Porters Nokia

8/4/2019 Porters Nokia

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B. Industry1. Classification and definition of industry2. Analysis of existing competitors3. Analysis of potential new entrants4. Analysis of substitute products

5. Analysis of suppliers6. Analysis of buyers7. Summary of industry opportunities and threats8. Implication for strategy development

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anagement of Nokia

The roots of Nokia go back to the year 1865 with the establishment of a forestry industryenterprise in South-

Western Finland by mining engineer Fredrick Idestam. While in the year 1898,witnessed the foundation of Finnish

Rubber Works Ltd, and in 1912, Finnish Cable Works beganoperations. Gradually, the ownership of this two

companies and Nokia began to shift into hands ofjust a few owners. Finally, these three companies were merged to

form Nokia Corporation in 1967. [1]

Nokia Corporation engages in the manufacture of mobile devices and mobile network equipment,as well as in

the provision of related solutions and services worldwide. The company has four mainbusiness functions or

segments: Mobile Phones, Multimedia, Enterprise Solutions, and Networks. TheMobile Phones segment provides

various mobile voice and data devices. This segment offers mobilephones and devices based on GSM/EDGE,

3G/WCDMA, and CDMA cellular technologies. TheMultimedia segment offers mobile devices and applications

with multimedia connectivity over GSM,3G/WCDMA, WLAM etc.1Waqas Asif
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ID: 36076

Strategic Management of NokiaRole of Strategy:

Every company on a small level with very low risk or a multinational company with much more tolose than just

money on the line have to have a strategy to make its name in the world with othercompanies in mind. Strategy is as

important in an organisation like walking for a human. Behindevery successful organisation there is a strategy.

It may be hard for an egg to turn into a bird: it would be a jolly sight harder for it to learn to flywhile remaining an

egg. We are like eggs at present. And you cannot go on indefinitely being just anordinary, decent egg. We must be

hatched or go bad.

The idea from above statement says in strategy you cannot just attempt something that you have toor will do just

like that you need to take small and control in sometimes brave steps to achieve whatyou desire and have to be

patient because in planned strategy to work time is your biggest friend andsometimes the worst enemy. Sometime it

takes years to be where you want your organisation to stand.

In a competitive business environment you have to realise the brutal facts of Market environment,Financial and

Economic conditions. You need to ask yourself the hard questions before making astrategic plan weather it can be

achieved or not and have to make sub small plans those will help you.You have to think of the value added to the

organisation after the completion of your strategy.

External analysis:2Waqas Asif ID: 36076


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Strategic Management of NokiaThe External Analysis examines opportunities and threats that exist in the environment and Iwill be discussing the fallowing.1. P.E.S.T Analysis2.Porters Five Forces/Market Trends 3.Types of Market1. P.E.S.T Analysis:PEST identifies the political, economic,social, technological, environmental, and legal factors that of which directly affect a company. In thiscase Nokia.Political As markets are deregulated, both operators and manufacturers are free to actindependently of government intervention. In Countries like India and China where Partialregulations exist, government intervention does take place.Economic With incomes rising, people have more disposable income, which enables

consumers to be more selective with their choice of mobile phone, looking to other factors ratherthan fulfilling the

most basic of user needs (text messaging and phone calls) and price being such akey factor.Social The rise of the so-called information society has made telecommunicationsincreasingly more important to consumers, both in terms of work and leisure. Users are more awareof mobile phone handset choice and advancements due to increased information availability.3Waqas Asif

ID: 36076


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Strategic Management of NokiaTechnological There have been much global advancement in technology such as MMS,

Bluetooth, WAP, GSM, GPRS, cameras etc. The Asian markets are more technologically advancedthan their

European counterparts, for example in 2002, just 4% of phones had cameras, whereas inAsia 90% did.2.Porters 5 Force/Market Trends:

It uses concepts

developed inIndustrial Organization (IO) economics to derive five forces which determine the competitiveintensity

and therefore attractiveness of a market. It consists of fallowing factors.Power of New Entrants:In any market arrival of a new product is not always welcomed.

In mobiles world its not different a mobile phone or an online service is launched by Nokia it has as50 percent

chance of success. Its like the launch of Nokias N95 Smartphone which was muchappreciated by buyers then the

launch of N96 Smartphone.Power of Buyers:Due to recent down fall in the economy, the demand of consumers buyingnew mobiles has come to a halt. Due to which companies everywhere are thinking of strategies toincrease the demand of their products.4Waqas Asif ID: 36076


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Strategic Management of NokiaThreat of Substitute:There are substitute for everything out in the world. So goes for the

mobile, and the services provided by Nokia but the problem lies in consumers switching to thesubstitute. The main

reason is that most people dont like to change to something new because theymight find it hard to use or switch

over.Power of Suppliers:If the suppliers change the price then company in this case Nokia has adirect impact on the pricing of their products. If there are more suppliers then it is easy to change fromone to another if the first one is not able to provide the services a company needs.Competitive Rivalry:Business is good where there are competitors because it gives morechance to improve and go ahead of your rivals. Nokia keep their product catalogs up-to-date and keeplooking for better technologies to update its mobile and services.3.Types of Market :There are different types of markets on which a company makes strategies to fallow and considerbefore releasing products. Which are discussed as below.Monopoly:Nokia as a mobile manufacturer has dominated mobiles market with its high endN-series Smartphone to its low end mobiles. It was Nokias intentional strategy to keep ah ead with

the technology to keep customers interested in its products.Duopoly: Its a market state when two companies dominate the market. In this market Nokia is challenging HUAWEI technologies in producing 3G technology dongles because at present timethere is no other company in the world expect Huawei producing 3G dongles.Oligopoly: Its a type of market where small numbers of companies in the market collude to

take control of the market prices and products. In Nokias case it is colluding with Sony Eric sson andSamsung to

make phones which use Nokias mobile operating system (Symbian S60). This eliminatesthe use of Windows

mobile operating system and newly introduced Googles operating system Android.Perfect Competition: Its a market where all Companies are on a same level. Nokia as aleading manufacturer still have Samsung, Sony Ericsson, Motorola, and LG give a tough competitionwith products ranging from every low end user to high end tech loving customer.Internal analysis :5Waqas Asif ID: 36076


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Strategic Management of NokiaInternal environment analysis is the analysis of factors within the organisation that make give anorganisation advantages and disadvantages. Some of them are discussed below.

