COMSATS University Islamabad

Sahiwal Campus

Submitted By

Husnain Ali FA17-BBA-087 (A)

Submitted to
Mam Shawana
Lecturer
Department of Management Sciences

Seminar In Marketing
Wednesday,8 July, 2020
Assignment No #3

COMSATS University Islamabad, Sahiwal Campus

What brand of cell phone do you own? If you’re living in the United States, chances are it
isn’t a Nokia. But if you’re living anywhere else in the world, it probably is. The Finnish
electronics company grabs only a single-digit slice of the U.S. cell phone pie, but it
dominates the global cell phone market with close to a 40 percent share. Few companies lead
their industries the way that Nokia does. Half of the world’s population holds an active cell
phone, and more than one in three of those phones is a Nokia. That’s over one billion
people holding a cell phone with a Nokia logo. Perhaps even more amazing, the company
sells half-again that many—about half a billion—phones every year. In fact, Nokia sells
more cell phones each year than its three closest rivals—Samsung, Motorola, and Sony-
Ericsson—combined!
You might think that Nokia has accomplished this feat by being the product leader, always
introducing the latest cutting-edge gadget. But Nokia has actually been slow to take
advantage of design trends, such as clamshell phones; “candy-bar” phones that slide open and
closed; and ultrathin, blingy, multifunction phones. Rather, Nokia has risen to global
dominance based on a simple, age-old strategy: sell basic products at low prices. Although
Nokia markets a huge variety of cell phone models, it is best known for its trademarked
easy-to-use block handset. Nokia mass produces this basic reliable hardware cheaply and
ships it in huge volumes to all parts of the world.

GAINING STRENGTH AS THE VOLUME LEADER

Based in Finland, Nokia’s single most profit- and revenue-generating region is Europe. But
the company’s global strategy has been likened to that of Honda decades ago. Honda
started by focusing on developing markets with small motorbikes. As the economies of such
countries emerged and people could afford cars, they were already loyal to Honda.
Nokia has followed that same model. It sells phones in more than 150 countries, and in most
of those countries, it is the market leader. Nokia has a real knack for forging regional
strategies based on the overall needs of its consumers. But Nokia has filled its coffers by
understanding the growth dynamics of specific emerging markets. Soren Peterson, Nokia’s
senior vice president of mobile phones, understands that concept more than anyone. He
spends a great deal of his time studying the needs of consumers in emerging markets. And
for the most part, these consumers need cheap phones.
To that end, Petersen has led Nokia on a crusade to bring down costs and make its phones
even less expensive. Petersen cites an example of one cost-cutting tactic that sparked a
chain of events at Nokia. While on a visit to Kenya, he stopped by an “excessively rural
storefront,” where he noticed that all products were displayed in plastic bags. When he
asked the merchant where the boxes and manuals had gone, the man replied, “Make good
fire.” Petersen quickly realized that packaging for many areas of the world barely needed
to “last the journey.” Packaging changes resulted in a savings of $147 million a year.
Among other notable discoveries for emerging markets, Nokia developed an icon-based
interface to replace text, a welcome innovation for many people in the world who don’t
know how to read. Nokia also added multiple phonebooks to its devices, based on the fact
that many people in less-developed countries share their phones with up to a half-dozen
other people. Nokia has even developed an inexpensive charging kit for bicycles with a
dynamo that attaches to the wheel and a phone holder for the handlebars. At 7.5 miles per
hour, it charges as fast as a traditional wall charger.
CAPITALIZING ON MARKET LEADERSHIP

Just as Honda used strength gained from selling motorbikes in emerging countries to
establish itself as a manufacturer of virtually every kind of passenger vehicle, Nokia aims to
do the same in the mobile industry. Although Nokia remains committed to the entry-level
market and emerging nations, it has developed a comprehensive global strategy. According to
Nokia’s vision statement, that strategy has three facets: growing the number of people using
Nokia devices, transforming the devices people use, and building new businesses.
For the first part of this plan, Nokia projects that global cell phone usage will reach five
billion users by 2015. That means Nokia can significantly increase the number of phones it
sells, even if it doesn’t increase its market share. In fact, if Nokia simply holds its current
share of the market, that means that approximately 1.7 billion people will be holding Nokia
phones, 67 percent more than today. That’s good news for Nokia. According to one analyst,
given the number of players in the global market, it will be almost impossible for Nokia
to maintain a 40 percent share.

