Marketing Strategy of Nokia in India
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Abdul Hassan UGP/FW/ICHE-B/10-13
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Synopsis Introduction: •
India is one of the fastest growing markets for the mobile industry.
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Indian telecom industry underwent a high pace of market liberalisation and growth since 1990s and now has become the world's most competitive and one of the fastest growing telecom markets.
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The Industry has grown over twenty times in just ten years, from under 37 million subscribers in the year 2001 to over 846 million subscribers in the year 2011.
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India has the world's second-largest mobile phone user base with over 929.37 million users as of May 2012.
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Major players of mobile sector in India
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Samsung
Nokia
Apple
Micromax
Blackberry
Sony
Urban Objective :
Communication
Banking
Entertainment
Internet
Business transactions
Application market 2
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Rural Objective:
Communication
A large market yet to be conquered
Social impact through government agencies
Research objective: To find out the marketing strategy of Nokia in India and the market value of Nokia. Research methodology: Primary research: This consists of questionnaire and interaction with various people. Secondary research: sources of secondary data were primarily the internet, journals, newspapers, and annual reports, database available in library, catalogues and presentations. Research design: It is in descriptive studies.
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Sampling method - random sampling
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Sample size – 20-30
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Scope of work - the real aim of the project is to study the effectiveness and response towards smart phones provided by major players. A survey will be conducted to know the impact of smart phones on customers which is part of the primary data. The secondary data will be collected from different books and websites available.
Smart phones in India: • Samsung is the no.1 smart phone seller in India, followed by Nokia, Blackberry, Apple and others. • Urban India has the highest no of users for smart phones; youth is the biggest consumer of smart phone market in India.
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http://www.tech-thoughts.net/
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The Nokia Corporation is a Finnish multinational communication and information technology communication corporation that is originally headquartered in Espoo, Finland.
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Its principal products are mobile telephones and portable IT devices. It also offers Internet services including apps, music, gaming, media, messaging and navigation.
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Nokia is a public limited company conducts sales in 150 countries and is 2nd largest – mobile maker in terms of sale after Samsung.
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Nokia entered Indian market in the year 1994.It is the second largest phone seller in India.
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Nokia offers smart, dual and QUERTY pad phones, it launched special edition ASHA phones for the Indian sub-continent market. Nokia products are inclusive; it has different product range for different market structure. 4
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Table of Contents 1. History of Nokia…………………………………6 2. Begining of the Mobile era………………….9 3. Nokia India story………………………………..11 4. Competitive analysis of Nokia…………….. 14 5. Market research………………………………..18
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1. History of Nokia •
In 1865, mining engineer Fredrik Idestam sets up his first wood pulp mill at the Tammerkoski Rapids in south-western Finland. A few years later he opens a second mill on the banks of the Nokianvirta river, which inspires him to name his company Nokia Ab in 1871. In 1871, Idestam, with the help of his close friend statesman Leo Mechelin, renamed and transformed his firm into a share company, thereby founding the Nokia Company, the name it is still known by today.
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Toward the end of the 19th century, Mechelin's wishes to expand into the electricity business were at first thwarted by Idestam's opposition. However, Idestam's retirement from the management of the company in 1896 allowed Mechelin to become the company's chairman (from 1898 until 1914) and sell most shareholders on his plans, thus realizing his vision. In 1902, Nokia added electricity generation to its business activities.
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In 1898, Eduard Polón founded Finnish Rubber Works, manufacturer of galoshes and other rubber products, which later became Nokia's rubber business. At the beginning of the 20th century, Finnish Rubber Works established its factories near the town of Nokia and they began using Nokia as its product brand.
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In 1912, Arvid Wickström founded Finnish Cable Works, producer of telephone, telegraph and electrical cables and the foundation of Nokia's cable and electronics businesses. At the end of the 1910s, shortly after World War I, the Nokia Company was nearing bankruptcy. To ensure the continuation of electricity supply from Nokia's generators, Finnish Rubber Works acquired the business of the insolvent company. In 1922, Finnish Rubber Works acquired Finnish Cable Works.
