The Nokia Lumia is a well-known smart phone brand that only rivals the iPhone and the Samsung Galaxy range of smartphones. This paper is a detailed report on the marketing plan behind the development of the Nokia Lumia.
It provides the past, present and future analysis of the prospects of the Lumia brand with respect to the achievements it has been able to attain. The paper has four sections. The first provides background information on the topic while the second section details an analysis of the strengths, weakness, opportunities and threats to the Lumia. Subsequently, the third section of the report reviews the strategic focus plan for the Nokia Lumia brand of phones it details the vision and mission statements behind the success of the brand. Later the report details the marketing plan of the brand drawing a line between dos and don’ts in the smartphone marketing business. The results of this report indicate that the Nokia Lumia served as a comeback strategy for Nokia after its sales plummeted due to competitors’ introduction of smartphones into the market. Nonetheless, the Lumia proves a successful brand as it has carved a niche in the smartphone industry. Moreover, it has reclaimed Nokia’s lost glory despite that fact that Nokia’s acquisition by Microsoft means the end of production of the Nokia Lumia line of phones. Henceforth, the Nokia Lumia will appear as the Microsoft Lumia brand. Likewise, the report also finds it optimistic that the future of the Lumia bases on innovation and technological advancements which are the building block of its success. This paper is divided into various sections, the structure of the paper is as illustrated below:
The first part of the paper is a background establishment of the plan development on the Lumia brand of products. It details the features of the brand and how it came to be established giving the reasons behind the motivation for the partnership between Microsoft and Nokia for the development of the Lumia brand. The section also details the review on the competitiveness of the Lumia in regards to the development of smartphones in the market. As a matter of fact it brings into focus the relationship between competitors’ brands and the Lumia and discusses the motivations behind the development of the Lumia. The review finds that Nokia’s dominance was toppled by the likes of iPhone and Samsung Galaxy brands which revolutionized the mobile telephony market. The competition also reviews the differences in software and smartphone capabilities between the Lumia and its competitors. To this end, weaknesses, strengths, opportunities and threats presented by the competition on the Lumia are reviewed as well.
Subsequently, the paper advances its analysis into discussing the strategic focus plan on for the Lumia brand. It presents the mission and vision of the companies that formulated a merger for the sole purpose of development of the Lumia. Further, the goals and objectives of the company are found to be reminiscent of the vision and mission that unites both firms in regards to the development of the Lumia brand of smartphones. Moreover, the section details input from Nokia and from Microsoft that have served to sustain the development of a partnership which successfully brings the Lumia into production. Finally, the paper delves into the marketing strategy behind the marketing plan for the Lumia detailing issues regarding the annual budget, action programs, controls, product promotional approaches, distribution, marketing research, and the marketing mix for the Lumia. Essentially, the paper is a detailed review of the marketing plan for the Nokia Lumia brand of smartphones.
Current marketing situation
This section of the report presents an introductory analysis of the case of Nokia Lumia’s transition to Microsoft Lumia. It describes the background of the two companies with respect to the Lumia line of products. First, it details the description of the market in which the Nokia Lumia line of phones draws a customer base and a review of the product’s appeal to the market. Subsequently, it also details a review on the competitiveness of the Lumia brand of phones in the smart phones market in general drawing analysis from market performance of the Lumia in comparison to competitor brands. This section culminates in an analysis of the distribution mechanism that is used by Microsoft and Nokia to deliver the Lumia smartphone to its clientele (Microsoft, 2014).
The Nokia brand of phones has dominated the mobile phones market the world over since the late 1980s up to the mid-2000s. For a long period, the Nokia brand have dominated the mobile phones market the world over until the year 2007 when smartphones were produced presenting a formidable challenge to the Nokia line of mobile phones. The transformation followed introduction of the iPhone that revolutionized mobile phone technology enhancing capabilities that mobile phones could achieve. The popularity of the smartphone served to hurt the performance of the Nokia brand of phones mainly because Nokia was increasingly becoming old-fashioned. Some also regard it to be backward leaning in terms of trendiness and technological advancement (Singh, 2014).
