Nokia_Report

[pic] NOKIA Group Project Marketing Planning Aastha (08PGHR01) Sakshi Sehgal (08PGHR02) Ajeeta Kahale (08PGHR03) Amit Arora (08PGHR04) Amit Sanghvi (08PGHR05) Word Count: 1940 Introduction The project report studies Nokia's marketing strategies and consumer behavior as the No1 player in mobile headset in India as well as the world. The focus is on Nokia in the Indian market. In the past one decade, Nokia has emerged as one of the most recognized brands in India, surpassing some of the Indian business conglomerates in terms of revenues. It was awarded as “MOST TRUSTED BRAND” by Brand Equity in the year 2008. The mobile sector has grown from around 10 million subscribers in 2002 to reach 150 million by early 2007 registering an average growth of over 90% YOY. The two major reasons that have fuelled this growth are low tariffs coupled with falling handset prices. In recent time India has surpassed China in terms of number of new connections that is being added yearly. The other reason that has tremendously helped the telecom Industry is the regulatory changes and reforms that have been pushed for last 10 years by successive Indian governments. According to Telecom Regulatory Authority of India (TRAI) the rate of market expansion would increase with further regulatory and structural reforms. Even though the fixed line market share has been dropping consistently, the overall (fixed and mobile) subscriber has risen to more than 200 million by first quarter of 2007. The telecom reforms have allowed the foreign telecommunication companies to enter Indian market which has still got huge potential. International telecom companies like Vodafone have made entry into Indian market in a big way. Currently the Indian Telecommunication market is valued at around $100 billion (Rupees 400,000 crore) 1. # 1: "Indian Telecommunication story: from 10 million to 150 million mobile subscribers in 5 years.” By Arun was published on June 19th, 2007 and is listed in Business, India, Indian, consumer, fact file, infrastructure, internet, and telecommunication. # 2: Q1 2008 Quarterly results. Nokia Corporation (2008-04-17) SWOT Analysis: |Strengths |Weaknesses | |High quality Product |High Price | |Product Warranty Worldwide |High Dependence on Volume | |Fashionable product |Low no. of innovations lately | |Wide range of Product |Modest presence in CDMA market | |Ability to quickly learn from past mistakes |Mostly “candy bar” models. | |Manufacturing Plants in India | | |Opportunities |Threats | |Availability of large consumer market in India. |Strong and Smarter competition | |Mobile phones becoming a multipurpose device. |Demanding customers | |Mobile becoming a necessity. |Low profitability in low cost handsets. | |Lowering of tariffs. |Low presence in touch screen segment which is gaining popularity. | 3 Strengths: 4 1) High product quality: Nokia concerns about product quality, which is the most important factor to satisfy customers’ needs. The durability tag associated with the NOKIA brand has no match in the market. Mobile sets like 3100 and 1100 have penetrated the Indian market with its durability as one of the primary selling point. Also the high performance of the Nokia N Series put the faith of the Indian public to new high. 2) Fashionable product (serve new trend) “The rise in number of users by 700 million in a little over three years will be driven by a huge rise in the number of young style –conscious users” (Nokia, 2002). That is the reason why they have to serve for young people who use their mobile for text messaging rather than phone call. The music phone series introduced by Nokia through the models like Nokia 3250 and 5200 series also became a fashion statement amongst the Indian youths. The introduction of E Series phones for the business class made the professionals to carry their work on sleek and smart. 3) Wide range of products Nokia has the highest number of product line compared to its competitors (more than 10 models) accordingly; it covered every class of people in India. Nokia 1100 and 1110 series caters the need of mobile of the low class public, while N Series caters to a richer class people. Thus catering all range of people in the society, Nokia has truly managed to stand on its tag line ‘Connecting People’ 4) Product warranty worldwide Nokia is in the first place in terms of market share in India. No matter where Nokia’s customers are, if they got a problem from Nokia’s mobile phone. It’s this belief of the customers in India specifically that has created the brand value of the company. Customer Cares of Nokia are so common in any city of India, that people prefer Nokia over other brands. 5) Ability to quickly learn from mistakes Recently it has roped in Mr. Shahrukh Khan, a famous Bollywood personality to be its brand ambassador. Its advertisement `dus saal se aapka saathi ` is being aired across all major TV channels during prime time. A part of this can be attributed to the fact that Motorola had Mr. Amitabh and Mr. Abhishek Bachchan as its brand ambassadors for quite sometime. Lately, it has entered into strategic partnership with major service providers like Airtel in India to provide handset for their new customers. This was not a policy of Nokia and it imitated this seeing the success of its competitor Samsung and LG which has been a major partner of Reliance in providing handsets to its customers. 6) Manufacturing Plant in India To cater to Indian market it has set up a manufacturing plant in Chennai which has further reduced its production cost due to availability of cheap labour and close proximity to market. This has further decreased its turnaround time from three weeks to one week as far as Indian market in concerned. Weaknesses: 1. High price Nokia has highest price in a few types of its products. Nokia has to continue using a cost leadership strategy. By initially cutting its prices, it would be able to regain its market share and volumes to sustain economies of scale and its cost advantage. 2. Low Number of Innovations lately Nokia has been lately been merely improving its present models. It has not been having any innovation unlike its competitors who are making innovations in the camera phone and PDA phone segment. These problems have mainly arisen because of poor anticipation of future trends and customer preferences. It has to address these issues by thinking and acting smarter. 