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In 1937, Verner Weckman, a sport wrestler and Finland's first Olympic Gold medallist, became president of Finnish Cable Works, after 16 7
years as its technical director. After World War II, Finnish Cable Works supplied cables to the Soviet Union as part of Finland's war reparations. This gave the company a good foothold for later trade. •
By the 1960s, Finnish Cable Works – already working closely with Nokia Ab and Finnish Rubber Works – starts branching out into electronics. In 1962, it makes its first electronic device in-house: a pulse analyser for use in nuclear power plants. In 1963, it starts developing radio telephones for the army and emergency services – Nokia’s first foray into telecommunications.
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The three companies, which had been jointly owned since 1922, were merged to form a new industrial conglomerate, Nokia Corporation in 1967 and paved the way for Nokia's future as a global corporation. The new company was involved in many industries.
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Björn Westerlund became the first Nokia Corporation President and as the president of the Finnish Cable Works, he had been responsible for setting up the company's first electronics department in 1960, sowing the seeds of Nokia's future in telecommunications.
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Nokia Company Logo:
Founders of Nokia and first President of Nokia Corporation:
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2. Beginning of the Mobile era •
Nokia sets the ball rolling in 1979, creating radio telephone company Mobira Oy as a joint venture with leading Finnish TV maker Salora. 1981 then sees the launch of the Nordic Mobile Telephone (NMT) service, the world’s first international cellular network and the first to allow international roaming.
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The NMT standard catches on fast and the mobile phone industry begins to expand rapidly. In 1982, Nokia introduces the first car phone – the Mobira Senator – to the network. That same year, the Nokia DX200, the company’s first digital telephone switch, goes into operation.
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In 1984, Nokia launches the Mobira Talkman portable car phone. Resembling a military field telephone, it’s a fairly cumbersome piece of kit – but it’s a start.
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Then in 1987, Nokia introduces the Mobira Cityman, the first handheld mobile phone for NMT networks. Despite weighing in at 800 grams and a price tag of 24,000 Finnish Marks (around EUR 4,560), it goes on to become a classic. The Cityman even earns a nickname, the “Gorba”, after Soviet leader Mikhail Gorbachev is pictured using one to make a call from Helsinki to his communications minister in Moscow. Over the next decade, millions of consumers worldwide enjoy their very own Gorbachev moment as the mobile revolution takes hold.
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In 1987, GSM (Global System for Mobile communications) is adopted as the European standard for digital mobile technology. With its highquality voice calls, international roaming and support for text messages, GSM ignites a global mobile revolution. As a key player in developing this new technology, Nokia is able to take full advantage.
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On July 1, 1991, Finnish Prime Minister Harri Holkeri makes the world’s first GSM call, using Nokia equipment. And in 1992, Nokia launches its first digital handheld GSM phone, the Nokia 1011.
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In 1994, Nokia launches the 2100 series, the first phones to feature the Nokia Tune ringtone. Based on Gran Vals, a classical guitar piece composed by Francisco Tarrega in the 19th century, it is probably one of the most frequently played pieces of music in the world. The Nokia 2100 series goes on to sell 20 million phones worldwide. Nokia’s target had been 400,000. 1994 also sees the world’s first satellite call, made using a Nokia GSM handset.
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By 1998, Nokia is the world leader in mobile phones. The strategic decision to focus on telecommunications, plus early investment in GSM, has paid off. Between 1996 and 2001, Nokia’s turnover increases almost fivefold from EUR 6.5 billion to EUR 31 billion.
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In 1999, Nokia launches the Nokia 7110, a phone capable of rudimentary web-based functions, including email. Then in November 2001 Nokia launches its first phone with a built-in camera, the Nokia 7650, and in September 2002 its first video capture phone, the Nokia 3650.
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Nokia launches its first 3G phone (third generation), the Nokia 6650, in 2002 that things really take off. With 3G technology, phones can now be used to browse the web, download music, watch TV on the move, and more.
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In 2005, Nokia sells its billionth phone – a Nokia 1100 – in Nigeria, and global mobile phone subscriptions pass 2 billion. Two years later, Nokia is recognised as the 5th most valued brand in the world.
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By 2010, having dominated the mobile world for over a decade, Nokia no longer has things all its own way. In the all-important smart phone market, competitors such as the iPhone and Android-based devices now pose a serious challenge.
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In February 2011, Nokia announces it is joining forces with Microsoft to strengthen its position in the smart phone market. The strategic partnership sees Nokia smart phones adopting the new Windows Phone 7, operating system, with the Symbian platform gradually being
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sidelined. The goal is to establish a third ecosystem to rival iOS and Android. •
Nokia launches its first Nokia with Windows Phones, the Nokia Lumia 800 and the Nokia Lumia 710, in October 2011. Fast-forward to 2013 and Nokia has a full portfolio of great Windows Phone 8 smart phones, from the Lumia 520 through the flagship Lumia 920.
