Btec Business Coursework
Introduction:
In the following coursework I will be investigating how Nokia market their products and whether these methods of marketing are effective or not. The report will focus on the marketing strategy used by Nokia, how Nokia carry out their market research, market segmentation and other issues relating to how Nokia market products.
The report will identify and research the target market of Nokia and the marketing mix and how these four P's relate to Nokia. In order to complete this coursework I will be using the Nokia website and, books and my class notes. The company I have chosen to base this coursework on is Nokia. In this part of the coursework I will be focussing on the Nokia N91. Also I will be discussing the marketing background of this product.
About Nokia:
What is known today as Nokia was established in 1865 as a pulp mill by Knut Fredrik Idestam on the banks of Nokia rapids. Finnish Rubber Works established its factories in the beginning of 20th century nearby and began using Nokia as its brand. Shortly after World War I Finnish Rubber Works acquired Nokia wood mills as well as Finnish Cable Works, a producer of telephone and telegraph cables. All these three companies were merged into the Nokia Corporation in 1967.
The Nokia Corporation that was created in the 1967 fusion was involved in many sectors, producing at one time or another paper products, bicycle and car tyres, footwear (including Wellington boots), personal computers, communications cables, televisions, electricity production
Nokia's first major mobile phone order came from the Finnish Defence Forces in 1972, for field radios. In the 1970s, Nokia began developing mobile phones for the Nordic Mobile Telephone (NMT) network standard, that went online in the 1980s. Nokia introduced the world's first NMT mobile phone, the Nokia Cityman, in 1987. NMT was the world's first mobile telephony standard that enabled international roaming, and provided valuable experience for Nokia for its close participation in developing Global System for Mobile Communications (GSM). It is a digital standard which came to dominate the world of mobile telephony in the 1980s and 1990s, in mid-2006 accounting for about two billion mobile telephone subscribers in the world, or about 80% percent of the total, in more than 200 countries. The world's first commercial GSM call was made in 1991 in Helsinki over a Nokia-supplied network, by Prime Minister of Finland Harri Holkeri, using a Nokia phone.
In the 1980s, during the era of its CEO Kari Kairamo, Nokia expanded aggressively into new fields, mostly by acquisitions. In the late 1980s and early 1990s, the corporation ran into serious financial problems, a major reason being its heavily loss-making television division. (These problems probably contributed to Kairamo taking his own life in 1988.) Nokia responded by streamlining its telecommunications divisions, and by divesting itself of the television and PC divisions. Jorma Ollila, who became the CEO in 1992, made a strategic decision to concentrate solely on telecommunications. Thus, during the rest of the 1990s, Nokia continued to divest itself of all of its non-telecommunications divisions.
The exploding worldwide popularity of mobile telephones, beyond even Nokia's most optimistic predictions, caused a logistics crisis in the mid-1990s. This prompted Nokia to overhaul its entire logistics operation. Logistics continues to be one of Nokia's major advantages over its rivals, along with greater economies of scale.
The 4 P's:
In this part of the coursework I will discuss marketing strategies. It will consist of the four P's, which are product, place, price and promotion.
The four P's are extremely important to Nokia as these P's are the essence which has made Nokia the global success that it is. Nokia have to set the right price for the products as price is a major factor affecting demand. If the price is too high then consumers will decide not to purchase the product, whereas if the price for Nokia phones is too low the company will not get the brand image they want. However price can be changed at the right time. For example when the demand for Nokia phones are high the can put the price up, however when the demand is low the price of the product will come down.
Also Nokia must continuously develop new products in order to get consumers and get a big stake of the market share. Without products Nokia cannot even enter the market so this is sometimes called the most important of the four P's. With the development of new products comes high demand for products and Nokia will be able to be recognized as a big company.
Where Nokia decide to locate is also very important. There are many factors affecting location for a company like Nokia. For example distance from suppliers and transport links. A really important factor is competition. As Nokia is a specialist outlet they are able to locate out of town, this can be a good and bad for Nokia. It will be good because the rent for the space will not be as much. However competitors may decide to locate in town and Nokia will loose out on potential customers. All this means that location can directly affect Nokia's profit margins and their segment in the market.
Advertisements have long been a part of Nokia's successful campaign. Consumers are often wary of technology so promotional campaigns break it down for consumers. Nokia often use celebrities to promote their products. An example of this is the R&B star Cassie is the Nokia N91 which appears in the song me &you'. This type of promotion will immediately attract the attention of consumers, especially the "MTV generation" which Nokia often aim their products at. With good promotion come more consumers leading to higher profit margins and consequently leading to a high market share.
Pricing Strategies:
Pricing strategies are very common in the business world as companies often use different methods in order to get the best out of their products. There are different types of pricing strategies. In this part of the coursework I will explain the different pricing strategies and I will explain how well these pricing strategies work and which one Nokia themselves decide to use.
Price Skimming:
This involves charging relatively high prices for a short time where new, innovative or a much improved product enters the market. The object of skimming is to "skim" off customers who are willing to pay more to have the product sooner, prices are lowered later when demand from the falls. High prices can be applied in the short term whilst the demand is still inelastic. In the short term the suppler will benefit a lot, however as profitability increases competing suppliers are likely to attract the market and the price will fall as competition increases. The main aim of this strategy is to apply high price whilst the demand for the product is still high. The advantages and disadvantages of price skimming are:
By charging high prices initially a company can build a good reputation for themselves.
Also it can act as an effective way of segmenting the market. It will divide the market into a number of segments and companies can reduce the price of the product at different stages.
For high value goods this method can be very successful. This is because the buyer will be aware of the product so he/she will be willing and able to pay a high price for the product. However the high prices that are set will mean that a lot of potential will be lost as they will be unable to afford the product. Also the image surrounding the product may mean that customers will not even think about purchasing that product as it is out of their price range.
Penetration Pricing:
This involves the setting of lower rather than higher prices in order to achieve a large if not dominant market share. This is often used by new companies who are new to the market; these companies use this strategy so that they are able to survive. This method is also used by companies who wish to build on a relatively small segment of the market share. This is only achievable when it is believed that the demand for a specific product is highly elastic.
This will attract the attention of new buyers and existing buyers will by more of the product as a result of the new price. The advantages and disadvantages of this are:
This pricing strategy may lead to large sales volume and a high market share.
Also good economies of scale will be gained from this and it will lead to lower production costs.
This type of pricing could also lead to the promotion of products that are not doing well in the market. Competitors may do the same; this will nullify the advantage you have over your competitors. Also if the prices are too low it may have a negative affect on the product. Consumers will be put off as the image for the product will decline.
Psychological Pricing:
Retail prices are often expressed as odd prices. It is usually a little less than a round number, for example $19.99 or £6.95. Psychological is used because it is a theory in marketing that these prices have a psychological impact on consumers. It is hoped that because the price seems a little less consumers will believe that it is value for money and will buy the product. The advantages and disadvantages of psychological pricing are:
More people will buy the product because of the odd price.
This pricing strategy may lead to large sales volume and a high market share. The only issue with this strategy is that if customers are not influenced by this pricing strategy then consumers will not buy the products.
Nokia predominantly use price skimming as a pricing strategy. This because as Nokia are continuously innovating new products they will sell at high prices then bring the price down slowly. This is the way Nokia choose to sell products as it suits their company. It is good for Nokia as they will build a high reputation for themselves. Also it can act as an effective way of segmenting the market. It will divide the market into a number of segments and companies can reduce the price of the product at different stages. Furthermore it is good for nokia because the buyer will be aware of the product so he/she will be willing and able to pay a high price for the product, maximising sales for Nokia.
Distribution Channels:
Distribution is one of the four aspects of marketing. Channels of distribution are the different stages a product will go through to get to the consumer. A distributor is the middleman between the manufacturer and retailer. After a product is manufactured by a factory it is stored in the distributor's warehouse. The product is then sold to retailers or directly to customers. Companies have to decide what channel to use for each scenario they are in .I will now explain he different distribution channels Nokia may decide to use the advantages and disadvantages of them and the channel which will be most suited to Nokia.
Directly to the consumers this is one of Nokia's channels of distribution as they have Nokia stores in London. The advantages and disadvantages of this method are:
It is cost effective as no middle man is required.
It is time effective as it only has one place to go.
A business is able to establish itself if it is selling independently. Consumers may have top travel to get a product. Consumers will have to pay a lot of money for the product.
Retailer this is when a company sells products to a retailer and the retailer acts as a middle man selling them on to consumers. The pros and cons of this channel are:
Nokia will sell more products as they will have more products on the market.
The phones will be sold at low prices to the middle man as they are buying in bulk, consequently they will obtain economies of scale. Nokia are not acting independently and they are loosing potential customers.