The situation was reminiscent of the dwindling market share of the mobile devices that Nokia served. Resultantly, the company ran into losses owing to stiff competition in the market from an array of smartphones produced by competitors following the lead of the iPhone, and Android operated mobile phones. The company had no choice but to adopt the current dynamics in the industry in order to sustain its relevance in the mobile telephony production and manufacturing industry. Adopting required that Nokia merges with software company Microsoft to produce the Nokia Lumia brand of phones. The strategy worked out quite well in that the firm was able to produce smartphones that could compete favorably with the likes of the iPhone. Nokia had regained its market through the development of the Nokia Lumia brand which is a smartphone that runs on Microsoft windows software with additional features such as high megapixel camera and expandable storage capacity. Essentially, the Nokia Lumia served to edge Nokia closer to regaining its market lost during the introduction of the iPhone and followed by Android operated phones in the market (Singh, 2014).
The Lumia brand of phones is built to compete with the likes of Android operated phones developed by Samsung and apple among other competing brands. The strengths of the Nokia Lumia lies in its capacity to provide the user with a multiplicity of usability in terms of experience with the product. To this end, the Lumia is built to have features that rival the Android operated systems and the iPhone operating system. The Lumia runs on windows 8.1 software or operating system which allows it to have smartphone capabilities pitting it competitively against the likes of the iPhone. The phone also has features such as a camera with high-resolution capabilities that allows the user to take high definition photos (Singh, 2014).
However, the windows 8.1 operating system was not the first attempt that Nokia made on the development of smart phones. Prior to the development of the Lumia, Nokia had developed Symbian operated brands that did not perform well in the market; the poor performance owing to difficulties that the Symbian based operating system developed which frustrated users. The introduction of the iPhone did not make matters better for Nokia because sales soon plummeted leaving the company grappling to hold on to its market share. A comeback strategy development which encompassed the introduction of the Lumia range of phones that proved the wiser move. The Windows 8.1 operated Lumia had smartphone capabilities meeting expected standards in the smartphone market (Marian, 2013).
As earlier mentioned the main competitors for the Lumia are the iPhone and Samsung mobile which largely develop functionality on Google’s Android platform or operating system. The intention of the development of the Lumia stems from the need to counter the competition that was present in the market as a result of development of the iPhone and Samsung smartphones. In the case of the former i.e., the iPhone that is currently selling its sixth generation in the line of its products since inception in 2007. The iPhone appeals to a variety of age groups from children, teenager to adults; the usability of the iPhone across clientele of all ages is driven by its capability to install android application. The feature that allows for a multiplicity of application makes the iPhone appeal to different age groups due to its flexibility. Hence, individual users can be able to customize their iPhones by installing applications that they use or that appeal to them. For instance, children will install more game apps on their iPhones while teenagers would install social media apps such as Facebook and the likes. On the other hand, adults can install other features work related such as diary or calendar reminder which best suits their individual needs. The iPhone has appeal on the mobile telephone market due to the buzz it created at its first release back in 2007 which has served as its main marketing plan. As a result, the product promotional approach employed by the company is majorly word of mouth. Word of mouth has enhanced its profitability because little to no funds are spent on advertising (Marian, 2013).
Samsung smartphones also present formidable challenge for the Lumia range of smartphones in the market. Similar to the iPhone, Samsung smartphones also run on Google’s operating system Android which makes it a formidable challenger to the Windows 8.1 operating system installed in Lumia phones. Moreover, customization is the main strategy that Samsung employs to gain a customer base and meet the needs of the clientele. In this regard, Samsung smartphones come in a range of different sizes and prices to meet the varied needs of different customer segments. Furthermore, customization includes android applications such as the Samsung Galaxy music that allows users to create and save their playlist. Recently, Samsung has considered the development of windows run smartphones having produced the first Samsung windows operating system phone in 2012. This move to incorporate windows software in its devices in observers’ views is a strategy to tap into Lumia’s market share in line with its goals in customization to meet customer needs. Essentially, the Samsung Android operated smartphone serves effective in meeting the needs of its clientele by addressing issues regarding customization that enhances customer satisfaction (Marian, 2013).
