An Analysis of Nokia’s Communications Strategies
In the world of telecommunications, the name Nokia is already a byword amidst a competitive field composed of aggressive players that include Samsung, LG, Motorola, RIM, Sony Ericsson, Apple, ZTE, G-5 and other medium and small-sized manufacturers.
Nokia presently occupies the top rank in the world’s listing of telecommunications providers, with a market share of 36.2% representing close to 100 million units sold in 2009 (Gartner Newsroom, 2009).
How Nokia achieved dominance in its industry, considering its rather inconsequential beginnings, is a corporate success story by itself. But given that its rise to market prominence happened only in the last two decades, this paper shall dwell on analyzing not its history but its marketing strategies, particularly its marketing communications strategies, and how effectively it maneuvered its brand positioning in the market.
In addition, this paper would also take a look at the impact of its communications to its various stakeholders and how these various clients have responded to the company’s communication initiatives. The paper shall proceed with a brief background on Nokia to establish a springboard to the specific topical objective of this analysis and then focus on the issues related to marketing communications, the selected mix, positioning, branding, and other marketing communication functions, together with the writer’s evaluation of the effectiveness of these activities.
Nokia as a Marketing Organization
In a customer-oriented organization such as Nokia, the main driver of business is marketing, a set of processes that aims to create, communicate and deliver offerings that will benefit customers and other stakeholders, according to the American Marketing Association (AMA) in Parsons and Maclaran (2009). And for a company to perform these processes in pursuit of its business, it must be a marketing-oriented organization which recognizes its customers as its number one stakeholders (Parsons and Maclaran, 2009).
It is evident in all the official communications of Nokia, at least in the web and the brick-and-mortar outdoor ads and in print, that it lives up to this orientation, even more so in its appropriate adoption of the vision phrase “connecting people” to “help make the world a better place for everyone.” (Nokia website). In fact, through its products, Nokia promises to empower every one to share and make the most of their lives by offering “irresistible personal experiences.” These statements are truly very biased in favor of the customers. Pursuant to this vision and the company’s marketing orientation, to situate the marketing communications activities for the purpose of this paper, it is necessary to take a glance at the marketing plan and its constituencies (Wee,2011). The function of marketing proceeds along the lines of the strategic maneuvering of the elements of the marketing mix: product, price, place and promotion (Marketing Teacher, 2011).
Who are the Stakeholders for Nokia
An analysis of the communication strategy of Nokia is only possible by identifying the stakeholders which are relevant to the operation of Nokia. As described by the company’s directors in the strategic policy document the company is aiming to be an excellent one as described by Peters and Waterman (1982). This done by ensuring that anybody whose activities affect the operation of the company and those who the company’s operation affects are credibly recognized and reached out to.
The first of tense categories of the stakeholders are the customers who are given the pride of place in the promotion strategy of the company. Rightly so NOKIA acknowledges that the customer base is the only reason why it is in business and for that matter there should be a constant flow of communication between the company and it customers. The company as a marketing oriented company share in the values of the marketing philosophy that the consumer is sovereign and around whom all of its activities must revolve or for whose satisfaction the company is in business (Ritson, 2010).
For Nokia marketing when it comes to the huge Chinese market where it has almost a third of its entire customer base, communication must aim at information the consumer about the brand and why it is more superior than others and how it is able to meet the changing consumer expectation and values, the educate the consumer about how to use the Nokia product in such a way that it will be able to give them the level of utility which they require and from that make them loyal to the product.
Marketing communication is also aimed persuading them to make a purchasing decision by going beyond merely accepting the company’s message and rather going on to make effective purchases after which the company is interested in communication with the client to build a relationship with him or her. In China therefore attribute of marketing communication as far as the consumer is concerned is not ignored and every effort is put into making it a reality
The second group of stakeholders is the community. Nokia acknowledges that where they find themselves they work within a community that is responsible for providing all the factors of production. The market is created by the society; the human resources which are employed and its physical location are all gained from the community. The role f the community is thus important to Nokia to the extent that when it is ignored it also means they have ignored a large deposit of the market opportunities that are available to the company. As far as the community is concerned Nokia has a belief that a communication system that reflects the culture and promotes its heritage is an indispensable tool in developing a healthy relationship with the community (Wee,2011).
