Executive summary
The electronic products technology is popular all around the world. It has done a tremendous change in all over the world; basically the mobile phones because now at present time mobile phones are the first priority in terms of telecommunication. In the mobile phone manufacturers China must be one of the biggest and growing markets. As we know about that, a leader in mobile telecommunications market, Nokia has its scientific business strategy that leads to success, and pays a great attention to the market of China. Based on the Chinese mobile phone market, this paper analyzes Nokia’s business strategy to show reason of Nokia’s success.
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The business strategy includes the strategic intent, the competitive strategy and marketing mix. The strategic concept of Nokia is to take the demand-side strategy. Nokia subdivides the whole market into several objective markets according to the researches about the partialities of different individuals. And then different types of mobile phones are put into the market aimed at attracting different consumer groups. The competitive strategy of Nokia is to improve the innovative ability to win the competitive advantage. Strong technological innovation ability makes Nokia stand in the most forward position of mobile industry all the time, and characterized this brand by a special vitality. And the marketing mix of Nokia is to use the integrated marketing strategy including product, price, promotion and place. It values the construction of a brand, the orientation of its products and pays a lot of attention to technology improvement. It increases the sales through sensitive advertisement, presentation to the celebrities and large-scale entertainment. And also choose the FD platform as its major sales channel to improve its sale.
Introduction
Nokia is famous all over the world as a successful mobile phone manufacturer. It keeps being the leader in the mobile telecommunications relies on its plentiful experience, technology innovation and scientific marketing strategy. The concept of the company is “technology connecting people”, which has been rooted in people’s mind deeply. The company emphasizes the consideration of humanity either in the decision of marketing strategy or in the management of the corporation.
In 1985, Nokia established its first branch company in Beijing, which means that Nokia has entered the Chinese market. And now the employee of Nokia in China has increased far beyond 6000. Nokia insists on the combination of produce and research in China. It has set up two research centers in China and paid a great attention to the cooperation with other local company. Nokia also takes parts in several public services and has gained great reputation in China.
The first part gives a brief description of the Nokia in China. The second part shows the marketing objective of Nokia, and the third one talks about the Target Market Strategy of this company. Following that is the Competitive Strategy of Nokia, and finally marketing mix is the which includes product strategy, price strategy, and promotional strategy and place strategy. At last is the conclusion about Nokia’s total business strategy.
The marketing objectives of Nokia in China
As Nokia knows that everyone in the world needs communication, it insists on helping people fulfill this need by providing consumers with very human technology- technology that is intuitive, a joy to use and beautiful. While in the Chinese market, the marketing objectives of Nokia is to take the first place in the field of mobile communications and become the international enterprise welcomed by government, operator and consumer most of all. Besides these, Nokia in China is determined to become the best employer that has the ability to attract and keep outstanding talents.
Because of such market target, the strategy of Nokia relies on growing, transforming, and building the Nokia business to ensure its future success.
The Target Market Strategy of Nokia in China
a. The market segmentation
The subdivision of the market is essential for a company to make decision. It is required as a basic skill for a company to understand the mobile phone market and its structure, so as to the market decision. (Earl Peter, 1996))
Nokia collect data and process it in order to get results that may reflect the age, sex, region, education, income, lifestyle and the partiality of the consumers in China. Then it subdivides consumers according to the research results and chooses the target market accurately. (John C, Mowen, Miner, 2004) According to the development of communication and the extensive market research, Nokia has subdivided the mobile phone market into four different types: the science and technology pursuer, the time controller, the personal communicator and the image chaser. From such continuously improving market segmentation, the products of Nokia have been more and more mature, and have attracted the attention of the majority of customers. (Reid, David A, Richard E, 2004)
b. The target market strategy of Nokia
According to the correct subdivision of the Chinese mobile phone market, Nokia has delineated its different market strategies emphasized on different market demands. Through its abundant product line, strong investigative ability and sound commercial network, with the suitable marketing strategy, Nokia designs various types of products to meet the need of each target market.
