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How successfully does Nokia advance its products and what should be its strategy in the future: A Research Project of Branding

Tutor: Megan Moore

Pei-Sui Sung (Betty Sung)
Sarakorn Roongruengmanirut (M Roongruengmanirut)

Date: 20 November 2002

TABLE OF CONTENTS

EXECUTIVE SUMMARY

1         INTRODUCTION

1.1        COMPANY HISTORY

1.2        NOKIA’S CHANGE IN FOCUS BETWEEN 1988 AND 2000

1.3        PEST ANALYSIS

2         RESEARCH ANALYSIS

2.1        SWOT ANALYSIS

2.2        ENVIRONMENT POLICY AND TECHNOLOGY DEVELOPMENT IN THE FUTURE

3         CONCLUSION 

4         RECOMMENDATION

5         REFERENCES

5.1        BOOK

5.2        PERIODICAL

5.3        WEBSITE

6         APPENDICES

Executive Summary

This report analyses the impact of external an internal influences on the business strategies of Nokia Corporation, evaluats the factors, modifers of Nokia’s advancement, and also considers the environment policies, and technology development in the future.

Analyzing current business situation shows that Nokia needs to:

n          Differentiate its products capability between old and new category.

n          Enhance its products with computer IT compatible, focusing on new technology users.

n          Maintain its price reasonably.

n          Follow, practice and promote its environment policies.

The purpose of this report is to evaluate how successfully does Nokia advance its products.  Due to the modern trends of social development, whether Nokia’s environment policy is accurately operated or not will be related to improve its reputation.  In addition, the grow of mobile terminals leads Nokia to modify its changes, therefore, Nokia has to develop new technology to approach to a new market, which combine with PC market not only to occupy the position in mobile phone market.  Moreover, to connect PC and mobile phone is a tendency in mobile phone market, even though to combine these two products together.  Because of this trend, Nokia creates new products to match with the market.  

The result of the report finds that Nokia does not only want to occupy the position in mobile phone market, but also to base on its technology development to approach to the PC market.  In addition, Nokia should not only develop new technology, but also has other responsibilities for human, such as to reduce pollution and waste, which are produced by the process of production.

1         Introduction

In present years, the mobile Internet has attracted numerous media attention.  We know need to consider why it is important to creative new products of mobile market, what does consumers need, and what kinds of social activities change affected Nokia change its main starching.

In this report, it is important to find some information from Nokia’s background and to analysis Nokia’s further decisions in the future.  Focus on Nokia’s strength, weakness, opportunity, threat, environmental policies and technologies development, to know more about Nokia’s vision and action in the future.

1.1 Company History

At beginning, Nokia was a manufacturer of paper in 1865.  It had a dramatic changes in last centary. (Nokia, 2002)  After World War II, the require of industrial products were increased substantially.(Liu, 2001)  Nokia had change its function to an industrial enterprise and produce industrial products, such as chemicals and rubbers.  Untile 1960s, Nokia had set electronic department, and focused on develop transmission systems, this was the factor that Nokia became a famous company in the world.

1.2        Nokia’s change in focus between 1988 and 2000

Source: Merriden, T. (2001), Business the Nokia Way, overview, pp Xiii  

1.3 Background (PEST Analysis)

In the case of Nokia, it can be classified as international organization. It basic for global brand, which is required to focus on macro environmental factors, such as Nokia.  Macro environmental factors comprise Political, Economics, Society, and Technology, viz, PEST Analysis.  It is necessary force that Nokia has to concern and know what is happening in the other countries at the moment.  Because there are different culture and different external factors between different countries, Nokia has to adjust its strategic plan in order to develop international market.

1.3.1   Political

It is important of a company to acquire resources from government, such as economic policy, and science and technology policy.  The success of Nokia has obtaine the resources from Finnish policies which assist Nokia to advance its products.  As Zheng (2001) has observed:

The Finnish policies are the most important factors of Nokia.  To operate efficiently, a modern knowledge- and technology-based economy that is highly specialized, internationalized and undergoing rapid structural change requires active support from the public sector.  In its widest sense industrial policy and science and technology (S&T) policy comprise all those measures by which the public sector shapes the operating environment for business and thus fosters public welfare.  Both policies ursued by Finnish government and Parliament are crucial for the development bothe of the Finnish Economy and of national information society.  

