Nokorola is the third largest mobile phone producer in the world. Stiff competition from its competitors has put pressure on internal structures and resources leading to downsizing. A total of three thousand workers have been relieved of their duties due Nokorola’s inability to keep them during these difficult times. The purpose of any company is to operate in a rational manner. Rationality in this case refers to the reasoning that the company is a business investment that is meant to not only sustain itself but also benefit the shareholders. Marketing strategies play a role in achieving this target (Ferrell & William2006, pp.12-13).
From the figures that are available, the company made an operating margin loss of 7.2 % in the fourth quarter of a year. This is in spite of the fact that there was a notable 47% increase in handset sales in the same period. What does this mean? In business terms, the market may have expanded but not in sufficient numbers to meet the operation costs and bring in some profit for the company. This report will be presented on the basis of the political, economic, social, technological, environmental and legal (PESTEL) dynamics as well as the six Ps of advanced marketing as a way of covering all the elements that are crucial in advanced marketing. The six Ps are product, people, place, price, performance and promotion. They represent the internal environment within which the company is functioning. The competitors will be examined followed by a look at the five porter forces that constitute the external environment. The five porter forces include the threat of new competitors, the purchasing power of customers, the purchasing power of suppliers, the threat of new products and the intensity of rivalry. Predictions on the possible way forward will be made followed by a conclusion. There is also an analysis of strengths, weaknesses, opportunities, and threats that Nokorola is facing. Through the SWOT analysis, the room for maneuvering for success in the phone business for Nokorola is determined. This is essential for purposes of initiating the right action.
Political, Economic, Social, Technological, Environmental and Legal Dynamics Affecting Nokorola
The company is operating within a system that has apolitical organization. It is however evident that external political conditions have not affected the internal operations of the company. In the internal operations of the company, the politics of administration can be seen through the Marketing Director’s dismissal of the Nokorola’s evident loss of its competitive edge. It is possible that acceptance of the disappearance of this edge would be interpreted as failure on his part and therefore all that he has to do is defend the status quo be declaring the company successful.
The economic conditions are characterized by a number of elements such as competition for market share. Below is a look at the competitors of Nokorola as an element of economics.
Competitors and what they mean to Nokorola’s Future
It is clear that Nokorola faces stiff competition from new entrants into the handset production business. The competitors include Samsung, Sony Ericson, Google, Huawei, RIM, Apple, blackberry and Nokia. The competitors such as Google, RIM and Apple that have introduced smart phones are rapidly taking away Nokorola’s personnel and market share. This is a clear indication that with time if nothing changes at Nokorola its employees will run away to these competitors and the company will be driven out of the market. These are market warfare strategies that the management of Nokorola is supposed to be conversant with (Singh &Kotler 1981, pp.30-36).The competitive advantage that these competitors have is that they have embraced technology in the manufactures of their handsets under the name third generation technology; a phenomenon that has led to the production of phones with more applications that are fancier and popular with a huge section of the market as shown by their rising sales (Baker 2008, pp.3).
Some of these competitors have a weakness that Nokorola can aggressively capitalize on so as to gain some advantage. The smart phones manufactured by some of these companies do not keep power for long and this can be a nuisance in mobile telephony communication. This is contrary to the Crazr battery that lasts longer.
This aspect has affected company business in a number of ways. First, there is the emergence of a setting that makes it desirable for young people to go for the glamorous phones described as third generation. This social climate is not working in favor of Nokorola since it is giving the advantage to its competitors. Then there is the possibility that Nokorola may end up losing all or most of its employees to the more glamorous companies such as Apple and Google; a phenomenon that has a social twist to it. This is because of the belief that society perceives people who work for glamorous companies as successful. This is another undoing for Nokorola.
This is perhaps the most significant area in the PESTEL analysis. This is because Nokorola is a company that is purely technological and its success or failure is pegged on its ability to take command of its technological destiny. The fierce competitors such as Apple and Google are giving Nokorola a run for its money due to the fact that they have made strides in the economic sphere. The future of Nokorola is going to be determined by its adoption of modern technology in the production of its handsets.
