어떤 회사 찾아서 그거 분석하는 거 별 일 아닐 거라고
생각했었는데 쉬운 일이 아니더군요.
(그래도 예전에 전공한 공학보다는 재미있더군요.)
제대로 할려면 정말 힘들져...
예를 들어 10장짜리 레포트 쓰는데
책 읽고 자료 검색하는 데만
밥먹고 수업 듣는 거 빼고
나머지 시간 꼬박 도서관이랑 컴 앞에 처박혀서
5일 걸리더군요.
특히나 외국 회사의 경우에는 한글로 된 자료만으로는 불충분합니다.
저도 얼마 전에 이걸로 프레젠테이션을 했었는데요
에궁.. 그게 시간이 조금 지난 데다가
하도 요즘 이것저것 하는 게 많아서
지금은 막 뒤죽박죽입니다.
어쨌든 숙제는 스스로의 힘으로!
GSM 선두주자.
(유럽의 모바일폰 기술은 GSM이라고 해서 TDMA<시분할다중방식> 기술입니다. 한국은 CDMA죠<코드분할다중방식>)
세계시장 점유율 36%
모토롤라 에릭슨 등과 경쟁관계였으나
최근 에릭슨의 몰락과
소비자의 모토롤라에 대한 인식 변화
(유럽에서 젊은 애들은 모토롤라 싫어해요.)
노키아는 시장점유율 급속성장.
(여기 젊은 애들은 노키아 폰을 통해 아이덴티티를 창조한대나 뭐래나. 디자인을 그렇게 한다나요...? 뭐 실제로 노키아 3310 모델이 엄청 인기였는데 이게... 폰 산 다음 모양 맘에 안 들면 길거리에서 색깔 이쁘고 모양 여러가지인 껍데기 많이 팔았거든요. 그거만 뒤집어 씌우면 분홍색으로도 바뀌고 꽃모양으로도 바뀌고... 그거 대히트였답니다.)
기술면에 있어서... 한국 기술이랑 노키아 기술이랑 어디가
더 우위일까? 물론 기술 기반이 달라서 단순 비교자체가 힘든 일이지만
제가 한국 핸드폰산업의 기술개발에 대해 들은 건 16화음뿐이네요.
그나마 핵심기술은 퀄컴꺼구...
음.. 일본 도코모도 함 참고해 보시구요.
요즘 여기는 3세대 모바일폰 기술이 어쩌구저쩌구하며 디게 시끄러운데요
혹시 한국에서도 그런 얘기 있으면 저도 정보 좀 주세요.
(요 3세대 모바일폰 연구... 저희 학교 리서치파크에서 하고 있답니다.)
작년 하반기까지만 해도 한국 기술이 2.5세대라고 해서 최신 기술이었는데... 지금은 알 수 없네요. 이코노미스트 작년 가을꺼에서 찾아 보세요. 떠들썩했으니까 아마 한두 시간 정성 들이시면 찾기 어렵지 않을 겁니다. 그게 내용이... 한 십여년 전으로 기억되는데 한국전력에서 '예산소모'차원에서 아무 생각 없이 광케이블을 깔았구요... 그게 지금과 같은 데이터 전송을 염두한 게 아니라... 단지 예산이 남으면 다음해 예산이 줄어드니까 한 거거든요. 근데 그 광케이블망 기반 위에서 운영되던 (특히 엘지텔레콤이 한국전력의 광케이블망을 이용해서 사업을 시작했습니다. 한국전력 관련 얘기는 그냥 제 기억일 뿐입니다.) 한국의 모바일폰 시스템의 전송률이 그렇게 좋은지 모르고 그냥 무작정 사용해 왔는데 알고 보니 그게 3세대에 근접한 속도였다. 그래서 그게 2.5세대다. 그런 얘기였어요. 상용화는 일본에서 됐죠.
어느 신문에서 읽었는데요
(Guardian 아니면 이코노미스트일 것으로 기억됨.)
영국에서 서비스 프로바이더 중 젊은이들에게 가장 인기 없는 건 BT
휴대폰 중 가장 싫어하는 건 모토롤라입니다.
그래서 휴대폰 가게 가면 이 재고 처리할려고
비티에 모토롤라 폰을 가장 먼저 추천한답니다.
삼성 폰의 경우에는... 올해 빅히트를 친 것이 분명하지만
(A-300 모델이 유럽시장에서 Catwalk를 했다는군요.)
이번 하반기와 내년도 전망이 그렇게 좋지는 않을 것으로 보입니다.
일단 시장에 나오는 제품들만 봐도
삼성의 유럽시장 공략제품과 노키아의 신제품과는
좀... 비교가 많이 됩니다.
이건 광고를 좀 보여드려야 할텐데...
쉽지 않네요.
한국 모바일폰 산업에 대한 신문 기사를 읽으면
우리나라 신문기사는 많이 과장된 느낌을 받습니다.
각종 기사 정보는 영국계 신문들 보면
엄청 많습니다.
www.bbc.co.uk
www.economist.co.uk
www.ft.com
핀란드 주식시장의 50%.
핀란드 정부의 정보통신분야 전폭 지원
(교육투자, 외국인 고급인력의 핀란드 이민 적극 지원, 과감한 투자.
주 핀란드 한국대사관 홈피 들어가시면
노키아의 External Analysis에 필요한 자료 나옵니다.
핀란드 경제상황이었던가??)
회사는 3개(?) 비즈니스유닛으로 구성되어 있는데
모바일폰 사업부는 그 중 하나임.
정확한 정보는 노키아 홈피에 있어요...
아래 자료들 참고하시구요, (도움이 될라나 모르겠네...)
아마 자료 더 찾으셔야 할 겁니다.
제가 작성한 자료를 드리면 좋겠지만
그러면 숙제를 대신 해 드리는 게 되겠죠?
그럴 수는 없는 일이구요.
아차차
그리고 인터넷에 경영학 교수님들의 가상수업 사이트들이 많습니다.
이런 데 뒤지다가 대구대학교 이재규교tnsla의 사이트를 발견했는데요
거기 노키아는 왜 세계제일인가라는 제목의 사례연구가 있더군요.
www.jklee.com/data4.htm
Sales of mobile phones are holding up and Nokia has consolidated its position as number one handset maker, new research has found. The study by Strategy Analytics found that Nokia had increased its market share during the April to June period, when it shipped 36 million handsets.
The number two handset maker Motorola also had a good quarter, But Sony-Ericsson's strategy of concentrating on more expensive phones was hitting sales. Overall, Strategy Analytics said it expected sales of handsets to climb to 417 million this year, compared with 393 million in 2001. Sales of mobiles fell in 2001 - the first year-on-year fall since 1990.
Nokia pulling away
In June, Nokia had cut back its growth forecasts for the rest of the year. But Strategy Analytics said that the Finnish company had expanded its market share in the April to June quarter. Nokia now has 37.2% of the global market, and saw handset sales climb to 36 million units in the last quarter, compared with 32 million in the first three months of the year.
The second biggest mobile maker, Motorola, also saw sales and market share rise, while sales at Samsung and Siemens held steady. But Sony-Ericsson saw sales decline, a fall Strategy Analytics blamed on a focus on more expensive handsets. The research also noted that a number of Asian handset makers making good progress, notably LG.
New technology
Global market share
Nokia: 37.2%
Motorola: 17.3%
Samsung: 9.8%
Siemens: 8.5%
Sony-Ericsson: 5.2%
Others: 22.1%
Source: Strategy Analytics
Mobile phone makers are hoping that sales will be driven by the introduction of new handsets with more features. They hope that next-generation services, such as multi-media messaging (MMS), will persuade consumers to upgrade their phones. MMS allows users to send pictures and sound along with text.