 

Finnish government best facilitate the efficient functioning of the economy by directing its resources to the reduction of market failures.  The state must also pursure an industrial and economic policy that provides a stable macroeconomic environment for enterprises.  General macroeconomic stability, low interest rates, stable currency conditions and the international competitiveness of the tax system form the foundation for the growth of business an improvement in employment.

As the result of this, not only Finnish Government but also international companies, such as Nokia, have play very important roles to develop their information society and national technology strength.

1.3.2   Economic

According to the fact that Russian Federation was collapsed in early 1990s and it assaulted with Finnish economics (OECD, 1996).  Nokia also face with the problem, and changed its functions from single market and overall products to global market and focusing mobile phone market. 

1.3.3   Society and Technology

In the 1980s, people trend to microcomputers and Nokia try to match the tendency to produce its main products, such as computers, monitors and TV sets.(Merriden, 2001)  According to the changes in 1990s, Nokia also changs its functions to mobile phone market.  Nowadays, the global market trends to connect PC and mobile phone, even though to combine these two products together.

On the other hand, one important future challenge of Nokia is to estblished its policy to follow up the environmental policy and science and technology policy of the Finnish Government.  As Zheng (2001) has report:

Substainable development and environmental protection have various effects on the operation of the innovation system.  Innovation also creates new opportunities for promoting sustaainable development.  The markets for environmental products are expected to grow rapidly in the near future.  The Finnish government offers goods facilities for taking this opportunity.  National and European reforms arising from environmental objectives influence the perequisites from innovation.  [Nokia] must be used to find solution which help to implement environmental objectives as well as the objectives of innovation policy in a balanced way.(Science and Technology policy council of Finland, 1996)  

To sum up, the main reason of Nokia has success to advance its products are the policies and technology development of Finnish Government.  It can not be separate between Nokia’s successful of advance its product and Finnish Government’s policies, both of Nokia and Finnish Government are the winner in the international market.  Nokia has obtain the success of mobile phone market, and Finnish Government has establish its position of technology development.

2         Research analysis

2.1 SWOT Analysis

Strength and weakness analysis can be defined as internal factor in order to show how well they are performing inside the company at a moment.  In case of Nokia, there is much strength where it was success in its company, whereas weakness point has only one where it was inevitable for high price- high quality.  Clearly, the business does not have to correct all its weaknesses, however it should retain its strength as long as they can.  In the same way, they do have to research and develop their company continuously in order to achieve the goal.

In contrast, the opportunity can be classified because of their attractiveness.  The key success requirement for operating in the target market is basically depended on the external factor (opportunity).  In case of Nokia, it has numerous opportunities to be able to enlarge their market share.  Conversely, Nokia still have threat, which mean a challenge posed by an unfavorable trend or development that may lead into the absence of defensive marketing action, to diminish in sales and gross profit.  Consequently, Nokia have to create more strength and opportunity, then it needs to correct its weakness and threat as well.

2.1.1   Strength

n          Global marketing (product)

Nokia is the global product so it is undoubted true that its products should be at least passed worldwide qualification, viz, ISO.  This is the reason of why Nokia can be entrust around the whole world.

n          High product quality

Nokia concerns about product quality, which is the most important factor to satisfy customers’ needs.  Nokia adds more values by superior quality or differentiated features to the market.  In the meantime, Nokia still produces the products with high quality and continuously improve to the particular market.

n          Fashionable product (serve new trend )

“The rise in number of users by 700 million in a little over three years will be driven by a huge rise in the number of young style –conscious users” (Nokia, 2002).  That is the reason why they have to serve for young people who use their mobile for text messaging rather than phone call.

n          Wide range of product

Based on the contemporary data (see appendices),, it can be determined that Nokia has the highest number of product line compared to its competitors (more than 10 models) accordingly; it covered every class of people from (low to high class).  Comparing data with Ericsson, Motorola, Sony, Samsung, siemens and other companies. (see appendices), it illustrates that other brands have narrow shape of product lines (not more than 5 models per brands). 

n          Product warrantee worldwide

No matter where Nokia’s customers are, if they got a problem from Nokia’s mobile phone. Of course, they can use Nokia service worldwide wherever Nokia centers are. These can ensure customers who worried about service system.