In order to develop a system through which the company Nokia can reach out to potential clientele, the company has entered into partnerships with local distributors to strengthen its presence in foreign markets. Whereas its operations in regards to manufacturing and production are based in Europe, the Lumia is a worldwide brand and thus sells everywhere across the world. For this reason, Nokia has chosen to work closely with network providers in regional markets where the company has been able to provide clients with data bundles upon purchasing a Lumia phone. The plan aims at ensuring that customers have a holistic customer experience when interacting with the Lumia. Hence, the provision of data bundles allows users to explore the features of the Lumia phones to gauge whether they meet their expectations. Close coordination with regional distributors is the strategy that Nokia has used to ensure that its products have presence in regional markets. In addition, the company has employed advertising in conventional media such as TV and newspapers as a product promotional means to enhance distribution. Hence, combined with the partnerships developed between Nokia and regional network providers to give free packages to customers; the advertising strategy adopted by the company serves to place the Lumia competitively in the market (Marian, 2013).
This section details a review of the general situation of the Lumia product pitting all variables in the marketplace to gauge its success and or failure in the marketplace. Consequently, it discusses the strengths, weaknesses, opportunities and threats that the company faces. Subsequently, an analysis of the Lumia’s internal and external environmental soundness is evaluated based on Porter’s generic strategies to provide an overview of the soundness of the Lumia brand in the smartphone market segment.
- Strengths. Nokia Lumia’s strength is said to lie in its brand name which is synonymous with sturdiness, accountability and distinct design. Customers of Nokia phones can attest to the durability that they associate the brand with while others have known Nokia to be the most popular brand of phones the world over due to its domination of the mobile phone industry since its inception in 1865 leading up to its downfall in 2007. In fact, Nokia brand name was dominant in the mobile telephony industry until the introduction of the iPhone in 2007 which revolutionized the mobile manufacturing sector forcing Nokia to adapt in line with the current trends. Moreover, Nokia’s success can be attributable to the brand loyalty that it has enjoyed over the years stemming from customers who have remained dedicated clientele. However, the introduction of Android smartphones toppled Nokia’s dominance which made it necessary for Nokia to develop its own range of smartphones in order to regain relevance. To this end, and as far as the introduction of the Nokia Lumia is concerned, Nokia can regain its influence on the market to reclaim its brand name as a strength and driver for its success (Mata, 2012).
- Weaknesses. The weakness that Nokia is largely known to have can be said to be historical in the sense that it has for a long time been struggling to overcome the challenge of software development. In this regard, Nokia finds it difficult to keep up with the current trends as pertains to the development applications that are characteristic of competitors design. For instance, in the past Nokia’s attempt to develop smartphones operated on the Symbian platform or software backfired due to operational difficulties of the phones by users. Resultantly, this places the competitiveness of the company’s products at an unfavorable position. Nonetheless, Nokia has moved to correct this anomaly by entering into a partnership with Microsoft to develop the Lumia range of smartphones. In the partnership Nokia is tasked with the responsibility of developing the phones hardware while Microsoft is tasked with the development of attributes such as internet capabilities and software. Evidence to the fact that Nokia is incapable of effectively handling software development can be drawn from the fact that the company recently sold out its production rights to Microsoft. Effective to the sale the Nokia brand will be replaced by the brand name Microsoft. Hence, production of Lumia phones in the future will be branded Microsoft Lumia. In this respect, the greatest challenge for Nokia remains software development since it has not effectively mastered the development of software for its smartphones which explains its acquisition by Microsoft (Marian, 2013).