Wednesday, 21 August, 2002, 16:42 GMT 17:42 UK
-------------------
A Finnish fable
Oct 12th 2000 | ESPOO, HELSINKI
From The Economist print edition
The world’s biggest mobile-phone maker has had a great past decade; but, as this week’s sharp fall in its share price suggests, it faces a more testing future
OLLI-PEKKA KALLASVUO has been Nokia’s chief financial officer, and the strong right arm of Jorma Ollila, the Finnish company’s chief executive, ever since the two men reinvented the 127-year-old company in 1992. Surveying a future in which Nokia believes that its handsets could shoulder aside the personal computer to become the commonest way of connecting to the Internet, he observes that “the complexity [of the new devices] benefits us. We know this industry better than anyone. Complexity improves our competitive position.” Meanwhile, at the reception desk of Nokia’s lakeside glass palace in Espoo, just outside Helsinki, a young woman gives telephone directions to a visitor. “Just ask for Nokia,” she says, “everybody knows where it is.”
Nokians, it is fair to say, are pretty pleased with themselves. And why not? Most very successful companies, especially in high technology, have a self-belief that borders on arrogance. But those that stay successful combine it with a restless determination never to underestimate the competition—what Silicon Valley types like to call “paranoia”. By contrast, there is something slightly smug about Nokia. It is a danger that Mr Ollila recognises. When asked what is the biggest threat to his company, he says, without hesitation, “complacency”. Nokia has become so used to everybody saying how wonderful it is that its 60,000 employees would not be human if they didn’t start believing it.
From lumber to wireless
Few would dispute the claim that Nokia has been Europe’s outstanding business success story of the past decade. A couple of decades ago, it was a stodgy Finnish conglomerate, making everything from rubber boots and cables to lavatory paper and televisions. Even in that form, it had come some way from its start, in 1865, as a lumber mill on the banks of the Nokia river.
The process of Nokia’s transformation from staid old conglomerate into one of the world’s most relentlessly focused consumer technology companies was relatively slow. As early as the late 1970s, the company was already ploughing profits from its traditional operations into buying technology and electronics businesses—mainly computers and TVs. Mobile telephony did not exist as such, but Nokia was already big in radio telephones—an essential communications tool in sparsely populated Scandinavia. When Ericsson, Sweden’s giant telecoms-equipment supplier, adapted a technology that had been pioneered by America’s Bell Labs to build an early cellular network in 1980, Nokia was a natural choice to provide the telephones.
But it took another 11 years and a huge crisis, for both Nokia and the Finnish economy, before the company fully shed its old skin. The collapse of trade with the imploding Soviet Union dealt a huge blow to Nokia (at one point it was left with a mass of unsellable lavatory paper). And although demand for mobile handsets was starting to take off, Nokia had so little idea about how to raise production to meet demand that its mobile-phone operation was nearly sold. It was Mr Ollila, in charge of this division, who in 1991 sorted out production and found a way through the problems of getting the new GSM digital standard ready for market.
A year later, Mr Ollila became chief executive. He promptly took a gigantic gamble: in effect, he bet the company on becoming a mobile-phone pure-play. Only eight years on, the gamble has paid off hugely. Earlier this year, Nokia was briefly Europe’s most valuable company, though its shares have since fallen back sharply. Even in mobile telephony, it has been ousted by that other star, Britain’s Vodafone. However, Vodafone, unlike Nokia, has grown by acquisitive deal-making, notably its purchases of AirTouch in America and Mannesmann in Germany. Nokia accounts for almost a quarter of Finland’s exports, and nearly 4% of its GDP.
Nokia is thus an authentic business miracle, and one that owes everything to the sheer smartness of Mr Ollila and his close-knit team of fellow Finns. But that smartness is now being tested more profoundly than at any time since those dark days at the start of the 1990s. For Nokia is at what Andy Grove, boss of America’s Intel, called an “inflection point” in his book, “Only the Paranoid Survive”: a moment at which a disruptive technological change emerges to redraw the business landscape.
That may seem a surprising suggestion, just when the mobile phone’s triumph over the fixed-line telephone as the primary means of voice communication seems assured. It is the sudden arrival of data and the mobile Internet that is rewriting the rules of the mobile-communications game. As Mr Ollila knows well, this is hardly a moment for resting on laurels, let alone economising on metaphors. “It’s a big paradigm shift,” he says. “We have the challenge of sailing in much more uncertain waters.”
At least the changes that are about to sweep the industry are being driven by the technology of the incumbent equipment makers rather than by outside competitive forces. But that does not mean that Nokia, or its big rivals such as Ericsson and America’s Motorola, will stay in control: all three saw their share prices tumble this week.
In the first place, there is unavoidable technology risk. The new data-centred mobile networks are based on Internet-style packet switching rather than the circuit-switching of today’s voice networks. Even the least sophisticated new handsets will be far more complex than today’s.
Second, the success or failure of these new phones will depend on the usefulness and cleverness of the services and applications that can be reached from them—and those will be developed by third-party firms, which will be keen to reap any profits themselves. And third, as today’s simple mobile phones morph into many different devices, from powerful handheld computers through to games consoles or to pocket audio/visual terminals, new competitors with different skills and potent brands of their own, such as Dell, Palm and Sony, will challenge the “traditional” handset makers.
The shock of the new
Although there is inevitably risk and uncertainty ahead, this challenge is not coming at a bad time for Nokia. Two months ago, the company was given its first nasty jolt. In some ways, what happened is a measure of what has come to be expected of Nokia. On July 27th, it announced sales of euro7.0 billion ($6.5 billion), a 55% increase on a year earlier, for the quarter to the end of June. Its shares promptly plummeted by 26%, rubbing out over $60 billion of its market value. It was the largest single-day drop in value ever experienced by a European company. Of course, the numbers were not the whole story. What really provoked the sell-off was the revelation from Jorma Ollila that the figures for the third quarter would not be so good.
Mr Ollila soothingly assured investors that the only reason for the hiccup was a slight delay in shipping some hot new handsets, including, significantly, the vital 6210, Nokia’s first mass-market WAP (wireless application protocol) phone for gaining access to the Internet. Growth would, he promised, resume strongly after the 6210 was ready. Underlying demand for mobile communications was as strong as ever; what was more, he was confident that Nokia would increase its share of the booming market in both terminals and infrastructure. Yet the idea had taken hold, especially among the American investors who now hold the majority of Nokia’s shares, that the company just might be slowing down. Since then, Nokia’s shares have languished: after their drop this week, they are down some 40% from their peak earlier in the year.
In a limited sense, and despite Mr Ollila’s own optimism, it is the market’s judgment that may be correct. Since 1997 annual sales growth has been nudging 50%. This year is likely to be little different, with most analysts expecting around 43%. But mobile-phone penetration in the big European markets, in which Nokia makes more than half its sales, has gone from an average of less than 20% in 1997 to nearly 60%. Nokia executives say there is no reason why penetration should not reach about 90%—but the signs from such mature markets as Sweden and, indeed, Finland, are that merely to get from 60% to 70% could take two or three years.
That is because operators are now having to sell phones to people who have decided that they don’t want them. And the marketing effort of trying to convert “rejecters” into, at best, very light users, may not be worth the candle. Mr Ollila speaks confidently of more than a billion mobile-phone subscribers worldwide before the end of 2002 (compared with about 600m today). But the highest growth will come in markets such as China and Latin America, in which Nokia will have to compete against, or join with, well-connected local rivals.
