- Today’s telecommunications companies encounter the need to renovate their products due to the increased competition and technological advancements.
- Nokia is a company that operates in telecommunications, networking, and electronics.
- The reduction in operations faced by Nokia previously dictates the need to develop in terms of cellular marketing.
- The key competitors in the field are Apple, Samsung, and Huawei.
- The marketing plan will be prepared, focusing on the comprehensive industry analysis based on Porter’s 5 forces model.
- Industry Analysis Using Porter’s 5 Forces Model
- Porter’s 5 forces model is a useful instrument that allows evaluating a company’s level of competitiveness in a specific market, taking into account both internal and external factors.
- The threat of substitute products is high for Nokia as there is a substantial amount of alternative models that can be selected by customers, and the prices of variants are approximately similar.
- The rivalry among competitors is intense on the market of smartphones since such large corporations as Apple, Huawei, and Samsung provide competitive products. Nokia needs to apply a differentiation strategy to revive and attract more customers.
- The bargaining power of suppliers can be regarded as moderate: a range of companies performing on the smartphones market provides unique and irreplaceable products such as Apple, while others can be easily substituted.
- The threat of new entrants is moderate, and novel companies need to compete to enter the market, which requires essential costs. Also, customers prefer brands and famous products instead of valuing newly established companies, although some of them are open to innovators.
- The bargaining power of customers is rather high due to the convenience of alternatives as customers may choose any similar product, be it Samsung or Huawei, which dictates the need to create long-term customer loyalty.
- Past Product Performance Analysis
- Nokia significantly contributed to the development of the cellular market by producing some breakthrough products in the 1990s.
- 3210 and 3310 are the most prominent models that identified Nokia’s position in the given field.
- The entrance of Apple with its iPhone reduced the sales of Nokia as the former captured the market segment and introduced new product standards.
- In response, Nokia launched the Lumia 800 model yet unsuccessfully, and Samsung became the company that proved to be more effective.
- Lumia 920 model was also met by customers inertly as its competitors’ products were valued more by the target audience.
- Nokia 8 Sirocco is planned to be launched in the future based on the renovation of the previous model.
- The review of the company’s initiatives demonstrates that it strives to present a specific niche product to achieve resurgence. As HMD Global now owns Nokia, it is possible to expect that the overall approach and management strategy will be changed.
- One of the recent successes is the launch of the renovated 3310 model that received positive feedback from customers.
- To remain competitive and aware of the market of smartphones, Nokia should create unique products.
- The previous success of the company should be used as a foundation for renovation since the industry competition is high.
- The power of competitors and substitutions should be given precise attention while planning resurgence.
- The bargaining power of customers was found to be another critical point to take into account as the review of the previous operation of Nokia shows that failures were largely caused by the fact that customers gave preference to competitors.
A Marketing Plan
Nokia Corporation is a Finnish multinational company engaged in communications, information technology, and consumer electronics. It operates through four distinct segments that include Global Services, Ultra Broadband Networks, IP Networks and Applications, and Nokia Technologies. In this connection, the key aim of the company is to provide networking and telecommunications solutions to enterprises, operators, and other related markets.
The success achieved by the company in the future largely predetermined the development of the cellular market, yet the evidence shows that Nokia experiences failure within recent years. The entrance of Apple and the innovative products of Samsung are the key barriers that affect customers’ preferences and, accordingly, sales of Nokia. The current analysis aims to develop a marketing plan for Nokia’s resurgence in cellular marketing due to its overall decline in operations in the previous decade.
Industry Analysis Using Porter’s 5 Forces Model
Porter’s 5 forces model is a tool used for understanding the level of a businesses’ competitiveness within a specific market environment. The tool has been useful for understanding the forces that exist within a specific industry and can directly influence the success and competitiveness of a company (Mullins & Walker, 2013). The fist force developed within the 5 Forces Model, the threat of substitute products or services is substantial when it comes to the market of smartphones and telecommunications.