This is a wide concept in the PESTEL analysis. The environments elements include the business environment as well as the physical environment concerns. In terms of business; Nokorola must look for an edge over its competitors if it is going to survive. The concerns over radiation from handsets is an environmental concern that Nokorola has to consider in its design of handsets.
The fact that Nokorola is doing business means that it has met legal requirements that have enabled it to obtain a trading license. Future engagements carried out y the company have to be within the law if unnecessary lawsuits are to be avoided.
The External Environment: The Five Porter Forces and How They Affect Nokorola
The five porter forces that are part of the external environment are: the threat of new competitors, the purchasing power of customers, the purchasing power of suppliers, the threat of new products and the intensity of rivalry (Porter 1980, pp.23-29).In Nokorola’s case, the purchasing power of suppliers seems solid apart from the problem of employees who are moving to more glamorous companies. This means that labor supply is under attack. The threat of new products is a cause for worry since Apple and Google are out with new products. Competition from new entrants and rivalry are also a big issue with the emergence of more technology compliant companies whose products are hot as far as the market is concerned. The purchasing power of the customers may be intact as per the statistics that show rising sales but the fact that the other companies are better means that Nokorola is not benefitting from this enhanced customer purchasing power.
The Internal Environment: The Six Ps
In identifying the product, the producer is also analyzed. The product is a Nokorola handset and the producer is the Nokorola, the third largest handset maker. The company is the subject of analysis in this report. The Nokorola handset falls into the category of traditional models and this has earned the company the identity of a traditional manufacturer. The Crazr model is the leading brand for Nokorola. Its market magnetism is on the decline. Only poor market management principles lead to this type of scenario (Kotler & Keller 2006, pp.56).Strategic management is also absent and this is why we are witnessing this sorry business state whereby detection of brand anomalies is not possible (Pearce & Robnson2008, pp.68).The factors behind the decline include the absence of innovation in an atmosphere that has gotten saturated with more modern handsets from Nokorola’s competitors such as blackberry and the smart phone introduced by Google. The Crazr from Nokorola has been enhanced technologically through the incorporation of a camera from Carl Zeiss, a company that is allied to Nokorola. An additional product enhancement alliance has been forged with the globally respected apparel maker, Girgio Armani, whereby a designer model of the Crazr will be produced.
This is the much that the product has achieved for the company. The sales may be rising but they are behind when compared to the rest of the companies in the industry. And most importantly, the operating margin is on the decline. What are the industry parameters that have affected this Nokorola product and therefore affected the performance of the company?
The main product problem is that it is acquiring an inferior position as more advanced products get introduced to the market. The obvious outcome of this is that the better products from these competitors will always get more consumer attention than the Crazr.
The element of people in the advanced marketing field covers the internal and the external segments of the company. The first group of people to look at are those within the company. These are the ones who are directly involved with the production of the Nokorola product discussed above. The Nokorola Marketing Director is of the opinion that Crazr is not being phased out of the market. According to him, the 75 million handsets sold globally which represents a 23 % global market sale is a representation of a strong position for Nokorola.All that he thinks is happening is market maturation that leads to segmentation. Is there any problem with this view? The Marketing Director has definitely not considered the fact that the operating margin of Nokorola has sunk from 11.6% to 4.4 % in a period of three months. Therefore as much as there may be a rise in the number of phones sold, the rise is not significant enough to prevent losses.
If the Marketing Director of Nokorola can be a representative of the internal people, then it is clear that the company insiders have problems with proper diagnosis of the company’s woes and this can lead to collapse (Hamilton 2003, p.14).
Also under the P for people, the more glamorous companies have begun receiving the employees of Nokorola who are not willing to stay in a company that is not in line with the time.
In some cases, this P is also called market. The areas where the Nokorola product is being sold include the West, India and Asia. The West is nearly being saturated and the Asian markets of India and China are alternatives. What are the characteristics of these new places or markets? China has a competitor for Nokorola called Huawei. This Chinese company is said to be offering an aggressive price; meaning that it is likely to give market challenges to Nokorola. Also, the two markets of India and China have poor populations who live on a dollar a day. This means that their purchasing power is highly compromised and therefore if Nokorola is intending to fight for market share among the populations of the two countries, it must be ready to make more losses on the operating margin.