- Opportunities. Nokia’s partnership with Microsoft remains its greatest chance to reclaiming the mobile phone market segment’s domination that it has experienced in the past. To achieve this, the company’s investments in product development on the windows 8 and windows 8.1 platforms provides optimism in future advancement of products. The reason for projected success lies in the fact that Nokia is the first to enter into a partnership with Microsoft to develop a product i.e. the Lumia. Since the commencement of the partnership, Nokia Lumia brand production is continuously gaining experience with windows software. Hence, the future can only promise that the Nokia Lumia can be a pace setter in the mobile telephony industry in line with the development of windows 8 operated mobile phones. Therefore, imitators such as Samsung and HTC which are beginning to develop their own brands of windows phones can only be compared against the capabilities of the Lumia. Thus, Nokia can maintain the lead and dominance over windows software operated mobile phones due to the experience it has collected in the development of windows phones (Singh, 2014).
- Threats. The success of the Lumia brand is largely dependent on the dynamics in the smartphone mobile telephony market. In this sense, the level of competition that the Lumia is pitted against serves to be its greatest challenge with respect to the threats in the industry. The likes of the Blackberry, iPhone and HTC are increasingly developing their brands to be appealing to clientele. Hence, the plan adopted by Lumia’s competitors is such that the phones capabilities in terms of usability and multiplicity of applications becomes the drive for innovation in the smart phone industry. Thus it is important for Lumia to cut a niche into the windows software operating system platform in order to give the phone a competitive edge in the market place (Marian, 2013). According to Sing (2014), hope for the Lumia in countering the threat of competition in the market lies in its capacity to enhance its technical efficiency as well as making improvements in its innovative performance. On the former, the merger between Microsoft and Nokia and later the acquisition of Nokia by Microsoft is regarded as a move towards the right direction since it will enhance technical efficiency of the Lumia windows 8 software. The latter on innovation and performance lies in the capacity of the Lumia to invest in research and development that will continuously improve the operating system as well as the functionalities of the Lumia in terms of the applications that it can execute seamlessly (Mata, 2012).
Porter’s Generic Strategies for Lumia
The generic strategies developed by Porter are used to describe the company’s pursuit of competitive advantage with respect to the analysis of its strengths, weaknesses, opportunities and threats. There are three generic strategies namely differentiation, lower cost and focus. The Lumia brand can employ either of the three to enhance its competitive advantage in the market. For example Lumia can employ focus such that its product is offered to a specific segment of the market or choose to focus on the industry where the product is provided to all and sundry. Regardless of the focus chosen the intentions of the focus are to enhance the competitiveness of the brand in the market (Marian, 2013). Below is a detailed analysis of the Porter’s generic strategies for the case of the Lumia.
Lowering Costs. Porter’s generic strategies adopted by Nokia for the Lumia has been based on reduction of costs to enhance affordability of the Lumia range of smartphones. Initially, the Lumia the design of the Lumia was geared towards competing with high end smartphone brands such as the iPhone. However, markers at Nokia realized that cost conscious persons were not being catered for. To address this concern, Lumia brands were developed to suit various market segments based on affordability, thus, the Lumia was able to appeal to the high end and middle class market segments. Eventually, enhancing Lumia’s competitiveness in the market (Mata, 2012).
Differentiation. This is yet another formidable challenge that the Lumia is faced with in terms of setting itself apart from the competition. Its main point of differentiation is in its being the first to enter into a partnership with Microsoft to develop the Lumia range of windows phones. Hence, the value of differentiation can only be sustained if Nokia Lumia is the only brand that runs on windows software. However, this seems to have been compromised since other brands such as HTC and Samsung have already developed windows phones (Mata, 2012).
Nonetheless, all hope is not lost for the Lumia in terms of differentiation since this can be achievable through development of unique applications as well as enhancing the physical appearance of Lumia phones to provide a sense of uniqueness. Examples of physical differentiations include width, different colors and screen size etcetera (Marian, 2013).