Internet some Nokia products are sold over the internet as another method of distribution. Some advantages and disadvantages of this are:
This is target the niche market giving Nokia high profit margins and in turn will increase Nokia's market share.
Prices over the internal tend to be low this will attract new also customers. It is time consuming as the company will have to mail products to consumers.
Nokia tend to use a mixture of these channels, this is so they maximise sales and get the high amount of profit possible. As well as having their own exclusive Nokia stores they also sell at supermarkets for example Tesco. This will make their product familiar with everyone and eventually increase the popularity for Nokia phones. Also they will be recognized as a company who sells at competitive prices for high quality goods. Furthermore selling over the internet will mean they are targeting the niche. This will also increase their market share as they targeting an even bigger market and hopefully profit will be increased.
Market Segmentation:
In this part of the coursework I will explain what market segmentation is, why companies decide to use it and the benefits and drawbacks of market segmentation.
Market segmentation is involves sub dividing the markets, channels or customers into groups with different needs to deliver tailored requirements which meet these needs as precisely as possible. One disadvantage of market segmentation is that because people's desires are constantly changing companies will have to continuously make new segments so that they are able to keep up with theses desires. This is so they are able to find their possible cliental and cater for their specific needs. Segmentation exists because: o Everyone has different needs. o It is too expensive to target the whole market. o Companies will be able to design and deliver more relevant products.
Companies like Nokia spend massive amounts of time on market segmentation as they are aware of how it may benefit there company. Also Nokia is aware that it is under immense competition and needs to produce products consumers will like to use. There are different of market segmentation these are:
Demographic segmentation use criteria such as age, gender, income, occupation, type of housing and ethnicity. This type of segmentation is usually expressed in the form of quantitative data. This type of data gives companies a background understanding of whom their customers could be and how much they are willing to pay for products. It cold also helps them to understand what type of products they are interested in.
Geographic segmentation this type of segmentation is usually related to where companies cliental may be situated. E.g. city, urban/rural areas, towns etc. this could give companies the idea of where best to locate themselves which would attract customers.
Psychographic segmentation this is t do with personality, interests, opinions, beliefs, aims and objectives. This could give companies an incite on the type of products consumers are looking for or what they may think about certain products.
These three types of segmentation are used for different uses and purposes. For example there is no use in a company using psychographic segmentation they wish to find out about a persons income. However the right combination of the three could prove to be ideal for the company in finding out what information they require. Nokia understand and that is why they spend so much time segmenting groups and trying to find what these different groups want to buy. One affective method in which Nokia use to segment the market is in their pricing. The use of price skimming will mean that Nokia will that the Nokia products will first attract customers who are willing to pay more to have the product sooner and then eventually prices will be lowered later when demand from the falls for the product. This involves segmenting their market according to the income of consumers which will b demographically based.
Nokia segment their market on a number of different levels, firstly the prices they set segment there market as the people who are able to pay will pay at first. Then as the price of their products gradually comes down their target market will change. Another way Nokia segment their market is by producing different phones which specialise in different areas, for example some phones pay particular attention to camera quality and others to memory.
Market Research:
Market Research is the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services. In this part of the coursework I will the difference between primary and secondary research. Also I will explain the strengths and weaknesses of both and which method will be the ideal for Nokia.
Primary research primary research is research collected for the first time and it collects items of information for a specific purpose. There are three ways of collecting primary data: o Survey this is the most widely used method of primary data collection. Most people are familiar with door-to-door interviewers who come ready with questionnaires about people spending habits. The questions have to be carefully structured to include all the information needed by the client. This could vary from sex and occupation to income and race. The data collected is then separated into quantitative and qualitative data. An advantage of a survey is it is qualitative so views of consumers are expressed so companies can benefit more from the data. A disadvantage with primary research is people may lie to give off a particular image of themselves and the data will prove to be useless. o Observation this is a method of collecting information by looking at what people do, rather than asking why they do it. An excellent example of marketing based on the observation concept is the way supermarkets lay out their merchandise. An advantage of observation is that you can have first hand evidence of consumer spending and there is no chance no them lying to you as you can see it for your self. However a drawback could be that the customer may be doing shopping for someone else so again the data will not be accurate. o Testing research is a way of trying out new or improved products by allowing customers to make their own choices, rather than asking them what they think they are likely to buy in the future. Some of these tests are often carried out in monitored locations, so the researchers are able to obtain beneficial feed back. An advantage of testing is that researchers will be able to understand how consumers feel about the product. On the other hand a disadvantage would be that people may look at the reputation of the product rather than the product.
Secondary research secondary research which is sometimes called desk research is looking at various sources of existing data to find information that will be useful in marketing a product for a business. There are many fitting sources of data and analysing them should be easier and cheaper than primary research. However there are also negatives to this technique, sometimes good information are difficult to find. Companies must work hard in making sure that the data collected is not only full proof but also up to date. This is important because companies may end up collecting data which is not relevant to them and valuable time and money will be wasted in doing so. Usually secondary research is external, for example an already published census. However secondary research can also be internal. Internal forms of market research can include: o Financial information. o Customer information. o Background of own products, for example past performance of products. o Previous marketing activities.
Both of these methods of research have their benefits and drawbacks and usually the situation is the factor which determines which that is ultimately used. Primary will benefit Nokia when they are introducing a new phone to the market and require the opinion of consumers. This is called market orientation, when a business identifies and reviews consumer needs. Primary research is used at this time so that companies like Nokia can understand the consumer's views, opinions and likes and dislikes, this will hopefully make the products made more successful as they will cater to their needs. Secondary research will benefit Nokia when they are introducing for example a phone feature never used or seen before. This is used in secondary research because consumers will not have opinions on a subject they have no knowledge on. This is called product orientation, when companies focus on production process and the product itself. Product orientation usually takes place when business like Nokia identify a gap in the market and attempt at taking advantage of that gap.
Without market research Nokia will suffer as a company because they must continue to meet the needs of consumers. This is a very important objective of market research and it needs to be done properly in order to be effective. Market research supports marketing activities in Nokia as it gives guidelines. It establishes who Nokia's potential customers would be, what type of phones they would like to see Nokia produce, amounts of money they are able to pay for Nokia phones and other information that may be useful.
Questionnaire:
1. Do you own a phone?
2. What mobile phone company are you most familiar with? Nokia Sony Ecrission Motorola Samsung
3. What is the best feature on your mobile phone and why?
4. Which of the following TV channels do you watch most? ITV Channel 4 Channel 5 Sports channels Other
5. If you do own a Nokia phone would you recommend it to others? and why?
1. Do you as an individual see mobile phones as a necessities or luxuries. 2. What price are you willing to pay for, for a new phone?
£400
£250
£200
£100
Results:
Buyer Behaviour & Decision Making:
It is important to understand why a customer makes a purchase. This is why I will explain what the factors that make consumers to make a decision, the steps a consumer goes through before making the decision and the way consumers behave whilst buying a product.
There are a number of factors that are likely to influence the purchase of consumers. For example there may be a number of reasons why a consumer may choose Nokia over a Sony Ericcsson phone. There are three types of factors which can have an affect on a consumer decision, these are:
Social Factors social factors usually deal with the view society or a small has on a particular product. One social factor that may influence a consumer decision is social class. This will have an affect on the type of mobile they buy because if they are of a high social class they will want to purchase a phone which will reflect that and visa versa. Secondly another social factor which will have an affect on a consumer decision is culture of sub culture. If a consumer comes from such a background where it is a necessity to purchase a mobile of the highest quality that will have a massive impact on their decision. Another social factor which will influence a consumer's decision is their family.
Personal Factors these factors discuss occupational and economic status, age and lifestyle. Firstly economic status, this will have a direct influence on consumers because if they are able to afford a product then they will buy it otherwise they will not be able to. Another personal factor which will influence consumers is lifestyle. Mobile phones have now been adapted to meet and fit the lifestyles of individuals. For example the new range of phones with internal mp3 players, these phones have been developed so that there is no need for consumers to purchase another music source. Another factor influencing consumer decisions is age. Age is an oblivious factor as age and economical status will go hand in hand. Furthermore consumers under the age of 18 are unable to purchase some mobile phone software.
There are many stages consumers go through when purchasing a product, these are: o Problem recognition sometimes a consumer has a problem or need and is unaware of it. For example, when mobile phone companies start advertising a few months before Christmas, consumers then begin to think about Christmas presents. o Information search when a consumer has recognised his/her need they begin to search for information about the product they need. For example, when people begin to plan the presents they will purchase. o Evaluation of alternatives when the consumer has gathered the information he/she will begin to compare it with other products. For example, one buyer may want to buy a mobile phone which includes accessory equipment, whereas another may be willing to pay extra for the accessory products. o Purchase this happens when the consumer chooses the product he/she to be brought. o Post purchase evaluation after the purchase the buyer begins to evaluate to see if its actual performance meets the expectations he/she had before the purchase. This is where we will see if the consumer is satisfied or not.