The most important element after quality is the pricing. What the various companies in this industry are engaged in is called a price war. This simply means that each company is trying to reduce the prices of its products as much as it can so as to win the hearts of more customers and therefore get a big share of the market (ronmedlin.com 2010,p.1). This brings in the concept of market warfare strategies that are crucial to a company’s success (Miles 2003, pp 34-36).The pricing of Nokorola’s Crazr may have worked when competition in the field was limited. But times have changed and better handsets are now available at cheaper prices. The impact of the price war in which Nokorola is inevitably involved in has already claimed 3000 of the company’s employees. Additional upsets of this price war include the lagging behind in competition given that the new entrants into the industry with better phones are doing better than Nokorola. In most cases, the price of a product is a function of the quality of the product. In this case, the other already discussed P for product can be enhanced so that the current P for price remains unchanged and this will lead to increased handset sales (Ferrell & William2006, pp.12-13).
This is the position of the company’s product in the market. For Nokorola, the Crazr is currently lagging behind the other competitors with better phones as well as those with reduced prices. This performance is likely to worsen with the saturation of the Western markets and the poverty of the Asian markets. How is this performance? The performance of Nokorola as seen through Crazr is low. It is a performance that is in need of improvement. The means through which this can happen are through product modifications as well as price adjustments. The performance can also be enhanced through the strategic identification of alternative places of sale.
Nokorola seems to be engaging in less promotion as it is not mentioned anywhere. Given the traditional nature of its handsets, there is more need for promotion than in the new companies such as Google that have come up with smart phones whose popularity has risen rapidly. Promotion for Nokorola will have even a bigger impact if it comes after a strategic adjustment of the product, the price and the place. Marketing is vital to any business (Laermer & Simmons 2007, pp.6-7).The way Nokorola handles this element will ultimately determine its success (Levitz 2009,p.1).
Nokorola faces tough times as shown by market conditions. The best way forward will be to make a strategic marketing plan which can only be implemented after the product quality has been adjusted upwards so as to measure up to industry standards. Both the internal environment as shown by the six Ps and the external environment as captured in the five Porter forces analysis must be attended to if a competitive edge is to be gained by Nokorola. The outcome of failing to do this is being outcompeted.
- Baker M., 2008. The Strategic Marketing Plan Audit.NewYork: Cambridge Strategy Publications.
- Ferrell,P & William,O., 2006.Marketing Concepts and Strategies. New York: South-Western College Pub.
- Hamilton, S., 2003.The Enron Collapse. Lausanne: International Institute for Management Development.
- Kotler,P & Keller,K.,2006.Marketing Management. 12th ed. New York: Prentice Hall.
- Laermer, R & Simmons, M., 2007. Punk Marketing. New York: Harper Collins.
- Levitz,S., 2009.Advanced Marketing Strategies for a Successful MLM business.Attraction Marketing [Online].
- Miles, R., 2003. Organizational Strategy, Structure, and Process. Stanford: Stanford University Press.
- Pearce,J & Robnson,R.,2008.Strategic Management. 11th ed.New York: McGraw-Hill/Irwin.
- Porter, M., 1980.Competitive Strategy. New York: Free Press.
- Singh, R & Kotler, P., 1981 Marketing warfare in the 1980s”, Journal of Business Strategy, (1), 3.
Nokorola SWOT Analysis
Nokorola produces the Crazr which has a long lasting battery compared to the smart phones
The company seems to be having a loyal base of clients. This is shown by the fact that despite the technological retardation of the Crazr, it is still being sold.
The marketing leadership for Nokorola is not in touch with market trends and the appropriate action as exemplified by the Marketing Director.
The pricing of Crazr is not fit for poor markets of Asia such as India and China where the population lives on a dollar a day.
The Crazr is technologically trapped in a time warp. This is the greatest weakness that has seen newer entrants into the industry such as Google perform better than Nokorola.
The Crazr has a crucial opportunity in coming up with a new model that incorporates modern technology and a long lasting battery. This will outdo the Google and Apple models whose smart phones keep power for lesser periods.
The loyal client base is an opportunity to for an aggressive start in strategic marketing.
Nokorola’s biggest threat is being pushed out of the industry due to the loss of employees to other companies and the losses incurred on sales.