As for transforming the devices that people use, Nokia is aiming to become more than just an
entry-level phone provider. Of its 123,000 employees, almost one-third work in
R&D, and R&D expenses account for approximately 10 percent of net sales. Nokia invests
heavily in developing more cutting-edge devices in hopes that as its customers in
developing nations gain the resources, they will trade-up and stay with Nokia. Nokia may
have an advantage here. Beyond selling lots of phones, Nokia is also one of the most
trusted brands in the world. With a brand value of $35 billion, it’s the fifth-most-valuable
brand in the world. “The trust is so high, it has less trouble than other brands getting a
customer back who may have tried out a competing brand,” says a branding expert.
Nokia also recognizes that the biggest trends in mobile devices are music, navigation, and
gaming. Focusing on these activities, it is collaborating with the best minds in the business
to find ways to add value for the consumer. Nokia appears poised to take advantage of the
convergence of the Internet, media, and the cell phone. Last year, Nokia sold more than
200 million camera phones (far more cameras than Canon) and more than 140 million music
phones (Apple only sold 52 million iPods). Thus, through its mobile handsets, Nokia
can claim to sell more computers, portable music players, and cameras than any other
company. However, it has yet to find a way to secure a steady income stream from its devices
once they are in place.

This creates a logical transition to the third leg of Nokia’s strategy, building new businesses.
In an effort to gain income from existing devices, Nokia has opened its “Ovi Store.” The
goal is to accomplish something that has eluded many mobile network operators—building a
profitable business in mobile services. The Ovi Store is a one-stop shop that connects
consumers with content providers through their Nokia phones. Users can access apps, games,
videos, widgets, podcasts, location-based services, and personalized content. Nokia
customers all over the planet now download more than one million apps per day; that’s not
close to the 30 million apps downloaded from Apples iTunes store, but it’s a start.
Nokia continues to develop a host of mobile services, including Point & Find (a service that
lets users gain relevant Internet content by simply pointing a camera phone at a realworld
object), Nokia Home Control Center (lets users interact with home appliances and devices),
and various satellite location services. Not only has the cell phone giant invested
a great deal of money in these projects, it is has also lured executives from Yahoo!,
Microsoft, eBay, and IBM and is collaborating with numerous other corporations to help
build these business ventures.
STORM ON THE HORIZON
Regardless of the fact that Nokia dominates the cell phone market, it seems that the latest
wares from smaller competitors have been the darlings of the press. In an attempt to
downplay the initial success of Apple’s iPhone after it sold four million units its first year
out, one Nokia vice president was heard to say, “We’ve done that since we’ve had dinner
last Friday.” That statement was meant to draw attention to the fact that Apple has only 4
percent of the global cell phone market. But given the shifting tides of consumer
preference, it is now apparent that Nokia has a serious threat on its hands.
Growth in smartphones is fast outpacing the growth of the overall market. Although global
sales of mobile handsets surged 17 percent in the first quarter of 2010, most of that was
due to the increasing hunger for smartphones, which grew by a whopping 40 percent, the
strongest annual increase for the category since 2006. Despite Nokia’s R&D efforts to
expand its portfolio of high-end devices, the company still lags in that area. Smartphones are
the only phones that Apple makes, so it is poised to enjoy the lion’s share of market
growth. For example, Apple sold 83 percent more iPhones in 2009 than it did the year before,
a bigger bump than any other company. In terms of market share, that translates to a
jump from 3 percent of the global smartphone market to more than 13 percent.
Nokia still holds the title not only for the most phones sold but also for the most smartphones,
with a 39 percent share. But Apple has hit another home run with its new iPhone4.
On the first day of preorders, the company sold 600,000 units (a company record) despite the
fact that higher than expected volume crashed the servers at both Apple’s online
store and AT&T. Close on the heels of Apple’s new “must have,” Samsung’s Galaxy S and
Sony Ericsson’s Xperia X10 will also be on the market. And Google’s open-platform
Android now boasts the fourth most widely used mobile-operating system.
Falling behind in this rapidly growing market segment is taking its toll on Nokia’s financial
performance. Halfway through 2010, the Finnish giant announced that its market share by
volume would be flat for the year. Given that smartphones have higher prices and higher
margins, this means that Nokia’s share of the market by revenue would actually drop.
Nokia dropped another bomb on investors by admitting that its profits would also be lower
than previously forecasted.

But Nokia is determined to stay in the battle. Months following the release of the latest
gadgets by its competitors, Nokia will launch it’s impressive new N8, complete with a 12-
megapixel camera, high definition video, and streaming TV services. But given its
competitors’ head start, many analysts question just how much of a splash Nokia’s top-end
model will make.

Questions for Discussion

2. Consider the different global marketing environments discussed in the text. How do these
environments differ in developing versus developed countries?
3. Discuss Nokia’s global strategy in terms of the five global product and communications
strategies.
4. Can competitors easily replicate Nokia’s global strategy? Why or why not?
5. Based on the most recent competitive threats, what do you predict for Nokia in the coming
years?

Answers:
1. Does Nokia have a truly global strategy, rather than just a series of
regional strategies? Explain.

