Market/Industry Analysis - Market Characteristics - Nokia.

University Degree Business and Administrative studies

Market/Industry Analysis

Market Characteristics

Nokia is one of the largest telecommunications companies in the world and has built a strong reputation to prove this. Initially Nokia only mainly produced mobile phones and assessories for them, however as the business grew it saw a demand for network infrastructures within organisations and thereafter began to provide that service. In the later part of 2000 Nokia once again diversified this time manufacturing digital set-top boxes which when purchased at a one of price gives the customer a further 50 channels from all around the world for no extra cost.

Other companies in the market include Ericsson and Sony who have recently merged and become one company called Sony Ericsson, which at the moment is Nokia’s major competitor. Motorola, Samsung, Panasonic and Sharp are not too far behind in terms of producing hi-tech mobile phone handsets.

“Nokia achieves excellent profitability in the first quarter and mobile phone volumes grow faster than market”.

Market Potential

During the first quarter 2003, Nokia were pleased to see mobile phone market volumes growing year on year for the fourth consecutive quarter, rising by 10% to approximately 98 million units. Nokia's own volumes grew by 13% to around 38 million units, marking faster-than-market growth. Again, profits in their mobile phone business exceeded expectations, rising 9% on very healthy margins of 24%. With this strong performance from the mobile phone segment, they succeeded in substantially reducing the impact of difficult operating conditions in their network infrastructure business and were able to post solid overall first-quarter results.

Results clearly show that the mobile phone market is going from strength to strength and thus seems that it will continue to do so. However with the network infrastructure business not doing as well, manufacturing a new product will be a risk but not implementing such an innovation would be insane.

With the reputation of Nokia and capability of the product it is bound to be a success. Features such as SMS owner alert will notify the owner of the vehicle that his/her or her car alarm has been activated. This device will ensure peace of mind for many car ...

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Consumer Analysis

Nokia to customers means quality and reliability, and if Nokia produced any other product this built up persona would reflect upon it. The SOA will indeed be a useful device and in terms of security as there is no other device which can complete with it.

This product is targeted at the people who proud of their cars, e.g. owners of new cars, owners of modified cars. Or even for people who have the average car but e.g. live or work in high crime areas. Business who carry valuable stock in their vehicles, e.g. when delivering stock, products etc.

However the SOA device has some basic requirements, all owners who wish to purchase the SOA device and service must have an existing security system fitted to their vehicle and also have current subscription to one of the six UK mobile telecommunication networks, (Vodafone, O2, T-Mobile, Orange, Virgin or Fresh). Nokia have made an agreement with these networks that customers will be issued with another SIM (Subscriber Identity Module) card from their existing connection which fits directly into the device and only sends SMS messages. The cost of each SMS sent via the device will be 20 pence as appose to the standard 10/12p messages. This extra cost will allow the networks not to charge an additional line rental fee for the device to be live and roaming.

Competitor Analysis

As mentioned above the current market is highly competitive, but with the patenting of the product it will be sometime before any of the competitors will be able to create a similar device.

At present there is no other product which provides a similar service to the SOA so the whole market is at the mercy of Nokia. Although there are tracking systems out on the market like the Siemens TrakBak II. Nevertheless such devicees are expensive to fit and even more expensive to run as a monthly subscription fee is charged and the driver is only contacted once the vehicle has been driven without the authorisation code being entered. The advantage of the tracking system is that with the satillaite system technology the car can be located once stolen.

So in essence the SOA provides a different type of service as it only sends SMS to the driver when the security alarm had been activated. Therefore it will not be in direct competition with this product however will be able a cheaper alternative to the existing tracker users or potential ones.

However it is not only the phone manufacturers that Nokia needs to be aware of. Other companies who provide car security like Clifford and Toad may want to enhance their security systems by adding on a device similar to the SOA. However this can also be seen as a opportunity rather than a threat as Nokia could work in conjunction with these companies to produce a state of the art alarm system. However this is discussed further in the SWOT analysis.

Distributor Analysis

This is a very important aspect and has to be planned like a military operation in order for the product to be a success. Which areas should the product initially be launched and why. The variables that need to be taken into consideration here are areas with high crime rates, areas with high disposable income, thus meaning people who live in those areas are - not necessarily - but more likely to have more than your average priced car and therefore are more likely to want the device installed in their car. The point made earlier about targeting those owners with modified cars cannot really be determined when initially launching the product as these types of owners are located all over the country.

After comparing