SWOT Analysis:
The word swot is short for strengths, weaknesses, opportunities and threats. A swot analysis is an effective way of for a company to measure their current position in the market. I will now list and explain all of Nokia's strengths, weaknesses, opportunities and threats. I will explain how Nokia may benefit from carrying out a swot analysis.
Strengths:
I thought it was best and most fitting that first I discussed all the points standing in favour of Nokia: o Strong financial resources this is seen as a necessity for a large company like Nokia. It's their strong financial resources that allow them to re-invest in new products and to launch marketing campaigns to aid the introduction of the new products. This is the route of all Nokia's strengths as any of their strengths can be linked back to strong financial resources. o Economies of scale because Nokia is such a large firm they are able to benefit greatly from economies of scale. This is because they have the funds at their expense to buy products in bulk, thus meaning they are able to obtain the products more cheaply which will ultimately cut down their cost of production. This will benefit them as it will mean they are able to sell at more competitive prices and to invest in weaker areas of their business. o Resources for research and development this is also very important because Nokia must be specific in who they are targeting to and what their target market requires. Otherwise if Nokia target the whole market they will waste their resources and this will be bad for their overall business costs.
Weaknesses:
The weaknesses that may have an affect on Nokia are as follows: o High labour turnover this can occur for many reasons, some employees may find it difficult to adjust to the Nokia environment and some simply may not be right for the job. This is a weakness because every time an employee leaves the company Nokia will have to advertise for the job and train the employees. This will be very time consuming and costly for Nokia. o High production costs this is also a weakness for Nokia as high production costs will mean that Nokia will have to charge high prices for the products produced and this may mean they will loose out to possible customers to the hands of their competitors. This can be combated by introducing incentives so employees work harder during production or even by simply introducing a piece rate system instead of paying them by the hour.
Opportunities:
This is how Nokia benefit from external factors of the company; I will now state and explain some of these opportunities: o Less experienced competition this could serve Nokia as an opportunity because if the competition has less experience it will mean that they will be unable to anticipate the market less. Also it may mean they will make some wrong decisions concerning promotions. Nokia will be able to capitalise from the mistakes of the other companies. o Season this is could also serve Nokia as an opportunity because there are periods of time in the year which will affect and influence sales and demand. An example of this would be Christmas as there is always a rise in demand during this time of year. o Interest rates interest can have an affect on demand as the rate of interest goes up and down. When the interest rate is low consumers will be encouraged to spend rather than save, this is because they will not obtain a lot of interest on their saved money. This will help Nokia as this means that demand will rise and more Nokia products will be brought.
Threats:
This is the problems Nokia will face because of external factors having an affect on the business: o Alliances and mergers this is a concern for Nokia as it will mean their competition will grow stronger and this could mean that they will take some of Nokia's clientele. A company with a great amount of financial resources will obviously have more money to invest in their business. o Competition from larger players Nokia will have to lower their prices in order to compete with the competition and this will have a negative affect on the reputation of Nokia as well as their profit margins. o Government legislations and actions with the introduction of new laws by the government it will mean that Nokia will have to comply with more rules. These rules could vary from employee pay to working conditions; this would increase the costs of running Nokia and could also have a negative affect on their profit margins.
SWOT analysis' are very useful for companies like Nokia as it will allow them to make careful and cautious decisions. A swot analysis will identify where Nokia are doing well and where Nokia they can improve on. Companies like Nokia will be more concerned with the external factors rather than the internal factors so the swot analysis will also be useful for that reason.
SLEPT Analysis:
The word slept is short for social, legal, economical, political and technological factors which may affect a business. A slept analysis is an external audit of a company. I will now list and explain all of Nokia's strengths, weaknesses, opportunities and threats. I will explain how Nokia may benefit from carrying out a slept analysis.
Social:
These factors are usually concerned with demographics, ethical issues and other issues which may be considered to be social. o The risk directed towards under 18's often parents have concerns about their children being contacted by paedophiles or other adults. Furthermore society is also concerned about adult content being available to under 18's. Examples of such could be gambling, violent games and erotic material. o Where Nokia products are sold this can have a massive influence on the demand for their products. For example if Nokia decide to locate in an area of high unemployment it will be likely that there will be a low demand for their products. o Another social factor concerning Nokia phones is that people who own phones are under a constant threat by muggers. Unfortunately Nokia are unable to do anything about this so that will continue to be a put off for customers.
Legal:
These factors are concerned with laws passed by the government and how they affect Nokia's sales: o The sales of good act 1974 this means that if a product sold by Nokia is in anyway faulty at purchase or not fit for the purpose intended Nokia will automatically be at fault. o Tariffs Nokia is a foreign company so it has to import its products to England. Unfortunately for those laws have been introduced taxing any products coming into the company so that the government could profit directly.
Economical:
These factors are concerned with monetary issues out side the company: o Interest rates interest rates are set by the government to encourage spending and borrowing. Nokia would prefer the interest rate to be low so that consumers are not getting much interest from their savings and therefore will be encouraged to spend. However it could go the other way for Nokia if the interest rate is high, then consumers will be encouraged to spend and consequently their will be a slump in the demand for Nokia. o The state of the economy if the economy is in a recession then the likelihood of the demand for Nokia being high is relatively low. A recession is when a economy poor state and there is not much spending helping the economy to stay a float.
Political:
Political issues are usually concerned with the government's opinions and ideas towards a specific subject: o Government requests on mobile phone companies the government wants the mobile phone industry to create self regulating controls in relation to content so that under 18's are not exposed to anything they shouldn't be.
Technological:
This is to do with how Nokia can adapt to the technological desires required by consumers: o Growing number of mobile phone users because of the number of people owning mobile phones increasing Nokia must be able to produce more in order to keep up with the demand. o Competitors because Nokia are under such intense competition from the other major players, for example Sony Ericcisson and Motorola they must continue to stay ahead or at least inline with them. This is in terms of the quality of products produced from each company. o Technological development as technology has developed it has become possible for people to swap information with each other via Bluetooth or through other devices. This is usually a good thing however it can be used inappropriately to send anonymous or unwanted texts, this is known as blue jacking and it can be very distressful to the recipient especially if he or she is a child.
Product Life Cycle:
The product life cycle is the stages a product goes through when introduced. The stages in the product life cycle are introduction, growth maturity and decline.
There is the 5 stage that products pass through:
o The first stage the product will go through is development. The prototype will be tested and market research carried out before it is launched on to the market. This is obviously with new Nokia products.
o The second stage it will go through is introduction. This is when the product begins to sell. The sales of the product are usually not high at this stage as customers will not be familiar with the product. With companies like Nokia most of their newly released material will begin to sell quickly, this is because of the awareness of its brand name.
o The third stage products go through is what is known as the growth stage. This is when the demand the products begin to increase and companies will often step up a gear in terms of their advertising campaigns. Also companies like Nokia may lower the price of their products in order to try and stay ahead of their demand.
o Maturity sales are still increasing, but at a slower rate. Profits are high. However, there is greater competition from new rival products. This is the stage where Nokia try and get the most out the products they sell.
o The last stage a product will go through is decline. This is when a demand for a product falls and sales go down. This could happen for many reasons such as the product is old and dated or the product may be too expensive.
Nokia has products in each of the stages of production. This is because they have so many products on the market. Some of Nokia's products are newly being introduced to the market; some have been in the market for long and some are in decline and leaving the market. This acts as an advantage for Nokia because they have so many products in the market it will increase brand awareness which will links back to the promotion in the 4p's.
The product life cycle is a tool which is often used in business and has a reputation for being accurate. However it has disadvantages as well as its advantages. An advantage of the product life cycle is: o It allows companies to asses where there product is in the cycle. This will give them an idea on which of their products to focus on and which has had its time.
Disadvantages of the product life cycle are: o Some times products may fall into more than one category. o Also the cycle is very generic and is not as specific as it could be.
Boston Matrix:
The Boston Matrix asses how well products are doing in the market and how much of the market share that product has. The Boston Matrix is split into four groups these are; stars, problem child's/question marks, cash cows and dogs. In this section of the coursework I will explain these different groups, furthermore I will discuss where Nokia product lie and the advantages and disadvantages of the Boston Matrix.
I will now explain what the groups are and give examples for each of them:
Stars - are potentially very profitable products for the company, but they may require a great deal of investment in promotion to make them sell well. Stars usually have a high market growth as well as a high market share. An example of this is the Apple I pod. This product has become very successful over the last two years.
Problem Child's - their future is uncertain, they may become stars if the company invests larger amounts of money in them, or they may turn into dogs. An example of this is the DVD player before they where reintroduced to become very popular products.