1.s Resource Audit

2. Boston Matrix

3. Core Competencies1. Resource Audit:Human resources:

Its the count of all the skilled or unskilled staff a company hires towork

for them. Nokia do hire highly skilled staff due to its nature of technology work and providethem with training to

keep them update and create opportunities for program developers who canwork from home to compete in a

competition to win prices and even offer them jobs.In this time ofrecession and economy down turn every company

is looking to cut cost by making their unwantedstaff redundant. Nokia as a mobile manufacturing giant has taken

loses and make 1000 of its staffvoluntary redundancies and are planning to cut even more staff by 600 due to poor

profits.[5] We cansee the change in the annual report of the first quarter of 2009 of Nokia.


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[6]Physical resources:These resources of a company can be seen in the form of building,land, equipment and factories all over the world. Nokia in this respect has factories all over the world.6Waqas Asif ID: 36076

Marketing Strategy for Nokia

For this project I have been instructed to come up with a marketingstrategy for an existing company/product I have chosen to do Nokiacommunications, particularly the mobile phone sector of Nokia'sbusiness. To do this properly I will need to:

* Appropriately identify, collect and use primary and secondary datathat is relevant to the marketing strategy of Nokia .

* Produce a clear analysis of the external influences affecting thedevelopment of a marketing strategy.

* Complete a realistic rationale for the development of a coherentmarketing mix for Nokia communications.

* Show a full understanding of a marketing strategy for Nokia with aclear understanding of marketing principles.

* Produce a full, well-balanced marketing strategy that reflectsappropriate use of marketing models and tools.

Introducing the product-----------------------

Nokia is a communications based company, which focuses on mobiletelephone technology. When mobile phones first became available on themarket the models were very basic with the best technology being SMSmessaging (sending written "text messages" from one phone to another).Then the next advance in technology was being able to put differentfaces on your phone (different style covers for the front and back ofyour mobile device) and after that the technological advances havecome thick and fast, with advances such as:

* MMS

* WAP (internet)

* Polyphonic ringtones
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* Predictive SMS (where the phone will finish off a word for you ifit 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 isobvious that Nokia will have lots of competition, they include:

* Sony Ericsson

* Samsung

* Motorola

* Siemens

* Panasonic

* NEG

* Sagem and

* Toplux

With all of these competitors in the market Nokia must keep ahead ofthe game by running successful marketing strategies, to do this Nokiamust focus on the principles of marketing. At the moment Nokia are theworld's best selling phone company (see table below which shows marketshare). Nokia strengthened its lead as the No. 1 vendor in the marketduring 2000 with shipments growing 66 percent over 1999. Some of thecompany's success was attributed to a strong second half in 2000 when59 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%)


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Marketing principles====================

There are many priorities within a business, but in a marketingorientated company like Nokia, many of the following principles willbe high on the agenda:

1. Customer satisfaction: Market research must be used to find outwhether customers' expectations are being met by current productsor services.

2. Customer perception: this is based on the images consumers haveof the organization and its products, this can be based on; valuefor money, product quality, fashion and product reliability.

3. Customer needs and expectations: This is anticipating futuretrends and forecasting for future sales. This is vital to anyorganization if they wish to keep their entire current marketshare and develop more.

4. Generating income or profit: This principle clearly states thatthe need of the organization is to be profitable enough togenerate income for growth and to satisfy stakeholders in thebusiness. Although satisfying the customer is a big part of acompanies plans they also need to take into account their ownneeds, such as:

5. Making satisfactory progress: Organizations need to make surethat their product is developing along with the market, if aproduct is developing well, then income should increase, if notthen the marketing strategy should be revised.

6. Be aware of the environment: An organization should always knowwhat is happening within their designated market, if it ischanging, saturation, technological advances, slowing down orrapidly growing, being up to date on this is essential forcompanies to survive.

There are also certain external factors that a company should be veryaware of, such as P.E.S.T factors (political, environmental, socialand technological) and also S.W.O.T (strength, weakness, opportunityand threat). A business must take into account all these constraintswhen designing and introducing a marketing strategy.

P.E.S.T:

Political factors- Legal constraints (such as the G3 technology


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constraints that Nokia have to take into consideration) must be takeninto account because many businesses aim to make a profit so they maybe tempted to mislead their customers about prices, quality ofproducts and the availability of their products. They may also try tocut expenditure by using lesser quality materials in their products(such as weaker materials for Nokia cases and batteries), also somecompanies may also dispose their waste in ways that damage theenvironment (pollution) and not ensuring high standards of hygiene andsafety in the workplace and outlet stores, all of these are illegaland can leave companies in big legal trouble.

The governmental bodies in the U.K have introduced new laws into thebusiness environment, which ensure that none of these procedures takeplace; if a company is to be successful they must follow all of theselaws.

Environmental social and ethical factors- some businesses view profits

are more valuable then a strong ethical code and this can governbehaviour and business conduct. Some un-ethical practices are againstthe law and companies can not become involved in them (I havementioned these above) but there are also some practices that aren'tillegal by law but are considered highly un-ethical by the consumingpublic, companies who engage in these practice's can lose a lot ofmarket share if they are found out. An example of this is cosmetictesting on animals, it is legal but some of the consuming public arenot 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 notdone anything that the consuming public have taken huge offence to,they have been very careful about this and this is one of the reasonsthey are such a popular brand of mobile phones.

Technological- In the communications market technology is perhaps themost important factor that companies like Nokia have to take intoconsideration. They have to keep up to date with all the newesttechnological advances (like camera and motion capture phones) if theyare going to capture the biggest market share and stay ahead of theircompetitors (Sony and Seimens).

S.W.O.T

SWOT analysis is also another way of deciding on a successfulmarketing scheme, we must look at strength, weakness, opportunity andthreat.

Strength (internal factors)- Is looking at the companies currentmarket share and researching how recognised Nokia is amongst consumersin the target market. Nokia is currently one of the most popular


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Mobile communications companies in the industry, generating over52,000 sales in 1997, which was a 34% increase from 1996. Nokia's netsales for the October-December period in 1997 came to a total of FIM15 857 million (FIM 12 669 million in 1996).

Weakness (internal factors)- This is basically looking at where theproduct 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 marketsegment.

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

currently paying.

Opportunity (external factors)- This is the area in which Nokia canmake more profit, or gain more market share. There are 2 ways in whichNokia can currently do this:

1. Improve the technology that they are using to make their phones anduse in their products, for example, camera phones and advanced picturemessaging would attract new consumers to purchase phones under theNokia brand name.

2. Using innovation to re-invent their products, change and developwithin the market to offer something none of the competitors have.Also the fact that phone call charges are being forced to fall shouldprove to be an opportunity for Nokia to sell to the people, whopreviously may have not purchased a phone because of higher callcharges.

Threat (external factors)- This is looking mainly at the competitionthat are taking away Nokia's current market share and also governmentlegislations (the total costs of 3G licensing in Europe is 110 billioneuros) that could hinder Nokia's development as a company.

