Nokia Company’s Success Exploration

Introduction

Increasingly, mobile phones are becoming more of a luxury than a necessity. The benefits that these devices provide are too many, convenience and easiness of communication. Nokia growth has been tremendous since its inception (Viardot, 2004). The company has become one of the leading giant in the mobile industry. Nokia group consist of four key businesses which include; mobile phones, multimedia, networks and enterprise solutions. Using its mission; connecting people, the company has simply helped in establishing communication as the main drive in connecting people around the globe.

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Numeric description is key to many brands of Nokia (Lattanzi and Korhonen, 2006). This ensures that the company remains strong on corporate brands. Acting responsibly makes the firm experience a significant economic impetus, streamlined legal compliance and enhanced reputation in productivity, quality and costs. This reputation is crucial to enhance continued investment and adoration of its products by the consumer.

According to Haig (2011), psychological changes among the consumer, has seen the company develop different products that satisfy the needs and preferences of the individuals. Thus, the company strives to restructure and develop new products. The brand has also been segmented to fit persons depending on age. This helps the company to distinguish phones according to the needs of these groups. It has also adjusted its marketing option according to global functions. Nokia Company has also stretched to other areas such as Africa and Indian subcontinent. Despite this success, the company is still facing challenges in marketing (Hebler et al, 2011). This could be attributed to new players in the market who offer stiff competition to the Corporation. The paper tries to establish a case study of Nokia in marketing of its products in the wake mobile war on dominance. It is a detailed account which provides more information on how the corporation is struggling to keep its presence.

Background information

Nokia Corporation is one of the largest manufacturers of mobile phones in the world. The company evolved from pulp industry to one of the leading mobile giants (Smith and Gow, 2006). It took approximately one century for the company to start producing mobile phones (Keegan and Green, 2000). It has a worldwide share of 27 percent. According to Stolle (2006), Nokia Company was founded in 1865 in Finland. Nokia became the pioneer in the country by introducing new production methods. The company initially depended on forest as the major source of income. As the company became labour intensive, it opened new plants.

The company listed its shares in Helsinki in 1915 when they first traded (Haiko, 2002). Finland has remained a close tie to Scandinavian country and other Western countries; this made Nokia a leading exporter in the region (Honkapohja, 2009). According to Steinbock (2010), diversification saw the company develop interests beyond the borders. In order to make a strong economic impact at home, the company merged with Finnish Rubber Works and Finnish Cable Works. This made it be involved in several new industries. Nokia further ventured in data processing, communication systems and mobile phones. It gained a strong position in automatic banking and manufacturing of modems (Anonym, 2012).

According to Draft, Murphy and Wilmott (2010), the reign of Nokia as a world leading manufacturer began in 1998. This can be compared to Microsoft which had already established its ground in PC software. The good riddance the company enjoyed began to hit turbulence in the year 2004 where it lost 35 per cent in the global market share (Lattanzi and Korhonen, 2006). The stock and the revenues took a nosedive. The most attributing factor was that the company missed the market for the new devices which had the colour screens and cameras. The company instead chose to pump more money for the development of smart phones. The phones were complicated and expensive. This saw the consumers switch to cheaper phones such as Motorola, Samsung and Siemens (Ranchhod, Tinson and Gauzente, 2004). The clamshell design saw the competitors get the market share in Europe and North America (Sharma and Nakamura, 2003).

According to Stadler (2011), the company played negligence to some of its customers, service providers such as Orange SA and France Telecom wireless unit but rather pushed for custom made phones. However, it was slow to adjust and these missteps saw the competitors occupy the market share. In order to redeem the old prestige, the management resolved to introduce competitive new middle range phones. They slashed the prices on the low end models in third world countries.

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According to Andrew and Caldart (2009), the company still invests in high end phones with advanced software that enables consumers to send and receive mails and surf the internet. It again began to realize a quick resurgence in the market share as the clamshell models popularity diminished. By the year 2007, the market share reverted back to 33 per cent and the profits were once again rising thanks to the cutting edge technology.

According to Grunewalder (2008), the growth trends of Nokia have been incredible. Due creative innovations, the company has been transformed tremendously. The innovation strategies of Nokia include the speed, the interrelationship between the products and services and the design use. This has transformed Nokia into design driven manufacturer. The company has already shifted to multimedia services space (Grunewalder, 2008). This inspired the creation of N-series. The ubiquitous camera phones help in revenue creation from user generated content. The company has also liaised with social site such as facebook, yahoo and flickr. The company has also gone farther to generate tablets.