With the world (especially the European) market for handsets slowing, Nokia is putting its faith in rising replacement demand and more expensive feature-loaded phones to act as an offset. In the past 12 months, replacements have overtaken additions for the first time, helped mainly by improvements in size and battery life as well as by the hype surrounding the first coming of the mobile Internet, with WAP. By 2003, replacements are expected to account for some 80% of phone sales.
Nokia is now betting that one of the main drivers of future growth will be the rapid evolution of today’s predominantly voice-based networks into platforms for delivering increasingly high-speed data. Since last year operators in most rich countries have begun upgrading their networks so that they can handle data. Using technologies collectively labelled 2.5G (or generation), to distinguish them from existing second-generation voice networks, they will form a bridge to high-speed 3G networks. And, after a series of high-profile (and highly expensive) auctions by European governments of the necessary spectrum for these 3G networks, they will start being rolled out in a couple of years’ time.
Network effects
Nokia Networks, the infrastructure division that accounts for nearly a third of the company’s sales, thus has a chance of winning big new orders just as demand for its old GSM equipment slows. It also argues that it has an opportunity to increase market share, because Nokia was not a big infrastructure vendor when the first networks were built. Although Ericsson remains king of the hill for wireless infrastructure, Nokia has gained ground by winning a large share of orders for the GPRS equipment that is the main upgrade for GSM. Arja Suominen of Nokia Networks claims that the company’s “core network solution” has been delivered to over 50 mobile-phone operators.
After Europe’s 3G auctions, the winning bidders will, over the next decade or so, place orders worth nearly $175 billion. Having paid perhaps $125 billion for their licences, they will be keen to accelerate their investment plans so as to start earning some money from new services. Even though the operators have only the haziest idea of how they can make a return on these colossal investments, Nokia executives are rubbing their hands at what they see as the bonanza to come.
Their argument is that, as mobile Internet services proliferate, and the amount of software that can be crammed into a mobile phone increases, handsets will be designed to suit different tasks. They will also be made not just to appeal to different segments of the market (a Nokia strength), but to the same person at different times in their life. Nokia’s hope is thus that the tendency towards commoditisation that is already apparent at the low end of the mobile-phone market can be reversed—and with it the tendency of handset prices to fall. Nokia reckons that even basic 3G terminals will be about twice the price of today’s most upmarket voice phones.
Nokia firmly believes that no company is better placed to be the standard bearer of what its marketing people endlessly call “the mobile information society”. As Mr Kallasvuo says: “We have the design, the branding and the technology. We also have the biggest volumes in a business where volume really helps, and the best supply-chain management in the industry.” All of which even Nokia’s rivals would be hard-pressed to deny. But despite the breezy self-confidence and practical Finnish can-do, more reflective Nokians know that life is about to get harder.
Superiority complex
For even though Mr Kallasvuo maintains that the complexity of the new phones is to Nokia’s advantage, it was also responsible for the late arrival of the 6210. Even more troubling is the chequered history of Nokia’s first WAP phone, the iconic 7110, released late last year. Although beautiful and pioneering, the 7110 is probably the first unreliable phone that Nokia has ever made. Push the technical people at Espoo, or at the firm’s research centre at Salo, farther away from Helsinki, and it becomes clear that, however much of a marketing triumph it might have been, the 7110 is one they would prefer to forget. It is also a phone that you will hardly ever see a Nokia employee carrying around.
And if basic WAP phones are proving tricky, what does that imply for next-generation phones using the new standards of GPRS and W-CDMA? Yrjo Neuvo, chief technical officer of Nokia’s mobile-phone division, says that merely moving to GPRS is “as much as doing GSM all over again.” He reckons that there is ten times as much software in a GPRS handset as in a GSM phone.
After the disappointing experience that users have found with the first version of WAP, there is a lot riding on these early GPRS phones. They have to demonstrate to their users that the mobile Internet is as wonderful and as useful as enthusiasts say it will be. Mr Neuvo knows that, if digital convergence means that mobile phones import PC-like levels of reliability and user-friendliness, Nokia will have a disaster on its hands.
Nokia is also taking the competitive threat from Japanese makers, such as Panasonic and NEC, very seriously. Because the Japanese market adopted a standard for mobile telephony that was not found anywhere else in the world, the Japanese companies never made much effort in GSM markets. But that is about to change. Japan will not only be the first country to have 3G networks, with NTT DoCoMo rolling out its service in the first half of next year; it has also adopted the same basic 3G technology as Europe. Mr Kallasvuo may call Nokia “the biggest consumer-electronics firm in the world”, but it has achieved its success without having to fight what have long been the best consumer-electronics firms in the world: the Japanese. Significantly, Vodafone has already decided that four out of its first five 3G handsets will come from Asian rather than European suppliers.
Because most of the next generation of handsets will be dual-band devices with a GSM capability as well, Nokia is hoping that the need for “backwards compatibility” will afford it some protection from a Japanese onslaught. But the Japanese could deal with that problem by partnering with second-tier European firms. Both NEC and Siemens, and Fujitsu and Alcatel, have co-operated on infrastructure; they could easily extend that co-operation to handsets.
Nokia also takes comfort from the fact that Japanese taste in mobile-phone design is rather different from European. Its own model for DoCoMo’s i-mode Internet service looks unlike anything it sells in Europe. But the Japanese have no problems making cameras, televisions and hi-fis that appeal to Europeans; it is hard to believe that they are not capable of making mobile devices that would at least match Nokia’s for desirability. It is even possible that the importance of handset appearance (and therefore brand) will diminish thanks to the imminent arrival of wireless headsets and earpieces. With speech likely to replace fiddly keypads as the main user interface, phones may increasingly stay hidden in pockets and briefcases.
The move from voice to data also brings new risks to Nokia’s infrastructure business. As a recent report on the wireless Internet by Morgan Stanley Dean Witter argues, it is inevitable that 3G will increase competition between suppliers. Most threateningly, the big North American equipment makers that lost out with GSM are circling hungrily. Part of the appeal of equipment firms such as Lucent and Nortel is that they already have great experience blending together voice and data networks. Cisco Systems, with perhaps the most formidable data-networking credentials of all, is also determined to get a slice of the action and has recently been working with Motorola.
A further problem, for both Nokia and Ericsson, will be meeting demand. Ericsson has made no secret of the fact that it would have preferred a fairly slow and orderly build-out of 3G. But one consequence of the European spectrum auctions will be to speed it up. Operators must treat the billions they have shelled out for licences as a sunk cost that can only be carried if 3G services quickly start contributing a decent amount of revenue. That means they will want equipment delivered at a faster rate than their present suppliers can deliver it. A straw in the wind was BT Cellnet’s decision to make Nortel its lead 3G vendor.
Morgan Stanley thinks that Nokia and Ericsson can kiss goodbye to the fat margins that they have become used to with GSM. Increased competition, technical risk and the likelihood that cash-strapped operators will expect a high level of “vendor financing” will combine to erode margins. Nokia has resisted creative financing in the past, but new entrants to the market will win deals by accepting a share of future revenues and equity stakes in operators.
There are few cleverer or more focused companies than Nokia anywhere. But its dominance of the current mobile market is not the guarantee of success in 3G that some believe. It will need to learn new skills. Nokia also seems certain to face a level of competition that goes beyond anything it has previously experienced. Mr Ollila, for one, has no illusions about the scale of the challenge. He says: “In ten years’ time, I would like Nokia to be dubbed as the company that brought mobility and the Internet together. It’s not going to be easy, but this organisation loves discontinuity, we can jump on it and adapt. Finns live in a cold climate: we have to be adaptable to survive.”