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3. Nokia India Story Nokia’s Entry in India: Nokia entered India in 1995. • Third Largest Telecommunication Market: India ranks third globally after China and U.S. in terms of the largest telecommunication market. • 500 million mobile subscribers in India: The Indian market is adding about 10 million users a month. Nokia sees the Indian market as a growth opportunity particularly in the country’s rural areas. Rural penetration in India is still very low at 13%. By 2010, Nokia estimates that there will be around 500 million mobile phone users in India as compared to 427 million. According to Standard Chartered Bank’s annual forecast, India will have signed up its 500 millionth mobile subscriber sometime in December 2009 or January 2010. So, it took India 12 years (from 1997 when the mobile revolution began) to grow from zero to 500 million subscribers. However, analysts estimate it will take only five years to add the next 500 million. • Nokia’s market share in India: Nokia has more than half the share of India’s mobile handset market. In 2009, an IDC report indicated that there were about 28 new handset vendors in India. Nokia led with a 54.1% market share in the fragmented Indian market, while the new vendors accounted for 17.5%. Samsung and LG followed with markets shares of 7.7 % and 5.4 %respectively. • Update (Mar, 2012) – Nokia had a market share of approx. 38% in 2011 compared to 49.3 per cent in 2010 in India. Its revenues were Rs 12,929 crore in 2010-11 and Rs 12,900 in the 2009-10. The Indian market accounts for 12 per cent of worldwide sales for Nokia. •
Nokia’s manufacturing facilities in India: Nokia’s manufacturing facility in Chennai, Tamil Nadu (South India) exports half its production to more than 59 countries. Nokia has invested $250 million since its launch in 2006. • Mobile Microfinance – In 2009, Nokia piloted a scheme in two Indian states where it sold handsets on a weekly instalment of 100 rupees ($2) over 25 weeks. Nokia planned to rollout the microfinance offer in 12 Indian states. • India not a low-end market segment – 81 percent of the India’s mobile users are in urban areas. Nokia anticipates such customers would drive demand for high-end phones. • Increasing Competition from new mobile handset manufacturers’ entry into India: In one quarter of 2009 alone, twenty-seven new mobile handset manufacturers entered the Indian market to introduce entry•
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level models (and other models with features such as dual SIM cards and full QWERTY keyboard) for the price sensitive Indian consumer. • Mobile handset sales in India: By year ended June 30, 2009, mobile handset sales in India was 100.9 million compared to 94.6 million, a year ago. • Nokia’s strong distribution in India: In India, Nokia has 2 lakh retail outlets and 700 support centres across 400 cities and towns. • Nokia’s competitors in India: Motorola, Sony Ericsson, Spice, Micro Maxx, Karbon, Lava, Lemon, Oscar. • Nokia’s ‘Made for India’ phones: In 2000, Nokia introduced the Nokia 3210 with a Hindi menu. In 2003, Nokia launched the Nokia 1100, a first Made for India phone. • India’s Most Trusted Brand: Nokia ranked as India’s topmost trusted brand in the Economic Times-Brand Equity’s annual ‘Most Trusted Brands’ survey for 2010. In 2004, Nokia ranked 71 and moved to 44 in 2006 as India’s most trusted brand. In 2007, it ranked in the top ten at number 4. Nokia has since held the number one slot for three years consecutively. • Nokia’s biggest advertising/marketing campaign in India: In December 2011, Nokia launched its biggest ever campaign in India called the ‘The Amazing Everyday’. The idea behind Nokia’s global campaign is to engage customers with the idea that “hidden away in the everyday landscape are billions of little adventures”. • In February 2011, Nokia entered into an alliance with Microsoft. Nokia began using the Windows operating system on its smart phone range called Lumia. In June 2012, Nokia announced that it plans to cut 10,000 jobs and close 2 research facilities in Germany and Canada and a factory in Finland after its sales decreased by 29 percent with losses at $1.2 billion in the first quarter. However, India operations are unlikely to be affected by the job cuts, a spokeswoman from Nokia India confirmed. •
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NOKIA LUMIA MODELS
NOKIA ASHA MODELS 15
4. Competitive analysis of Nokia: SWOT Analysis: Strength: *
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Nokia is the world’s largest producer and distributor of cell phones. It has a well established distribution channels around the world.