In the market of personal communicator, the objective-oriented consumers pay more attention to the quality, price and convenience of a phone rather than any additional features. For this features, the product from Nokia, which is expected to satisfy the consumers, is simple, practical, and abandons a lot of phone’s additional features to result in lower prices on a large cut-off. Because of the lack of additional features, to extend the service life is very feasible. And the 1 series and the 3 series Nokia mobile phones like 1100, 3100, 3108 and 3120 have reflected this.
In the market that pursues science and technology, the consumers wish that their phones could be helpful to raise the efficiency of the work and study. For this reason, Nokia develop new technology applications on mobile phones as possible as it can. And the N series of Nokia phones are the typical representatives to fit this market. They have already become a kind of electronic product with a high price. In customers’ view, it is worthwhile to by such a mobile phone at a high price because of the application of new technology and improved efficiency. With a high price, this market offers Nokia with generous profits as well as a high-technology image of Nokia.
While in the market of image chaser, the customers prefer to care about the external image of a mobile phone. So the products should catch the popular element, including products appearance, propagate spokesman that popularizes, etc. And the orientation of the Nokia adoring series is to express the individual character and grade of their users appropriately. The Nokia 7260, Nokia 7280 and Nokia 7360 are representatives of these phones that have satisfied the demand of fashion, grade and lifestyle.
And in the market pursuing management of time, the products of Nokia are trying their best to improve their work efficiency. So that the users could have enough rest time out of their heavy workload. So for the supervisors who usually need to make decision and emphasize on efficiency, the 6 series of Nokia mobile phones like 6600, 6670 and 6681 are the correct choices.
The Competitive Strategy of Nokia
a. Theories of competitive strategy
There are five kinds of basic competitive strength in an industry. They determine the potentiality for profit of this industry. The potentiality here is measured in the long-term investment, and not every industry has the same potentiality. The final profit potentiality will change fundamentally with the change of the joint competitive strength. (He Zi-Lin, Lim Kwanghui, Won Pho-Kam, 2006)
The result comes out from the interaction of the competitive strength is to form three kinds of basic competitive strategies. Those strategies are: overall cost leadership strategy, differentiation strategy and focus strategy. (Michael porter, 1997)
The first strategy means to make the greatest efforts to lower commodity prices through reducing costs, then to maintain competitive advantage. It is necessary to improve the control of cost because the profit of a low-cost company could be much more than the average level. While in the competitive market, this is essential for a company to overpower its competitors, to take the initiative and to be a winner. (Hooley Graham J, John Saunders, 1993)
The second strategy is to provide a unique product or service that is more functional, more fashionable or handsome. If a differentiation strategy can be achieved, it would help the company acquire the extraordinary income in this area. Because it can establish a defensive position to deal with the five competitive forces, and maintain the competitive advantage on the basis of the customer brand loyalty. (Hooley Graham J, John Saunders, 1993)
Finally, the main strategy is to focus on a particular customer base or a certain regional market. This requires a company to provide goods or services more efficaciously to a narrow strategic target, and then surpass their competitors in a wider scale. This strategy has the potential to gain profit over the average level. (Ketels Christian H, 2006)
b. The competitive strategy of Nokia in China
The Chinese market of mobile phone is large and attractive for each mobile phone manufacturer. And so it is no doubt that the competition in Chinese mobile phone market is intense. Even though Nokia is in a leading position in global mobile communications industry, it always maintains a high degree of vigilance. Motorola must be its major competitor either in China or other areas. Anycall Corporation comes from Korea also wants to seize this profitable market. Meanwhile, more and more local mobile phone manufacturers appear and acquire support from some consumers. Nokia could never slacken itself.
The basic competitive strategy of Nokia is the differentiation strategy, which requires winning the competitive advantage through improving its innovative ability continuously. Strong technological innovation ability makes Nokia stand in the most forward position of mobile industry all the time, and characterized this brand by a special vitality. How to meet demands of realistic market? This is the biggest challenge which the Hi-Tech company faces together. (Oster Sharon M, 1994)
Nokia pays a great attention to technology innovations, and has invested a lot in developing new technologies to maintain its leadership. Till now, Nokia has 54 researches & develop centers all over the world. These centers work hard to analyze the global market and keep on providing new concept, new demands to the company. This ensures its advanced technology and leading position. In China, Nokia has 2 R&D centers which are located in Beijing and Hangzhou separately. So that the researches in China develop fast and won great reputation. Relied on these investments Nokia has enough resources to do researches, and could always keep ahead of others.