For an existing product it is often useful to draw up an Ansoff'smatrix, in order for Nokia to grow as a business we must look at:

Market penetration

Market development

Product development and


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Diversification

Market penetration- the aim of market penetration is to sell existingproducts to an existing market, to do this Nokia must do a few things:

1. Change the pricing scheme (for example, penetration or competitorbased)

2. Introduce discounting

3. Start up a different advertising campaign or consider changing anexisting one.

Market development- To complete market development successfully, Nokiamust 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 theplaces in which print adverts are being displayed (this can help yourproducts appeal to a whole new market segmentation)

Lower current prices to help the products appeal to a wider range ofconsumers.

Product development- This area of the Ansoff's matrix involves keepingup to date with the latest technologies available in your chosenmarket and using them to appeal to different people (for example, WAPphones are aimed at more professional people while Camera phones areaimed at the youth market)

Diversification- This refers to developing technology that offersconsumers something new or different, this is the most common way ofcompanies trying to gain greater market share and increase theirprofits.

Market research

A businesses success is based on whether they can give the customer

what they want and when they want it. Market research involves thecollection, collation and analysis of data relating to the consumptionand marketing of relevant goods and services.

The purpose of market research is really to find out whether there isa gap in the market for your product or service or whether you canmake customers want your product through persuasive adverting. Wealready know that there is a market for mobile phones but the currentmarket gap has become saturated (or if not saturated, almost


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saturated) so Nokia need to find a new market segment to aim theirproducts at. In order to classify the wants and needs of the consumingpopulation, companies need to gather information on the following:

Consumer behaviour- How do customers react to advertising? Whetherthey are partial to prize give-aways or free gifts? What are theirreactions to new and developed products?

Buying patterns and sales trends- Organizations need to look at howbuying trends and patterns are affected by class, gender, religion andregion. They also need to understand how buying patterns change overtime and what markets are expanding and are worth trying to enter andobviously which markets are contracting and companies shouldn't aim toenter into.

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 howtheir rivals are adapting their prices and products to meet theconsumers need's, how well the rivals are selling and what marketingstrategies they are using.

Market research should supply the company with all the informationthey require about consumers preferences, whether they buy certainproducts, what design features are preferable and what kind of retailoutfits are most frequently used for purchasing certain products.

Sources of marketing information

The information that companies collect through market research can bein 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 4thquarter of 1997 was 830 million.

2. Qualitative data is the information concerning the motives andattitudes 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 primaryresearch (where the company has gathered the information about themarkets themselves) and secondary research (when researchers useinformation that has been discovered by other companies).

Methods of collecting primary data:


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Face to face survey

Open ended interview

Telephone survey

Postal surveys

Consumer panels

Observations

Experiments

Methods of collecting secondary data:

Internal sources:

Existing reports

Distribution data

Shopkeepers opinions

Stock records

Sales records

Accounting records

External data:

Government statistics

Specialist business organization, for example, Mintel or Neilsonsretail audit.

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 aboutthe type of products to make, what advertising to use, promotionaltactics, pricing and packaging. Nokia will need to know about thefollowing:

1. The types of goods customers buy

2. How much they buy


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3. How often they buy

There are also certain variables that can affect peoples buyinghabits, they include:

1. Age

2. Gender

3. Area they live in

4. Religion

5. Lifestyle

6. Taste

7. Fashion and preferences.

Market segmentation

In order to plan their product Nokia must look at what area of themarket they want to aim the products at, as the current youth marketis more or less saturated Nokia will have to research into a newmarket, I suggest the 55+ market as they will have lots of disposableincome and my research shows that most people aged 55+ do notcurrently own a mobile device and could be persuaded to buy one bycertain promotions and a good advertising campaign, also the drop incall prices should attract a lot of people who may have previouslybeen hesitant due the high costs.

Below is a table showing the population in terms of social grouping ofthe U.K in 1999:

Socio-economic group

% Of population

A-Upper class

2.8%

B- Middle class

18.6%

C1- Lower middle class

27.5%


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C2- Skilled working class

22.1%

D- Working class

17.6%

E-Low income earners

11.4%

I think that Nokia should aim their products at the socio-economicgroup B (middle class) event though they aren't the biggest group theyare the group that is most likely to spend their money on a mobiletelephone as my questionnaire results showed.

Investigating consumer trends

As the main aim of market research is to develop an idea of marketopportunities, an important part of this research must be to tracksales in order to identify those products, which are likely toexperience a rise in sales and to look at those in which the sales arelikely to fall.

Changes in customer demand, which continue in the same direction formore then 2 years, show a long-term trend or saturation is occurringwithin the market. This is definitely a bad market for businesses tobe in (the mobile phone market is in the first year of a continuingtrend) and the company must consider changing their market or productto a market or product that is currently showing a continuing upwardstrend.

The marketing mix-----------------

The marketing mix refers to the combination of elements within acompanies 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 otherthree P's are based around it. Consumers purchase goods and servicesfor a variety of individual reasons and a company must be aware of allof these when selling a product (that is why they conduct marketresearch).
http://www.123helpme.com/search.asp?text=mobile+phonehttp://www.123helpme.com/search.asp?text=mobile+phonehttp://www.123helpme.com/search.asp?text=mobile+phonehttp://www.123helpme.com/search.asp?text=mobile+phone


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Price-Is a key factor in the selling of a product, and is usually theone that is open to the most change based on different pricingstrategies, for example, competitor based, penetration or skimming.The three main factors affecting the amount charged for a product orservice, are; the cost of production, customer demand and competition.

Place-This refers to the chosen outlets for a product or service, fora product to be very successful it must be easy to access, Mobilephones are very easy to access nowadays, they are sold insupermarkets, specialised outlets (either by network or brand) and allmajor department stores.

Promotion-This involves providing information to the customer over avariety of media platforms, using radio, television and printadvertising as well as using other promotional tools such as "moneyoff 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

* Pricing

* Branding

* Packaging

3. Product promotion

* Advertising

* Merchandising

* Publicity and P.R

* Sales promotion

4. Sales and distribution


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* 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 asubstantial amount of the goals haven't been met then they will haveto consider re-launching the product or taking it out of the marketcompletely and placing it in a different market or changing it to meetthe needs of the current market.

Product life cycle- Mobile phones---------------------------------

Introduction

When mobile phones where first introduced they were low qualitytechnology (bad reception, poor reliability and had a short batterylife), high priced (around 100 for a basic model) and consumers hadto be persuaded to buy mobile telephones, as they were not yetestablished as a necessity. When products are first released,

companies can expect high promotion fee's as the public are probablynot yet familiar with the product.