Focus. Building a focus on the segment of the market is an essential component of enhancing competitiveness especially in the smartphone industry. To this end, the Lumia has been designed to meet specific needs of a wide scope of clientele. Hence, the focus approach that the Lumia assumes is the broad target approach to focus. The broad target approach is inclusive given that it combines both high end and middleclass customer needs to provide a range of Lumia products that appeal to different clientele. Therefore, Lumia features are varied depending on the price range of the phone cheaper phones provide quality products at affordable prices while high end market customers are also given the choice to purchase Lumia phones that suit their needs. The idea behind the broad target strategy is to target a multiplicity of market segments which enhances the chances of the Lumia becoming popular among segments of clientele (Singh, 2014).
Essentially, the interplay between the three generic strategies developed for the Lumia serve to ensure that the company effectively addresses concerns in the market related to its competitiveness. More importantly, the Porter’s generic strategies serve as effective means of maximizing on strengths and opportunities while at the same time taking measure to address weaknesses and threats. The figure below illustrates the ideal operation of Porter’s generic strategies for evaluating competitive soundness of the Lumia in the smart phone market.
Strategic focus and plan
This section details discussions on the intervention measures that put in place by the Lumia product development team in efforts of shaping the vision and mission of Nokia as a mobile phone manufacturer. Further, the analysis also delves into the strategic goals set by the organization Nokia in conjunction with Microsoft in the development of the Lumia bran of smartphone.
The Mission and Vision
Nokia’s vision as per stipulates on its latest logo which was launched in 1992 simply reads “Connecting People”. Hence, the mission that Nokia is tasked with is to ensure that all its customers get satisfaction and convenience provided by the mobile phone devices it provides to enhance connectivity between friends and family. To deliver on the promise of customer satisfaction in terms of convenience through connectivity the company has made it its mission to invest in futuristic technologies. Hence, the partnership with Microsoft that eventually led to the acquisition of Nokia by Microsoft is driven by the commitment of the company to provide its customers with the most efficient and quality services (Mata, 2012).
On the other hand, the mission of Microsoft is to “to enable businesses and people throughout the world to realize their full potential.” To this end, Microsoft makes it a priority to ensure that the services and products offered by the company serve to meet the needs and expectations of clientele. Further, Microsoft is committed to innovation and research in new technologies to make their products better. The need to better the services and products that customers receive from the company is what makes Microsoft tick in that efficiency and effectiveness drives the innovation and technological advancements at the company. Microsoft bases its strategy on the provision of quality services and products to its clientele that are reflective of the current trends in the market. Similarly, its innovation and research are geared towards meeting the needs and expectations of the dynamic markets of the world (Microsoft, 2014).
The coming together of the two companies Nokia with a mission to connect people while Microsoft with a mission to enhance realization of full potential in people and organizations a formidable partnership was formed. Resultantly, the merger gave rise to the development of the Lumia range of products which at inception served to save Nokia from imminent failure occasioned by stiff competition in the smartphone market. On the other hand, Microsoft gained by venturing into the telephone manufacturing industry expanding its investments from the conventional computer software development to the development of smartphones. Judging from the recent developments Microsoft seems to be the big winner in the merger because as of April 2014 it successfully acquired Nokia assets to own all rights to production of the Lumia. In line with the developments, Microsoft did not only assist Nokia to achieve its full potential, but continued to the extent that Nokia could not commence with the partnership and opted to sell its assets to Microsoft. In other words, Microsoft surpassed the expectations of Nokia which made Nokia decide to let Microsoft take charge of its assets. Essentially, the merger between Microsoft and Nokia brought together team effort that transformed the fortunes of Nokia at a time when it was under threat of being faced out by competitors (Mata, 2012).
Goals and Objectives of the Lumia
The Lumia’s main objective lies in the repositioning of the brand Nokia in the mobile telephony manufacturing sector after the brand suffered a decline in sales due to competition in the development of smartphones. Hence, the intention for the development of the Lumia is to counter the threat paused by rivals and regain the glory that the brand Nokia enjoyed in the mobile telephony sector. Secondly, Nokia opts to become a market leader once again on the mobile manufacturing frontier through the partnership with Microsoft. To achieve this goal of industry leadership the company intends to improve its presence in various regions around the world. Fundamentally, one of the sub goals of industry domination is to ensure infiltration into various market segments around the world. To this end, Nokia aims to develop partnerships with distributors and network service providers to enhance its presence in various market segments around the world (Mata, 2012).