Weakness: *
Nokia has declining profits since 2010.
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Stiff competition from Android and IOS devices.
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Competition from local brands in terms of pricing and software such as karbon and Miramax.
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Brand value.
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It has strong R&D facilities.
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Updating of software.
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It makes environmental friendly products.
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Marketing and advertising strategy.
There are fewer applications for Nokia devices compared to IOS and Android.
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Microsoft Nokia partnership.
Opportunity: •
Nokia has a huge market presence in emerging markets, than its competitors in Europe
Threat: •
Cut throat competition from competitors such as Samsung 16
and Americas. •
Introducing of new product line and features.
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Updating software to Android (or) coming up with better features in windows
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Takeover of Nokia by Microsoft can lead to introducing of new and innovative products.
and Apple. •
Declining brand loyalty and market presence due to lack in features and software
Porter’s Five force analysis of Nokia : The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position you're considering moving into.
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Threat of new entrants: •
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The mobile phone industry is already a well established market and the threat of a new entrant is quite low, as the technology needed to rival the devices already available is quite advance if they want to differentiate from them. The barriers to entry in the mobile phone industry is high because any new entrants will need high investments in R&D, technology and marketing in order to compete with the established organisations. Nokia is a well established brand and has a strong market presence distribution channel and it would be difficult for the new entrants to compete with nokia in terms of brand presence and distribution access. It faces competition from local made mobile brands and china made phones, in terms of pricing for low end mobiles. Ex: Karbon, Maxx etc.
Power of Suppliers: •
Although Nokia rely on its suppliers to supply equipment for their advanced mobile phones there are actually a number of large equipment makers, which Nokia could switch to.
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The software suppliers for their smart phones are now Microsoft, who will have a very high bargaining power.
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As the leading mobile phone company in the industry they are in a very strong position when bargaining with their suppliers.
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Nokia are in the position where they can bargain and negotiate with any mobile phone hardware maker because there is a high number of equipment suppliers that are readily available to them should their current suppliers attempt to bargain for more money with them.
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Nokia’s main argument would be the fact that they are a global organisation that has the highest market share in the industry, so the suppliers would not want to lose such an illustrious organisation.
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On the other hand, Nokia have recently created an alliance with Microsoft for their software which would be considered a major coup for Nokia more than Microsoft. As a result, Microsoft will have a lot of power when negotiating a price and share because the deal is more beneficial to Nokia than Microsoft.
Power of Buyers: •
The power that customers have is rising because of the increasing number of choices in the mobile telecommunication industry.
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With a lot of the Nokia competitors all offering similar packages (e.g. unlimited texts and calls) the industry is very price sensitive with customers seeking out the best value for money.
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Many of the consumers will also be tied into long term contracts so switching from one handset to another will be difficult and expensive for the consumer, as a result they may not want to change until the contract is finished.
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The mobile phone industry is a competitive market where the number of choices is very wide, resulting in the consumer having a lot of power because they can choose to go to one of Nokia’s many rivals if they feel Nokia are not good enough.
Industry Rivalry: 19
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Nokia faces cut throat competition from its competitors, Samsung, Apple.
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Nokia is no longer the world’s no.1 mobile seller, it has declining sales and is losing its customer base and market as it is unable to compete with its competitors.
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Nokia’s competitors uses Android and IOS software where as nokia uses Windows software, Android and IOS devices have a huge customer base and users prefer them due to better features and application market.
Threat from substitute products: Mobile phones have become an everyday necessity in peoples’ lives because of the important functions that they can do and are all available in just one handset. No other product has the ability to make phone calls, send messages, surf the web and many more in one device. The idea of being in constant communication with someone at anytime and anywhere makes the mobile phone a very important device to people. On the other hand, a mobile phone can be dissected into the key function where there are substitutes for the functions, such as the camera function on a mobile phone can be substituted for a digital camera which can do a better job than the camera in a mobile phone. In conclusion, the threat of a substitute product is very low due to the fact a mobile phone is no longer just for making calls but for all the other function as well are expected on all mobile phones.
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5.Market Survey of Nokia: The following market survey was done through Google form maker and it was done online , the objective of the market survey was to find out the market and the brand loyalty of the nokia in the market.Sample size – 30
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