2.1.2   Weakness

n          High price

After compared the price between Nokia and others, it can be established that Nokia has highest price in every type of its products.  In this report it can be conclude that Nokia still have a weak point as higher price than the competitors. (See appendices)

2.1.3   Opportunity

n          Product launch continuously

In this report it has determined that Nokia uses Total Quality Management (TQM) which mentions more about training worker program, and makes the higher product quality.  All employees are well-trained and motivated consecutively afterward production processes also developed as well.  In addition, as Merriden (2001) claims that Nokia established Research and Development department (R&D) where develops its product line into modern modification as well quality as the existing products.

n          Users Availability

Nowadays, the business has steadily recovered during this period so that there are so many retail stores where it grew up continuously in London.  Especially mobile phone retail stores, such as, the link, Phone4U and Carphonewarehouse, which is spread around London in every street.  And, of course, every stores have not missed the opportunity to choose Nokia as their product line.  Consequently, all the customers can be guaranteed that any damaged or loss of Mobile phone will be service through those retail shops.  Likewise, in opportunity aspect, Nokia has an opportunity to convince the prospects to buy Nokia in those plenty of stores around the town.  However the key to success of Nokia will be services that are relevant with flexible changing capabilities.(Nokia, 2002)

n          Necessary Product For People Now

In recent years, businesses are involving among the downturn session, then every people are more concerned about business.  Especially, time is specific in rush hours.  As a result of this, mobile phone has become a popular device for everybody in the world now, especially for businessmen who really need everything in advance during specific time because time is money for them.  Certainly, mobile phone has already become a necessary device for every ultimate user nowadays.  And both Nokia and Ericsson have forecasted that number of global mobile phone subscribers would increase from the current 300 million to a billion by 2003.(Merriden, 2001)

n          New Software Market

Referring to the amount of data traffic in mobile networks is growing at a tremendous rate.  People around the world are using new mobile services, which is directly relevant to personal needs.  Definitely, it can access anytime, anywhere and, of course, the innovative are fully provided to customer’s Nokia.  And nowadays Nokia has already added value through MMS for Messaging and E-mail, Java for download any applications and HTML especially for content search.  So it may attract those businessmen and teenagers who are interested in the new software market.(Nokia, 2002)

n          Joint Venture In Technology

It is be known that, Nokia has already joint with Hewlett Packard (HP) Company; it has a well reputation about computer programs for many years.  As a result of this, Nokia has a considerable opportunity for enlarge their market size into PC user who prefers mobile phone compatible with PC device as well.(Merriden, 2001)

2.1.4   Threats

n          Obsolete about PC tools if compare with new comers who have more specialize on PC tools

Due to fierce competition in mobile phone amarket nowadays caused new technology compatible with PC computer such as, SonyEricsson which specialize on PC computer now.  Sony applied their computer system into mobile phone as well as PC computer on hand at the same time. Furthermore, nowadays people are interested in advance of computer as similar as mobile phone market. 

It is importat that most companines has move on the PC connected and try to bread into the PC market.  People want to use mobile anywhere and want to connect Internet, therefore to own or to corporate with a Internet Network Service company is the chance to join into the new PC market.

2.2 Environment Policy and Technology Development in The Future

2.2.1   Environment policy

Nokia’s slogan is “Technology is connecting with people”, which is explained that Nokia respecte humen’s needs.  Because of this reason, Nokia is dedicating to follow environment policy, including environmental design, supply for network management, systems of environmental management, and recycle practices.  This has became an important part of Nokia’s corporate culture.  Indeed, Nokia had guarantee to improve in environmental issues and had been published in 1994.  Therefore, Nokia has four dimensions of environment policy.(Nokia, 2002)

n          Environmental Design

Design for Environment means to consider the environmental system into the development of all products, processes and services.  It involves design processes that minimize material and consume with energy while maximizing the prospective for reuse and recycling.

n          Supply for Network Management

Nokia set of environmental requirements for its suppliers strictly.  The process for a Nokia supplier included environmental assessment.