Cash cow - these are highly profitable products. The money they make can be milked' to help stars and problem children. Nokia understand that they must get everything they can out of their cash cow products. An example of this type of product is the Nokia 6230i.
Dog - products which are in decline with falling sales. These products have a low market growth as well as a low market share. An example of a dog would be the Nokia 3310. This phone is a dog because technology has improved a great amount since it came out and it is now an outdated product.
Like in the product life cycle you it is impossible to place Nokia's products in any one of the groups in the Boston Matrix. This is because they have many products in the market at the same time. So their products will fall into different groups in the Boston Matrix. For example the Nokia 3310 in the year 2001 was considered to be a star as it had a high market growth as well as a high market share. The product was so successful because at the time it was seen as new technology and furthermore it was a reliable product that consumers could depend on. An example of a Nokia phone that could be seen as a problem child now is the Nokia 8800. The phone is a limited addition and costs around £700, consumers will most probably be put off by the price of the phone and furthermore consumers who already own the phone often complain about the features on the phone. This will bring down the reputation for that phone spread by consumers by word of mouth.
I will now discuss the advantages and disadvantages of the Boston Matrix. The advantages are: o It will allow companies to realise when it is time to give up on a product if the company believe it is unable to sell more products in the market. o Also even the products with a low market share will still be invested in as companies will recognize their potential.
The disadvantages of the Boston Matrix are: o It is only a model and a company needs actual data for it to be completely effective. o Also external factors will have a influenced on where the product lie in the Boston Matrix.
Social, Ethical & Legal Constraints:
The term constraint means a restriction or limitation. So in this section of the coursework I will be paying attention towards the drawbacks Nokia may face socially, ethically and legally.
Social:
Social factors are very important because these factors will influence the reflection the society or community has on Nokia. Social constraints could be any of the following: o The risk directed towards under 18's often parents have concerns about their children being contacted by paedophiles or other adults. Furthermore society is also concerned about adult content being available to under 18's. Examples of such could be gambling, violent games and erotic material. o Another social factor concerning Nokia phones is that people who own phones are under a constant threat by muggers. Unfortunately Nokia are unable to do anything about this so that will continue to be a put off for customers.
Both of these factors will have a negative affect on Nokia as they will make possible cliental think twice about purchasing a Nokia mobile. Even though these factors are a big problem for Nokia it will not allow their competition to gain a competitive advantage over them as they too will have the same problem. Unfortunately for Nokia these negatives cannot be avoided and so they will always remain an issue for Nokia.
Ethical:
These factors will also affect the reflection the society has on Nokia. The ethical constraints are similar to the social constraints, however the ethical constraints pay particular attention towards what is moral for Nokia to do or not to do. The ethical restrictions Nokia faces are: o Viruses Nokia phones are now becoming more and more advantaged technologically. This means that it is now possible for phones to attract viruses, Nokia understand this and ethically it is morally wrong for them to sell the anti virus equipment separately. If Nokia as a company act morally towards sensitive issues they will loose out on some potential, on the other hand they will be recognized as a company how cares and this may result in consumer loyalty and maybe even higher profit levels. o Another ethical restriction which will limit the amount of sales Nokia have is the threat of muggers. Unfortunately Nokia are unable to do anything about this so that will continue to be a put off for customers.
Nokia understand that ethical issues are very sensitive, they also understand that some can still work out in their favour whereas others cannot be helped.
Legal:
The restrictions are the restrictions the government put on companies which all companies must abide by. Some of these are:
The sales of good act 1974 this means that if a product sold by Nokia is in anyway faulty at purchase or not fit for the purpose intended Nokia will automatically be at fault.
Tariffs Nokia is a foreign company so it has to import its products to England. Unfortunately for Nokia laws have been introduced taxing any products coming into the company so that the government could profit directly. As Nokia are a foreign company they will be directly affected by this.
Consumer Protection Act this act relates to price and safety. It is important that Nokia abide by the rules of this act as it will have an impact on their reputation. Under the act it is an offence to: o Mislead consumers as to the price of goods and services. o Also to mislead consumers over sales prices and claim exaggerated price reductions. o Furthermore it is an offence to supply goods which are not reasonably safe.
There are many other acts which act as restraints towards Nokia. Legal issues are unfortunately unavoidable for Nokia or any other business; however they are at no disadvantage as all companies must abide by these rules.
Marketing Objectives for Plan:
In this part of the coursework I will explain the marketing objectives for my plan. The marketing objectives will underline what I wish to achieve from my marketing plan.
Meet consumer requirements this is one of the main reasons companies such as Nokia carry out market research. Market research is an effective and low cost method to finding out what consumers want in their products. One method of market research carried out by Nokia is the stocking of limited addition phones. An example of this would be the Nokia 8850 which was released in 2000. When Nokia saw the success of the 8850, it gave Nokia a chance to release a similar product, in the form of the 8310.
Create an image for the product this also very important for Nokia as brand imaging can have a massive impact on the profit a company makes.
Target new market segments this is paramount for Nokia as they have to target new areas on the market in order to develop and expand their business. It is also important to Nokia as they will be able to keep one of the most important of Nokia's objectives.
Make a profit without this Nokia would not be as successful as up with their competition and earn global recognition. The whole point of any company performing market research is to find out what consumer's needs are and meeting these needs in order to maintain a profit. Making a profit is what keeps the company running and helps it to expand globally.
Increase market share this is also important for Nokia as an increase in the market share will show that the company is performing well. It is also a way of measuring the effectiveness of Nokia's marketing campaign. The company with the largest percentage in the market share will be the company dominating the market.
Introduce new products to the market this is also a sign of development, as introducing new products to the market shows that company's are innovative and are able to adapt to the changing lifestyle of consumers. Company's who are unable to produce new products are usually the companies that fall behind and become unsuccessful. An example of this is IBM. IBM were the first company to produce personal computers, however they did not believe the idea would catch on and were succeeded by other companies, for example Sony.
Anticipate the market marketing is now becoming more and more customer orientated. This shows that companies are trying hard to meet the needs of consumers by anticipating the market. This is very important as companies will know exactly what consumers want therefore not wasting vital money or resources.
Target Group:
The mobile phone I have chosen to promote is the Nokia N91. In this section of the coursework I will discuss who my target market will be and why. Furthermore I will explain why it is important to have a target market.
The market I have chosen to target for the Nokia N91 is teenagers and young adults. This is because firstly the features on this phone are features which will attract the attention of this age group. Examples of these features are an mp3 player, video, Bluetooth and internet access. Also the Nokia N91 has been featured in hit R & B singer Cassie's video "me & you". Cassie is a singer which is much admired by this target group so this is another reason why I chosen this target group. The celebrity endorsement will increase the reputation for product amongst that target group. Furthermore more another reason I chose to market the product to this target group is because it is easiest to market products to that group as they are usually the group who are most interested in mobile phones.
It is paramount that Nokia and all other companies segment their market and market specifically. This is because everyone has different needs, so there is no point in targeting everyone if Nokia will only get a small reaction from this. This will eventually lead to the second reason which is that if Nokia do target a specific area of the market and target everyone they run out of resources. All companies understand this so they think logically and only target the group of people they want to sell products to. If they do end up wasting their marketing resources it will have a negative affect on the whole of the Nokia company, this is why the marketing department can be the difference between success and failure for any company.
Recommendations for 4 P's:
In this section I will make recommendations of what Nokia should do to improve their 4 p's.
Price is a very delicate issue and must be addressed in the right manor. The way I will set the price for Nokia products is through the concept of price skimming. This involves charging relatively high prices for a short time where new, innovative or a much improved product enters the market. I will use this pricing strategy as it will "skim" off customers who are willing to pay more to have the product sooner, prices are lowered later when demand from the falls. By charging high prices initially a company can build a good reputation for themselves. Also it can act as an effective way of segmenting the market. Furthermore it will divide the market into a number of segments and companies can reduce the price of the product at different stages.
In order to promote Nokia products I will try to get more consumer input. Hopefully this will make Nokia products more consumer orientated; this is when products are developed according to the desires of consumers. I will do this by conducting primary and secondary market research. This will give me a variety of results and hopefully this will make my product more successful with consumer. Furthermore I could try and use more celebrity endorsements, in order to increase the reputation as well as the awareness of Nokia phones.
In terms of place I could use more distribution channels in order to make my product more available to consumers. If Nokia only sell directly to consumers they are cutting costs however they will be unable to sell many products, so it will be more beneficial for Nokia to use many distribution channels. For example they could sell directly to consumers, through the internet and they could sell to industrial consumer (retailers).
This P is often regarded as the most important of all, in its simplest form it just means the products a company is selling. In order to any company to be successful they must sell products. Nokia have already achieved this and the next step would be to continue selling products so they able to make a profit. With the aid of market research I will attempt at developing a product which will increase their market share.