Also when mobile phones were first released they were bulky and hardto use, as product design and development are a key figure in success,Nokia had to design phones that were smaller and simpler for consumersto use. As people had paid a lot for earlier, more primitive productsthey were obviously not going to pay the same high prices for laterproducts so Nokia had to develop phones that could be sold for less


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and would last longer, this is where companies can expect to pay highproduction costs.

When Mobile phones were first introduced they were not such a popularitem and there weren't as many competing companies in the market. SoNokia and a few other companies (Sony and Panasonic) could chargehigher prices then they would in the highly competitive market thatthey are in today, as there aren't so many companies competing formarket share.

Growth

In the growth stage of the product life cycle companies can expectadvertising and promotional costs to be as high as in the introductionstage as more companies will enter the market and competition formarket share will increase. Advertising is a proven way of promoting

technological advances within a market (as with the new company 3promoting their new technology that allows people to watch video's ontheir handsets) so higher advertising costs can be expected as thetechnologies 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 strongsense of branding and a successful marketing scheme. In the growthstage profit isn't the only thing that will start to develop, as thereare more companies in the market it is obvious that more technologywill be developed and that will drive prices higher, this is howcompanies start to make profits (because consumers have accepted theproduct, in Nokia's case, mobile phones, as a necessity they will bemore willing to pay higher prices for new phones that emerge in themarket).

Maturity

When a product enters the maturity stage, advertising and promotionalprices should decrease, as consumers are more aware of the product andwill research new additions to the market instead of being told whatis new (this is because phones have been promoted as fashion items and

will be desired by the consumers). At this point in the product lifecycle the main producers (Nokia, Siemens, Sony etc) should be clear asthey will have the most money to develop and promote their phoneswhile the other, less popular producers of phones (Panasonic, Topluxand NEC) will be struggling to survive and will drop out of the marketeither here or they will seriously struggle in the next stage,decline.


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Decline

This is the stage that Mobile phones have entered (Nokia had recordedtheir first drop in sales earlier this year), and all the remainingcompanies are trying to re-launch their products by either developingtheir products or entering new markets. At this point phone sales willbe decreasing and promotion and advertising costs will start to riseagain as companies fight for the remaining market share and struggleto make a profit.

Below is a graph showing the product life cycle

[IMAGE]

Sales

Time

[IMAGE]

Sales-----

[IMAGE]

Time----

With successful re-launching the product life cycle should look likethe one above.--------------------------------------------------------------------

Branding--------

Most forms of promotion are based around the idea of having an imageto go with the product. Brand imaging plays a dominant part in anorganizations marketing strategy. This is because people make apurchase they aren't just buying a product, they are buying alifestyle or an image. If branding can make people believe that the


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branded product is better then an un-branded product, more people willbuy 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 andCoke) the main way of making your product stand out is throughaggressive branding, This is usually achieved by companies usingslogans, logos and distinctive packaging.

Types of pricing strategies

Cost based pricing

This involves calculating the cost of production for the product andthen adding a mark-up for profit, usually 10% so a company can makeenough 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 anadditional unit of output. If a decision is made to expand by one ormore units it will be based on an assumption that the price of eachunit will be least sufficient to cover marginal costs, so that theprofit earned on all previous units is not lower then it previouslywas.

Demand based pricing

This is usually pricing products based around the customer demand fora product, if the demand is high, the prices will rise. This isusually used when the product is unique, for example, a football matchor concert. To use this strategy companies must carry out detailedmarket research to find out what prices the consumers are willing topay so they don't over price their product.

Market skimming

This pricing strategy is also known as price creaming and is usuallyput into place in markets where the competition is limited. Marketskimming pricing involves charging a high price for new productsbecause the customer is new and unique so (hopefully) the consumerswill be willing to pay higher prices for them. This is the most commonstrategy in the mobile phone market, as consumers will pay the higherprices for phones that have the newest technology.


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Penetration pricing

Firms who are trying to establish themselves in a new market and gaininstant market share usually use this strategy. It is a high-risk,high cost strategy that is only an available option to the biggercompanies (like Nokia) who supply to mass markets. Penetration pricingis based around the idea that a company will set their prices low toencourage customers to buy their products instead of higher priced,more established brands.

The organization may also boost sales by lowering prices if demand isprice elastic. One problem with this strategy in the mobilecommunications market (or any other highly competitive markets) isthat price wars will often develop with rival companies and this canlimit to the amount of profit that can be made, and also generatelosses due to under-pricing in an attempt to hold onto market share.

Price discrimination

This is where companies can charge different prices in differentmarkets, because of the consumers they are aiming at, for example,rail companies charge different prices for peak and off-peak travelcards and fares. This strategy is only available for use when theconsumers are unable to undercut higher prices by reselling theirproducts from low priced markets to high priced markets.

Destroyer pricing

This is a more drastic and aggressive form of penetration pricing,used when a company's objective is to get rid of competitioncompletely by lowering their prices to levels that other companiescannot afford to drop to. The down side to this strategy is thatconsumers may see the low price as a reflection of the quality of theproduct and stick to the higher priced products because they offer aproduct of higher quality.

External factors affecting pricing decisions

--------------------------------------------

Setting a price with regards to only production costs ignores theinfluence of external factors, such as:

* Market conditions- how much are the customers willing to pay? Canadvertising increase product image and price? Is the product aimedat a mass market or a niche market? (a niche market refers to whena company aims a product at a very small, select segment of the


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market)

* Production costs- Prices must cover the costs spent in productionif a profit is to be made. The price must cover variable costs(for the short term) and fixed costs (for the long term) otherwisea company will face closing.

* Taxes and subsidies- VAT and customs duties will raise the priceof a product. Government subsidies will allow businesses to chargelower prices.

* 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 beingsold?

* 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+, ifthey carry the latest technology). The price of the new phones usuallydecreases after an introductory period, which is usually around 2months long. Nokia's prices are usually competitor based, in such away as, they try to keep their prices a bit lower then those of theclosest competitors, but not as low as the "smallest" competition asconsumers 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 phonedealerships such as Carphone Warehouse and The Link, although they arealso sold at other retailers such as Dixon's and other electricalsuppliers. The products are only sold in the electrical suppliers andstores other then dedicated phone dealerships after the introductory

period so the phones can remain limited edition, as this willencourage younger consumers to buy them.

Promotions- Nokia tend to promote the new technologies and mobiledevices they create using one big advertising campaign that focuses ona singular technology instead of each individual handset so they canappeal to a lot of different markets with one campaign.

Product- Nokia phones tend to include all the latest technology and a


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lot of the consumers favourite aspects such as text messaging andgames like Snake and Memory. When the phones came out they were bigand bulky and quite unattractive but now they are all quite sleek andstylish with phones now getting small enough to fit in the palm ofyour hand as standard. Most of the phones produced nowadays haveaccessories that consumers must buy with them (carry cases, hands freekits and in-car chargers) these generate Nokia a lot of profit, asthey are very high priced.