Nokia - Building A Powerful Technology Brand
The world of parity has hit the mobile phone market just as it has many other technology product categories. The products range from the simple to the complex, but every manufacturer offers, of course, the latest features. Leapfrogging in sales between brands frequently occurs based on design. But overall the market is predictable, with Nokia, Motorola, and Ericsson fighting it out at the top and several less successful brands like Samsung, Philips, Siemensand Panasonic trying hard to make inroads into their top competitors' market share. So what makes the difference between the most successful and less successful brands? It certainly is not what product features are offered. How, then, do consumers choose? The answer seems to be what the brand names mean to them.
Nokia Group the Finland-based manufacturer of mobile phones, has been steadily working on its corporate brand name and the management of consumer perceptions over the last few years. Its efforts have paid off, because it is now the number one brand in many markets around the world, effectively dislodging Motorola from that position. The brand has been built using the principles described above, and has been consistently well managed across all markets. Nokia has succeeded in lending personality to its products, without even giving them names. In other words, it has not created any sub-brands but has concentrated on the corporate brand, giving individual products a generic brand personality. Only numeric descriptors are used for the products, which do not even appear on the product themselves. Such is the strength of the corporate brand.
Nokia has suceeded where other big brand names have so far failed, chiefly by putting across the human face technology-taking and dominating the emotional high ground. It has done so in the following way.
Nokia Brand Personality
Nokia has detailed many personality characteristics for its brand, but employees do not have to remember every characteristic. They do, however, have to remember the overall impression of the list of attributes, as you would when thinking about someone you have met. As the focus is on customer relationships, the Nokia personality is like a trusted friend. Building friendship and trust is at the heart of the Nokia brand. And the human dimension created by the brand personality carries over into the positioning strategy for the brand.
Nokia Positioning
When Nokia positions its brand in the crowded mobile phone marketplace, its message must clearly bring together the technology and human side of its offer in a powerful way. The specific message that is conveyed to consumers in every advertisement and market communication (though not necessarily in these words) is "Only Nokia Human Technolgy enables you to get more out of life"
In many cases, this is represented by the tag line, "We call this human technology". This gives consumers a sense of trust and consideration by the company, as though to say that Nokia understand what they want in life, and how it can help. And it knows that technology is really only an enabler so that you-the customer-can enjoy a better life. Nokia thus uses a combination of aspirational, benefit-based, emotional features, and competition-driven positioning strategies. It owns the "human" dimension of mobile communications, leaving its competitors wondering what to own (or how to position themselves), having taken the best position for itself.
Nokia Product Design
Nokia is a great brand because it knows that the essence of the brand needs to be reflected in everything the company does, especially those that impact the consumer. Product design is clearly critical to the success of the brand, but how does Nokia manage to inject personality into product design? The answer is that it gives a great deal of thought to how the user of its phones will experience the brand, and how it can make that experience reflect its brand character. The large display screen, for example, is the "face" of the phone. Nokia designers describe it as the "eye into the soul of the product". The shape of phones is curvy and easy to hold. The faceplates and their different colors can be changed to fit the personality, lifestyle, and mood of the user. The soft key touch pads also add to the feeling of friendliness, expressing the brand personality. Product design focuses on the consumer and his needs, and is summed up in the slogan, "human technology."
Nokia now accounts for over half of the value of the Finland stock market, and has taken huge market share from its competitiors. According to one brand valuation study carried out in mid-1999, it ranked 11th on the world's most valuable brand list, making it the highest-ranking non-U.S. brand. As has been pointed out, it has unseated Motorola. Nokia achieved its brilliant feat through consistent branding, backed by first-class logistics and manufacturing, all of which revolve around what consumers what.
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NOKIA
Marketing Analysis
MKTG 6000
Dr. Ha
December 4, 2000
April Makalea
Marianne Noergaard
Navin Yip
Dennis Guh
Robert Pinkas
II. Table of contents
III. Executive Summary
Nokia is over a century old and during that time they have become known for their pioneering abilities. They operate globally in the area of communications, primarily regarding cellular telephones and networks. Both the external and internal analysis for telephones and networks vary greatly. Currently holding the greatest market share in cellular telephone sales, we focus here on Nokia’s cellular telephone division.
The purchase of cellular telephones has grown exponentially over the past few years. More and more users of all ages are using cellular telephones for personal or business use. Nokia’s current marketing targets consumers through mass media and business users through sales agents. The structure of pricing, promotion and distribution is based upon regional factors. In Asia and Europe telephones are priced for and sold through retail locations. While in the United States, telephones are sold to network providers who then include telephones as part of a service package.
The cellular telephone market’s user base is expected to double in size over the next two years, and the upgrade market continues to expand. The growing market coupled with changes in technology has created fierce competition. Competitors differ by region, but the main aspect of competition is based on technology. Cellular telephones have already progressed from a first generation analog technology to the second generation of digital networks. The third generation is beginning to hit the market and allows for the exchange of data.
Nokia is a strong organization with many resources, yet they must still be concerned with the fast paced changes in technology. The market is comprised of many opportunities to expand and grow, but these possibilities are often coupled with risk.
IV. Introduction
Nokia has been constantly reaching out to the innovative possibilities of the future by being a pioneer in mobile telephony. Besides, Nokia is paving the way to the Mobile Information Society with its innovative products and solutions.
While individuality, freedom, inspired technology, enduring quality and the uniqueness of the human touch are among what the company believes in, understanding human needs and connecting people in an all-embracing world of easy communication are its daily business. That's why, "Connecting People" is not just a slogan, it's an everyday goal.
Being a global innovator, the company is the leading mobile phone supplier and a leading supplier of mobile, fixed and IP networks and services, as well as multimedia terminals. Headquartered in Finland, Nokia is listed on five European Stock Exchanges and on the New York Stock Exchange, with a committed workforce of more than 60,000 worldwide.
In 1865, the Finnish mining engineer Fredrik Idestam established a wood-pulp mill in Southern Finland and began manufacturing paper. Since then, the company has evolved dramatically, growing first into a conglomerate encompassing industries ranging from paper to chemicals and rubber, and streamlining in the 1990s into a dynamic telecommunications company.
The groundwork for the shift to telecommunications was laid in the 1960s, when Nokia's electronics department was researching radio transmission. In the decades that followed, Nokia's mobile phones and telecommunications infrastructure products reached international markets, and by the 1990s, Nokia was established as a global leader in digital communication technologies.
Since its entrance into the field of telecommunications, Nokia has faced competition from established international competitors. Yet in a relatively short time, Nokia has earned global success by recognizing and exploiting the opportunities created by continuous technological and market change.
In 1960, with the establishment of the Cable Works' Electronics department, the seeds of Nokia's global success in telecommunications were planted. The decision to expand into electronics proved to be a wise one, and the timing was also right: semiconductor technology was just making its way from the lab into the factory. Even the industry leaders at the time were just learning the ABCs of this new technology, so newcomers like Nokia were not at a disadvantage.
The Electronics department was the idea of Björn Westerlund, the president of the Cable Works at the time. Realizing the future potential of semiconductor technology, Westerlund maintained good relations with universities and colleges and was open-minded enough to hire visionaries in the form of scientists, inventors and apprentices.
Kurt Wikstedt, the head of the Electronics department, took the blueprints created by these visionaries and "squeezed out" products that would respond to the needs of the market. When the Nokia Group was formed in 1967, Electronics generated three percent of the Group's net sales and provided work for 460 people.
Transmission systems based on Pulse Code Modulation (PCM) were the newest innovation in telecommunications in 1967. In PCM, analog sound signals are converted into digital form. This technology substantially increased the capacity of telephone cables.