As explained by Hofstede and Trompenaars the Chinese culture are typically communitarian or collectivist, power distance, and higher on uncertainty avoidance. If all of these are translated into the communication environment, it gives an indication that the Chinese are very proud of their culture and many people are affected by it in many ways.
Nokia understand this very well and for that matter has designed its communication mix to the extent that each one of them is able to fit and represent the Chinese culture of communitarians and togetherness. This is not only represented in the verbal communication but also through the colors, designs and the symbols which are used to carry out communication other business practices, h company is able to bring out the essential feature of the Chinese culture which are highlighted in order to build a health relationship with the company.
A typical example in this direction is the cultural perspective of the Chinese that is against any form of exposure of the human body in a manner that is seductive. Recently while a number of competitor are making sue of sex appeal advertisement in China, Nokia understand that such an approach to marketing has the propensity of desecrating the cherished values of the Chinese culture in its entirety as against the very few people who have abandoned the values of the culture and are aspiring for western life styles that are very liberal. Chinese names, symbols and holidays are all considered important occasion for which Nokia identifies with and are able to main a health communication between the company and the environment as a whole
Nokia considers that when it has a workforce that understands the company’s polices and programs and have been witnessed to they are able to deliver their core responsibilities with all the efficiency that it deserve. Internal marketing is considered to be an important attribute of the whole marketing communication process as employees are offered the information which is likely to make them perform their function very well.
This also means that there is a creation of the right environment where each person’s work in acknowledged. In China Nokia has an internal marketing approach which draws it strength from the Chinese cultural attribute that sees the business environment as an extension of the family with the head of the company assuming the father figure role.
A culture that has a high respect for old age, providing of equal opportunity for the advancements of both men and woman and a culture that has a special place for the socially disadvantages are all important attribute of the culture which has been adopted to make internal marketing very important (Ritson, 2010). The employees are considered as partner in achieving the goals of the company and not as instruments of work hence play an important role in the communication strategy of the company in China.
Marketing Communications Mix
Promotion is also known as marketing communications. If the elements in the marketing mix are to be examined closely, it will be noted that the single activity that will spark and trigger the dynamic interaction with the customer is marketing communications (Egan, 2007). It is the first step in the product purchase from the point of view of the customer.
Marketing communications in effect starts the implementation of the marketing plan. It involves the mobilization of the marcom tools of advertising, sales promotion, publicity, public relations, sponsorships, direct marketing and internet marketing (Cant et al, 2007). These are the means by which the stimuli are presented to influence the audience to make a response.
Just like most areas where the company is operating Nokia believes that advertising can play an important and a leading role in communicating the value of the Nokia brand to the whole public. As a communication platform that that is able to reach as many people as possible and considering the size of the market in China which is in excess of one and half billion people, the use of advertisement is not only appropriate but also cost effective It is able to compete effectively on the televisions and the air waves with those of other people. Nokia does not only employ televisions advertisement in China but a more importantly the advertisement in the press, journal. This has the ability to reduce the limitations of the television and radio advertisement of non permanence by making sure the information can be available for a long time. In recent time the opportunity which has come in the advertisement platform is in the area of online advertisements and marketing. As more and more people get access to the internet the opportunity for Nokia to provide a platform which is cheaper and where all of its products can be displayed has been found in the website. People can go there and explore all the essential feature of the Nokia brands including it latest collection of blackberry.
The Nokia website is almost like “human technology” as the slogan puts it. As one adapts to the contents of a tab, the site adapts to the visitor. Its sincerity and its transparency are felt. Whether one is just scouting for information or seeking a feature or looking for a product version, it is all there. And the experience projects a feeling that the website is a “human technology” that knows the answers to questions. Its transparency even goes as far as having a presentation on the compensation of the board of directors.
It has been indicated that the company understands that culture in China is an indispensable part of every entity that seeks success in business venture hence the company has departed from modern advertising techniques which many of it competitors such as Apple and Sony etc are employing in the market to appeal to the youth market that are in the majority which is sex appeal advertisements. It is the position of Nokia that such attitudes may have the tendency to compromise on the cherished cultural values of the Chinese people for which the company is determined to main. So in advertising it is possible to say that Nokia is culturally inclined company
A trip down the rural areas around of Shanghai, Beijing, and Ningbo will bring one to an encounter with the many things which Nokia is doing to help the communities in the area of education and health and sports development. Nokia understand that it does not only seek interest in communities of their consumers alone but as an integral part of the community they focus on assisting it in meeting some of its need. These needs are captured by the media and then come out as promotional material for the company. There is however challenges with this approach as the cut back on social responsibility cost as a result of unfavorable market conditions sometimes affect the efficacy of this approach alone. For example during the three years of economic crunch very little as done in the area. This is why it is better used as a supporting tool. Just in December 2010, Nokia has taken over the sponsorship of the Chinese University Games which is held on an annual basis.
