3.2 Market Share of the major players
Mintel's report estimates for mobile phone brand shares by volume and manufacturer for the period 2000-02. These estimates are based on feedback from key players within the industry, including retailers, manufacturers and network providers.
Estimated mobile phone handset brand share, by volume, 2000-02
The data suggest that the market is consolidating. The top six providers of mobile phone handsets were together responsible for an estimated 92% of volume sales in 2002, compared to 83% in 2000. Nokia remains the market leader; having increased its share significantly during 2001, although is estimated to have retained its 52% share in 2002.
Siemens share has been rising from 6% to 11% over the review period. The German company's strategy has been to focus on the UK,
Samsung has also experienced significant growth over the review period. The company's meteoric rise in market share illustrates the success of its clam-shaped handsets with colour screens.
Ericsson - in order to maintain its foothold in the industry - linked up with Sony in 2001, and thus maintained its share over the past two years.
3.3 Trends in the Market
Due to the decrease in handset sales, manufacturers believe third generation (3G) phones are the only way forward, based on the popularity of WAP, MMS and Universal Mobile Telecommunications System (UMTS), which enables consumers to undertake a vast range of communication tasks and multimedia activities such as downloading music. However the 3G technology has yet to make significant impact on the market as previously predicted.
Manufacturers are therefore continuously investing heavily in research and development and new technology to encourage existing customers to continuously upgrade their handsets generating more demand and market growth. This is not aimed to generate more revenue that is left up to the increasing use of content services such as instant and picture messaging, games, ring tones, mms, and internet access.
4. Ethics
Nokia is strongly committed to the highest standards of ethical conduct and complies with all laws. For example it believes in fair competition, corporate governance, preventing bribery, illicit payments and corruption, publicly traded securities, safety in the intended use of the products and services Nokia delivers to customers, labour laws and practices, the environment, human rights laws and internationally recognized standards, and protecting copyright, company assets and other forms of intellectual property. Nokia’s goal is to be an industry leader and have best corporate citizenship.
Human rights are promoted (freedom from any discrimination based on race, creed etc...) and no child or forced labour is used. Nokia promotes team work, and avoids conflicts of interests at work. It continues to invest in the promotion and growth in the employees, allowing a safer and secure labour force. Nokia does not use any endangered species for any business purpose and furthermore requests that its suppliers avoid raw material procurement from an origin where there are clear human or animal rights abuse, or the method of procurement or distribution is illegal.
Nokia believes that "Sound company ethics makes business sense by helping minimize risk, ensuring legal compliance, and building reputation amongst stakeholders."
Jorma Ollila, Nokia Chairman and CEO (Nokia.com) it is important for large co-corporations such as Nokia to have an image in society which benefits them in being responsible, so they can integrate programmes in the core of the business. Business in a sustainable way is a prime objective to Nokia. This is needed for a sustainable life cycle, employment, reputation and a steady economic growth.
Nokia believes in minimising risk by acknowledging the companies range of opportunities. Good responsibility has allowed Nokia to bring improvements in risk management, legal compliance, enhanced reputation and improvement in company efficiency issues like productivity, quality and costs. This has made the Nokia brand one of the most valuable in the world so a good reputation is vital in order to keep consumers, employees, investors and network operators. We believe that it makes business sense to look after the markets we operate in, to anticipate risks, demonstrate company values, work at increasing employee satisfaction, enhance corporate governance principles, protect the Nokia brand and build a reputation for citizenship.(Nokia.com)
Nokia is a ‘trusted brand’ this has been enabled by its good reputation. There are many other reasons for which a good reputation is held by Nokia; increased mobility and new marketing opportunities are served by nurturing diverse, innovative teams, catering for accessibility in use of mobile phones. The digital bridging work and developing countries in the market scope; innovative and high-quality products cannot be created without attracting, retaining and motivating employees, and efficient supply chain management; therefore good reputation is helped by, among other things, community involvement. Due to Nokia acting in such manner helps to demonstrate the company’s values, corporate transparency and responsiveness to stakeholder expectation.
