and branding.
My revised strategy has a lot of advantages over Nokia's previous
strategy, and I have listed them below:
· My target market is one that has never been entered before, so Nokia
will instantly gain 100% market share, whereas the current target
market is saturated and competition for market share is very strong.
· The products that are being released do not need to be as
technically advanced as the ones in the current market, because my
market research showed that the 40+ market do not want phones that are
to complicated and hard to use.
· If product research and development is not needed as much anymore
then Nokia can afford to decrease its employment numbers and this
would save Nokia a lot of money every year.
· When entering a new market with no competition a company can charge
whatever prices they want, Nokia's prices can be higher then they
currently are and this will increase income and profitability.