In China Nokia understand very well that the Chinese seek for moderation, sobriety and simplicity while others are looking for aesthetics and luxury. When the cost is cheaper the Chinese can be counted to support and patronize. All of these are jealously guarded attributes and values of the culture of the Chinese which are relevant and informs as consumers on their purchasing decisions. To this end the company’s sales promotion is not in the form of the usual buy one get one free o r elaborate promotions but rather the frequent prices discounts which are offered to the public as and when the need be. At time discussions are offered during major season of the years where gifts are expected to be exchanges (Singh, 2004). For example in the Chinese New Year celebrations the Nokia black berry phone was reduced in price so as to enable as many people to buy and give as gifts. Even at the university campuses where the company is beginning to focus Nokia blackberry is challenging the iphone as the most preferred brand due to the use of sales promotions to induce the customers to make purchases compared with the high expensive phones
A walk through the streets of cities and town in China will not miss sight of the many Nokia shops which are springing up each day. These are all part of the efforts which Nokia is putting in place to engage in direct marketing. It has been noted by Singh (2004) that almost all shopping mall in China have at least a Nokia shops within it that s strongly representing the interest of the company
Brand Communication Strategy
The mobile phone market, like any other technology product, is one market where the products reach a certain parity or similarity over a period of time. This means that the features of mobile phones become eventually the same irrespective of maker, including their seeming technological complexity (Temporal, 2006). If one manufacturer excels and leads over the rest, it certainly is not because of better features.
If not features, what can put a company on top? The answer seems to lie in branding, and it seems it is the one secret that apparently has kept Nokia on top of the heap. Brand is the image that comes to mind at the mention of a generic product. According to Newmeier in Ehret (2009), it is a person’s gut feel relative to a product or service or the company that promotes it. It is what customers get a sense of right after an exposure to the item. Cromwell (2009) defines brand as the context within which an audience feels or appreciates a product or service that a company is offering.
Ehret (2009) further states that brand is the emotional glue that welds a company to its customers or vice versa. Strong brands elicit deep emotional, psychological and mental attachments from their users. In short, a brand is not a brand until it connects to its customers emotionally (Dahlen et al, 2010). Nokia has many characteristics it attributes to its products but customers do not remember these characteristics. What they remember is Nokia as if Nokia were a trusted friend (Temporal, 2006). It must have been because Nokia has worked carefully and steadily on its brand name and the management of consumer perceptions over the years.
The Nokia brand is all about building friendship and trust, removing the gap between customer and her Nokia. It is the human dimension that has descended on every Nokia product and making apparent romance with its owner (Temporal, 2006).
How effective is Nokia’s marketing communications? How is effectiveness measured? Powell (2008) suggests metrics that speak of increased market share, increased sales, improved revenues, increased customer base, return on investment and increased shareholder value. On the other hand, MacDonald et al (2007) believe that effectiveness pertains to the impact of promotional activities on these parameters.
A look at the following summary of performance (Nokia website) for the last four years would help evaluate in a way whether the marketing and marketing communications strategies that were implemented were generating the desired results. It is to be noted that the study period in focus represents an abnormal period as it was attended by one of the worst recessions in history.
SUMMARY OF PERFORMANCE (in millions)
Year Net Sales Operating Profit Earning/Share
2007 51,058 7,985 1.83
2008 50,710 4,966 1.05
2009 40,984 1,197 0.24
2010 42,446 2,070 0.50
The figures in this table would show that the performance of Nokia for the four-year period had been affected substantially but with relativity. The figures for net sales, operating profit and earnings per share are parameters that may also be used to measure the effectiveness of the strategies that were implemented during those years.
It is to be noted that coming from a robust year 2007 where all figures showed very palatable levels of NS, OP and EPS, the effects of the recession were felt at their worst in 2009 that saw the earning per share drop to 0.24 from 1.83 in 2007, operating profit to Euro 1,197 million from Euro 7,985 million, and net sales to Euro 40,984 million from Euro 51,058 million.