The threat of substitution is the force that denotes the likelihood of customers to find products or services to do what a specific company does. If a company offers a unique product that has distinct features, customers are less likely to opt for substitutes. Nokia products can be substituted with any other available phone at any time without adding additional costs to customers due to the large variety of other items available. When resurging in the market, Nokia should be aware of the variability of products offered by competitors.
The second force, rivalry among competitors, is intense in the industry. Competitive rivalry is a force that represents the number of strengths that the competitors of a company have. If the quality of the offered by competitors’ products is high and prices are acceptable, customers are more likely to choose them. The high levels of market saturation for the product category of smartphones intensify the rivalry among existing companies due to the lack of differentiation among the products offered by companies.
One of the critical product categories, the smartphone, causes corporations to compete with a large variety of suppliers such as Samsung, Lenovo, Apple, Huawei, and many others. The maintenance of a leadership position in the context of extreme rivalry is linked to offering not only reasonably-priced but also highly-innovative products.
The third force, the bargaining power of suppliers, is not substantial in comparison to the rest of the forces in the industry. Supplier power is a force determined by the extent to which suppliers can increase their prices based on products or services that they provide. In case when suppliers offer unique and irreplaceable products or services that companies in the smartphone industry need to purchase, the supplier power is considered high.
Businesses that supply parts can be replaced; moreover, these suppliers depend on the volume order of companies and their prices during negotiations. The wide range of suppliers that offer cheaper alternatives to parts suggests that the power of suppliers is moderate since there is still a demand for high-quality and expensive parts as seen in the example of Apple products (Montgomerie & Roscoe, 2013).
The fourth power, threats of new entrants, is of moderate level because most customers are loyal to established companies and thus prefer specific brands. The threat of new entry is a power associated with the ease of companies to enter an industry. The barriers to entry are characterized by high costs of setting up a business in a highly competitive market. For Nokia, threats of entry represent neither favorable nor unfavorable characteristics since the company has operated in the cellular market for decades. Instead of new companies, Nokia is threatened by such competitors as Apple or Samsung that have shown higher levels of performance and competitiveness.
Lastly, the bargaining power of customers is very high because the switching costs of choosing competitors’ products are low. Due to the variety of existing options and replacements, customers can choose any product they want. The convenience of different choices prompts consumers to have high bargaining power over the majority of companies, including Nokia.
Brands must ensure that there is a target segment of loyal customers who choose smartphones made by the same company over and over to create stable demand and manufacture new products with their customers in mind. The bargaining power of buyers is a force that should not be overlooked when planning resurgence to the market: Nokia must introduce attractive products that will entice customers.
In sum, the smartphone industry is attractive, and Nokia has opportunities to revive among other corporations. The current situation on the market is neither favorable nor unfavorable to the given company as there are both advantages and disadvantages to its further operation. Nevertheless, the analysis of five forces illustrates that Nokia is quite successful in some areas, and the overall attractiveness of the industry is evident.
While Apple or Samsung remains highly competitive, the position of Nokia is also beneficial as it is famous for customers, which can be used as a competitive advantage. In the view of the past performance analysis and the consideration of Nokia in terms of Porter’s 5 forces model, there is a need to select a model or framework to design a resurgence strategy. One may recommend designing a resurgence strategy according to the framework offered by Carpenter, Gebhardt, and Sherry (2014) that includes four stages: recognize, reinvent, formalize, and maintain. The model suggests that a company should identify the need to change, develop a vision to connect to the market, make reinvention purposes public and indoctrinate, and ensure cultural maintenance of the new products.
Past Product Performance Analysis
Nokia products are considered one of the most important contributors to the development of smartphones as a segment. Very few companies in the industry have the story’s capacity for transforming and developing new technologies as well as adapting to the changes in market conditions. In the mid-1990s and onward, Nokia produced several landmark products that captured the international market (Curtis, 2013).
