Marketing Strategy for Motorola

1.2 Emerging Markets: China and India:

In recent years, China and India, the fastest emerging markets, have grown as favourite markets for telecom equipment makers.

China’s mobile market grew at the highest and remained the largest in the first half of 2006 according to China Electronics News.

India currently adds nearly 5 million new mobile phone users every month. India’s major carriers such as Bharti, CDMA-operator Reliance Communications Ltd. and state-run Bharat Sanchar Nigam Ltd. have annual expansion plans exceeding USD 1 billion each.

Asia Pacific handsets sales reached 67.9 million units in the second quarter of this year, up 5.4 percent from the previous quarter. (SDA India n.d.)

2. Company Background

        Motorola was founded in 1928 in the USA and was the market leader till 1998, when Nokia pushed Motorola to 2nd position (Nokia 1998). It has got a strong position in home market as well as in Europe, Asia, Africa and Middle East. Motorola builds and markets products, services and applications enabling connectivity, information and entertainment through broadband, embedded systems and wireless networks.  The company operates through three main divisions:  mobile devices, network and enterprise and connected home solutions.  (DataMonitor, 2007).

2.1 Company Mission and Vision:

“Organization’s role, business definition, distinctive competence, and future indications  The Mobile Devices segment is focused on profitable and sustainable growth while maintaining a strong commitment to quality and a unrelenting focus on technology and innovation.  A central theme to Mobile Devices strategy is our vision of seamless mobility enabling our consumer to experience a simple, rich and compelling experience regardless of environment, device or network.”  (Motorola Annual Report, 2006)

3. Situation Analysis:

3.1 Market Demand:

The study by Gartner shows that the shipments of mobile phones in general will surpass 1 billion units in 2009. As for the entire Asia/Pacific segment of the mobile phone market, it represents 25 percent of the worldwide market today, Gartner says, predicting that this will increase to 33 percent by 2009.(windows for devices, 2005)

3.2 Customer Analysis:

Buyers tend to be wealthier individuals who are willing to pay more for a better phone.  They have higher expectations than those who are first time buyers.  Motorola is creating new ways to use multimedia communications, which creates new business opportunities.

3.3 Competitive analysis:

Direct competitors - Nokia, Sony Ericsson, Samsung, Siemens

Indirect competitors - Walkie-talkies, PDA’s

3.4 Competitive position:

Motorola accounted for 13 percent of the phones sold to end users in the third quarter, i.e. in 2007, down from 21 percent in the same quarter last year”, Gartner said. At the same time, Samsung increased its share to 15 percent, while Nokia extended its lead at the top of the pack, accounting for 38 percent of the market, or more than one in every three mobile phones sold. Gartner said. At the same time, Samsung increased its share to 15 percent, while Nokia extended its lead at the top of the pack, accounting for 38 percent of the market, or more than one in every three mobile phones sold. (James, 2007)

3.5 Performance Metrices:

Motorola’s main business driver in 2006, accounting for 51% of net sales, is the mobile services segment, which includes wireless handsets. (Wikinvest, n.d.) Motorola is the third largest worldwide supplier of wireless handsets. Motorola has a huge customer base, and the loss of any one of these customers could have an adverse effect on the company’s performance.

4. Applying Porter’s Five Forces Model:

5. SWOT analysis:

6. Critical Success Factors:

By analysing Strength and opportunities, we can derive the key success factors as:

• Recognition of Motorola Brand.
• Market potential especially in emerging countries.
• Motorola’s R & D capabilities in innovating new products.
• High quality products at low cost.

7. Marketing Problem:

• The mobile Phone division was facing major difficulties with sales which resulted in losses.
• The new models introduced weren’t selling at the level that company needed.
• Ranked down to third position.
• Competition from new players.

8. Strategic Marketing Framework:

According to Philip Kotler, "Marketing is not the art of getting rid of what you have, but of creating genuine customer value."

Motorola which is now staggering in failure should realize that new markets do not mean the same thing as good marketing. Having gained a customer, their first thought is how to keep that customers through his next purchase, and thereafter...forever. In a competitive world someone will always come up with a better product for customers, and that someone had better be you.

8.1 Offensive Strategy: Improve Competitive Position:

Offensive strategies can range from growing the competitive advantage and market share in existing product-markets to entering a new market with no established share position (Best, p 355, 2005).  Motorola should embark on an investment to improve competitive position as it already has presence in emerging markets such as China and India; however, it needs to increase its revenue.  

Best (p 363-364, 2005) states the following core components of an offensive core strategy to improve competitive position as:

• Improve Customer Loyalty and Retention
• Improve Differentiation Advantage
• Lower Cost/Improve Marketing Productivity
• Build Marketing Advantage

Among these three Motorola seems to be consistent in applying 1st and 3rd but, it has to work mostly on differentiation advantage.

8.2 Improve Differentiation Advantage:

From the case study, we can clearly see that Motorola is basically looking into ,Cost leadership strategy, which alone is not giving any advantage to it, as the competitors are getting a competitive advantage over Motorola by differentiating their products at the same price.  

