Communication has become a necessity in the world today. This has led to the rise of different companies that are involved in the manufacture of products and provision of services in communication, which are dynamic, as demanded on a daily basis. Nokia Corporation is such a company, established in Finland, Europe. Nokia is the leading manufacturer of mobile devices, and is also involved in the convergence of communication industries and internet. It has more than 123,000 employees, and earns revenue of about 41 billion Euros (€) globally a year (Nokia, 2010, par.1).
Interbrand placed Nokia in fifth place among the top one hundred brands in the world, with a capital base of $34,864 million, in 2009 (Interbrand, 2010). Nokia has become the leading company in the manufacture of mobile devices in the world, with a large market segment that has seen it perform well in terms of sales. It has not gone smoothly all along without challenges which saw it, Nokia, being overtaken in the year 2003 by other competitors in the industry.
Nokia, the global mobile communications’ powerhouse
Nokia started from a far, from its establishment in the 19th century. Its concentration on the mobile communication was the first step that saw it start to expand tremendously. Being the first company to introduce the car and portable cellular phones saw it gain popularity in the 1980s and 90s. These phones had the ability to transfer both voice and data calls and text message services.
This was a good starting point as the needs and the preferences of the customers grew, and changed, in the market. With different innovations in design, style and the fact the services became more available and cheap made Nokia gain its popularity in the 1990s, through its identification of different segments in the needs of the customers and addressing them appropriately.
This led to the company and its products becoming the choice of the public. The increased production of mobile devices and offering of internet services such as applications, games and messaging has seen Nokia capture a bigger market segment of about 40% alone (Nokia, 2010, par.3). Integration of solutions in terms of mobile device, personalized services and content into a package that is attractive to the consumer has also made Nokia grow to the level it has.
The other aspect that has seen Nokia grow to the level it has is the involvement with subsidiaries. This was mostly evident in 2007 where it joined hands with other companies like Siemens and Navteq, and other notable subsidiaries that contributed in the production and retailing of luxury smart phones that have the capacity to not only serve the basic purpose of voice communication, but also the sending and receiving of text messages and e-mails. There has also been development of software as a result of merging with subsidiaries.
Their (Nokia and Siemens) merging in 2009, for instance, forming Nokia Siemens Network contributed to the network serving well more than 600 operator customers in more than 150 countries and at the same time serving about 1.5 billion people, connected through its networks (Nokia, 2010, par.32). Nokia Siemens network is in a position to offer wired and wireless infrastructure that enhances communications greatly. They mainly focus on core networks which have multi-access capabilities.
The other aspect relates to Nokia’s provision of free personalized services to its subscribers in the name of ‘My Nokia’ service that avails: free tips and alerts through the web, e-mails and texts; free online service for contacts, using GPRS connection; ringtones, wall papers, and games that can be downloaded by all registered users free of cost (Nokia, 2010, par.39). This gives the customers privileges that are not found anywhere else, and so its products ultimately becomes the people’s choice hence its growth to reach the kind of communication powerhouse it is currently.
The decline of Nokia in 2003/ 2004
In the years 2003 and 2004, Nokia Corporation had declined and had been overtaken by other companies in the industry. The main reasons for this scenario can be explained in a number of ways that were as a result of focusing so much as an internally oriented business rather than market-driven business, which contributed to its failure. According to Jobber (2009, p.7), an internally oriented business operates on the following principles: the fact that their convenience is the first priority, the assumption that sales are dependent on prices and performance of the product in the market, low regard on competition, perception that investment in marketing is a luxury, rigidity (sticking with the same thing), and reluctance in speed of operation and innovation, to name just but a few.
In 2003/4 Nokia Corporation was overtaken by other companies in the same industries as they (competitors) were market-driven rather than internally oriented as Nokia. They regarded customers’ satisfaction first and knew that good marketing mixes mattered in making high sales in the market.
This is brought about by the investments they carried on researching the market to come up with needed information on the expectations of the customers, an aspect Nokia considered a luxury. They, therefore, were in a position to come up with innovations and other developments that gave the customers a choice of change from the usual products that were being offered by Nokia.
Again, due to the fact that Nokia was a big multinational corporation that was well established in the market, it ignored competition from related businesses in the industry. This reduced the level of innovation with Nokia. It therefore failed to come up with better and more advanced mobile products, a niche that the other competitors took advantage of, and this saw the sales of Nokia decline as there were other products in the market that were more interesting to the customers than the usual products and services that Nokia provided.
This is what Jobber (2009, p.7), terms as punishment of innovation. Nokia had progressed well in the market and in ensuring that its products were the choice of many customers to an extent that it made them reluctant to innovation. They, therefore, stuck with the same products that the customers had gotten used to instead of developing new and more attractive products that could have compelled the customers top stick to its products, and maintain if not increase its sales volume and market share.
