MGT301 GDB Solution Spring 2013

This is a critical point for Nokia: Nokia should decide what they want to be in the smartphone play: a company like Apple, providing the platform, the device and all the ecosystem around it or a company like HTC (or Motorola for that matter), building the device and letting others worry about the ecosystem.

There is no third alternative.

This is a memo that CEO Stephen Elop send to members of his company this week:

Hello there,

There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice.

He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times–his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour.

We too, are standing on a “burning platform,” and we must decide how we are going to change our behavior.

Over the past few months, I’ve shared with you what I’ve heard from our shareholders, operators, developers, suppliers and from you. Today, I’m going to share what I’ve learned and what I have come to believe.

I have learned that we are standing on a burning platform.

And, we have more than one explosion–we have multiple points of scorching heat that are fuelling a blazing fire around us.

For example, there is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.

In 2008, Apple’s market share in the $300+ price range was 25 percent; by 2010 it escalated to 61 percent. They are enjoying a tremendous growth trajectory with a 78 percent earnings growth year over year in Q4 2010. Apple demonstrated that if designed well, consumers would buy a high-priced phone with a great experience and developers would build applications. They changed the game, and today, Apple owns the high-end range.

And then, there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under €100. Google has become a gravitational force, drawing much of the industry’s innovation to its core.

Let’s not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally–taking share from us in emerging markets.

While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.

The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.

We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.

At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America. Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead.

At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.

And the truly perplexing aspect is that we’re not even fighting with the right weapons. We are still too often trying to approach each price range on a device-to-device basis.

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.

This is one of the decisions we need to make. In the meantime, we’ve lost market share, we’ve lost mind share and we’ve lost time.

On Tuesday, Standard & Poor’s informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody’s took last week. Basically it means that during the next few weeks they will make an analysis of Nokia, and decide on a possible credit rating downgrade. Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.

Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It’s also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on.

How did we get to this point? Why did we fall behind when the world around us evolved?

This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.

Nokia, our platform is burning.

We are working on a path forward–a path to rebuild our market leadership. When we share the new strategy on February 11, it will be a huge effort to transform our company. But, I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future.

The burning platform, upon which the man found himself, caused the man to shift his behavior, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same.

Stephen.

Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs, and then designing and implementing strategies to target their needs and desires using media channels and other touch-points that best allow to reach them. Market segments allow companies to create product differentiation strategies to target them.

What Is an Attractive Marketing Segment?

An attractive market segment is one that offers solid current or long-term profit potential for your business. Companies typically consider the various segment options they have to market to and may target one or multiple markets depending on how much money they have available to invest in marketing.

Market Segmentation Basics

Market segmentation means breaking down a large target audience into smaller, more homogeneous market segments. Demographics, lifestyle, geography and behavioral traits are among the common approaches used to segment markets. By breaking customers into smaller markets of customers with similar traits, companies can more effectively target each segment with messages that will more likely have an impact. After market segments are identified, companies must determine which segments to pursue first with marketing efforts.

Size

One of the most attractive features of a market segment is its size. While the largest segments do not always offer the best potential, it is better to have a larger potential market when possible. With larger market segments, advertisers can generate business without having to pull in as high of a percentage of the market segment. Long-term sales volume and profitability are both higher with large markets.

Growth Potential

Another trait of attractive market segments is untapped potential. With emerging markets or market segments that have not seen a full range of product or service offerings, a company has more opportunity to generate business and expand market share. Additionally, the opportunity to derive high profit margins by offering value in a way that the market has not experienced is a draw. Higher profit margins mean you can sell less and still make money.

Competition

Along with the traits of the market segment, the amount and quality of the competition already serving the market significantly affects a segment's attractiveness. Generally, more competitors means a business has to work harder and invest more in advertising to earn business and increase market share. When considering two market segments, the one that poses a less competitive environment is most attractive if other factors, such as size and potential, are constant.

Market share

"Market share is the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity." In a survey of nearly 200 senior marketing managers, 67 percent responded that they found the "dollar market share" metric very useful, while 61% found "unit market share" very useful

"Marketers need to be able to translate sales targets into market share because this will demonstrate whether forecasts are to be attained by growing with the market or by capturing share from competitors. The latter will almost always be more difficult to achieve. Market share is closely monitored for signs of change in the competitive landscape, and it frequently drives strategic or tactical action.