In the current mobile industry market, the company is facing extremely stiff competition from other mobile companies such as Samsung, Apple Inc., Motorola and Huawei (Ryan and Jones, 2012). This is because it has continued with the production of common mobile phones while these other companies have shifted into smartphone manufacturing. Samsung and Apple are competing for market leadership in smartphone industry with the latest software (Ryan and Jones, 2012). Samsung is manufacturing smartphone using Google android operating system while Apple is using iOS software that it developed. They have transformed the mobile phone industry from just communication devices to devices that perform multiple functions. These new smartphones come with stylish designs that edge cutting and eye catching from retailers shop. Apple has gone further to producing more products such as iPad and iPod tablets (Fifield, 2007). These pose a serious threat to Nokia Company now and in the future of mobile phone industry.

Core analysis

Nokia company take-off in the mobile industry began in 1982 when it developed the first digital telephone exchange in Europe called DX 200 (Daft, Murphy and Willmott, 2010). From that time, the company has made tremendous growth in the industry. It claims to be the first in the introduction of car phone (Gruber, 2005). It was also the first to produce the transferrable mobile phone handset in the market (Gruber, 2005). In the late 1980s, the company introduced Integrated Service Digital Network (ISDN) which was the first one of its kind in the world. Another item that the company claims pioneering in production was the modem which had a speed of 14,400 bps (Gruber, 2005). This period of 1980 to 1990 marked the company take-off in industry of the digital world and it gave it a lead in the market. There was no competition at this time as these were new products in the market and no companies were showing interest to engage in production (Sharma and Nakamura, 2003).

Then came the 1990s era when the Nokia Company began experiencing successful growth in market share. It gained popularity at this time with various launches of mobile phones products in the market. It launched the first global mobile communications network called Global System for Mobile Communications (GSM). This launch was in the year 1991. The GSM technology has grown and now has over 2 million users worldwide within more than 200 countries (Merriden, 2001). In 1992, the company launched the first hand portable mobile phone handset operating on the GSM technology. The handset was named Nokia 100 series. In the following year, the Short Message Service Centre (SMSC) and credit cards for loading on mobile phone were launched (Paley, 2006). It gained market lead at this time in the mobile phone industry with its new products that were targeting the market needs of consumers. Its market strategy was producing new market catching products.

The mobile phone industry exploded in the late 1990s when the consumers’ needs shifted (Lattanzi and Korhonen, 2006). They now became sensitive on technology as new companies were entering into the industry with new technologies. Portability, design, services and new design styles became a critical factor to consider for customers (Lattanzi and Korhonen, 2006). Differentiated needs of various customers also emerged into the market. The market needed to be segmented in order to fulfil the varied desires of the customers. Nokia took a lead in segmenting the market by producing differentiated products serving different market segments (Fifield, 2007). During this time, the company’s handsets became more popular in the market as they were produced for various market segments (Fifield, 2007).

The segmentation method was as shown the diagrams below.

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The segmentation method
The segmentation method
Functional and style categories of devices
Functional and style categories of devices

In this same period, the volume of sales of the company grew by a large margin throughout the world. According to Grunewalder (2008), it sold approximately 78.5 million handsets and obtained revenue worth 14.2 billion. The net profits from the sales were 2.8 billion (Grunewalder, 2008). These were the sales of the year 2000.

Then came the millennium period where the company now was competing to maintain market leadership. According to Ferrell and Hartline (2010), Nokia Company at this time had gained popularity and its brand had acquired much value. The brand was valued to be approximately 21.9 billion by the end of year 2000 (Ferrell and Hartline, 2010). During the millennium period, the brand began declining and by the year 2004, it was valued at 13.7 billion (Keegan and Green, 2000). Some of the reasons that led to this decline included concentration on one competitor. When Nokia heard of Microsoft announcement of entrance into mobile phone industry, they concentrated on Microsoft competition and forgot there are other players in the industry (Dziri, 2011). This created a loophole in their marketing strategies that allowed other firms eat into part of its market share. Therefore, a loss of market share occurred to these other competitors.

Another reason for the loss was concentration on the internal operations of the company. This made them forget about studying the market trend and the needs of the consumers (Dziri, 2011). This also created a loophole for competitors to enlarge their market share. During this time, there was an innovation of colour screens, handset in built cameras and clamshell models. The competitors build their products providing these extra additions and their mobile phones became cutting edge in the market. Nokia concentrated on reducing production cost through reduction of handset sizes. Their products were also restricted in terms of range variation whereas customers needed wanted more better products than what Nokia could offer (Dziri, 2011).