In the following coursework I will be investigating how Nokia market their products and whether these methods of marketing are effective or not. The report will focus on the marketing strategy used by Nokia, how Nokia carry out their market research, market segmentation and other issues relating to how Nokia market products.
The report will identify and research the target market of Nokia and the marketing mix and how these four P's relate to Nokia. In order to complete this coursework I will be using the Nokia website and, books and my class notes. The company I have chosen to base this coursework on is Nokia. In this part of the coursework I will be focussing on the Nokia N91. Also I will be discussing the marketing background of this product.
About Nokia:
What is known today as Nokia was established in 1865 as a pulp mill by Knut Fredrik Idestam on the banks of Nokia rapids. Finnish Rubber Works established its factories in the beginning of 20th century nearby and began using Nokia as its brand. Shortly after World War I Finnish Rubber Works acquired Nokia wood mills as well as Finnish Cable Works, a producer of telephone and telegraph cables. All these three companies were merged into the Nokia Corporation in 1967.
The Nokia Corporation that was created in the 1967 fusion was involved in many sectors, producing at one time or another paper products, bicycle and car tyres, footwear (including Wellington boots), personal computers, communications cables, televisions, electricity production
Nokia's first major mobile phone order came from the Finnish Defence Forces in 1972, for field radios. In the 1970s, Nokia began developing mobile phones for the Nordic Mobile Telephone (NMT) network standard, that went online in the 1980s. Nokia introduced the world's first NMT mobile phone, the Nokia Cityman, in 1987. NMT was the world's first mobile telephony standard that enabled international roaming, and provided valuable experience for Nokia for its close participation in developing Global System for Mobile Communications (GSM). It is a digital standard which came to dominate the world of mobile telephony in the 1980s and 1990s, in mid-2006 accounting for about two billion mobile telephone subscribers in the world, or about 80% percent of the total, in more than 200 countries. The world's first commercial GSM call was made in 1991 in Helsinki over a Nokia-supplied network, by Prime Minister of Finland Harri Holkeri, using a Nokia phone.
In the 1980s, during the era of its CEO Kari Kairamo, Nokia expanded aggressively into new fields, mostly by acquisitions. In the late 1980s and early 1990s, the corporation ran into serious financial problems, a major reason being its heavily loss-making television division. (These problems probably contributed to Kairamo taking his own life in 1988.) Nokia responded by streamlining its telecommunications divisions, and by divesting itself of the television and PC divisions. Jorma Ollila, who became the CEO in 1992, made a strategic decision to concentrate solely on telecommunications. Thus, during the rest of the 1990s, Nokia continued to divest itself of all of its non-telecommunications divisions.
The exploding worldwide popularity of mobile telephones, beyond even Nokia's most optimistic predictions, caused a logistics crisis in the mid-1990s. This prompted Nokia to overhaul its entire logistics operation. Logistics continues to be one of Nokia's major advantages over its rivals, along with greater economies of scale.
The 4 P's:
In this part of the coursework I will discuss marketing strategies. It will consist of the four P's, which are product, place, price and promotion.
The four P's are extremely important to Nokia as these P's are the essence which has made Nokia the global success that it is. Nokia have to set the right price for the products as price is a major factor affecting demand. If the price is too high then consumers will decide not to purchase the product, whereas if the price for Nokia phones is too low the company will not get the brand image they want. However price can be changed at the right time. For example when the demand for Nokia phones are high the can put the price up, however when the demand is low the price of the product will come down.
Also Nokia must continuously develop new products in order to get consumers and get a big stake of the market share. Without products Nokia cannot even enter the market so this is sometimes called the most important of the four P's. With the development of new products comes high demand for products and Nokia will be able to be recognized as a big company.
Where Nokia decide to locate is also very important. There are many factors affecting location for a company like Nokia. For example distance from suppliers and transport links. A really important factor is competition. As Nokia is a specialist outlet they are able to locate out of town, this can be a good and bad for Nokia. It will be good because the rent for the space will not be as much. However competitors may decide to locate in town and Nokia will loose out on potential customers. All this means that location can directly affect Nokia's profit margins and their segment in the market.
Advertisements have long been a part of Nokia's successful campaign. Consumers are often wary of technology so promotional campaigns break it down for consumers. Nokia often use celebrities to promote their products. An example of this is the R&B star Cassie is the Nokia N91 which appears in the song me &you'. This type of promotion will immediately attract the attention of consumers, especially the "MTV generation" which Nokia often aim their products at. With good promotion come more consumers leading to higher profit margins and consequently leading to a high market share.
Pricing Strategies:
Pricing strategies are very common in the business world as companies often use different methods in order to get the best out of their products. There are different types of pricing strategies. In this part of the coursework I will explain the different pricing strategies and I will explain how well these pricing strategies work and which one Nokia themselves decide to use.
Price Skimming:
This involves charging relatively high prices for a short time where new, innovative or a much improved product enters the market. The object of skimming is to "skim" off customers who are willing to pay more to have the product sooner, prices are lowered later when demand from the falls. High prices can be applied in the short term whilst the demand is still inelastic. In the short term the suppler will benefit a lot, however as profitability increases competing suppliers are likely to attract the market and the price will fall as competition increases. The main aim of this strategy is to apply high price whilst the demand for the product is still high. The advantages and disadvantages of price skimming are:
By charging high prices initially a company can build a good reputation for themselves.
Also it can act as an effective way of segmenting the market. It will divide the market into a number of segments and companies can reduce the price of the product at different stages.
For high value goods this method can be very successful. This is because the buyer will be aware of the product so he/she will be willing and able to pay a high price for the product. However the high prices that are set will mean that a lot of potential will be lost as they will be unable to afford the product. Also the image surrounding the product may mean that customers will not even think about purchasing that product as it is out of their price range.
Penetration Pricing:
This involves the setting of lower rather than higher prices in order to achieve a large if not dominant market share. This is often used by new companies who are new to the market; these companies use this strategy so that they are able to survive. This method is also used by companies who wish to build on a relatively small segment of the market share. This is only achievable when it is believed that the demand for a specific product is highly elastic.
This will attract the attention of new buyers and existing buyers will by more of the product as a result of the new price. The advantages and disadvantages of this are:
This pricing strategy may lead to large sales volume and a high market share.
Also good economies of scale will be gained from this and it will lead to lower production costs.
This type of pricing could also lead to the promotion of products that are not doing well in the market. Competitors may do the same; this will nullify the advantage you have over your competitors. Also if the prices are too low it may have a negative affect on the product. Consumers will be put off as the image for the product will decline.
Psychological Pricing:
Retail prices are often expressed as odd prices. It is usually a little less than a round number, for example $19.99 or £6.95. Psychological is used because it is a theory in marketing that these prices have a psychological impact on consumers. It is hoped that because the price seems a little less consumers will believe that it is value for money and will buy the product. The advantages and disadvantages of psychological pricing are:
More people will buy the product because of the odd price.
This pricing strategy may lead to large sales volume and a high market share. The only issue with this strategy is that if customers are not influenced by this pricing strategy then consumers will not buy the products.
Nokia predominantly use price skimming as a pricing strategy. This because as Nokia are continuously innovating new products they will sell at high prices then bring the price down slowly. This is the way Nokia choose to sell products as it suits their company. It is good for Nokia as they will build a high reputation for themselves. Also it can act as an effective way of segmenting the market. It will divide the market into a number of segments and companies can reduce the price of the product at different stages. Furthermore it is good for nokia because the buyer will be aware of the product so he/she will be willing and able to pay a high price for the product, maximising sales for Nokia.
Distribution Channels:
Distribution is one of the four aspects of marketing. Channels of distribution are the different stages a product will go through to get to the consumer. A distributor is the middleman between the manufacturer and retailer. After a product is manufactured by a factory it is stored in the distributor's warehouse. The product is then sold to retailers or directly to customers. Companies have to decide what channel to use for each scenario they are in .I will now explain he different distribution channels Nokia may decide to use the advantages and disadvantages of them and the channel which will be most suited to Nokia.
Directly to the consumers this is one of Nokia's channels of distribution as they have Nokia stores in London. The advantages and disadvantages of this method are:
It is cost effective as no middle man is required.
It is time effective as it only has one place to go.
A business is able to establish itself if it is selling independently. Consumers may have top travel to get a product. Consumers will have to pay a lot of money for the product.
Retailer this is when a company sells products to a retailer and the retailer acts as a middle man selling them on to consumers. The pros and cons of this channel are:
Nokia will sell more products as they will have more products on the market.
The phones will be sold at low prices to the middle man as they are buying in bulk, consequently they will obtain economies of scale. Nokia are not acting independently and they are loosing potential customers.