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The individuation is the marrow of the Nokia mobile phones. On the gradually ripe market of mobile phone, the dazzling and outstanding design is even more important than the technology. Nokia is far-sighted that takes the initial to establish an independent apartment which are specialized in appearance design. The assignment of this apartment is to provide mobile phones with diversification and individual character. Over the past 10 years, the factor that Nokia’s continually updated product design has become a unique competitive advantage. Under the guidance of the philosophy called “technology connecting people”, Nokia has not only won the leading position in mobile phone market, it also fit the customers’ needs accurately.
Nokia also makes great effort to innovate upon technology, produce new mobile phones continuously, create good cooperative relationship with local companies and carry out humanized management. All of these are essential for Nokia to hold its competitive advantage and leading position.
The marketing mix
The mix marketing program, which is one of the major concepts in modern marketing, means a set of controllable, tactical marketing tools that the firm blends to produce the goods or services to meet the demands in the target market. It consists of everything that a company has ability to de to influence the demands for its product. There are four kinds of tools that are well known, they are product, price, place, and promotion. (Peter Doyle, 2006)
a. Product Strategy
There are many choices for a company to make its product strategy. Among them, the product orientation strategy, the brand strategy and the product development strategy are the most three important choices. (Safon Vicente, 2007)
After subdividing, confirming the target market, how to enter and capture that market becomes the essential problem for Nokia. This is a problem about its products orientation. The market researches of Nokia shows that the consumers can make decisions completely in accordance with their own preferences, the product brand, the ability of the economy, consumer confidence and other personal characteristics, when supplied with the mobile phone products with the same quality and effort. In this so-called buyers’ market, the marketing strategy should be corresponding to the characteristics of the different consumption community to win the competition. Nokia has done well in this area. Researchers in Nokia analyze the different personalities, divide consumer groups and decide what kind of mobile phones should be supplied to a particular consumer community. So the Nokia mobile phones have won a great number of supporters around the world. It is no doubt that the Nokia mobile phones will be considered first of all when a person decides to buy a mobile phone because of its high ability, special design and good reputation. (Sadler Philip, 2003)
A brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service. Consumers view a brand as an important part of a product, and branding can add value to a product. And product design is certainly affect the success of the brand. Nokia keeps being good at molding the good brand image by injecting individuality into product design. It has considered a lot about how the customers will choose the brand, and how it can make that experience reflect the brand character. For example, Nokia designers believe that the screen of a phone is the “eye into the soul of the product”. The shape of phones is curvy and easy to hold. The soft key touch pads also add to the feeling of friendliness, expressing the brand personality. All in a word, the design of a mobile phone is essential and important to the development of Nokia.
At the year of 2006, Nokia has won several design awards because of the four successful types of mobile phones. Nokia 8800, Nokia N70, Nokia 7370 and the N series are the awarded phones. All of them has gained glorification and always been welcomed by consumers since the day they were put into the market. Here shows that Nokia has paid a great attention to the fit the consumers’ demands and acquired encouraging repayments.
b. Price strategy
The price of a product reflects that the business enterprise should satisfy the various kinds of demand and get profit to ensure its general index object. The pricing objectives are the guidance for an enterprise to make price decision, which means the purpose or the standard that the company consciously wants to attain while setting a price for its product.
The pricing decision means that the business enterprise set a reasonable price for its product scientifically so that it could achieve the goal. And the major method for Nokia to make its pricing decision is the Brand Life Cycle Model that means to set different prices based on different life cycle of the product. That means to set a high price for new products, medium price for second-line products and low price for third-line products. The new products are the substitutes for the original first-line products. Once there has a change or development, whether it is technical, functional or just on the packaging and even it is the slightest one, the price can jumped to a new level.