In 1969, Nokia was the first company to introduce PCM transmission equipment that conformed to CCITT (Consultative Committee on International Telegraphy and Telephony) standards. By stepping into the digital age early, Nokia made one of its most important strategic decisions ever.
Communication between people has become much easier, cheaper, and faster in the recent past. This phenomenon can be attributed to the wireless communication networks around the globe. One of the major and leading players in the cellular communication network is Nokia. A producer of cellular phones, network products and a leading researcher in the field, Nokia holds a dominant position in almost all markets it enters. Nokia today manufactures their products in 10 countries in 3 different continents. It has recorded revenues of $19 billion and net income of almost $4 billion. Nokia employs 55,000 people worldwide and spends over $1.5 billion in research and development in its 52 R&D centers across the globe (Nokia Corporation, 1999).
We will present Nokia to you as a technology leader in one of the newest and hottest markets in the world. The market represents $30 billion annually in sales. And growing!
V. External Analysis
Customer Analysis
Whereas mobile phones a few years ago only were targeted towards a niche in the market, they have within the last couple of years become a mainstream product. In fact, now a days some people use cellular phones as substitutes for stationary phones.
Although the highest ownership rate of mobile phone belongs to people between 18-29 years of age (African Cellular, 2000); the buyers of mobile phones actually range from young teenagers to seniors.
The mobile phone market can be divided into 2 main segments; the consumers segment and the business segment. Additionally, we have divided the cellular phone consumers segment into three different categories according to their usage patterns and buying motives. Light users are people that buy the phones for convenience and emergency use. When choosing a phone their main concern is the functionality of the phone and not the particular brand, model nor features. Their primary buying criteria is the price of the phone; they will be very apt to go for a good deal on a package consisting of a subscription and a mobile phone. The type of people that fall into this category is primarily the elderly who want a phone for security reasons and consumers who just want the phone in order to be able to call for help or be reached in emergency situations.
Medium users are people who buy the phones for convenience use, but unlike the light users they use them on a daily basis and for more than emergencies. They are more concerned about the models and the features, but are also likely to buy the phones as a package if can get a good offer on a phone that somewhat fits the model and the features that they want. Amongst others, this group consists of people that are frequently on the road, parents who buy the phones for their kids in order to be able to get a hold of them, or parents who need the phone in order for their kids to be able to reach them. Consumers who do not have a particular need for it, but who just want the phone for convenience, also falls into the group.
Heavy users are people to whom the phone is totally indispensable and who would not consider leaving home without it. The phones have become part of their life and image and a large part of their daily conversations take place over the cellular phone. This group tends to be very concerned about brand, model and technological features rather than price. They often want to buy the newest of the new and favor the brand that is popular amongst their reference group. This category mostly consists of young people between the age of 18-29 years who think of a mobile phone as a necessity rather than a luxury. They will use the phones heavily on a daily basis both for important and chatty conversations. They frequently, but not necessarily, belong to “upper income households”.
The buying behavior for the light and medium uses will be very different from the heavy users. The light and medium users mainly buy the phones for functionality reasons rather than psychological. As they are primarily concerned about price rather than the brand or model; their information search will normally be lower. They will either shop around or wait for the right offer since they do not necessarily need the phone right now. When they finally act it might be in response to a newspaper ad or a good deal seen in a store. Since the purchase is not extremely important for them they will not experience much cognitive dissonance.
The heavy users buy the phones for both functional and psychological reasons. To them the product is very important and thus the information search will in general be higher than for the light and medium users. They will often visit several stores and confront many brochures before making the final brand/model decision. Reference groups play a large role in this stage and will often influence the final choice. The phones will be evaluated on brand, models, features and price; and the buyers will experience a large degree of cognitive dissonance.
It has been difficult to find much material about the demographics of the mobile phone users. However, according to an American Zogby survey the largest percentage of mobile phone owners are between the age of 18-29 years of age, women have a slightly higher ownership rate than men, and divided by profession the highest usage rate was amongst professional, sales, medical, and managerial workers (African Cellular, 2000). Even though we believe the above mentioned three groups exist on all three continents, and that the demographics will be somewhat the same, some differences do apply. In Asia young people, and primarily teenagers, are heavy users of the phones. The cellular phones are often used as a fashion statement thus having the correct and newest models becomes very important. In Europe the mobile phone phenomenon has existed for a while and from being a market in which price was an important purchasing criteria the trend has changed more towards Asia’s where the primary purchasing criteria is the newest and hottest models. As in Asia the consumers are primarily young teenagers and adults, but not quite as young as in Asia. In the US the consumers have had a harder time adapting to the cellular phones and they are therefore currently in a stage where price is a prime buying criteria for many consumers. The phones are often bought as part of a package with a good deal on both the subscription and the phone. However, the trends are changing towards more emphasis on newer models and technology features. In addition, the heavy American users are not quite as young as the Asians.
The business segment varies from the consumer segment, as their motive for purchasing a mobile phone is more due to an actual need for the phone rather than a desire to own one. As with the consumer market, different usage patterns and needs apply, often according to the size of the firm and the stage of technology. Larger companies generally have a higher need for more advanced phones which have the ability to go on the net and transfer data, whereas smaller one man firms need the phones in order to be reached. However, the choice of phone will vary from company to company regardless of their size. As the purchasing behavior on the business segment generally is very much alike, we have chosen to describe the segment as a whole.
When buying a phone the motive is, for most companies/business people, purely functional. They need the phones in order to be reached and in order to conduct business from wherever they might be. Thus, they are more concerned about the functionality such as battery life, etc. and capabilities of the phones rather than the price or the particular brand. The choice of phone will either be made by a particular department within the firm or by the individual employees themselves. When the individual employees conduct the purchase there will be a higher focus on the brand. Naturally businessmen want a phone that functionally meets their needs, but they are also concerned about buying the “right” brand. If a department within the firm conducts the purchase, the buying criteria will slightly change towards price and capabilities rather than the brand. The department will be more concerned about getting a discounted deal on the subscription and the phone fees, as that will enable them to save a lot of money. Therefore, the company will be more apt to act on a good deal provided that the phones have the necessary capabilities and quality.
Competitors Analysis
In a fast pace environment of the technology industry, competition tends to be fierce and unforgiving. One such field is the mobile phone industry, where competition for markets has allowed many players to enter and challenge the existing industry leader, Nokia. This has lead to a blossoming of mobile phone makers all over the world. These competitors, new or existing, are becoming a clear and present danger to Nokia’s bid for control of the world’s mobile phone markets.
It is these competitors that will be examined in this section of the paper to better understand the plight of Nokia. In this analysis, the world markets will be broken up into three major regions: Asia, Europe, and the Americas. The analysis will be looking at each of the major and minor competitors in these regions and what products they have lined up to attack Nokia with, in the coming years.
The Asian region with its fashion oriented consumers and catching up with the Jones mentality, has now become a boom for many mobile phone makers. This boom has drawn in some heavy hitters native and non-native to the region. The major movers are Sony, Samsung, Panasonic, LG TeleCom and Motorola. The minor players are Mitsubishi, NEC, and Sanyo.
The European region, where mobile phones are a daily part of life, has seen many bitter clashes in the home turf of Nokia. It is here that some of the newest technologies of mobile phones are seen and also where some of the heaviest market fighting has occurred. The major European players are Ericssion, Alcatel, and Siemens. There are no real minor players since the major ones have dealt with them already.
The American region is the slowest in development and farthest behind in technological release. Some would claim it is due to the American consumer’s lack of interest in high-end products because the native telecommunication companies are screening what products enter this region. The major players are Motorola, Ericsson, Samsung, Mitsubishi, Sony and Panasonic. The minor players are General Electric, Philips, Radio Shack, and Audiovox.