n          Systems of Environmental Management

With ISO 14001 and certified environmental management system (EMS), which is to reduce energy consumption and improve waste management, Nokia has not only improved its production processes but also enhanced employee trainings.  In addition, the suppliers of Nokia have been also required to follow the same rules.  Indeed, Nokia has practice the environmental issues and reduced costs.

n          Recycled Practices

Nokia claimed that it has operated recycled practices, such as energy returns and materials back to circulation.  According to these environmental policies, it is debatable whether the environment policies of Nokia work.  Actually, Nokia has promote its products but does not promote its environment policies.  Nokia has produce new products to the mobile market, but sometime, these products have different functions and different components, such as batteries.  Although, Nokia develops recycled batteries, but while customers change different type of mobile phones, the batteries can be used.  Nokia wants to promote new products and the same systems of componets but the promotion activities do not work to reduce the wast of natural resources.  Indeed, there is a conflict between the environment policies and promotion activies of Nokia.

2.2.2   Technologies Development In The Future

Generally, Nokia always improve their product line through Research and development process, beside this Nokia also has multimedia compatible improvement with mobile at the same time, such as, GPRS and WAP Service.  Nokia has numerous technologies which can satisfied those end-users need, such as, Bluetooth, Symbian, SYNCML, M2M, Wireless LAN and Java. Research (see appendices) and development can ensure that it stays ahead of the existing products, which seen to be shortening life cycles of product.(Marriden, 2001)  And Nokia employed more than 17,000 people in R&D department over fourteen countries worldwide.  Moreover, Nokia do not only mention on product.  Nokia also provided customers to choose the features and service that they personally want and need.  It means Nokia does not develop only their product line, but they improve their service process to provide the most appropriate service to those customers efficiently. (Research and Development also included in technology development)

3      Conclusion

It may be argued that brand extention following the stretching path may be too absurd.  Crainer (1995) said, building business through elasticity may cause risks to disperse the power of a brand, and to influence consumers’ loyalties.  However, Nokia has been successful at brand stretching from a paper manufacturer to supply mobile phones and network service.

This report has argued about the kind of technology consumer need.  “How to promote the future of phones?”(BBC, 2001)  Nokia has already joint with Hewlett Packard (HP) Corporation Company.  As a result of this, Nokia has a considerable opportunity for enlarging its market size into PC users who prefers mobile phone compatible with PC devic.  In fact, Nokia has established some types of mobile phones that are similar with handhold PC, like Nokia 9210, or Nokia 9110.  These kinds of mobile phone have diversified functions, such as colour screen, connecting with Internet, and interacting with PC software.  For instance, Nokia 9210 and Nokia 9110 consist of Microsoft Word, Microsoft Excel, and Microsoft Power Point and other PC softwares. (Nokia, 2002)

However, Nokia does not promote these kinds of product deeply and widely.  It seems that Nokia can not successfully join into the new market.  For example, comparing with other brands’ mobile phones, Nokia is more expensive than its competitors.  Moreover, based on the limited technological resources, Nokia can not improve its technology to attach with new PC age.  For example, a comparation between Nokia and Sony in terms of technological development is that Nokia has less abilities to develop high technologcial mobile phones which combine with PDA or computer than Sony.  In addition, Sony also has combine with Erisson to produce mobile phones, and to improve its technological development.

Finally, the environment policy is also one of the most important business strategies for Nokia, but it seems does not be operated well.  For example, Nokia develops recycled batteries, but while customers change different type of mobile phones, sometimes the batteries cannot be used.  Although, Nokia is successful in saling new products, and building consumers’ loyties.  There is a conflict between the environment policies and promotion activies.  Nokia, of course, has responsibilities to change its promotion and development plans.

4 Recommendation

Nokia Company can be classified as market leader hereunder mobile phone market, and it can be easily observe their wide range of product which may be too often to change its model within one series e.g., Nokia 3210 until now Nokia 3350.  Despite the rapid change in one series, it still looks quite similar as the old model which has just launched in the short period before.  Because of this problem, in this report it recommens Nokia to launch the product timely, and Nokia should have product life- plan (specific time table) in order to inform and ensure the end-users who need to buy a really new model.  Nobody in the real world is willing to buy the product, which is going to change and obsolete in the next few days.  These can be helping Nokia in the aspect of customer’s satisfaction and give the chance to the users to select.