Most important aspect of a mobile set is its price & network grasping capacity, and then comes the listed features, screen play, customization of features, camera capability, music play capabilities, storage capability, speed of functionality,

Let’s see what NOKIA phones lag behind in competition

Multiple features and customizable features

Storage capability

Speed of functionality

Screen play

Let’s see what NOKIA phones have

Solid battery back up

Durability

Excellent camera

Excellent music play

Talking about Network grasping again Nokia is competent but talking about price Nokia is lagging behind

1) Either Nokia should come up with its own package of operating system that should be same as android in capability and functioning. I can bet even if it will be window based still it will be able to attract market due to its durability and battery backup qualities

2) It should come up with tablet like phone with higher random access memory and storage capacity

We know Nokia is the first choice and hence when it will come to choose among numerous brands people will trust Nokia tablet or tabloid phones

3) The glamour and the beauty of the look of the handset needs to improve, sleek and shiny wide flat screen, and with additional attractive safety cover ( i.e. to cater different segments of buyer group teens, professionals etc) . The additional safety cover should not be a plastic some how carry away sort of

4) Nokia should do a market analysis to get near to exact numbers of people desiring above stated features. Depending on that they should plan there break even and accordingly come up with the lowest possible price.

5) Flood the market with the stock, the supply should be in all sorts of shop & in all segments of geography

6) The web based competition and lottery prize should be launched

7) The ad should be more of web based

If buyers can buy Chinese company phone and other micro max phones online without seeing it in hand, then we can imagine Nokia has its own credibility. What will happen if they come up with there online purchase scheme.

9) The name of Nokia is more than enough to call peoples' attention, so for the advertisement may be TV or press media should use all the footage to show the beauty and functionality of sets and should not use big star cast which may lower the cost of marketing and hence give higher share of profit to the marketing selling chain so that they shall prefer to keep the stock of product and pay more emphasis on its sale

10) Product diversification should be in the fields of corporate selling with the product line having more emphasis on its organizational mail and data base access, i.e. higher capability of its functionality. Here Nokia can take advantage of its window based operating system and can also add MS office

I have listed few of my views which may bring up Nokia’s

Source(s):

self understanding

1- Nokia maintain his reliability but change his price planning because if nokia decrease its mobile phone price then Nokia can re-gain its market share

2- Nokia must provide all things like wifi, Bluetooth, camera, memory card option in mobile phones at low price minimum 4000 rupees.

3- If consumer sees that nokia provide latest features at low price then selling point is high and nokia again maintain his position in market.

Nokia maintain his reliability but change his price planning because if nokia decrease its mobile phone price then Nokia can re-gain its market share

Nokia must provide all things like wifi, Bluetooth, camera, memory card option in mobile phones at low price minimum 4000 rupees.

If consumer sees that nokia provide latest features at low price then selling point is high and nokia again maintain his position in market.

1) Either Nokia should come up with its own package of operating system that should be same as android in capability and functioning. I can bet even if it will be window based still it will be able to attract market due to its durability and battery backup qualities

2) It should come up with tablet like phone with higher random access memory and storage capacity

We know Nokia is the first choice and hence when it will come to choose among numerous brands people will trust Nokia tablet or tabloid phones

3) The glamour and the beauty of the look of the handset needs to improve, sleek and shiny wide flat screen, and with additional attractive safety cover ( i.e. to cater different segments of buyer group teens, professionals etc) . The additional safety cover should not be a plastic some how carry away sort of

4) Nokia should do a market analysis to get near to exact numbers of people desiring above stated features. Depending on that they should plan there break even and accordingly come up with the lowest possible price.

5) Flood the market with the stock, the supply should be in all sorts of shop & in all segments of geography

6) The web based competition and lottery prize should be launched

7) The ad should be more of web based

If buyers can buy Chinese company phone and other micro max phones online without seeing it in hand, then we can imagine Nokia has its own credibility. What will happen if they come up with there online purchase scheme.

9) The name of Nokia is more than enough to call peoples' attention, so for the advertisement may be TV or press media should use all the footage to show the beauty and functionality of sets and should not use big star cast which may lower the cost of marketing and hence give higher share of profit to the marketing selling chain so that they shall prefer to keep the stock of product and pay more emphasis on its sale

10) Product diversification should be in the fields of corporate selling with the product line having more emphasis on its organizational mail and data base access, i.e. higher capability of its functionality. Here Nokia can take advantage of its window based operating system and can also add MS office