Now that the identities of the major and minor competitors are known, the analysis will take a look in more detail at the major players and what they offer as their competing products and what technological edge do they possess.
LG TeleCom, Ltd. is an affiliate of the LG Group and was established in 1996 at Seoul. Korean government authorizes LG TeleCom R&D Center as a national center for industrial research. Sprint and LG are introducing two CDMA internet-ready phones. Verizon Wireless agrees to use 500,000 handsets from LG (LG TeleCom, 2000).
Sony offers an impressive line of wireless phones. Their goal is to stay on the cutting edge of communication service. With their understanding of the electronic industry and heavy R&D, they are able to catch up technologically in the mobile phone industry. Relying on their D-WAVE technology, they are able to produce the smallest mobile phones in the world (Sony Corporation, 2000).
Samsung Electronics in 1996 signed with Sprint to supply PCS mobile phones. In 1997, Samsung sold 1 million CDMA handsets, which is a world record. They were the first in the world to have cellular phone with voice-activated dialing system. Export started in China in 1998 and full-scale exports of CDMA WLL handsets to Russia. Samsung’s new products take mobile phones to new directions with its watch phone, MP3 phone, and TV phone. This year they have attained 5.6 of the global market share (Samsung, 2000).
Motorola released its first personal mobile phone in 1989, the MicroTAC. This year sales of mobile phones increased significantly in the Americas, were higher in Asia and decreased significantly in Europe. Digital products represented 98 percent of mobile phone sales. Overall they fell to 15.6 percent in the second quarter from 16 percent of the market share (Motorola, 2000).
Ericsson is the world’s leading supplier in telecommunications with the largest customer base. They provide everything from systems and applications to mobile phones. Ericsson has the highest R&D ratio in the world, around 15% of sales. This year they saw the largest decrease in market share, falling to 10.3 percent from 11.5 percent. The reason for this decrease is that Ericsson has been plagued by production problems at its mobile phone division in the first two quarters of the year. Ericsson’s new product on the horizon, R520, allows for high, speed transmission of data to mobile Internet services. It also allows for secure e-commerce transactions, and automatic synchronization to PC (Ericsson, 2000).
Siemens, like Sony, is a giant and an old hand in the electronic industry which entered the mobile phone industry. This German based company developed the first GSM cellular phone with color display. This year, so far, they were able to capture 5.5% of world mobile phone market shares (Siemens, 2000).
Market Analysis
The overall cellular phones market in 1999 consisted of 275 million phones sold worldwide, totaling over $30 billion. Nokia successfully holds one of the leading positions in this aspect, realizing sales of 78.5 million units, a 92% increase over the previous year. The market for Nokia is growing in a rate untypical for any other business. There are about 480 million mobile users worldwide. Which is 50% more than in the year 1998. The projected growth is to reach 1 billion users by 2002, more than double the user base today. In addition, the upgrade market is growing as well and represented 40% of Nokia’s sales in 1999. This number is expected to reach 70-80% by 2002 (Nokia Corporation, 2000). This suggests that even though the market will reach a saturation point in the new-user segment, the upgrades will carry on the growth in a similar matter, perhaps even higher. New technology and the high research and development spending by the companies account for this success.
Nokia increases its global market presence on all fronts. The breakdown of sales by region in 1999 was 53% in Europe; Americas accounted for 25%, Asia-Pacific for 22%. The move is towards the largest markets in the world, which are the US, Japan, China, UK, and Germany. The top ten countries in 1999 represented total of 67% of sales. Interesting statistic, since Nokia delivers its product to 130 countries (Nokia Corporation, 1999).
Technology Analysis
Nokia wants to make life simpler, more efficient and more fun. It offers increased freedom to customers, and believes that mobile phones and other similar devices are the keys that will open doors to exciting and liberating futures.
The technology of mobile telecommunication has changed at an amazing speed in the past. First generation systems are analog and were designed for voice transfer. AMPS, NMT, TACS, etc are included among first generation systems. With the recent proliferation of PDC/PHS in Japan, post-analog technology has advanced rapidly and consequently only a very few analog systems remain in existence.
Second generation systems are digital and are capable of providing voice/data/fax transfer as well as a range of other value-added services. At present, second generation systems are still evolving with ever-increasing data rates via new technologies such as HSCSD (High Speed Circuit Switched Data) and GPRS (General Packet Radio Service). Second generation systems include GSM, US-TDMA (IS_136), cdmaOne _IS-95) and PDC. US-TDMA/PDC has been structured atop existing first generation analog technology and is premised on compatibility and parallel operation with analog networks. GSM/IS-95, on the other hand, are based on an entirely new concept, and have been subject to increasing adoption worldwide.
Third generation mobile communication systems are scheduled for operational startup in Japan and Europe in 2001-2002. Applying high-speed data transfer and state-of-the-art radio terminal technology, third generations systems enable multimedia and are currently in the process of being standardized under 3GPP. Among the three types of system to be standardized (i.e. WCDMA-DS, MC-CDMA, UTRA TDD), Japan and Europe will adopt WCDMA-DS in a strategy to take the lead through superior service.
Harmonizing of UTRA and CDMA2000 is the third generation system in the US. At present, there are three coinciding technologies under third generation systems: DS-CDMA (UTRA FDD), MC-CDMA and UTRA TDD. Current chip rate for both UTRA FDD and TDD is 3.84Mchips. MC-CDMA adopts the previous 3.68Mchips as is. As a result, transition from the existing 2G to 3G will be facilitated on a worldwide level. Despite the fact that it will not comprise one uniform system, convergence of 3G into three systems with maximum compatibility will still enable achieving the primary 3G goal of service to users over a seamless worldwide network.
Although the technology behind 3G may seem complicated, the ways in which 3G will affect all of our lives are easy to imagine. Just imagine having a combined camera, video camera, computer, stereo, and radio included in your mobile phone. Rich-media information and entertainment will be at your fingertips whenever you want anywhere there is a wireless network.
Mobile communication is moving from simple voice to rich media, where we use more of our senses to intensify our experiences. But not all of this will happen at once. 3G is an evolution to a communications ideal that no one completely understands yet. What we do know is that mobile multimedia will hit the Japanese markets in 2001, and Europe and North America will follow soon after.
Socio-cultural Analysis
Cellular phones were introduced to the consumer segments as a convenience and to the business segment as a method for improved performance. The market has developed to a point where many consumers and business people consider cellular phones a necessity. Cellular phones are used by millions of people, in hundreds of countries, and there are numerous cultural and social conditions affecting users. Cultural research, such as Hofstede’s work, indicates cultural similarities and differences. The wide use of phones defies the ability to draw parallels between cultural based research regarding countries and cellular phone usage.
The growth of cellular phone use has been impacted by several social conditions. There has been the changing business environment, shifting to a faster pace. Cellular phones have become so widely used that they have become fashion statements. There are also issues surrounding socially acceptable behavior regarding the use of cellular phones.
Advances in technology have spurred a changing business environment. Businesses are moving and changing faster than ever. They are dealing in internet speed. The faster pace of the business environment has been both enabled and encouraged by advances in technology and cellular phone usage. Socially there is a greater expectation on people to maintain a fast paced lifestyle, and cellular phones are key to this existence.
Cellular phones have also become a fashion statement, greatly impacting appearance. Phones now have the ability to have covers changed to change appearances. New models are coming in an increasing variety of colors. Greater numbers of accessories are being produced that enable consumers to customize their cellular phones. Nokia recently participated in Paris Fashion Week, indicating their acceptance as a fashion element (Nokia Corporation, 2000).