Similarly, one of Lumia’s goals is to provide a product that can appeal to persons of all age groups and backgrounds. To achieve this universality the operating system that the Lumia runs on is Windows 8 which is fitted with capabilities of installing a variety of applications. Thus, the Lumia can appeal to children, teenagers, youth and adults in equal measure mainly because every age group can customize their phone by installing applications that matter to them. In the same line, Nokia recognizes that customers have varied opinions when it comes to pricing of smartphones. Due to the fact that market trends are on the higher end of the market with respect to the development of smart phones; the Lumia is constructed to suit the needs of clientele in the high end market in order to compete favorably with the lacks of iPhone and Samsung Galaxy smartphones. However, the Lumia brand of phones also recognize middleclass customers who are apprehensive on spending too much on a phone. For this reason, Lumia series of phones have been tailored to fit the pockets of an array of clientele. Thus, Nokia Lumia phones come in affordable brands for economy customers while also providing high end brands for big spending customers (Singh, 2014).
Primarily, the goals and objectives of the development of the Lumia brand was to refurbish the reputation of Nokia the mobile phone manufacturer as well as provide products that are consistent with technological and innovative developments in the industry. Achievement of these objectives meant that the Lumia had to compete head on with smart phones in the industry that had for a short while toppled the dominance of Nokia as a mobile manufacturer in the industry. The specific goals were three-fold which included; penetration of various market segments to establish presence, provision of various brands of the Lumia to appeal to different kinds of clientele, and innovation in technological advancement that will ensure that the firm delivers high quality products. The quality of the Lumia is in line with technological advancements and innovation in the smartphone sector where a multiplicity of applications and superiority of features is the main selling point of smartphones (Mata, 2012; Singh, 2014).
The positioning of the Lumia obviously had to put into consideration the fact that competitors such as Apple and Samsung had already developed Smartphones for the market. Therefore, providing a smartphone with variance or that is different from what competitors offered was key in positioning the brand competitively in the market. To achieve differentiation, the development of the Lumia was enhanced through a partnership with windows software developer Microsoft (Mata, 2012). At the time, smartphones developed employed the use of Google’s operating system Android, thus, no competitor had entered into a partnership with software developer Microsoft to develop a smartphone. The Lumia brand achieved its uniqueness intention by positioning itself differently with a windows 8 operating system as opposed to competitors’ android based operating systems. This served to catapult the company Nokia from the increasing unpopularity it experienced to immediately become popular again among well-known brands in mobile phones manufacturing (Microsoft, 2014).
Secondly, the positioning of the Lumia was also based on cognizance that various segments of clientele existed in the market. To this end, the Lumia came way after smartphone manufactures had launched products such as the Samsung Galaxy and the iPhone. Lumia smartphones considered customers who were competitor smartphone users as well as customers who were yet to own a smartphone. The marketing strategy that ensures that both customer categories are addressed is the development of focus on both customer categories. In this respect, pricing of Lumia units became essential in the development of a customer base for clientele. Since the likes of Samsung Galaxy and iPhone especially the iPhone fetched high end market prices, Lumia focused on production of more affordable brands. The decision to do so was informed by the fact that Lumia projected more sales from affordable brands which could appeal to economical clients. Further, Nokia targeted clients who wanted to own a smartphone for the first time but wary of the high prices charged by competitors. Nonetheless, the Lumia brand also produced units for high end clientele who would desire to purchase a Lumia that meets their needs and expectations (Microsoft, 2014).
Essentially, the positioning of the Lumia was based on three main factors; first, differentiation which enhanced it uniqueness from other smartphones. Differentiation in this case enhances the use of windows software as opposed to competitors’ use of Android operating systems. Secondly, the positioning of the Lumia through variety of price range to cater for high-end and economy clientele and thirdly, the focus on segments of the market for high-end and economy clientele. The aim of Lumia in its positioning is to provide a product a product that meets the needs and expectations of the customer to their satisfaction levels (Singh, 2014).
