Market Positioning Case Study: How Nokia Fell from Number 1

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Last week, the world found out that Samsung surpassed Nokia for the top position in the global handset market in the first quarter of 2012. The Korean company shipped 93.5 million handsets in the first quarter for a 25 percent share of the market, even as global handset shipments grew a little over 3 percent annually. In contrast, Nokia's handset shipments were down 24 percent year-on-year to 82.7 million units, giving it a 22.5 percent share.¹

According to market research firm Strategy Analytics, only 14% of Nokia’s shipments were smartphones, in contrast to 34% for Samsung. This marks the first time since 1998 that Nokia has not been number one in the cell phone market.

Ouch.

I’LL HAVE THE TROUT

In their classic 1981 book Positioning: The Battle for Your Mind, Al Ries and Jack Trout describe how positioning is used as a communication tool to reach target customers in a crowded marketplace. The easiest way to get into someone’s mind is to be first; nobody remembers second.²

Nokia Who?

Ries and Trout go on to list a number of things a market leader should do to maintain leadership position. One point in particular stands out:

■Change is inevitable. Leaders must embrace change rather than resisting it. When a new technology opens up the possibility of a new market that may threaten the existing one, a brand leader should consider entering into the new market so it will have first-mover advantage in it.² Apparently, Nokia Chairman Jorma Ollila wasn’t fond of trout (sorry, couldn’t resist).

Looking at product mix of both companies over the past few years, Samsung growth was almost entirely in the smartphone segment, whereas Nokia went the opposite direction. As a percent of total, Nokia has shrunk its smartphone business from a peak of 24% in Q3 2010 to 14% last quarter. In the same time frame Samsung’s smartphone share of portfolio has exploded from 10% to nearly 50%.³

A look at global smartphone shipment data tells a similar story....
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