Nokia Product Differentiation

Topics: Nokia, Mobile phone, Smartphone Pages: 6 (1940 words) Published: November 20, 2011
History of NOKIA
The name NOKIA comes after the Nokia River in southern Finland, next to which the original Nokia wood pulp mill was located. The first Nokia century began with Fredrik Idestam's paper mill on the banks of the Nokianvirta river. Between 1865 and 1967, the company would become a major industrial force; but it took a merger with a cable company and a rubber firm to set the new Nokia Corporation on the path to electronic. In 1967, all 3 companies merged-up to form the NOKIA Group. This NOKIA Group provided work for 460 people. The first handheld mobile phone was launched 1987, this phone was called Mobira Cityman. In 1992 NOKIA made a crucial decision; to focus on telecommunications and move out of its other businesses. Nokia's core business was now: manufacturing mobile phones and manufacturing telecommunications systems.

Porter´s 5 Forces
Porter´s 5 Forces analysis is done to understand the industry attractiveness of the smartphone industry. Threat of entry
Easy entry for firms with background in production of technology. (Sony-TVs, Apple-computers) Supplier Power
Software and Hardware provider(Moderate): There are so many suppliers for software and hardwares and hence the bargaining power is low. Substitutes
The power of substitutes is moderate and it actually depends on the impact of substitute products. Smart phones do wide variety of functions so any product that specialize In one of those individual functions can also be termed as a substitute. Buyer power

Buyers bargaining power is high because of the following reasons: * More choice of products and very limited differentiation of those products * Elastic demand- demand is highly sensitive to economy

* Less asymmetric information-buyers have all the required information * Less switching costs: This depends on the country and type of mobile plans provided by the service provider Rivalry
* Rivalry is intense among existing players
* The differentiation in terms of product features are getting diminished; however players are continuing to differentiate their products in terms of applications and service offered * Exit barriers have to be evaluated in correlation with value chain analysis

From the analysis of the Porter’s diamond, we have seen that Nokia is competing in Monopolistic competition market. The industry is characterized by a large number of firms that attempt to differentiate their products and maintain a certain degree of control over their pricing. The firms produce almost similar products, with the difference in quality and prices. In general, monopolistic competition is characterized by relatively low barriers to entry and exit.

What Does Product Differentiation Mean?

By product differentiation is considered incorporation of certain attributes which make a specific product more desirable and different for buyers. There can be a variety of differences, such as benefits, price, styling, service, quality, etc. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a competitive advantage for the seller, as customers view these products as unique or superior.

Product differentiation can be achieved in many ways. It may be as simple as packaging the goods in a creative way, or as complicated as incorporating new functional features. Sometimes differentiation does not involve changing the product at all, but creating a new advertising campaign or other sales promotions instead. In a market with highly differentiated products consumers cannot know all of the competing products varieties or their prices. Here, the importance of appropriate advertising becomes important due to the fact consumers will often make their purchasing choices based on the information which firms make available with regard to the product. We have made an analysis and have compared some of the best known...
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