Nokia's marketing mix has worked very well until recently as themarket they are aiming at has become more and more saturated and afterlooking at all the mobile phone sales figures, it looks as if thephone companies can aim at this same youth market for about another 2years until they need to change, but they should change sooner so theycan start making a bigger profit and get a head start on thecompetition who will also have to change the market they are aimingat. Nokia's current promotional strategy is working very well as they

are able to "talk to" a large number of consumers in different marketsrather then the niche markets the old promotional strategies whererestricted to.

Market segmentation

Market segmentation refers to the different areas of the populationthat companies can aim their products towards. The market segment thatNokia has chosen to aim is the youth market focusing on students aimed13-19 as market research has shown that some of the youth market arereceiving large amounts of pocket money and most have no realcommitments to spend it on and that means they have lots of disposableincome 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 andadvertising that smaller, less successful companies, may not be ableto afford, such as television advertising and sponsoring lots ofevents that will be viewed or heard by large amounts of people intheir chosen market segment (events such as music festivals and musicawards are a goldmine for companies as they are viewed by millions ofpeople worldwide). Adverts such as television and print adverts willbe put into certain areas so that they can attract their chosen marketsegment, 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 theirreaders instead of a smaller percentage of the readers they wouldattract in magazines such as Lifestyle and Good Housekeeping. I thinkNokia's way of promoting is very good as they can appeal to massmarkets and large amounts of people in their chosen marketsegmentation with certain advertisement's and with sponsoring largeevents like the ones I have previously mentioned.

Pricing strategy


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Nokia's current pricing strategy is based on 2 main theories:

1. Penetration pricing- although this strategy is usually forcompanies that are trying to gain instant market share in a newmarket, companies who are already well known in the market stilldo it with new products that carry new technologies so they cantake more market share form their competitors.

2. Competitor based pricing- this is used when there is a lot ofcompetition in the market and a company is looking to take anothercompanies market share by offering the same or similar productsfor a lower price, this happens a lot in the communications marketand this strategy is used by every mobile phone producing companythat 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 havevery limited sales but make big profits on each sale, they then lowerthe price of their product and have lots more sales but they make lessprofit, 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 highquality products and they sell them for the same price and sometimeseven lower prices then the competition and have now built up thehighest market share, they currently have 37.2% of the mobile phonemarket share and are the biggest selling mobile phone company in theworld.

Branding

Nokia phones are seen as being of the highest quality and this isreflected in their massive sales figures. The fact that they are seento be such high quality products is partly down to successfulbranding, they have a highly recognisable packaging style and thestyle of their handsets is similar in every line of production withthe company name printed just above the screen and just below theearpiece. The fact that Nokia operate such an aggressive marketingstrategy has elevated them above the competition as consumers arefooled into believing that branded products are "better" then

un-branded products or products produced by lesser-known brands suchas One Tel and other lesser-known phone producers in the market.

Product life cycle-Nokia

Introduction

When Nokia phones were first introduced they required a lot ofpromoting and advertising as they weren't established enough to sell


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based on their quality and what they offer to the consumer, so this iswhere Nokia spent the largest amount of money promoting their productsand establishing their brand as a leader in the communications market.Also when mobile phones were first available there were only a fewcompanies as well as Nokia in the market (Sony e.t.c) so they couldcharge higher prices then they can at the present time in the productlife cycle because no companies would dare to enter a price war withsuch a new product.

Growth

This stage of the life cycle also has high promotion costs involved init, this is due to the fact that mobile phones are becomingestablished as a consumer necessity and lots of other companies decideto enter the growing market, although companies do not need to assurecustomers that they need a mobile phone, Nokia have to assure thecustomers that they want a Nokia phone and this is where the high

promotional costs come from.

Maturity

In this stage the promotional costs do decrease as the more popularbrands, such as Nokia and Samsung, have gathered the majority of themarket share and only have to show customers that they have a newmodel out and it will sell well, as they have been established as aquality brand and customers no-longer need to be persuaded to buyNokia brand technology.

Decline

This is the stage that the mobile communications market, includingNokia, have recently entered (Nokia had reported the first drop insales in the first quarter of 2002), and companies are now promoting,heavily, their new MMS products to the market in an attempt to get outof decline and back into growth, with a new generation oftechnologically advanced phones that offer motion picture capture,camera technology and the opportunity to watch television on yourhandset.

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 onpage's 3 and 4.

What I have found out by analysing S.W.O.T is that Nokia's mainweaknesses are:

1. They are currently promoting their products to a market that isverging on saturation- Nokia need to re-launch some of the oldermodels to a different market and only promote new products to the


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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 canincrease productivity so that the number of staff currently employed(The average number of employees in 2002 was 52714 and this was adecrease 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, thiswill have high start up costs but will eventually start to save Nokiamoney on import and export charges.

I have also discovered that Nokia have established themselves as oneof the most popular mobile communications companies in the market with

a total of over 52000 sales in 1997 which was a 34% increase from1996's sales.

There are many external factors that can affect a marketing strategyfrom developing; this is where you must use P.E.S.T analysis. I haveoutlined P.E.S.T analysis on pages 2 and 3 but have further analysedthe effect of these external factors on the development of Nokia'smarketing schemes below:

Political factors- Legal factors, such as the G3 technology licensingwhich has cost companies a total of 110 billion euros so far, arealways around to stop Nokia from properly developing strategies andfurther conquering the communications market. Also taxes such asimport and export have an affect on Nokia's development and these aremore-or-less impossible to avoid unless a company can afford to runfactories in every country and continent in the world.

Environmental, Social and ethical factors- Many companies may viewprofit as more important then ethical practice and this can lead themto making illegal decisions and this has been a big contribution tomany companies going out of business or loosing all their market shareto eco-friendly companies.

Technological factors- In the communications market this is probablythe most important external factor in affecting a companiesdevelopment of their marketing strategy as they must always keep up todate with every change within the market if they are to be successfuland hold on to their market share ad hopefully gain more.

Nokia's current marketing strategy has helped them become the biggestselling brand in the communications market to date, but now sales arestarting to decrease with the saturation of the current market segment


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so Nokia will need to do one of the following; Re-launch theirproducts with an aggressive promotional scheme; Target a differentsegment of the market that has not been entered so Nokia can instantlygain 100% of the market share (although this is risky as the marketmight not take to their products and the demand might be low, so saleswill also be low and prices will have to be high and this will furtherstop people from purchasing Nokia's products); Differentiate theirproducts to offer something no other company can offer to the marketor simply try and offer a different product altogether, such aslandline phones or televisions.