It is to be further noted that the worst level of the economy had only caused a reduction in the level of the parameters for Nokia, compared to the negative performance of many large companies in other industries. In 2010, a turnaround was already experienced and it is expected that the positive trend will continue as the world economy begins to recover from its slump.
If Nokia kept its top ranking worldwide, it is because it has kept its premier position in China where it stands out as a classic example of a company that easily learned the rules of the game and smartly revamped its strategy for the local market (Bloomberg, 2008). As of the end of 2007, China registered as Nokia’s largest mobile phone market accounting for more than one half of its global sales (Bloomberg, 2008). Market analysts reported that the success of Nokia in China has been largely attributable to the revamped distribution strategy favoring alliances with small provincial players as against its original partnerships with national distributors. Additionally, Nokia tapped into a traditional element in the Chinese culture by engaging Chinese engineers and designers in Nokia research and development initiatives (Bloomberg, 2008).
In a mobile phone market survey conducted among students in China, Grail Research (2009) reported that the reasons Nokia continued to dominate the Chinese market were its “people first” policy indicating its understanding of the market’s needs, its targeting of the student market and its distribution leverages. In that survey, close to 50% of university students owned a Nokia phone and close to 80% of all students indicated their intentions to buy one.
The mere fact that 50% of university students are present users and 80% plan to own a unit speaks a lot of the effectiveness of Nokia’s marketing strategies. In an added effort to bring the Nokia experience even before a purchase is made, Nokia expanded the accessibility and presentability of its Nokia OVI stores which are now the most frequently visited mobile application store in China (Wee, 2011). The results of operations of Nokia in China validate the marketing orientation of Nokia as an organization: the customer is number one and not the shareholders (Singh, 2004).
The analysis that is being done in this paper regarding the effectiveness of marketing communications in Nokia indicates a certain strength that was exhibited by Nokia that may serve as some item for adoption (Temporal, 2006). The ability shown by Nokia in being able to wiggle out of the effects of recession with the least strain can be attributed to the strength of the corporate brand. In good times, people buy cell phones and they would choose the more expensive classy versions. In bad times, they would still buy cell phones though they may slide in their selection, if a selection is available.
Some analysts have chided Nokia for not maneuvering strategically in the smart phones market, as if it is giving the market away to competition (Ritson, 2010). It must be a concern coming from a sympathizer who would not want to give competition a chance to make an edge. In a recent survey of the market for smartphones in China, Apple’s iPhone appeared headed for a huge slice of the Nokia market (Dewittt, 2011).
There is reason for this apprehension especially that Nokia has entered into the very rich markets of China and India. As the world economy improves and welcomes new economic leaders among the developing nations, telecommunication becomes a very engaging market. With a near perfect image it has created for itself, Nokia has to continually enhance that image by protecting its ranking.
Where Nokia is right now is a lesson in branding. It is a conclusion that shouts out loud for everyone to hear. It is an aftertaste. It is the scent after a romance, and even when the current experience is over, the memory still lingers. In Nokia’s language, it is the irresistible personal experience that a customer feels when he grips that instrument of communication close to his ear.
The lesson shared is also a lesson in understanding culture, in keeping close as much as possible to the customer. China is a closely-knit people. Nokia’s lesson with them was one of faith in a people who have learned to trust the name Nokia and might have even fallen in love with it. It is a relationship that saves. And no one is giving up, in good times, in bad times, as was shown in the last recession.
How would stakeholders feel about Nokia’s marketing communications initiatives? If this writer were a shareholder, Nokia would be given an overwhelming vote of support and trust for what it is has done and is presently doing. It is expected that shareholders will understand the problems of the world as these impact on the company. At the rate Nokia is showing its ability to stand up to the challenges, it is just a matter of time when things would get back to normal streaming.
If this writer were an employee, Nokia would be given a high thumbs up sign of approval for the care and concern it shows to the workforce. It is seldom that one finds an employer like Nokia. If this writer were society, Nokia would be asked to do more for the benefit of the less privileged and more to enhance its programs to protect the balance of nature. Nokia would be asked to double its efforts to reduce carbon emissions and lead the way towards a sustainable healthy surrounding.
If this writer were the customer, Nokia would be asked to continue its enhancing its people connection and making that irresistible personal experience “more irresistible.”
Branding. Friendship building. Trust building. It must have been the Nokia way.
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