Nokia makes a positive difference to the society. By its main strategy of being ‘responsible’ by continuing this they stand to achieve sustainable growth. In the long run, as the World Council for Sustainable Business aptly puts it, "companies cannot succeed in societies that fail". Therefore by wining the society with their products and reputation they stand a chance to continue growth. Nokia believes in following in all code of conduct in order to carry on achieving growth.
5. Internal Marketing Audit: based on Nokia
5.1 Products produced
Throughout 2002, Nokia introduced a total of 33 new products, including the Series 60. The trend continued in 2003 with the introduction the Nokia 6800, a phone which is designed to facilitate easy text messaging, through the incorporation of an integrated full keyboard. Nokia is also developing a range of 3G solutions, including the 7650, 9210 and 92101 phones. These options include full colour display and offer multi-messaging and a variety of smart applications.
Nokia offers entertainment, imaging, games and business mobile devices, as Nokia realises the individual customers needs to mobilise life and business. Nokia phones users in the UK can download Nokia tones, Graphics and Games official website.
As the mobile phone sector continues to be driven by technological enhancements, it is logical to assume that this would have a positive knock-on effect for producers such as Nokia on accessories. The accessories sector has reaped the rewards of investment in 3G and other technologies with Nokia enjoying great returns. Bluetooth headsets, for instance, are proving to be a highly marketable as it is now illegal to drive whilst holding a handset, their popularity is likely to increase as there are promoted. Additional technology offered by Nokia also include: GPRS, MMS, mobile commerce, mobile streaming, symbain, symcML, WAP and wireless LAN.
5.2 Pricing Structure
Nokia’s pricing structure like most technological advancing produces in demand opts towards a market-led pricing strategy. This enables Nokia to set high prices, which indicates the phone’s value to consumers. Nokia also adopts a price skimming strategy, which allows Nokia to attract different segments in the market (according to social class/disposable income) as the price progressively falls.
However an ethic issue may arise if Nokia misleads consumers by setting high prices for a short time so that much “lower” sale prices can be claimed, known as deceptive pricing (Jobber and Fahy p 172), this gives the consumer a false sense of value.
5.3 Places Sold/Distribution
A wide range of mobile products is sold through a national network of expert distributors that numbers several thousand retail outlets. Nokia provides three methods of distribution: Nokia Concept Stores; exclusively dedicated to Nokia phones, mobile enhancements, ringing tones, graphics, games and software, exclusive merchandise - plus expert customer service for all your buying, repair or recycling needs. Nokia Shop-in-Shops e.g. The Carphone Warehouse and Phones4u who have special Nokia department for specialist advice and support on the complete range of Nokia mobile phones, personalisation and merchandise. (Nokia.com) Purchasing via the Internet.
The diverse distribution of mobile phones, both on the high street and via the Internet, makes distribution in this market particularly competitive.
Selling mobile phones over the Internet is a logical step, given the focus on offering improved technical solutions, which will appeal to more technically-minded consumers. The target audience of 3G phones, for example, is likely to comprise a high proportion of Internet users. The trend to buy mobile phones over the Internet would also reduce expenditure on outlets and prove to be more economically friendly.
5.4 Promotion and Advertising
In response to a decline in new handset sales and to intensifying competition, Nokia devoted more resources to advertising and promotion in 2003 compared to 2002. Indeed, total expenditure on above-the-line advertising increased by nearly 10% in 2003.
The extent to which Nokia has promoted its products and services over the past few years mirrors many of the issues that have affected its progress. As the market nears saturation, Nokia has had to adapt their marketing strategies. Thus, the focus has shifted away from targeting new customers and onto encouraging existing customers to upgrade.
Lack of investment into advertising arguably leads to the failure of capturing consumer’s attention; this is evident by the disappointing popularity of WAP.
Therefore Nokia’s advertising expenditure is likely to continue to increase in 2003/4 with the launch of 3G phones, as the benefits of upgrading to these enhanced models are presented to the consumer.
10. References
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David Jobber and John Fahy (2003) Foundations of Marketing McGraw-Hill Education