3. High dependence on volumes Nokia works on the basis of low profit margins and high volumes. Therefore its profits are highly dependent on the number of cell phones it is able to sell. With increasing competition, the sales are getting affected. Thus its profits are getting affected. Such a strategy is very hard to replace because the company cannot increase the prices of its products overnight. Therefore Nokia is in a terrible fix because of its dwindling sales. 4. Only modest presence in the CDMA market Nokia was too late in realizing the potential of the CDMA market in India, as it did not come out with CDMA phones until Reliance had become a hit in the local market. Till then LG and Samsung had made a significant presence in that market and had tied up with all the major service providers in the CDMA market. This weakened the market share in India. 5. Mostly “candy bar” models Most of the NOKIA models are flat “candy bar” models that are rectangular in shape. They couldn’t come up with good “clampshell” models which have been great hits for Samsung and Motorola. Opportunities: Availability of large consumer market in India. The mobile sector has grown from around 10 million subscribers in 2002 to reach 150 million by early 2007 registering an average growth of over 90% YOY. It is likely that this growth rate will sustain in the future. 1. Cell becoming a multipurpose device Cell phone these days is not just a communication device. More is being put into cell phone like camera, music players, picture gallery, internet surfing, navigation systems. All these new utilities that have been put into cell phone leading to an increase in demand. 2. Mobiles becoming a necessity In recent years, time is specific in rush hours. As a result of this, mobile phone has become a popular device for everybody in the world now. The rural penetration in India is still only 1.7% and there is a huge market which still needs to be catered to. (TRAI Report) 3. Lowering of tariffs It is likely in near future that additional spectrum will be allotted to telecom players in India, which will help in lowering of tariffs. This scenario will fuel the demand for cell phones. Threats: 1. Stronger and Smarter Competition Major market in India and the world are having more and more player in the mobile handset sector. Traditional competitors like Motorola, Sony Ericsson, Samsung, LG etc are putting in a lot of efforts to capture the market share of Nokia. Their major strategy is to beat Nokia in creating more innovative mobile sets at comfortable rates. 2. Demanding customers The competition in the Indian mobile market is increasing drastically with each passing day, with every customer coming out with its own range of products and services for the consumers. In this scenario, the consumer taste gets changed almost daily by a new service being introduced. Thus, it’s tough to live up to the consumer's expectations and forecast their preferences. To keep up sales this factor can be a big threat, since if demands of the consumer are not met, the consumer may move to a competitor offering the desired services. 3. Low profitability in low cost handsets Profit margins in entry level handsets, which are the highest sales segment, are extremely low. Also LG is providing a fierce competition to nokia in this segment in India. 4. Low presence in touch screen segment which is gaining popularity. Various touchsreen models like that of Apple, HTC are increasingly gaining popularity. Nokia has low presence in this segment. PEST ANALYSIS |Political |Economic | | | | |Taxes and Duties Structure |High Indian Economy Growth rate | |Allocation of addition spectrum |Growing Indian middle class population | |Social |Technological | |Higher disposable income |The touch screen technology | |Cell phone as necessity, not luxury |Navigation systems | |Large immigrant population |3G technologies | |Favorable demographics- majority population under 30 yrs |Newer operating systems | Political factors Indian political environment is very supportive for growth of handset industry. The government abolished 4 per cent special additional customs duty, which made cell phones cheaper. However, Indian government has not been able to formulate the policies regarding the allotment of 3G spectrum which they have taken from defense. Hence, the lack of implementation means brakes on 3G expansion plans of Telecom companies and low sales for 3G handset. Nokia being the largest handset player will definitely get affected by this. Economic factors Economic factors are favorable for handset manufacturing companies. Indian economy is growing at a rate of more than 8 % which has brought prosperity in lives of many Indians. Hence this macroeconomic setup is conducive to growth in demand for cell phones. The teledensity in India was estimated to increase to 18.2% by March 2009, with mobile subscription rising to 148.77 million by that time. All these economic factors augur well for Nokia. Its global device market share was about 39% in Q1 of 2008, up from 36% in Q1 2007 and down from 40% in Q4 2007, predominantly because of good performance in Indian market. Socio-cultural factors Demographics of India are favorable for growth of telecom handset companies, reasons for this being • Higher disposable income. • Cell phone being viewed as a necesicity rather than a luxury. • Large scale immigration within the country. For example, people going away from their homes buy cell phones to stay connected to their family members. • Large population under 30. India’s 60% of the population is under 30yrs. Young generation wants change and newness. They go in for new models of cell phones, thereby increasing its sales. Technological factors The touch screen technology- The most successful handsets in prenst market scenario are the ones with touch screens. Apple’s I phone is a good example. A lot new technologies are developed in touch screen field. Navigation systems- the most advanced cell phones come with navigation systems which displays the phones position on map of location. 3G technologies – newer technologies which are more advance to 3g technology are being developed which provides better data transfer speeds enabling various applications like steaming video downloads, television on cell phones. ----------------------- NOKIA SWOT Matrix ----------------------- NOKIA