Product. The development of the Lumia was intended on face-lifting the dilapidated image of Nokia which had been overtaken by the likes of Samsung and Apple. The features of the Lumia were unique and appealing to clientele, however, comparisons with competitor’s smartphones reveals that the Lumia falls short of the competition in various functions. For instance, customers complain of difficulties with the operation of windows software as compared to the android platform. In a sense, the notion is that windows software was hurriedly done as a reaction to the competition rather than a solution to the development of a smartphone for Nokia. In other words, Nokia Lumia does not meet the specifications and capabilities that other smartphones have achieved. For example considering the number of applications that android can accommodate, windows operating system is lacking in the capacity to host as may apps (Singh, 2014).
Price. Nokia’s strategy to price the Lumia at both high-end and economy levels serves as an intelligent selling point since it attracts clientele from both the high-end customers and also middle class customers. But, the price charged on the high-end Lumia is too high such that customers are not willing to risk purchasing the Lumia before testing its capabilities. Known for its weaknesses in the past with regard to its software development challenges especially with Symbian brands, customers opt to purchase the low-end and affordable Lumia. This decision is driven by caution since customers do not want to risk purchasing a product that would disappoint them in the end. Nonetheless, the economy price Lumia received high number of sales as a result of the skepticism which is attributable to Lumia’s pricing strategy (Mata, 2012).
Promotion. The Lumia’s launch investments in advertising on television, billboards and social media platforms have been extensively applied to generate the effect of product promotion for the Lumia. Nokia in establishing its presence in various market segments develops partnerships with regional distributors and network service providers to enhance its popularity in the market. Hence, the Lumia is advertised in local media through a partnership and engagement with stakeholders in local markets. The effect is such that the Lumia has established presence in most international markets owing to the fact that its greatest competitor the iPhone depends majorly on word of mouth to enhance its popularity (Singh, 2014).
Place. As mentioned earlier Nokia does not own retail outlets across the globe or anywhere for that matter, the company in establishing presence in regional markets works closely with distributors. Therefore, the Lumia’s shipment is a coordinated effort between the manufacturing firm in Europe and regional distributors around the world. In this sense, the Lumia is able to be distributed to different regions around the world and can be accessed locally at convenience stores and retail outlets partnering with Nokia to sell the Lumia (Marian, 2013).
Research on the strategy adopted for the Lumia reveals that its success largely lies in the fact that it focused more on first time users of smartphones than on users of competitor brands. Centrally, the costs of marketing the Lumia to existent users of smartphones say iPhone users proves limiting and less productive as compared to marketing to first time users of smartphones. The reason behind this assumption is that competitor smartphone users such as iPhone users find it difficult to transfer their data and information from the android based mobile phone to the Lumia which is windows 8 based operating system. Resultantly, convincing smartphone users to purchase a Lumia to replace their android smartphones is often met by resistance and reluctance to adoption of change. The chart below shows figures of shipments of Nokia Lumia brands in the United States between 2010 and 2012 the indications on the charts is such that the positioning strategy at the entry point of the Lumia in the American market proved successful. This is attributable to the fact that the greatest numbers of sales of the Lumia were realized between 2010 and 2012 providing proof that Lumia’s positioning strategy served to sell its brand well in the American market (Microsoft, 2014).
However, in the case that the Lumia is marketed to individuals who have never owned a smartphone, the costs incurred in product promotion are considerably low and serve to meet the purpose of advertising when sales are made. Hence, the Lumia stands to sell more to first time smartphone users as opposed to customers who have used competitor smartphones in the past. Moreover, it is often the case that first time smartphone users shy away from purchasing competitor smartphones due to the exorbitant prices charged on them. For this reason, Nokia’s approach to developing the Lumia line of brands that are affordable serves to fill this gap enabling more clientele to purchase smartphones. As a result, the Lumia brand was able to expand its market share by tapping into the economy class untapped segment of the clientele (Marian, 2013).