There was also the concept of “why rush”, as in Jobber (2009, p.7). Nokia did not see the use of reorganizing and restructuring its operations for efficient operations. If Nokia could have rushed to restructure and reorganize the way it conducted business to mind the priorities of the customers first, it could not only have maintained its prior market dominance but also increase its customer base. The integration of devices, services, solutions, and markets could have been done before other competitors could as Nokia had the resources for such advancements.
Lastly, the fact that Nokia did not welcome cooperating with other companies in the industry, initially, caused its decline. There was need for merging so that it could explore joint ventures in innovating and providing of better products and services for its continued dominance. The norm of remaining the same and operating the way it was, is what Jobber (2009, p.7) terms as “happy to be me too”.
Nokia failed to utilize other companies in the industry to form joint ventures that could have been more productive and profitable. It came to consider this while it had fallen and implemented it in 2007 with Siemens. Other companies that it merged with were Navteg and this has helped Nokia to regain its dominance in the market as it has learnt to be more market-driven, considering the needs of the customers first.
Maintenance of market leadership
For Nokia to maintain its market leadership it must shift from operating on an internally oriented basis to that of a market-driven one. The focus, therefore, will be on the customers and this will be possible by researching on the market to know the different needs and preferences of the customers, and how best to deliver to these expectations. The market-driven management has five key dimensions, which are interconnected and aims at giving the customer the first priority.
These dimensions are: sharing-keeping the needs of the customer first; skills to understand and respond to the customer appropriately; a market led strategy that links distinctive competences in marketing opportunities and being driven by competitive advantage; implementation that entails communication, persuasion, and giving incentives to people; and a structure that is strategic and driven by team work (Jobber, 2009, p.9).
For Nokia to maintain the market lead it must consider; Firstly, the creation of customer value and satisfaction. This is aimed at attracting of customers top a firms products and services and on the way to retain them. The benefits that the customer is getting must be more than the sacrifices the customer makes for a specific product. This is what is perceived to be customer value.
Satisfaction entails the performance of the products or services offered or bought by the customers against the customers expectations. Nokia should make sure that it conducts sufficient market research on the expectations of the customers so that it can be able to provide services and offer products that are higher than the expectation of the customer in terms of performance. This will ensure that they remain to be competitive in the market, hence making its products the products of choice by the customers. This will be able to deal effectively with competition from other companies in the industry (Jobber, 2009, p.12).
The other strategy is to come up with a market mix that is effective. This will concentrate on the four ‘Ps’ in marketing, which are: product, price, promotion, and place. The product entails a good decision on what product that the company needs to concentrate on. For our case, it will be mobile devices and related services that Nokia must develop to suit the customers expectations if not exceed them.
The price is considered as the key element for the success of the market mix. The objectives and policies are supposed to be clear so that the customers can perceive the real prices properly. This will help them to perceive the value of the product offered, and relate it to their expectation. Good pricing guarantees high sales for a company, like Nokia. Promotion entails creation of awareness of the existing of the product/service to the customers.
Nokia can, for example, use the internet to promote its [products, just as it has done lately as it is a very effective medium for creating awareness and this way it will remain in the lead and increase its customer base. Lastly, is the place. This entails the distribution channels to be used, and transportation modes so that the goods can be availed to the customers in the market where they (customers) can have easy access of the products (Jobber, 2009, pp.13-16).
The marketing mix must, however, be well blended, create competitive advantage, and match the need of the customer for it to be effective.
If the Nokia Company follows the market-driven strategy it will not only take the lead in the industry, in terms of sales, but also it will be able to create a much bigger customer base. This is very possible because when it merged with Siemens to create Nokia Siemens Network it has been able to rise up again. Therefore, proper marketing strategies and the incorporation of mergers will guarantee its dominance once again.
Nokia is a multinational corporation that has dominated the mobile manufacturing and sales in the world. It was ranked in fifth place by Interbrand in 2009, among the top one hundred companies in the world. It has risen to become the communications powerhouse and dominated the market for a long time. In 2003/2004 the corporation failed and was overtaken by other competing firms in the industry who adopted a market-driven approach toward their operations rather than Nokia’s internally oriented approach, which contributed to its failure. However, Nokia can still dominate the market and take the lead again if it adopts the market driven strategy towards production and sales, and this is evident from its acquisitions and merging forming stronger entities with stronger and improved products that are fit the customers’ expectations.
- Interbrand. 2010. Top one hundred brands.
- Jobber, D. 2009. Principles and Practice of Marketing. 6th Ed. New York: McGraw-Hill Education.
- Nokia. 2010. About Nokia. Web.