Yes, it does have a global strategy. The global strategy of Nokia is the foundation of all
the regional strategies and that is based on overall consumer needs. They found out the
main consumer needs is focused on selling products (phones) as lowest price all over
the world with its simple, easy and basic models. Also beside that Nokia has series of
regional strategies that use most advanced technologies in terms of Camera, music and
nanotechnology which is the future feature of the phones in e flexible shape and the
last not the least is focusing on the business communications to compete with other
companies in the industry and keep its position as the market leader.

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2. Consider the different global marketing environments discussed in

the text. How do these environments differ in developing versus

developed countries?

•Developing countries: African, Asian, Latin American countries and Middles East
region have the highest sale volumes in a way that the half of the world population
have cell phones and one of the three hold a Nokia phone, as China and India are
among the countries with highest number of population and also got the highest number
of sales, as an example 70 mil phones were sold in China in 2007 that is 38% more than
the previous year’s sales. Basically the high demand for this product in these regions is
for simplicity and user friendly system that the Nokia has along with its cheap price, as
most of the people in these regions have very low income and in some place the mobile
is shared by ½ dozen of people who even cannot read or write ( mostly in Africa). In
these regions (African-Asia) the main aim is connecting one person to another, could
be a simple greeting phone call, or a simple test message. It does not matter if it’s
colorful or black and white, or if it has a camera or Social group connection such as
Facebook, Twiter or so on. The simple lifestyle will remain the same in the usage of the
phone as the phone will not stop the normal people gathering and family meetings
while in the Developed countries it varys.

•Developed countries: Europe consists of 39% of Nokia’s net Sale. It was not explained
in the text what is the attraction of the European towards Nokia, but I assume it is based
on the different features that each phone has that is different from another phone and
also the user friendly technology that is used can be another reason as other
competitors’ phones are a bit difficult to get used to. The U.S. only consists of 5% of
the Nokia’s sale and the reason could be the people’s attraction is towards the most
advanced technology smart phone that includes all the required and needy application in
one slim size and light weighted smart phone and this is why most Americans seek
competitors phone like, Iphone, Samsung, LG, Sony and Motorella and Black Berry
phones. In terms of environment U.S is the place of business and fast communication,
no double in this place the level of education is very high and simple phones are not the
demand of the smart and highly educated individuals, they look for most advanced
technology and the simplicity is not their main aim. They try to save time for meeting,
gathering by a simple video call, or chat or so on which is the lifestyle of the people of
the developed countries.

3. Discuss Nokia’s global strategy in terms of the five global product and
communications strategies.

Nokia, tries to get highest number of Nokia users not only through the low cost and
simple mobiles that are mostly sold in the developing countries, it is also trying to grow
in the niche markets that other competitors are focusing on such as the touch screen
phones that were first introduced by Apple’s, and music focus products such as i-pod,
in camera is competing with other phones and Canon as having more sales than
Canons, and the business communication phones with advanced technology phones.
The high amount of investment in R&D and expanding the range of products are all
part of Nokia’s strategy in order to stay in the market and keep its position as the
market leader for a very long period. I personally admire Nokia’s strategy as it is this
keeps the Nokia brand name always speeded around for all the segments needs which is
the main global aim of the Nokia meeting what the consumer want.

4. Can competitors easily replicate Nokia’s global strategy? Why or Why not?

I don’t think so. As other companies are only focusing on their specific niche and
investing in other niche needs high investment and it’s already taken by Nokia, and the
only way is possible if there will be high investment in these companies to compete with
Nokia. As most of the competing companies are not only Phone producers, they are
producing a other electronic devices as well and their profit is gained from the whole
 range of their electronic devices that they sell and focusing only in one different targets
of one single product (Mobile phone for low income individuals) would not be very
beneficial for them to invest is. (Such as Samsung; Smart TV, mobile phones, Washing
Machine, ….) But in future (about 20-50 years from now) I think as we go further the old
technologies will be cheaper and cheaper, in a way that there will be less demand for
these low cost mobile phones as most probably these will be available for free or maybe
they will not be used at all as there are new products or devices that will be introduced
that will replace the Mobile phone the same for other electronic devices who knows…?

5. Will Nokia’s planned expansion into other products and services work? Explain.

In my opinion it won’t. As I have read in many places that Nokia had released a Laptop
and its sales was not successful. I think Nokia is knows as a Mobile Phone producer and
has to focus more on that market only. As if it produces other electronic devices, Nokia’s
customer will lose their focus on the Nokia as the leader in the Mobile phone devices.
Nokia if is trying to expand, its better to use the sample production as laptop, tablet for
very limited period, as limited period only and study the market demand. If it was
successful (which it was not in the first place) can expand its products slowly in the
business-communicating devices only.