Market research

Nokia's business strategy (statement taken from www.nokia.com)

"Our business objective is to strengthen our position as a leadingcommunications systems and products provider. Our strategic intent, as

the trusted brand, is to create personalised communication technologythat enables people to shape their own mobile world.

Nokia are currently creating innovative technology to allow people toaccess Internet applications, devices and services instantly,irrespective of time or place. Achieving interoperability of networkenvironments, terminals and mobile services is a key part of ourintent.

Nokia need to capitalise on our leadership role by continuing totarget and enter segments of the communications market that we believewill experience rapid growth or grow faster then the industry as awhole.

By expanding into these segments during the initial stages of theirdevelopment, Nokia have established themselves as one of the worldsleading player's in wireless communications and significantlyinfluenced the way in which voice and other services have beentransferred to a wireless, mobile environment.

As demand for wireless access to an increasing range of servicesaccelerates, Nokia are planning to lead the development andcommercialisation of the higher capacity networks and systems required

to make wireless content more accessible and rewarding to the enduser. In the process, we plan to offer our customers unprecedentedchoice, speed and value.

Nokia has a history of contributing to the development of newtechnologies, products and systems for mobile communications. Recentexamples include: the commitment to the open mobile alliance; theco-development of the new operating system for the future terminalswith symbian; short-range wireless connectivity with bluetooth; the


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development of wireless LANs for enabling local mobility in fixedLANs; and MMS for enabling mobile multimedia messaging.

In addition, Nokia have continued to be active in IP convergence. Theyhave established alliances with other service providers in order tomake 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 andtotalled EUR 30 016 million (EUR 31 191 million in 2001). Sales inNokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158million) and decreased in Nokia Networks by 13% to EUR 6 539 million(EUR 7 534 million). Sales decreased in Nokia Ventures Organization by22% 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% toEUR 5 201 million (EUR 4 521 million in 2001). Operating loss in NokiaNetworks decreased to EUR 49 million (operating loss of EUR 73 millionin 2001). Operating margin in Nokia Mobile Phones was 22.4% (19.5% in2001), while the operating margin in Nokia Networks was -0.7% (-1.0%in 2001). Nokia Ventures Organization showed an operating loss of EUR141 million (operating loss of EUR 855 million in 2001). Common GroupExpenses totalled EUR 231 million (EUR 231 million in 2001).

During 2002, the operating profit was negatively impacted by goodwillimpairments of EUR 182 million and net customer financing impairmentcharges related to MobilCom of EUR 265 million.

Financial income totalled EUR 156 million in 2002 (EUR 125 million in2001). Profit before tax and minority interests was EUR 4 917 millionin 2002 (EUR 3 475 million in 2001). Net profit totalled EUR 3 381million in 2002 (EUR 2 200 million in 2001). Earnings per shareincreased 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 totalledEUR 1 056 million (compared with EUR 1 128 in 2001), while guaranteesgiven on behalf of customers totalled EUR 91 million (EUR 127million). Nokia also had financing commitments totalling EUR 857million (EUR 2 955 million) at the end of 2002. Of the totaloutstanding and committed customer financing of EUR 2 004 million (EUR4 210 million), EUR 1 573 million (EUR 3 607 million) related to 3G


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networks.

Global Reach

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 largestmarkets 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 anddevelopment network and co-operation. At year-end, Nokia had 19 579R&D employees, approximately 38% of Nokia's total personnel. Nokia hasR&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).

People

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 atyear-end 2001). In 2002, Nokia's personnel decreased by a total of 2101 employees (decrease of 6 440 in 2001).

Employee Value Proposition-In a move to further attract and retain a skilled workforce, this yearNokia developed an employee value proposition framework. Theadaptation of this has already started at country levels to reflectand respond to local employee needs and expectations. The fourfundamentals 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 productline-up, launching a record 33 new products during 2002, incorporatingcolour, imaging, multimedia, mobile games and polyphonic ring tones.

Of the total new phones launched, 14 had colour screens and multimediacapability. This attests to the growing share of feature-rich phonesoffering advanced mobile services in the company's product portfolio.

During the year, Nokia launched its first WCDMA mobile phone, theNokia 6650, which began deliveries to operators for testing in October2002. The company also commenced shipments of its first CDMA2000 1Xmobile phones in the Americas. These included the Nokia 6370, theNokia 6385, the Nokia 3585, and the Nokia 8280.


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In imaging, Nokia began shipping its iconic camera phone, the Nokia7650, expanding the scope of the mobile market from voice to visualcommunications. Feedback from customers and users across the board hasbeen extremely positive.

In the enterprise segment, the company expanded its product offeringfrom the Nokia Communicator 9200 series to include the Nokia 6800messaging device, with full QWERTY keypad optimised for personal andenterprise mobile e-mail.

In entertainment, Nokia announced it would bring mobility to gaming byoffering console quality games for its new mobile game deck devicecategory. Under a collaboration agreement with world leading gamespublisher, Sega, the two companies will develop games for the newNokia N-Gage mobile game deck, which will run on the Nokia Series60 platform and the Symbian operating system.

For the full year 2002, Nokia volumes reached a record level of 152million units, representing faster than market growth of 9%, comparedwith 2001. Backed by Nokia's ongoing product leadership and user brandpreference, Nokia has again increased its market share for the fifthconsecutive year reaching about 38% for the full year 2002, bringingthe company closer to its target of 40%.

During the year, Nokia Mobile Phones took steps to accelerate growthand enhance both agility and scale benefits with the introduction of anew operational structure. From May 1, nine new business units wereeach made responsible for product and business development within adefined market segment. This allowed Nokia to optimise its activitiesin these vertically focused areas, while continuing to achieve broadeconomies of scale from horizontal functions such as applicationsoftware development and the company's market-leading demand-supplynetwork.

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. Byyear-end, Nokia Networks had delivered MMS solutions to well over 40operators.

WCDMA 3G technology implementation moved to pre-commercial andcommercial phase towards the end of 2002. Nokia signed 10 new 3G dealsin Austria, Belgium, Germany, Ireland, Japan, the UK and Taiwan. InSeptember, Nokia became the first vendor to commence volume deliveries


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of EDGE hardware across all major GSM bands and in all continents.

In broadband access, Nokia signed nine new contracts in 2002, andlaunched the Nokia D500 next generation multiservice broadband accessplatform for the US and ETSI markets.

The company also further strengthened its GSM/EDGE/WCDMA productfamily with several new products and solutions. Key launches includeda high-availability server platform for use in All-IP mobilitynetworks, and the Nokia LTX, a linear transceiver product family ofbase station modules that support the definition of Open IP BaseStation Architecture.