Vast amounts of people have begun using cellular phones is a short amount of time. The mobility and convenience of the items encourages users to talk on the phone in various locations and situations. As users began using the phone in restaurants, theaters, and other public venues; the public began lashing out on the inappropriateness of cellular phone use. People are dealing with social repercussions of cellular phone use by enacting rules or tossing dirty looks at those that fail to act according to an unspoken code of conduct.
Political-legal Analysis
There have become growing legal issues for the cellular phone industry. Recent research has raised concerns regarding cellular phones causing interference with medical devices, brain cancer, and memory loss. There is also growing pressure to limit the use of cellular phones while driving, and many countries currently have restrictions in place.
Scientific data and research has recently pointed to the possibility that cellular phones may cause brain cancer. There is also concern that the radio frequency that cellular phones operate on may cause interference with implanted medical devices such as pacemakers. The demand to protect consumers may legally impact producers of cellular phones. Nokia is committed to high quality research programs globally and fulfill relevant national and international safety standards (Nokia Corporation, 2000).
Many people believe that cellular phone use distracts automobile drivers. The wide spread usage of cellular phones has increased and the mobile nature has naturally meant that auto operators desire to use phones while driving. An increased frequency of accidents involving cellular phone users has spurred many countries to create laws requiring drivers use hands-free devices. The Czech Republic will institute a law as of January 1, 2001, limiting cellular phone use in automobiles, and Denmark currently has similar legislation. In the United States there are opponents to any cellular phone usage while driving, citing the distractions they create.
Economic Analysis
Nokia Mobile Phones division, the major source of revenue and profits for the Nokia group, has outperformed the industry in the past on a regular basis and 1999 has been no exception. The profits of $3 billion and revenues of $13 billion over performed the market by 20% (Nokia Corporation, 2000). The strength of the Group is lying in its economic force of $14 billion in assets and over 55, 000 worldwide employees. The operating margin has increased from 19% in 1998 to 23.5% in 1999. The trend in the global economy is to support the products of Nokia into the future. The market is supposed to grow by 100% within the next two years, making it possible to retain the current high yields and growth rates (Hermansky, 2000). Nokia works its economies of scale mainly through dealers that are supplying their phones in conjunction with the offering of local service mobile phone provider. The margins here are smaller but create a great brand recognition, which is created and utilized in the higher end market, targeted to businesspersons. Nokia also presents a brand new technology and advances that help people communicate more effectively. In the economical viewpoint, they introduce many new technological systems that become standards for the entire industry and then present their own product to be the leader and capitalize on the gains. The group employs over 17, 000 people in 52 research and development centers in 14 countries to gain such market share and stay as the technology world leader (Nokia Corporation, 1999).
VI. Internal Analysis
SWOT Analysis
Strengths
Nokia is a strong company that has become a market leader in the cellular phone market. As a market leader they have the ability to shape and direct the market. It would be difficult for a competitor to shake them from this number one position, and reaching number one is always harder than staying there. Holding a market share almost double that of its closest competitor, has helped increase the financial resources of Nokia. With over $30 billion in sales in 1999, they have the resources to remain in the number one position and fend off attacks from competitors. Strong financial resources also help maintain Nokia’s impressive research and development. Developing new technology and remaining on the front line of changes in the industry is one of Nokia’s strengths.
Quality technology is not enough to capture the largest share of the cellular market. Nokia has used its excellent marketing skills to increase brand awareness. As the largest manufacturer of cellular phones it is not surprising that Nokia has strong brand awareness. Nokia uses print, television, and online advertising coupled with sponsorships to maintain visibility in the marketplace. Part of Nokia’s strategy has been to appeal to a wide range of groups with a wide variety of phones with different features and prices. It has an exceptional design qualities for its mobile products that promote this awareness. It is one of the core strategies for Nokia – to be the #1 in design. Nokia also has a strong corporate culture that encourages loyal employees.
Weaknesses
Nokia is a large organization with operations in multiple countries. The size of the organization means that operations are large and complex. Managing such a large organization is a weakness, due to the fact that is often difficult to initiate change and adapt to market conditions especially is such a technology driven industry. The operations in various countries can also be a weakness, as the organization must deal with fluctuating exchange and interest rates in those countries. Despite the strong financial position of Nokia, we were able to determine a high rate of net sales to accounts receivables. Nokia has thirty-percent of net sales in account’s receivables, which is high but difficult to measure without industry comparisons.
Opportunities
The cellular phone market has been growing as prices have decreased and features have increased. The growing market is a wonderful opportunity for Nokia, but perhaps an even better opportunity is the many users that are upgrading to new phones. As the number of new cellular phone users decreases, the current users that upgrade will insure continuing sales. Another increasing market area is in phone accessories, such has fashion covers and hands-free devices. The development of hands-free capabilities and accessories will become increasingly important as more countries pass laws limiting the use of cellular phones while driving.
As new technology (WAP) increases usage possibilities the use of cellular phones will continue to increase. Additionally, many countries do not yet have the infrastructure to support cellular phones and these are new markets waiting to be tapped. The installation of landlines for traditional phones is very expensive and in many countries the cost and waiting time make cellular phones attractive as replacements landline phones. Standardized networks will also help in the development and expansion of markets. Nokia is in a position to continue to increase sales and maintain market share position.
Threats
In order to reach new cellular users much work has to be done to tap countries with underdeveloped infrastructures. There is an enormous market for telephones that many countries are having difficulty reach through traditional landlines. However, investing in infrastructure in order to reach these new markets is extremely costly and risky.
The cellular phone industry is developing at a fast and ever changing pace. Technology is constantly changing and Nokia must continuously improve and develop technology that will help them stay ahead of, or at the same level, as competitors. Failing to keep up with changing technology would threaten Nokia’s number sales position. Nokia must also be mindful of the technological gains looming from Asian companies, such as Sony.
Portfolio Analysis
As we have chosen to solely focus on one of Nokia’s businesses, cellular phones, conducting a portfolio analysis is a bit difficult; as we do not know which categories (Question Marks, Stars, Cash cows, Dogs) the other operations will fall into. Thus, it is difficult to assess which businesses to harvest, hold, divest or build. However, the Boston matrix is useful in evaluating which category the mobile phone business belongs to, as to assess the growth on the market and Nokia’s relative market share compared to the largest competitor.
The most recent information about the relative market share that we have, is from the second quarter of 2000 where Nokia had a share of the market of 27.5% and the largest competitor, Motorola, had a market share of 15.6% (African Cellular, 2000). Thus, Nokia’s relative market share is 1.76 times that of its largest competitor. According to Nokia’s Annual Report (Nokia Corporation, 1999), in 1999 the market growth on the mobile phone market exceeded 60%. Therefore, according to the matrix shown below, Nokia’s mobile phone business belongs in the Star category. Even though the business is profitable, Nokia still has to invest a lot of money on promotion and R&D in order to be upfront with the latest technology. As the market for mobile phone eventually stagnates mobile phones might move into the Cash Cow category.
Without knowing too much about Nokia’s other businesses, we believe that they are all either Stars or question marks, and thus all of the businesses requires a lot of investment.
Figure 1 - Matrix
VII. Strategies and Implementing the Strategies
Marketing Mix Strategies
Pricing
There are two different pricing strategies employed by Nokia. They promote the product to the local service providers who purchase the phones in bulk for a pre-determined lower price, guaranteeing to sell the entire shipment. The second strategy is the top market penetration of people technologically and more advanced functions. These customers pay premium price for a premium product. The price on the top tier does not play a significant role and Nokia realizes and targets this market in the entire world but separately. The purchasing power differs from country to country and Nokia prices the phones accordingly.