Internet some Nokia products are sold over the internet as another method of distribution. Some advantages and disadvantages of this are:
This is target the niche market giving Nokia high profit margins and in turn will increase Nokia's market share.
Prices over the internal tend to be low this will attract new also customers. It is time consuming as the company will have to mail products to consumers.
Nokia tend to use a mixture of these channels, this is so they maximise sales and get the high amount of profit possible. As well as having their own exclusive Nokia stores they also sell at supermarkets for example Tesco. This will make their product familiar with everyone and eventually increase the popularity for Nokia phones. Also they will be recognized as a company who sells at competitive prices for high quality goods. Furthermore selling over the internet will mean they are targeting the niche. This will also increase their market share as they targeting an even bigger market and hopefully profit will be increased.
Market Segmentation:
In this part of the coursework I will explain what market segmentation is, why companies decide to use it and the benefits and drawbacks of market segmentation.
Market segmentation is involves sub dividing the markets, channels or customers into groups with different needs to deliver tailored requirements which meet these needs as precisely as possible. One disadvantage of market segmentation is that because people's desires are constantly changing companies will have to continuously make new segments so that they are able to keep up with theses desires. This is so they are able to find their possible cliental and cater for their specific needs. Segmentation exists because: o Everyone has different needs. o It is too expensive to target the whole market. o Companies will be able to design and deliver more relevant products.
Companies like Nokia spend massive amounts of time on market segmentation as they are aware of how it may benefit there company. Also Nokia is aware that it is under immense competition and needs to produce products consumers will like to use. There are different of market segmentation these are:
Demographic segmentation use criteria such as age, gender, income, occupation, type of housing and ethnicity. This type of segmentation is usually expressed in the form of quantitative data. This type of data gives companies a background understanding of whom their customers could be and how much they are willing to pay for products. It cold also helps them to understand what type of products they are interested in.
Geographic segmentation this type of segmentation is usually related to where companies cliental may be situated. E.g. city, urban/rural areas, towns etc. this could give companies the idea of where best to locate themselves which would attract customers.
Psychographic segmentation this is t do with personality, interests, opinions, beliefs, aims and objectives. This could give companies an incite on the type of products consumers are looking for or what they may think about certain products.
These three types of segmentation are used for different uses and purposes. For example there is no use in a company using psychographic segmentation they wish to find out about a persons income. However the right combination of the three could prove to be ideal for the company in finding out what information they require. Nokia understand and that is why they spend so much time segmenting groups and trying to find what these different groups want to buy. One affective method in which Nokia use to segment the market is in their pricing. The use of price skimming will mean that Nokia will that the Nokia products will first attract customers who are willing to pay more to have the product sooner and then eventually prices will be lowered later when demand from the falls for the product. This involves segmenting their market according to the income of consumers which will b demographically based.
Nokia segment their market on a number of different levels, firstly the prices they set segment there market as the people who are able to pay will pay at first. Then as the price of their products gradually comes down their target market will change. Another way Nokia segment their market is by producing different phones which specialise in different areas, for example some phones pay particular attention to camera quality and others to memory.
Market Research:
Market Research is the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services. In this part of the coursework I will the difference between primary and secondary research. Also I will explain the strengths and weaknesses of both and which method will be the ideal for Nokia.
Primary research primary research is research collected for the first time and it collects items of information for a specific purpose. There are three ways of collecting primary data: o Survey this is the most widely used method of primary data collection. Most people are familiar with door-to-door interviewers who come ready with questionnaires about people spending habits. The questions have to be carefully structured to include all the information needed by the client. This could vary from sex and occupation to income and race. The data collected is then separated into quantitative and qualitative data. An advantage of a survey is it is qualitative so views of consumers are expressed so companies can benefit more from the data. A disadvantage with primary research is people may lie to give off a particular image of themselves and the data will prove to be useless. o Observation this is a method of collecting information by looking at what people do, rather than asking why they do it. An excellent example of marketing based on the observation concept is the way supermarkets lay out their merchandise. An advantage of observation is that you can have first hand evidence of consumer spending and there is no chance no them lying to you as you can see it for your self. However a drawback could be that the customer may be doing shopping for someone else so again the data will not be accurate. o Testing research is a way of trying out new or improved products by allowing customers to make their own choices, rather than asking them what they think they are likely to buy in the future. Some of these tests are often carried out in monitored locations, so the researchers are able to obtain beneficial feed back. An advantage of testing is that researchers will be able to understand how consumers feel about the product. On the other hand a disadvantage would be that people may look at the reputation of the product rather than the product.
Secondary research secondary research which is sometimes called desk research is looking at various sources of existing data to find information that will be useful in marketing a product for a business. There are many fitting sources of data and analysing them should be easier and cheaper than primary research. However there are also negatives to this technique, sometimes good information are difficult to find. Companies must work hard in making sure that the data collected is not only full proof but also up to date. This is important because companies may end up collecting data which is not relevant to them and valuable time and money will be wasted in doing so. Usually secondary research is external, for example an already published census. However secondary research can also be internal. Internal forms of market research can include: o Financial information. o Customer information. o Background of own products, for example past performance of products. o Previous marketing activities.
Both of these methods of research have their benefits and drawbacks and usually the situation is the factor which determines which that is ultimately used. Primary will benefit Nokia when they are introducing a new phone to the market and require the opinion of consumers. This is called market orientation, when a business identifies and reviews consumer needs. Primary research is used at this time so that companies like Nokia can understand the consumer's views, opinions and likes and dislikes, this will hopefully make the products made more successful as they will cater to their needs. Secondary research will benefit Nokia when they are introducing for example a phone feature never used or seen before. This is used in secondary research because consumers will not have opinions on a subject they have no knowledge on. This is called product orientation, when companies focus on production process and the product itself. Product orientation usually takes place when business like Nokia identify a gap in the market and attempt at taking advantage of that gap.
Without market research Nokia will suffer as a company because they must continue to meet the needs of consumers. This is a very important objective of market research and it needs to be done properly in order to be effective. Market research supports marketing activities in Nokia as it gives guidelines. It establishes who Nokia's potential customers would be, what type of phones they would like to see Nokia produce, amounts of money they are able to pay for Nokia phones and other information that may be useful.
Questionnaire:
1. Do you own a phone?
2. What mobile phone company are you most familiar with? Nokia Sony Ecrission Motorola Samsung
3. What is the best feature on your mobile phone and why?
4. Which of the following TV channels do you watch most? ITV Channel 4 Channel 5 Sports channels Other
5. If you do own a Nokia phone would you recommend it to others? and why?
1. Do you as an individual see mobile phones as a necessities or luxuries. 2. What price are you willing to pay for, for a new phone?
£400
£250
£200
£100
Results:
Buyer Behaviour & Decision Making:
It is important to understand why a customer makes a purchase. This is why I will explain what the factors that make consumers to make a decision, the steps a consumer goes through before making the decision and the way consumers behave whilst buying a product.
There are a number of factors that are likely to influence the purchase of consumers. For example there may be a number of reasons why a consumer may choose Nokia over a Sony Ericcsson phone. There are three types of factors which can have an affect on a consumer decision, these are:
Social Factors social factors usually deal with the view society or a small has on a particular product. One social factor that may influence a consumer decision is social class. This will have an affect on the type of mobile they buy because if they are of a high social class they will want to purchase a phone which will reflect that and visa versa. Secondly another social factor which will have an affect on a consumer decision is culture of sub culture. If a consumer comes from such a background where it is a necessity to purchase a mobile of the highest quality that will have a massive impact on their decision. Another social factor which will influence a consumer's decision is their family.
Personal Factors these factors discuss occupational and economic status, age and lifestyle. Firstly economic status, this will have a direct influence on consumers because if they are able to afford a product then they will buy it otherwise they will not be able to. Another personal factor which will influence consumers is lifestyle. Mobile phones have now been adapted to meet and fit the lifestyles of individuals. For example the new range of phones with internal mp3 players, these phones have been developed so that there is no need for consumers to purchase another music source. Another factor influencing consumer decisions is age. Age is an oblivious factor as age and economical status will go hand in hand. Furthermore consumers under the age of 18 are unable to purchase some mobile phone software.
There are many stages consumers go through when purchasing a product, these are: o Problem recognition sometimes a consumer has a problem or need and is unaware of it. For example, when mobile phone companies start advertising a few months before Christmas, consumers then begin to think about Christmas presents. o Information search when a consumer has recognised his/her need they begin to search for information about the product they need. For example, when people begin to plan the presents they will purchase. o Evaluation of alternatives when the consumer has gathered the information he/she will begin to compare it with other products. For example, one buyer may want to buy a mobile phone which includes accessory equipment, whereas another may be willing to pay extra for the accessory products. o Purchase this happens when the consumer chooses the product he/she to be brought. o Post purchase evaluation after the purchase the buyer begins to evaluate to see if its actual performance meets the expectations he/she had before the purchase. This is where we will see if the consumer is satisfied or not.