During the year, Nokia took measures to align its operations to betterreflect current market capacity and conditions, reducing the number ofemployees in its delivery and maintenance services as well as inproduction. 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 corporatenetwork security market throughout 2002, Nokia Internet Communicationsmaintained the same level of sales and market share in the enterprisefirewall/VPN appliance segment as the previous year, as well assignificantly improving its operational efficiency.

Highlights for the year include the introduction of a record number ofnew products and solutions that both expand Nokia's network securityappliance portfolio and respond to emerging market opportunities.Extending mobility to enterprise workforces, protecting corporatee-mail content and providing firewall/VPN benefits to remote officeswere promising growth areas addressed with new product offerings fromNokia. To help foster the creation of new security applications tocomplement Nokia's own solutions, the Nokia Security DevelopersAlliance was launched in July. Looking forward to 2003, Nokia InternetCommunications remains committed to building a leading position in thecorporate network security market and extending mobility toenterprises.

For Nokia Home Communications, sales in 2002 clearly declined as theunit began a migration towards emerging horizontal markets with thelaunch of new types of terminals focused on horizontal terrestrial andsatellite markets, providing digital viewers access to a broad rangeof digital services. Products, such as the Nokia Mediamaster 230 S,introduced Bluetooth-enabled interoperability to the home environmentin the second half of the year.

Dividend


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Nokia's Board of Directors will propose a dividend of EUR 0.28 pershare in respect of 2002.

Net sales by business group Jan. 1.-Dec. 31

2002

%

2001

%

Change

EURm

EURm

%

Nokia Mobile Phones

23 211

77

23 158

74

Nokia Networks

6 539

22

7 534

24

-13

Nokia Ventures Organization

459


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1

585

2

-22

Inter-businessgroup eliminations

- 193

- 86

Nokia Group

30 016

100

31 191

100

-4

Operating profit, IAS,Jan. 1-Dec. 31

2002

% of

2001

% of

EURm

net sales

EURm

net sales

Nokia Mobile Phones

5 201


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22.4

4 521

19.5

Nokia Networks

-49

-0.7

-73

-1.0

Nokia Ventures Organization

-141

-30.7

-855

-146.2

Common Group Expenses

-231

-231

Nokia Group

4 780

15.9

3 362

10.8

Primary research results

[IMAGE]

[IMAGE]


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[IMAGE]

[IMAGE]

[IMAGE]

Average Rating (from 1-10. 1 being the best and 10 being the worst

Battery life

1

Exchangeable covers

5

WAP

9

MMS

10

The style of the phone

3

SMS

2

Games

6

Picture messaging

8

Organiser

7


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Ringtone features

4

[IMAGE]

Analysis of my research-----------------------

For my primary research I handed out 30 questionnaires but only 20 ofthem got answered, and above I have compiled all the quantitative datainto the Bar and pie charts. When giving out my questionnaire I had tobe very selective about who I asked questions to, as I had to makesure that I had a representative sample population so I can makegeneralisations about the entire consuming population.

From my research I have found out that 55% of people do already own amobile 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 theolder people in the sample (aged around 40 and 50) didn't own a mobilephone, and I found out that everyone over 65 did not own a mobilephone. My results show that the current youth market has already beencapitalised on by the communications companies, and the market hasbecome saturated or is definitely near saturation. This is reflectedin the fact that Nokia's sales have decreased by 4% and this has beensaid by many Wall Street writers to be the tip of the iceberg and theyare prophesising that sales will continue to decrease until themarketing strategy is revised.

The majority of the people who answered my questionnaire had an incomeof 30000-40000 and this shows that the current market certainly hasenough money to purchase a new phone, the youth market had an averageof under 10000, but as they have the most disposable income are morelikely to buy new models of mobile phones, but if the majority of thepopulation has a large income they can afford mobile phones but as alot of them have families and other financial commitments they may bea bit apprehensive about spending a large amount of money on a newmobile phone, so if a phone was launched at this market it should be aavailable at a lower price then the phones aimed at the youth market.

My research also showed that "pay as you go" was the most popularpricing option for the entire population, especially the youth inwhich 100% of people had chosen this plan, but in the more matureconsumers 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,


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due to the high call rates to other mobile networks, and because onthe "pay monthly" system you can get free text messages (SMS) and freecall time, but the amount depended on the network you had a contractwith.

My primary research backed up my secondary research and showed thatNokia was the biggest selling brand of mobile phones, with 75% of myparticipants claiming that they owned a Nokia phone, compared to avery small 7% for Nokia's closest rivals, Sony. This has shown me thatNokia are already a very well established brand amongst the consumersand that they do not need to spend any money (or a small amount ifentering a new market) on promoting the brand as a whole and shouldconcentrate the majority of their promotional expenditure on singularmodels or new technologies that are being discovered or beingreleased.

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. Smalldealerships such as selective network outlets and major householdappliance stores, like John Lewis or the O2 stores accounted for avery small amount of sales (less then 10%). If a phone is to besuccessfully distributed it is only logical that it should be releasedin the main dealerships before the other smaller outlets if it isgoing to reach its maximum selling potential.

According to my research the three most important things thatconsumers are looking for in a mobile phone are; long battery life, astylish casing, and good SMS (text messaging) features. If a phone isto be successful in the market environment it must include all ofthese, but the consumers have to be told that your product has theseavailable, this is what the company should try and promote throughadvertising and not just the brand name.

I have found out that most people do not conduct heavy research, ifthey do any research at all (only 65% did research into mobilephones), and the most common forms of research are magazines andwindow-shopping. This means that it is important for a product tostand out to the consumer and look good statistically in a magazine sothat it will stand out to the consuming population who research in

magazines, and the people who ask floor sales people for advice onwhich handset to purchase.

Price was a difficult variable to analyse as my research has shownthat it was a 50-50 split between people who said price was a keyfactor, and those who didn't really care about the price as long asthe phone was offering everything they wanted, although upon furtherinspection 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


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campaign or a good all-round package, that includes; cheap call rates,free text messages and some free accessories, for example, a handsfree kit or an in car charger.

I have also found out that the most popular food shops are Sainsbury'sand Marks & Spencer, this gives us an idea of where to put promotionalfliers and leaflets about up and coming releases into the market, andas people are usually bored while waiting in lines for a till, theywill want something to look at and if a flier is conveniently placednear in the lines then that could get more customers interested in aNokia mobile phone instead of one of their competitors, also peoplewho shop in these 2 main supermarkets tend to be either middle orupper 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 strategythat will re-launch Nokia and its products and increase sales to whatthey have been in the past, and probably higher then they have beensince they were first released.