The other reason was poor timing in carrying out re-organization within the company. A major re-organization was carried out in the year 2004 in all the departments (Andrew and Caldart, 2009). This led to retardation in the company operations both internally and externally in the market. The CEO at that time, Jorma Ollila, confessed that the reorganization was poorly timed. Lastly, other competitors in the market moved from just producing handsets for any market to market specific products. They liaised with network communication providers of various countries to produce handsets carrying the label or logo of that company. For example, Vodafone came into an agreement with Sharp and they designed for them handsets that carried the Sharp logo.

In the period between the years 2004 to 2006, it was a turnaround for Nokia Company. Their brand value increased to 17. 1 billion which was 14 percent rise (Mimoun, 2009). This increase was not only as a result of sales of handsets, but it also included other products sales. These include data services, home satellites, networks, enterprise solutions and mobile gaming devices. During this year, they released new mobile handset in the market; N series. This marked the move to production of smartphones for the market needs.

In the next period of the years 2007 to 2011, Nokia Company brand began to decline again. Market share declined from 36.4 percent in year 2009 to 28.9 percent in year 2010 (Boone, Kurtz, 2011). Competitors in the industry became more vibrant. Apple specialized with production of smartphones during this period, and it produced market edge cutting designs (Ranchhod and Guru, 2007). This posed a considerable threat to Nokia although it was the first company to produce smartphone in the year 2005. Apple came up with a powerful and better operating system called iOS which was used in the smartphones such as iPhone (Ryan and Jones, 2012). Nokia was stuck to its old Symbian operating system, but it could not compete with the new iOS. The Symbian operating system was only comparable to other normal operating systems such as Banda by Samsung. In the year 2010, Google launched the new operating system called Google Android and it was liberalized in the market (Ryan and Jones, 2012). Companies such as Samsung took advantage of the new Google Android operating system to produce smartphones such as Samsung Galaxy. According to Kumar (2011), during these developments in smartphone market, Nokia developed the meego operating system which was used in production of N series handsets. It later shifted to Android after its launch and produced another smartphone. In the year 2011, the company again shifted to Windows Phone operating system developed by Microsoft and produced Nokia Lumia smartphone. This instability in the smartphone industry made it lose market share to its competitors. Apple was leading the smartphone market during this period although it was overtaken by Samsung in the year 2011.

New marketing strategies have been developed by Nokia Company to help it re-capture its market share in the smartphone industry. One strategy is in producing smartphone products targeting the low end and average consumers in the market (Kalb, 2011).

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Another strategy is in marketing of the new products such as the new Nokia Lumia. It is opening large store layouts where customers can get in and have hand experience with the company products (Kalb, 2011). The CEO says that once the customers have hand experience on the products they will then buy them (O’Reilly, 2012). According to O’Reilly (2012), the other strategy is on making massive online advertisements especially in social websites where most youths visit. The company has also taken another dimension after the launch of the new Nokia Lumia. It hired a new chief marketing manager (Boone and Kurtz, 2011). The future of the company may not be easy to predict on the basis of the recent steps taken in the company which seem to make it unstable in the industry. However, serious internal and external analysis of the company may be necessary for the company operations in the future mobile phone industry.

Conclusion

Nokia Corporation has seen tremendous growth in 1998, during this period the company witnessed one of the profitable seasons. Due various problems, the company ceased has from leading the global mobile phone market. This has been left to emerging competitors such as Samsung and Apple Inc. The company has been static to change its Operating System, Symbian even when leading Android OS has been liberalized. This has seen her competitors have a greater stake in the Smartphone. However, the company has remained a favourite to many developing countries in Africa and Latin America. In India, the company enjoys 70 per cent of the market.

The company has lost its market share to competitors severally. Many problems experienced by Nokia results from ignorance and poor marketing strategies that have existed for quite a long time. Some of these problems are poor ignorance of the new market trends in the industry, poor timing when re-structuring, standardized production leaving little room for innovation and adoption of new technologies. These have made its marketing department fail in availing information about company products to consumers. With the hiring of the new CMO, Nokia is expected to improve and start making profits (Pride and Ferrell, 2011).

Reference List

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Appendix

Nokia's net sales since 1975
Nokia’s net sales since 1975
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