Whilst there are many marketing issues that have caused such sharp reduction in Nokia's product sales and profitability, ‘lack of product innovation' in single most imminent factor that has compromised market share and leadership position of Nokia. Nokia was the first one to launch Smartphone Nokia 7710 and remained a market leader for long. But with the introduction of Apple's iPhone and Samsung Galaxy, the net sales of Nokia Smartphone and other mobile headsets has decreased manifold. In FY 2012, Nokia reported having got its net sales of Mobile handsets and Smart Devices decreased by 32% and 52% respectively (Gassee, 2012).
Marketing Problem Nokia
Marketing problem: Lack of product innovation
Current marketing environment of Nokia
Marketing Problem Nokia
Nokia Corporation is a Finnish company that manufactures mobile phones, mobile computers, and networks. The company also provides services such as maps and navigation, music, media and software solutions for mobile phones. From late 1990s to late 2000s, Nokia remained the highest mobile selling company of the world. This however has changed recently and many other companies have effectively reduced the market share of Nokia. There are many causes of this decrease in global mobile sales share of Nokia however; one marketing issue has caused this downward journey more than others. The company reported having negative € 2.3 billion of operating income in FY 2012 whereas net income of the company was also reduced to -€ 3.1 billion in 2012 (Nokia Annual Report, 2012). Although Nokia was the first company to have launched Smartphone Nokia 7710, the company's dominant position has also been significantly compromised in this market segment as well. Currently the company is manufacturing Nokia Smartphone with Microsoft Windows as default operating system (OS). The likes of Apple and Samsung have reduced the appeal of Nokia Smartphone. In traditional mobile phones industry, indigenous Chinese brands have significantly reduced Nokia's market share globally. Net sales, operating profit, net cash from operating activities, Smartphone net sales, and Mobile phones net sales have decreased in FY 2012. In section II, detailed description of Nokia's main issue in planning and executing its marketing strategy will be presented. Part III of this paper will analyze current marketing environment of Nokia along with description of current trends, competitors and major stakeholders. SWOT analysis will also be presented in the same section followed by conclusion and recommendations.
II- Marketing problem: Lack of product innovation
Whilst there are many marketing issues that have caused such sharp reduction in Nokia's product sales and profitability, 'lack of product innovation' in single most imminent factor that has compromised market share and leadership position of Nokia. Nokia was the first one to launch Smartphone Nokia 7710 and remained a market leader for long. But with the introduction of Apple's iPhone and Samsung Galaxy, the net sales of Nokia Smartphone and other mobile headsets has decreased manifold. In FY 2012, Nokia reported having got its net sales of Mobile handsets and Smart Devices decreased by 32% and 52% respectively (Gassee, 2012). With lack of any real product innovation, Nokia has got its average selling price (ASP) of its handheld mobile sets decrease by more than 18% in 2012. Huawei and ZTE are two of the cheaper Chinese alternatives of Nokia Smartphone in market. The lack of differentiation in Smartphone category is also indicated by the fact that Nokia relies on Microsoft for providing her with OS for Nokia Smartphone. The Windows 8 OS is currently in use in the Nokia SP. The only innovation that Nokia launched in its Smartphone Lumia 1020 was a 41-megapixel camera (Ewing, Moritz & McMahon, 2013). Consumers are unlikely to pay higher prices for Nokia phones only because of better camera.
III- Current marketing environment of Nokia
The current marketing environment of Nokia is highly competitive and dynamic in accepting new changes in product designs as well as product features. Nokia currently operates in a market in which the company highly depends on OS supplier (Microsoft). The company initially removed Symbian as the OS of Nokia phones. The number of competitors in Smartphone category and other handheld mobile set categories has increased significantly. While Apple and Samsung pose significant threat in Smartphone category, ZTE, Motorola, Sony Ericsson, and Huawei have captured significant market share of Nokia in traditional handsets market. The threat of buyer's increasing negotiating power has also caused the company to decrease ASP of handheld mobile sets. The increased rivalry within mobile manufacturers, specifically those manufacturing Smartphone has also caused drop in market share and profitability of Nokia. Following is a SWOT analysis of Nokia.
Strengths
Weaknesses
One of largest mobile phone manufacturer & Distributor
Manufactures User friendly handsets
High resale value of Nokia handsets
Lack of product innovation
Lack of consistency in Operating System (OS) for Smartphone (First Symbian & then Windows software as OS)
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