My marketing mix

Product- The phones will continue to be of a high quality, but willnot be as technologically advanced as the recent phones that have beenreleased. The phones will be easier to use and carry the less advancedtechnology with WAP being the most advanced feature available in thenew range of phones that will be released, as my market researchshowed that most of the people aged 40+ were technophobes or wantedmobile technology to be easier to use if they were going to purchase amobile phone.

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 inthe market at the moment, as less money is being spent on productdevelopment and the phones wont cost as much to produce, there is noneed 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 allof the people who I intend to have set as the new target market (the40+ market) said that phones cost to much and so did call rates, butif 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 maincommunications outlets (Carphone warehouse and The link) but will alsobe sold at the three main supermarkets; Sainsbury's, Safeways and


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Tesco as my market research has shown that this where my new targetmarket do the majority of their food shopping at these outlets, itwould be an excellent place to sell phones as there is also nocompetition distributing their products in these locations, and Nokiacould have 100% of the shoppers business, and it would also be a wayof promoting Nokia for free as people will look at almost anythingwhile waiting in supermarket queues.

Promotion-As Nokia would be aiming their new line of mobile phones ata completely new market; there would be high promotion costs involvedas there is at the introduction stage of any product life cycle. Thebest places to put print advertisements would be in supermarkets nearthe tills so people in the queue can read them and hopefully becomeinterested in buying a Nokia brand mobile phone. Also print advertsshould be placed in magazines and newspapers where the target marketwill see them, my market research showed that the most read magazinesby 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 tobuying a magazine regularly. The most popular newspapers were TheObserver and The Guardian on weekends and the Evening standard duringthe week, so it is obvious that these are the magazines and newspapersthat adverts should be placed in as they would be seen more by the newtarget market. Because we do not want to cancel out any people outsideour target market (avoiding a niche market), Nokia should continue toplace poster adverts in places that will be viewed by a massiveselection of people (such as London's West End and other popularshopping centres).

Marketing principles

Any marketing scheme that has been developed must be based around theprinciples of marketing, and my revised Nokia strategy is nodifferent, below I have analysed how I have followed each marketingprinciple:

* Customer satisfaction- Before developing my strategy I had tofound out exactly what the consumers wanted, I found out that theywanted phones that were; high quality (with long battery life,good reception and good SMS features), low priced (priced lowerthen 150, but could be higher if call charges dropped), and I

have offered this in the new line of phones that are beingspecially developed to meet the needs of the 40+ market (simplertechnology).

* Customer perception- I had found out that Nokia was viewed as thehighest quality brand name in mobile communications, and it wasalso the most trusted brand, 8 out of 10 people said that theywould look for a Nokia phone that they liked, before they wouldlook at another brand. Nokia's prices were considered a bit


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expensive, and this was partly why I have decided to decrease theprices of the new range of phones, although people said theydidn't mind paying the extra money for the quality they think theywill receive with a branded item.

* Customer needs and expectations- This is where you companies needto anticipate future trends and forecast for future sales. In mymarket mobile phones are not considered a necessity yet so it ishard to anticipate future trends as no company has yet created afoothold in the market and the customers cant say what they wouldlike to see in future products if they do not have any at themoment, so a good thing to do would be to create a feedback groupwith some prototype phones and see what changes they would likeNokia to make to them.

* Generating income or profit- This is the reason why I had toreview Nokia's current strategy, the sales were starting to

decrease and this was starting to reflect in the income andprofits, and decreases in these will not satisfy the mainstakeholders in Nokia.

* Making satisfactory progress- If a product is developing with themarket then they are fulfilling this marketing principle, Nokiaare actually achieving this with their current marketing scheme,but they are spending huge amounts of money on product developmentand the sales are not currently reflecting well on the decisionsto spend that amount of money on product development.

* Awareness of the surrounding environment- This is the reason evercompany must complete market research, from my research I knowwhat the customers want, where they shop, what they watch ontelevision, what radio stations/programs they listen to, what theaverage income is and what features people rate highest in phonetechnology.

There are also many external factors that can affect your marketingstyle and the decision of which strategy to use, we can evaluate theseusing P.E.S.T:

Political factors- Legal constraints are the hardest external factor

to try and avoid making any serious impact on any pricing, ormarketing choices made. The only legal constraint that my new strategy"dodges" is the G3 licensing, as the new style of Nokia productdoesn't need any of the newest technologies under the G3 frame.

Environmental and Social factors- Nokia have never really had any ofthese affect the way in which they operate because they have neverdone anything that is really anti-environmental, the only problem isthe fact that the mobile phones let of radiation and has been said to


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increase the risk of cancer in mobile phone users, but this has notbeen highly documented and hasn't affected how Nokia have conductedthemselves.

Technological factors- This is the most important external factor inthe communications as mobile phones are based around technology andnew discoveries. The new strategy does have to be careful withtechnological advances as Nokia do not want to make the new phones tocomplicated as my market research discovered that this is exactly whatthe target market does not want, they want phones that are simpler touse.

Pricing strategy

As Nokia will be entering a new market as part of the new marketstrategy, I have decided to change the current pricing plan to amixture of two theoretical pricing approaches:

Market skimming and demand based pricing- Market skimming is where thecompetition in a market is slim or non-existent and a company cancharge what ever price they want because there is no other company tooffer a lower one. As Nokia will be entering a new market, we will beable to choose whatever price we want to start selling mobile phonesat, and I think they should first be introduced at around 150, as mymarket research showed that consumers in the new target market wouldbe hesitant to pay any higher, and this is the part that relates todemand based pricing.

Market segmentation

The market segment the Nokia was previously aiming at had becomesaturated, my research showed that 100% of students already owned amobile phone and where not about too buy another one in the nearfuture. Due to the fact that this youth market is saturated, Ianalysed the Ansoffs and Boston matrixes, and decided to undertake inmarket penetration. The new market that I am aiming Nokia's productsis the middle aged people, because my research showed that very fewmiddle aged people owned mobile phones and could be persuaded to buy aphone if the product was what they wanted and the price was right, andof those people who said that that didn't want a phone, most of them

said they could be persuaded by strong advertising and branding.

Evaluation

My revised strategy has a lot of advantages over Nokia's previousstrategy, and I have listed them below:

My target market is one that has never been entered before, so Nokiawill instantly gain 100% market share, whereas the current target


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market is saturated and competition for market share is very strong.

The products that are being released do not need to be astechnically advanced as the ones in the current market, because mymarket research showed that the 40+ market do not want phones that areto complicated and hard to use.

If product research and development is not needed as much anymorethen Nokia can afford to decrease its employment numbers and thiswould save Nokia a lot of money every year.

When entering a new market with no competition a company can chargewhatever prices they want, Nokia's prices can be

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