Product
Nokia introduced 18 new models in 1999. This number is a representation of the dedication of technological change and shows the commitment of the company to serve the wide range of customer base. Nokia produces phones for many end-user groups. Concentration on the WAP system and Internet based features are represented in the business product segment. Here Nokia employs the newest communication technology to enable its users to utilize the power of wireless communication to its finest level. The new phones enable the user to send, receive, process and sort data, voice messaging, web pages, communicate with its e-mail server, make conference calls etc.
Promotion
Nokia targets the business segment and the consumer segment in two different ways. The consumer segment is primarily targeted through mass media. Television is used to create awareness and to promote the brand, whereas magazines and newspapers are used to describe the phones in more detail and to display important information such as price, battery life, special features etc. Apart from conducting its own advertising, Nokia also engages in co-op advertising together with providers such as Sprint. These advertisements are often used to promote special deals on packages. Separate from the methods mentioned above, Nokia has also taken advantage of the emergence of the Internet as a promotion tool. Not only does Nokia have its own website, they also heavily advertise on other’s web pages. Additionally, Nokia also sponsors sports events. In order to reach the young segment Nokia has, amongst other things, during the last few years been sponsoring both the snowboarding world cup and the leading team within extreme sports (Adventure Sports). Besides the more traditional methods of promotion Nokia also operates a boat and crew that participate in contests in the Scandinavian/Northern countries. Additionally, Nokia also offers tours in their yellow balloons that can carry more than 25 people.
Sales agents, either Nokia’s own or the providers, primarily target the business segment. The sales agents promote the mobile phones and describe the features and the benefits of the phone; and the providers sales agents might also offer a discounted deal on a package, provided that the company exclusively orders from them. Even though the business segment is not the primary target group for the promotion methods targeted towards the consumer segment, they will still reach and influence the business segment as well and will presumably influence the decision making in some way.
Distribution
Nokia in both Asia and Europe uses a retailer or dealer as the selling point to consumers. They followed a selective distribution strategy, which allowed them to flood the market with their mobile phones. While in the Americas, Nokia mobile phones are bought wholesale by mobile wireless companies such as sprint, voice stream, and AT&T. Then when sold a wireless service the consumer chooses a mobile phone as a package deal. It is still possible to purchase the phones without the services, but usually it’s a better deal to get it as a package.
Growth Strategies
Penetration Strategies
Product-Market Expansion Strategies
Since the very beginning Nokia has continuously been entering new markets and the company is currently present in 130 different markets (Nokia’s Annual Report). When entering new markets Nokia has frequently established joint ventures with companies or distributors that possess knowledge and experience with the local markets. As in China, one of the fastest growing cellular markets, Nokia has entered both a joint venture with Beijing Telecommunications Equipment Factory 506, which manufactures both mobile phones and telecommunications infrastructure, and an agreement with Cell
Star which makes it an authorized distributor of Nokia’s phones in China. (Nokia, 1998).
Despite the worldwide identical use of mobile phones Nokia still has to make some adjustments to the local technology of the markets.
We believe that Nokia will continue to expand its business to new markets as long as the markets possesses substantial buying power and have a need for mobile phones. Furthermore, if the buying power persists in a market, but not the need Nokia will effortlessly try to create it.
Apart from expanding its sale of mobile phones Nokia is expanding its GMS networks in many existing markets. These expansions are bound to have an effect on their sale of mobile phones and thus might be seen as an expansion strategy that effects two areas of their business. The markets where they are currently expanding are amongst others, China, UK, Philippines, Norway, and Turkey.
Vertical Integration Strategies
Nokia’s operations are diverse and range from R&D, to manufacturing, to distribution, and sales. In Denmark Nokia operates several of their own stores. In other European and Asian countries sales are made through independent stores carrying a wide range of cellular brands and models. Nokia has established a strong brand name in the cellular phone market; therefore their strong consumer appeal lends to a place in the market that makes it nearly impossible for retailers to refuse to handle Nokia’s products. This type of vertical integration is referred to as Administrative Integration, and is prevalent in Asian and European countries (Shaw and Taylor, 1975).
In the United States phone purchases are structured differently. Nokia phones are carried by individual service providers, under contract, and the phones are given away with new contracts. High-end models may substituted for an additional price. Nokia and the service providers then often participate in joint advertising. This structure is referred to as contractual integration (Shaw and Taylor, 1975).
Differentiation
Nokia has been able to persuade the mass market that its design and quality is the market standard (McCaffery, 2000) and that the technological advances can go hand in hand with the pretty design and great functionality. McCaffery also states, that in order for Nokia to maintain the competitive advantage and product differentiation it has to cut the manufacturing time for mobile phones to minimum. He argues that in markets such as Japan and Europe the life cycle for one model of a phone is less than a year therefore it is necessary to design and produce as quickly as possible. The strength that differentiates Nokia from its competitors is exactly that – it can manufacture any of its phones in any global location in less than 8 days! In Japan the differentiation of the product is the main goal and strategy of Nokia. The President of Nokia Mobile Communications K.K. Japan, Olav Stang, says that innovation as part of the differentiation strategy gives them a great advantage over its competitors.
Diversification
Nokia’s manufacturing and management process is a continuous learning experience where innovation and re-focusing on new ideas is a constant. (Palmberg and Lemola, 2000) Nokia has brought some interest into investment and ventures with companies in its related fields, especially in the Internet business lately. It has formed a venture to establish the Wireless Application Protocol (WAP) guidelines and standard with competitors such as Motorola, Ericsson and others. What this venture brings is a complete diversified advantage from the competitors on the new communication digital platform. The WAP system is becoming a standard and indeed represents a great part of Nokia’s success in the past 5 years. (Jankowski, 1997). The organization Nokia Ventures is a great way for Nokia to diversify its activities as it invests in startup companies in the Internet and wireless fields. This keeps and will keep Nokia one step ahead of the competition technologically. All possibilities are studied and considered and new innovations are not only developed in-house, but now due to the financial strength of the company, even by the outside firms (Nokia, 2000).
Global Strategy
Small home markets are no more a barrier for growth in a global economy and therefore Nokia has chance to materialize on the simultaneous globalization of technological advancements (Laitinen and Leppanen, 2000). In the global vision of the Company it is mentioned that the focus will be moved toward the establishing and developing markets. Nokia focuses its attention not only on the strong markets such as US, Japan, and Germany but also on the previously ignored areas such as the Eastern European and African countries. The growth in new consumer subscription in cellular technology in Eastern Europe has actually surpassed the Western countries in the previous year. (EuroTel On-line, 2000). This illustrates the strength, power and opportunity globally for Nokia and other cellular phone manufacturers as well.
VIII. Conclusion and Recommendation
The Nokia company analyzed in the study represents the modern flexible global organization that through technological innovation and strong design appeal moves swiftly through the booming wireless telecommunication market. The company is a leader in the cellular phone business in the consumer products and one of the major players in the business networks units as well. It produces the best technology and plays commanding role in developing a new standard for communications to the future. With sales growing and the market size and potential in the future showing no signs of slowing, Nokia is in a great place to successfully grow and maintain its dominant position. Some dangers exist from the increasing competition but Nokia’s research and strong brand recognition because of its design will keep the company in the spotlight for a long time.
The recommendation for the company is very simple – continue on the current path. Bring new products to the wide range of people of all ages and social groups and appeal to them with functionality, design and new technological advances. Continue investing into research and diversify its activities by acquiring companies that bring a potential to the wireless world. The wireless world and the proposed integration of the 3G network to create one unified cellular global network represents the future not only to Nokia but all major telecommunication and electronics players. Who will be able to maintain and establish the standards will be the winner. And Nokia is working just on that!
Works Cited
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