One of the most successful mobile phones in history, 3210, sold 160 million units, which prompted the issuing of 3310 which is widely acclaimed even today (Curtis, 2013). The emergence of Apple to the smartphone market in 2007 presented a significant challenge for Nokia since the iPhone captured the target segment of consumers who had previously chosen Nokia.
To adapt to the demands of customers who became interested in smartphone operations, in 2011 Nokia’s executive Stephen Elop announced a strategic partnership with Microsoft to create flagship items based on Windows mobile operating system (Curtis, 2013). However, the launch of the Lumia 800, the first Windows phone made by Nokia did not do successfully despite the company’s efforts to capture the high-end smartphone marketplace.
Briefly after Lumia’s introduction, Samsung overtook Nokia as the largest producer of mobile phones. This resulted in Nokia issuing its third profit-warning ant cutting 10,000 jobs in its mobile division. To keep up with the growing competition, the company launched the Lumia 920 as a flagship phone operating through Windows Phone 8. The product was not received well due to Samsung and Apple have captured a significant share of the market. Subsequently, Nokia cut more jobs and outsourced some departments. In 2013, Microsoft announced its plans to buy the phone business of Nokia, estimated at $6,22 billion (Curtis, 2013).
A brief overview of Nokia’s previous operations shows that the company experienced significant success in the mobile phone industry. The corporation gave start to the production of innovative smartphones that modern users buy today. However, it is evident that the success of Apple and Samsung, in particular, created a significant barrier to Nokia’s competitiveness and forced the company to limit its operations. Currently, the company is planning to overcome the limitations with the launch of the Nokia 8 Sirocco. It is worth mentioning that HMD Global owns the Nokia brand, which points to a drastic shift in the company’s ownership and its subsequent operations.
The new Nokia 8 Sirocco is the reissued and updated Nokia 8800 Sirocco that was launched in 2006 as the premium version of the Nokia 8800. The Sirocco was the most expensive phone made by Nokia as it offered a covering made of sapphire glass, a steel body, a leather case, as well as a 262K TFT display (Shukla, 2018).
The attempt of the company to make a new version of a unique and niche product produced previously shows that Nokia is striving for resurgence and capturing a significant market share. Nokia also issued an updated version of its iconic product, 3310, which received an overwhelmingly positive reaction (Ranipeta, 2017). However, to reach the same level of success that the company had previously experienced, Nokia must produce innovative products that will be unique.
In conclusion, it should be stressed that the industry of smartphones has the extreme competition between brands, which suggests that most organizations have to struggle to stay relevant and competitive. While Nokia was an iconic brand that produced the most popular phones that were sold in millions worldwide, its current situation in the market is unclear. The power of competitors and substitutions is especially important to consider since it influences the success of all brands in the smartphone industry.
Another issue that is essential to pinpoint is that Nokia’s failures were primarily caused by the high bargaining power of customers since the latter preferred products offered by Samsung, Apple, and others. Therefore, when planning resurgence, Nokia is expected to capitalize on its previous success while also offering new products to potential customers and anticipating their responses to innovative ideas implemented in new models.
Carpenter, G. S., Gebhardt, G. F., & Sherry Jr, J. F. (2014). Resurgence: The four stages of market-focused reinvention. New York, NY: Macmillan.
Curtis, S. (2013). Nokia: A timeline in pictures. The Telegraph. Web.
Montgomerie, J., & Roscoe, S. (2013). Owning the consumer – Getting to the core of the Apple business model. Accounting Forum, 37(4), 290-299.
Mullins, J. W., & Walker, O. C. Jr. (2013). Marketing management: A strategic decision-making approach (8th ed.). New York, NY: McGraw-Hill.
Ranipeta, S. (2017). Nokia 3310’s comeback in a new avatar: How the iconic brand is battling to win the smartphone market. Web.
Shukla, V. (2018). Nokia 8 Sirocco: HMD Global to resurrect one more iconic brand. Web.