The technologies applied to mobile phones are innovated fast because of the short life cycle of the mobile phone. When the market is not saturated, the competition is not intensifying, and the transparency of the product technology is not very high, the enterprise could access to excess profits most easily. Once the new entrants and the transparency of improving technology increase, it only can get a basic profit. So it is necessary for a new product to have a high price, which could make the enterprise earn excess profits. When others begin to supply the similar products, it is essential to provide substitutes with improvements and reduce the price of the original ones. It is not only ensure the sales of the new products, also lengthen the life time of the old ones. As long as the enterprises innovates, challenges itself, surpass itself, it will be able to keep leadership when compete with other manufacturers.
Meanwhile, the price should be made on the basis of sufficient market researches on consumers. No matter what an advanced technology that a product has, it is successful only the consumers love and purchase it. Take Nokia 88 series and 89 series as an example, these phones were made for those costumers who have strong purchase abilities and treat the mobile phone as a symbol of their status. So this kind of mobile phones usually has a high price and a long life cycle, and seldom reduces their price because their users do not change their mobile phones too frequently.
c. Promotion of Nokia
Promotion refers to the use of effective ways to attract consumers’ attentions and acquire their comprehensions to understand and pay attention to their products and to stimulate consumer desire to purchase and promote the realization of the final purchase.
The promotional strategy for Nokia to increase the sales is the integrated promotional strategy. It is a series of activities inform the consumer the existence and characteristics of the enterprises, brands and products, which could arouse the market demands, create and maintain the image of a company.
The promotional activities of Nokia are always based on the topic like fashion, convenience and function etc. Especially in the past two years, it pays more and more attention to attract consumers and create consumer group through the usage of emotional elements.
“Technology Connecting People” is the distinguished brand concept of Nokia, which has been rooted in consumers’ mind through some traditional promotion methods like TV advertisements, magazine advertisements. But now, it adopts some new ways to publicize its products. Nokia usually contracts with film distributors to make its phones appear in the film. This is actually an advertisement in a different form. People could see Nokia phones in the TV or film just like “Friends”, “Love of Scenery” and “An Empire” etc. And Nokia takes the lead to use the celebrity effect and presents the celebrity with its own products. It also holds programs accord with its products to publicize the brand, concept and the culture of Nokia.
d. Marketing Channel Strategy of Nokia
The marketing channel strategy is a set of inter-reliant channels through which the products could be spread from manufacturers to the consumers. The meaning of products here is not restricted to the tangible ones. The marketing channel strategy is an important component of the entire marketing system, which plays a significant part in reducing the cost and enhancing the competitive power of the enterprise. Along with the market development, the patterns of the marketing channel strategy are diversified. The vertical marketing system, horizontal marketing system and hybrid marketing system are three common forms. (Arch W, 1975)
Nokia choose its local business agent based on 5C principle. That is to say, Nokia will decide whom to choose according to their capital, credibility, channel, cooperation and management. Once the decision is made, the agent must comply with the contract, and sale the phone in his own area. The office should supply perfect base station for the sell. Meanwhile, pay attention to the network marketing and try to take the intensive marketing strategy in all domains.
In 2005, Nokia chose new channel pattern called FD, which has ability to change the provincial agent into funds platform, save a lot of intermediate links and make the channel flat. Through this method, most of Nokia monopoly stores can acquire the ability of direct supply, which will help Nokia reduce the decision time, ensure the profit of its terminal cooperators and its good post-sale service.
Conclusions
In conclusion, the success of Nokia is inseparable with the scientific business strategy. The business strategy is a general concept. It includes two indispensable elements called competitive strategy and marketing strategies as well as the concept of the business strategy. The strategic concept of Nokia is to take the demand-side strategy. Nokia subdivides the whole market into several objective markets according to the researches about the partialities of different individuals. And then different types of mobile phones are put into the market aimed at attracting different consumer groups. The competitive strategy of Nokia is to improve the innovative ability to win the competitive advantage. Strong technological innovation ability makes Nokia stand in the most forward position of mobile industry all the time, and characterized this brand by a special vitality. And the marketing mix of Nokia is to use the integrated marketing strategy including product, price, promotion and place. It values the construction of a brand, the orientation of its products and pays a lot of attention to technology improvement. It increases the sales through sensitive advertisement, presentation to the celebrities and large-scale entertainment. And also choose the FD platform as its major sales channel to improve its sale.
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