While coming with a new product, Motorola should always consider the Kano Method, which can be used in marketing to discover which product features drive customer satisfaction and which cause customer dissatisfaction as well as to identify new product features and features that could be eliminated.

                                            Kano’s Model

                                                                                              Source:http://en.wikipedia.org/wiki/Kano_model

Another way is to apply knowledge as a source of advantage in getting a competitive advantage

Using Oblique Strategy: It means leveraging a knowledge advantage with respect to customers and competitors by having:

• Extensive Customer knowledge                                    
• Extensive Competitor knowledge

The goal of an oblique strategy is to gain market share and customers in a way that minimizes competitor response but achieves the desired marketing objective. It can include subtle but important product innovations, improved products and/or service quality, new marketing channels with more efficient supply-chain customer benefits.

9. The Marketing Mix of Motorola

In order to turn the headset division of Motorola profitable, these are the key marketing strategies identified.

• The products should be stylish and in with the current trend and technology. One of the noted trends is the ‘only touch screen’ mobile handsets, with the advent of iphone from Apple and a phone from the LG-Prada tie-up. (Ward, M, 2007). If the emerging markets of China and India are focused, then style would play a major role as the Indian and Chinese consumers are mostly young adults with an increasing amount of disposable income and they look for brands which are fashionable, especially the case in China (McEwen, W, 2006).

• A key point is that the handsets should be user-friendly, no matter what the technology platform used. It should be similar to the major rivals’ mobile browser windows so that a customer shifting loyalty could also use it with ease.

• Product should also be differentiated according to pricing. With heavy competition cutting down on the profits, Motorola should look into new markets using the penetration pricing technique, such as the poor customers and design cheap phones and create a new market segment, like what Nokia did in India with their Nokia 1130 mobile which was a dust proof phone with a torch.

• Product bundling of mobile phones, like, Nokia and Sony Ericsson. Bundling their mobile phones with the technology developed for walkman and camera. E.g. Sony Eriksson’s’ K series and Nokia’s N series. Apples’ new i-phone is a very good example of a complete bundle, i.e., music, wi-fi, videos etc.

• Product differentiation could be done on the basis of the respective bundling; if it focuses on music player then it should be placed in a separate category from the handset which has camera as its speciality.

• According to Andrew Morley of Motorola, the emphasis is to be given to direct marketing and customer relationship management (CRM). (Motorolas momentum, 2007). Also, promotion should be through digital and mobile marketing channels according to Morley.         

Morley identifies mobile marketing as a link between traditional and online marketing environment (Motorola’s momentum, 2007) and hopes to engage the customers to increase brand loyalty, which is a good strategy but care needs to be taken to avoid invasion of privacy.

• “A key part of brand development is making your brand more instantly accessible in memory and that’s what product placement does.”(Sutherland, M, 2005). So, placement should be utilised in the digital media to make a mark on the customers psyche. Also, strategic placement of advertisements in online games to target teenagers. Again the company needs to draw a line on ethical grounds as to not invade the consumer’s privacy.

The product needs to be placed strategically in such a way that customers treat it as a status symbol and a fashion statement. This could be done by direct marketing in mega malls and boutique shops, to improve the brand image.

They should endorse local film stars and athletes for their products and not go for international stars, which the local people wouldn’t be able to relate to.

 

• Physical settings of the showroom should be trendy and modern to give the general impression of the brand. It should not just confirm to the assumptions of the consumer but also delight them. The mobile phones should also be placed strategically such that the best phones should be in the front and the cheapest at the back.

• The employees dealing with the customers should be given special training as to how to be presentable, pleasing, and well-mannered and how to handle the customers efficiently. The training would set a certain standard across all outlets and increase the consumer satisfaction.

10. Conclusion:

Thus by applying the above strategies, Motorola can gain competitive advantage over the others by focussing more on their models.

11. References:

IT Facts n.d., Global mobile market in Q1 2007, retrieved on January 3, 2008, 2008, from , web page

Global mobile market n.d, retrieved on January 3, 2008, 2008, from

, web page.

SDA India n.d., Retrieved December 3, 2007, from , web page.

Nokia. 1998. Press Release, Retrieved January 3, 2008, from , web page.

DataMonitor (2007) “Motorola, Inc.” Company Profile. Retrieved on January 4, 2008, from , web page.

Motorola Annual Report (2006), Retrieved on January 4, 2008 from  , annual report.

James. N, 2007, Motorola slides to third in mobile phones, Retrieved on January 4, 2008, from  web page.

Windows for devices, 2005, Retrieved on January 4, 2008, from , web page.

Wikinvest, n.d., Retrieved on January 4, 2008, from , web page.

McEwen, W. (2006) “Inside the Mind of the Chinese Consumer,”  Harvard Business Review, Journal

Motorola’s momentum, 2007, retrieved on January 4, 2008, from , web site

Ward, Mark, 2007- ‘Muscling in on the mobile market’, Retrieved on January 4, 2008, from , e-news

Sutherland, M, 2005 – ‘Why product placement works’ Retrieved on January 4, 2008, from  ,web site

White, B, 2007, Will Greg Brown Rescue Motorola, Retrieved January 3, 2008, from

, website.

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