SWOT Analysis:
The word swot is short for strengths, weaknesses, opportunities and threats. A swot analysis is an effective way of for a company to measure their current position in the market. I will now list and explain all of Nokia's strengths, weaknesses, opportunities and threats. I will explain how Nokia may benefit from carrying out a swot analysis.
Strengths:
I thought it was best and most fitting that first I discussed all the points standing in favour of Nokia: o Strong financial resources this is seen as a necessity for a large company like Nokia. It's their strong financial resources that allow them to re-invest in new products and to launch marketing campaigns to aid the introduction of the new products. This is the route of all Nokia's strengths as any of their strengths can be linked back to strong financial resources. o Economies of scale because Nokia is such a large firm they are able to benefit greatly from economies of scale. This is because they have the funds at their expense to buy products in bulk, thus meaning they are able to obtain the products more cheaply which will ultimately cut down their cost of production. This will benefit them as it will mean they are able to sell at more competitive prices and to invest in weaker areas of their business. o Resources for research and development this is also very important because Nokia must be specific in who they are targeting to and what their target market requires. Otherwise if Nokia target the whole market they will waste their resources and this will be bad for their overall business costs.
Weaknesses:
The weaknesses that may have an affect on Nokia are as follows: o High labour turnover this can occur for many reasons, some employees may find it difficult to adjust to the Nokia environment and some simply may not be right for the job. This is a weakness because every time an employee leaves the company Nokia will have to advertise for the job and train the employees. This will be very time consuming and costly for Nokia. o High production costs this is also a weakness for Nokia as high production costs will mean that Nokia will have to charge high prices for the products produced and this may mean they will loose out to possible customers to the hands of their competitors. This can be combated by introducing incentives so employees work harder during production or even by simply introducing a piece rate system instead of paying them by the hour.
Opportunities:
This is how Nokia benefit from external factors of the company; I will now state and explain some of these opportunities: o Less experienced competition this could serve Nokia as an opportunity because if the competition has less experience it will mean that they will be unable to anticipate the market less. Also it may mean they will make some wrong decisions concerning promotions. Nokia will be able to capitalise from the mistakes of the other companies. o Season this is could also serve Nokia as an opportunity because there are periods of time in the year which will affect and influence sales and demand. An example of this would be Christmas as there is always a rise in demand during this time of year. o Interest rates interest can have an affect on demand as the rate of interest goes up and down. When the interest rate is low consumers will be encouraged to spend rather than save, this is because they will not obtain a lot of interest on their saved money. This will help Nokia as this means that demand will rise and more Nokia products will be brought.
Threats:
This is the problems Nokia will face because of external factors having an affect on the business: o Alliances and mergers this is a concern for Nokia as it will mean their competition will grow stronger and this could mean that they will take some of Nokia's clientele. A company with a great amount of financial resources will obviously have more money to invest in their business. o Competition from larger players Nokia will have to lower their prices in order to compete with the competition and this will have a negative affect on the reputation of Nokia as well as their profit margins. o Government legislations and actions with the introduction of new laws by the government it will mean that Nokia will have to comply with more rules. These rules could vary from employee pay to working conditions; this would increase the costs of running Nokia and could also have a negative affect on their profit margins.
SWOT analysis' are very useful for companies like Nokia as it will allow them to make careful and cautious decisions. A swot analysis will identify where Nokia are doing well and where Nokia they can improve on. Companies like Nokia will be more concerned with the external factors rather than the internal factors so the swot analysis will also be useful for that reason.
SLEPT Analysis:
The word slept is short for social, legal, economical, political and technological factors which may affect a business. A slept analysis is an external audit of a company. I will now list and explain all of Nokia's strengths, weaknesses, opportunities and threats. I will explain how Nokia may benefit from carrying out a slept analysis.
Social:
These factors are usually concerned with demographics, ethical issues and other issues which may be considered to be social. o The risk directed towards under 18's often parents have concerns about their children being contacted by paedophiles or other adults. Furthermore society is also concerned about adult content being available to under 18's. Examples of such could be gambling, violent games and erotic material. o Where Nokia products are sold this can have a massive influence on the demand for their products. For example if Nokia decide to locate in an area of high unemployment it will be likely that there will be a low demand for their products. o Another social factor concerning Nokia phones is that people who own phones are under a constant threat by muggers. Unfortunately Nokia are unable to do anything about this so that will continue to be a put off for customers.
Legal:
These factors are concerned with laws passed by the government and how they affect Nokia's sales: o The sales of good act 1974 this means that if a product sold by Nokia is in anyway faulty at purchase or not fit for the purpose intended Nokia will automatically be at fault. o Tariffs Nokia is a foreign company so it has to import its products to England. Unfortunately for those laws have been introduced taxing any products coming into the company so that the government could profit directly.
Economical:
These factors are concerned with monetary issues out side the company: o Interest rates interest rates are set by the government to encourage spending and borrowing. Nokia would prefer the interest rate to be low so that consumers are not getting much interest from their savings and therefore will be encouraged to spend. However it could go the other way for Nokia if the interest rate is high, then consumers will be encouraged to spend and consequently their will be a slump in the demand for Nokia. o The state of the economy if the economy is in a recession then the likelihood of the demand for Nokia being high is relatively low. A recession is when a economy poor state and there is not much spending helping the economy to stay a float.
Political:
Political issues are usually concerned with the government's opinions and ideas towards a specific subject: o Government requests on mobile phone companies the government wants the mobile phone industry to create self regulating controls in relation to content so that under 18's are not exposed to anything they shouldn't be.
Technological:
This is to do with how Nokia can adapt to the technological desires required by consumers: o Growing number of mobile phone users because of the number of people owning mobile phones increasing Nokia must be able to produce more in order to keep up with the demand. o Competitors because Nokia are under such intense competition from the other major players, for example Sony Ericcisson and Motorola they must continue to stay ahead or at least inline with them. This is in terms of the quality of products produced from each company. o Technological development as technology has developed it has become possible for people to swap information with each other via Bluetooth or through other devices. This is usually a good thing however it can be used inappropriately to send anonymous or unwanted texts, this is known as blue jacking and it can be very distressful to the recipient especially if he or she is a child.
Product Life Cycle:
The product life cycle is the stages a product goes through when introduced. The stages in the product life cycle are introduction, growth maturity and decline.
There is the 5 stage that products pass through:
o The first stage the product will go through is development. The prototype will be tested and market research carried out before it is launched on to the market. This is obviously with new Nokia products.
o The second stage it will go through is introduction. This is when the product begins to sell. The sales of the product are usually not high at this stage as customers will not be familiar with the product. With companies like Nokia most of their newly released material will begin to sell quickly, this is because of the awareness of its brand name.
o The third stage products go through is what is known as the growth stage. This is when the demand the products begin to increase and companies will often step up a gear in terms of their advertising campaigns. Also companies like Nokia may lower the price of their products in order to try and stay ahead of their demand.
o Maturity sales are still increasing, but at a slower rate. Profits are high. However, there is greater competition from new rival products. This is the stage where Nokia try and get the most out the products they sell.
o The last stage a product will go through is decline. This is when a demand for a product falls and sales go down. This could happen for many reasons such as the product is old and dated or the product may be too expensive.
Nokia has products in each of the stages of production. This is because they have so many products on the market. Some of Nokia's products are newly being introduced to the market; some have been in the market for long and some are in decline and leaving the market. This acts as an advantage for Nokia because they have so many products in the market it will increase brand awareness which will links back to the promotion in the 4p's.
The product life cycle is a tool which is often used in business and has a reputation for being accurate. However it has disadvantages as well as its advantages. An advantage of the product life cycle is: o It allows companies to asses where there product is in the cycle. This will give them an idea on which of their products to focus on and which has had its time.
Disadvantages of the product life cycle are: o Some times products may fall into more than one category. o Also the cycle is very generic and is not as specific as it could be.
Boston Matrix:
The Boston Matrix asses how well products are doing in the market and how much of the market share that product has. The Boston Matrix is split into four groups these are; stars, problem child's/question marks, cash cows and dogs. In this section of the coursework I will explain these different groups, furthermore I will discuss where Nokia product lie and the advantages and disadvantages of the Boston Matrix.
I will now explain what the groups are and give examples for each of them:
Stars - are potentially very profitable products for the company, but they may require a great deal of investment in promotion to make them sell well. Stars usually have a high market growth as well as a high market share. An example of this is the Apple I pod. This product has become very successful over the last two years.
Problem Child's - their future is uncertain, they may become stars if the company invests larger amounts of money in them, or they may turn into dogs. An example of this is the DVD player before they where reintroduced to become very popular products.