On the other hand, Nokia has already become a partner of Hewlett Packard i.e. HP where they specialize at computer tools, so it was a good chance for Nokia to compete with the new competitors who specialize at computer, such as Sony, Samsung and other companies.  However, Nokia mobile company is too strong for Sony and other new comers to Compete with it.  In this report it recommens Nokia to take this emerge opportunity to come over those competitors, because Nokia & HP are strong enough to be the market leader as well as it was doing now.  Due to this factor, Nokia has highest price range compares with all brands; we can just recommend Nokia that if price is floated unreasonably to the end-users, it is not the good way for Nokia to achieve a long term goals.  Reasonable price is the best way for Nokia to gain both profitable and customer’s satisfaction.

5         References

5.1        Books

n          Crainer, Stuart (1995), “The Real Power of Brands”, published by Great Britain, pp 122-137

n          Merriden, Trevor (2001), “Business the Nokia Way”, October, published by Capstone Publishing Limited

n          Zheng, Wen Bi (2001), “A Strategic Approach of Building National Techonology Strength – Finland as Case Study”, 30 June

5.2        Periodical

n          OECD (Organization for Economic Co-operation and Development) (1996), “OECD Economic Survey of Finland, 1996”, Paris

n          Science and Technology policy council of Finland (1996), “Finland: A Knowledge-based Society”, Science and Technology policy council of Finland, Helsinki

5.3        Website

n          BBC Online News (2001), “Promoting the future of phones”, 23 December, (http://news.bbc.co.uk/1/hi/sci/tech/1723738.stm)

n          Corporation Nokia (2002), “Nokia Connecting People,” 06 Auguest, http://www.Nokia.com and http://www.Nokiainfo.com

n          Liu, Wei Yi (2001), “The Global Enterprise of Finnish: Nokia” 26 June (http://home.kimo.com.tw/liutaho/A54.htm)

6         Appendices

n          WAP: Wireless Application Protocol, which estimated to grow to over 200 million users worldwide.

n          GPRS: General Packet Radio Service can connect directly to data network just turn on, tune in, and download whenever users like.

n          MMS: Multimedia messaging service is very similar to Short Message Service (SMS), or text messaging. It provides automatic, immediate delivery of personal multimedia messages from phone to phone or from phone to e-mail.

n          Blue Tooth: Bluetooth is a global factor standard for wireless connectivity. Based on a low-cost, short-range radio link, Bluetooth cuts the cords that used to tie up digital devices.

n          Symbian: The Symbian OS platform provides a secure, reliable operating system for mobile information devices. Being specifically designed for mobile devices - with low power consumption and small memory footprint, Symbian will provide a stable platform for the telecommunications industry.

n          Mobile Commencer: Mobile commerce is creating entirely new opportunities both for mobile phones and services such as banking, payment, and ticketing. Mobile commerce means transactions using a wireless device and data connection, which result in the transfer of value in exchange for information, services, or goods.

n          SYNCML: Synchronization is intended to be a common synchronization protocol that will allow devices to reach more types of networked information, create new types of synchronizable services for consumers, and expand the choice of interoperable data synchronization products. Ultimately, by defining a common protocol, SyncML leads to an increased choice for consumers and a larger market potential for vendors.

n          M2M: Stands for: machine-to-machine, mobile-to-machine and machine-to-mobile. Wireless technology is already managing data transmission and connection to the Internet. So it makes sense to put it to work in machines. The M2M business is in a phase of fast growth and M2M solutions are fast becoming a part of many companies' everyday life. Applications can be found in almost any segment or environment.

n          Wireless Lan: The Nokia Wireless LAN solution provides an excellent way to extend the reach of local area networks (LANs). Instead of plugging into a wired LAN wall outlet, users can quickly connect to the corporate network through users’ PC and wireless LAN card for easy access to broadband data rates without wires. Wireless LAN access zones at airports, hotels and other public places also allow users to connect to their corporate network via the Internet, while the full range of security features offer users reliable access to network resources.

n          JAVA: Java™ technology consists of both a programming language and a software platform. The Java™ platform can run on top of several operating systems.Nokia is using Java technology to provide an open platform for developers. Applications created with standard Java™ Application Programming Interfaces should run in all compliant devices.