Cash cow - these are highly profitable products. The money they make can be milked' to help stars and problem children. Nokia understand that they must get everything they can out of their cash cow products. An example of this type of product is the Nokia 6230i.
Dog - products which are in decline with falling sales. These products have a low market growth as well as a low market share. An example of a dog would be the Nokia 3310. This phone is a dog because technology has improved a great amount since it came out and it is now an outdated product.
Like in the product life cycle you it is impossible to place Nokia's products in any one of the groups in the Boston Matrix. This is because they have many products in the market at the same time. So their products will fall into different groups in the Boston Matrix. For example the Nokia 3310 in the year 2001 was considered to be a star as it had a high market growth as well as a high market share. The product was so successful because at the time it was seen as new technology and furthermore it was a reliable product that consumers could depend on. An example of a Nokia phone that could be seen as a problem child now is the Nokia 8800. The phone is a limited addition and costs around £700, consumers will most probably be put off by the price of the phone and furthermore consumers who already own the phone often complain about the features on the phone. This will bring down the reputation for that phone spread by consumers by word of mouth.
I will now discuss the advantages and disadvantages of the Boston Matrix. The advantages are: o It will allow companies to realise when it is time to give up on a product if the company believe it is unable to sell more products in the market. o Also even the products with a low market share will still be invested in as companies will recognize their potential.
The disadvantages of the Boston Matrix are: o It is only a model and a company needs actual data for it to be completely effective. o Also external factors will have a influenced on where the product lie in the Boston Matrix.
Social, Ethical & Legal Constraints:
The term constraint means a restriction or limitation. So in this section of the coursework I will be paying attention towards the drawbacks Nokia may face socially, ethically and legally.
Social:
Social factors are very important because these factors will influence the reflection the society or community has on Nokia. Social constraints could be any of the following: o The risk directed towards under 18's often parents have concerns about their children being contacted by paedophiles or other adults. Furthermore society is also concerned about adult content being available to under 18's. Examples of such could be gambling, violent games and erotic material. o Another social factor concerning Nokia phones is that people who own phones are under a constant threat by muggers. Unfortunately Nokia are unable to do anything about this so that will continue to be a put off for customers.
Both of these factors will have a negative affect on Nokia as they will make possible cliental think twice about purchasing a Nokia mobile. Even though these factors are a big problem for Nokia it will not allow their competition to gain a competitive advantage over them as they too will have the same problem. Unfortunately for Nokia these negatives cannot be avoided and so they will always remain an issue for Nokia.
Ethical:
These factors will also affect the reflection the society has on Nokia. The ethical constraints are similar to the social constraints, however the ethical constraints pay particular attention towards what is moral for Nokia to do or not to do. The ethical restrictions Nokia faces are: o Viruses Nokia phones are now becoming more and more advantaged technologically. This means that it is now possible for phones to attract viruses, Nokia understand this and ethically it is morally wrong for them to sell the anti virus equipment separately. If Nokia as a company act morally towards sensitive issues they will loose out on some potential, on the other hand they will be recognized as a company how cares and this may result in consumer loyalty and maybe even higher profit levels. o Another ethical restriction which will limit the amount of sales Nokia have is the threat of muggers. Unfortunately Nokia are unable to do anything about this so that will continue to be a put off for customers.
Nokia understand that ethical issues are very sensitive, they also understand that some can still work out in their favour whereas others cannot be helped.
Legal:
The restrictions are the restrictions the government put on companies which all companies must abide by. Some of these are:
The sales of good act 1974 this means that if a product sold by Nokia is in anyway faulty at purchase or not fit for the purpose intended Nokia will automatically be at fault.
Tariffs Nokia is a foreign company so it has to import its products to England. Unfortunately for Nokia laws have been introduced taxing any products coming into the company so that the government could profit directly. As Nokia are a foreign company they will be directly affected by this.
Consumer Protection Act this act relates to price and safety. It is important that Nokia abide by the rules of this act as it will have an impact on their reputation. Under the act it is an offence to: o Mislead consumers as to the price of goods and services. o Also to mislead consumers over sales prices and claim exaggerated price reductions. o Furthermore it is an offence to supply goods which are not reasonably safe.
There are many other acts which act as restraints towards Nokia. Legal issues are unfortunately unavoidable for Nokia or any other business; however they are at no disadvantage as all companies must abide by these rules.
Marketing Objectives for Plan:
In this part of the coursework I will explain the marketing objectives for my plan. The marketing objectives will underline what I wish to achieve from my marketing plan.
Meet consumer requirements this is one of the main reasons companies such as Nokia carry out market research. Market research is an effective and low cost method to finding out what consumers want in their products. One method of market research carried out by Nokia is the stocking of limited addition phones. An example of this would be the Nokia 8850 which was released in 2000. When Nokia saw the success of the 8850, it gave Nokia a chance to release a similar product, in the form of the 8310.
Create an image for the product this also very important for Nokia as brand imaging can have a massive impact on the profit a company makes.
Target new market segments this is paramount for Nokia as they have to target new areas on the market in order to develop and expand their business. It is also important to Nokia as they will be able to keep one of the most important of Nokia's objectives.
Make a profit without this Nokia would not be as successful as up with their competition and earn global recognition. The whole point of any company performing market research is to find out what consumer's needs are and meeting these needs in order to maintain a profit. Making a profit is what keeps the company running and helps it to expand globally.
Increase market share this is also important for Nokia as an increase in the market share will show that the company is performing well. It is also a way of measuring the effectiveness of Nokia's marketing campaign. The company with the largest percentage in the market share will be the company dominating the market.
Introduce new products to the market this is also a sign of development, as introducing new products to the market shows that company's are innovative and are able to adapt to the changing lifestyle of consumers. Company's who are unable to produce new products are usually the companies that fall behind and become unsuccessful. An example of this is IBM. IBM were the first company to produce personal computers, however they did not believe the idea would catch on and were succeeded by other companies, for example Sony.
Anticipate the market marketing is now becoming more and more customer orientated. This shows that companies are trying hard to meet the needs of consumers by anticipating the market. This is very important as companies will know exactly what consumers want therefore not wasting vital money or resources.
Target Group:
The mobile phone I have chosen to promote is the Nokia N91. In this section of the coursework I will discuss who my target market will be and why. Furthermore I will explain why it is important to have a target market.
The market I have chosen to target for the Nokia N91 is teenagers and young adults. This is because firstly the features on this phone are features which will attract the attention of this age group. Examples of these features are an mp3 player, video, Bluetooth and internet access. Also the Nokia N91 has been featured in hit R & B singer Cassie's video "me & you". Cassie is a singer which is much admired by this target group so this is another reason why I chosen this target group. The celebrity endorsement will increase the reputation for product amongst that target group. Furthermore more another reason I chose to market the product to this target group is because it is easiest to market products to that group as they are usually the group who are most interested in mobile phones.
It is paramount that Nokia and all other companies segment their market and market specifically. This is because everyone has different needs, so there is no point in targeting everyone if Nokia will only get a small reaction from this. This will eventually lead to the second reason which is that if Nokia do target a specific area of the market and target everyone they run out of resources. All companies understand this so they think logically and only target the group of people they want to sell products to. If they do end up wasting their marketing resources it will have a negative affect on the whole of the Nokia company, this is why the marketing department can be the difference between success and failure for any company.
Recommendations for 4 P's:
In this section I will make recommendations of what Nokia should do to improve their 4 p's.
Price is a very delicate issue and must be addressed in the right manor. The way I will set the price for Nokia products is through the concept of price skimming. This involves charging relatively high prices for a short time where new, innovative or a much improved product enters the market. I will use this pricing strategy as it will "skim" off customers who are willing to pay more to have the product sooner, prices are lowered later when demand from the falls. By charging high prices initially a company can build a good reputation for themselves. Also it can act as an effective way of segmenting the market. Furthermore it will divide the market into a number of segments and companies can reduce the price of the product at different stages.
In order to promote Nokia products I will try to get more consumer input. Hopefully this will make Nokia products more consumer orientated; this is when products are developed according to the desires of consumers. I will do this by conducting primary and secondary market research. This will give me a variety of results and hopefully this will make my product more successful with consumer. Furthermore I could try and use more celebrity endorsements, in order to increase the reputation as well as the awareness of Nokia phones.
In terms of place I could use more distribution channels in order to make my product more available to consumers. If Nokia only sell directly to consumers they are cutting costs however they will be unable to sell many products, so it will be more beneficial for Nokia to use many distribution channels. For example they could sell directly to consumers, through the internet and they could sell to industrial consumer (retailers).
This P is often regarded as the most important of all, in its simplest form it just means the products a company is selling. In order to any company to be successful they must sell products. Nokia have already achieved this and the next step would be to continue selling products so they able to make a profit. With the aid of market research I will attempt at developing a product which will increase their market share.
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