The plan of action for the Lumia basically incorporates ensuring a sustained service to its clientele. Hence, the acquisition by Microsoft is an avenue for the Lumia to provide a sustainably efficient service to its clientele. In this regard, the intention is to ensure that Microsoft takes charge of all issues regarding software update and maintenance of the Lumia range of phones (Microsoft, 2014). Therefore, customers of the Lumia can receive software updates and access support services that will enhance the efficiency and effectiveness of their experiences with the Lumia brand. Precisely, windows phone as the Lumia is best known will provide consistent consultative service to customers which will improve on customer satisfaction. Hence, the long-term intention of providing support services for the Lumia is to establish customer loyalty through the delivery of efficient software support services. Similarly, the intention is to innovatively and technologically advance the windows mobile smart phone in order to meet the needs and expectations of the clientele (Marian, 2013).
The amount of money that Microsoft places aside for research and development annually amounts to US $9 billion. The billions of dollars invested in R&D are proof of the commitment that the company places on innovation and development of technologies to meet the dynamic needs of its clientele (Microsoft, 2014). However, product development is not the only issue that Microsoft intends to spend on to ensure that customers of the Lumia are satisfied, the company also spends time to ensure that Lumia phones are affordable. In this respect, partnerships with retailers can ensure that Lumia phone prices are subsidized through installment payments that enhance Lumia’s affordability. To this end, part of the USD 2.5 billion that Microsoft allocated to Marketing in the financial year 2013 serves as a settlement between the retailers to insure them from loses in case customers default instalment payments on the Lumia. Historically, Microsoft keeps spending more every year on marketing, for instance, in 2012 the firm allocated US $1.6 billion to marketing which rose to $2.5 billion in 2013. Projections for 2014 are such that more than $2.5 billion will be allocated to marketing (Singh, 2014).
There are minimal to no controls that Microsoft needs to consider with regard to the Lumia especially since it acquired Nokia’s assets to own exclusive rights to the production of the Lumia. However, there is a need for the company to patent the windows phone. To this end, competitors that were formally competing against Nokia are now directly competing against Microsoft. Hence, the Lumia and its windows 8 operating system should be patented by Microsoft so that competitors such as Samsung and HTC do not continue production of their versions of the windows phone (Marian, 2013).
Nokia Lumia is a brand that has been largely attributable to the comeback of the Nokia brand of phones and the re-entry of Nokia into the mobile telephone industry. This report presents a detailed analysis of the case of the Nokia Lumia. The findings of the report are such that the success of the Lumia are centered on its merger between Microsoft and Nokia to develop a competitive smartphone products. In this regard, the main smartphone competitors to the Lumia include the iPhone and Samsung Galaxy phones. Whereas there exists a variety of advantages that the Lumia has over its competition, there also exists a myriad of challenges that the Lumia has not addressed at the advantage of the competition. Essentially though, the report is a detailed analysis of the Lumia brand of phones detailing its marketing pros and cons that encompasses its SWOT analysis to provide a comprehensive review of the stature of the brand in the smart phone market. Information detailed in this report can be useful in the development of appropriate recommendations for the management of the Lumia marketing team. Further, such information proves useful in enhancing the competitiveness of the Lumia brand in the smartphone market at the world stage.
Marian, L. (2013). Is Nokia’s Performance in the Smartphone Market Affected negatively by Marketing Strategy Decisions? Aarhus School of Business and Social Sciences. Retrieved 11 11, 2014, from http://pure.au.dk/portal/files/53734147/nokia_marketing_strategy.pdf
Mata, F. R. (2012). Leadership in the Mobile Smartphone Market. Turun yliopisto University of Turku.
Microsoft. (2014). Nokia Lumia 625-Software Update and Downloads. Retrieved 11 12, 2014, from microsoft.com: http://www.microsoft.com/en-gb/mobile/support/product/lumia625/softwareupdate/
Singh, A. (2014, October 31). Apple iPhone 6 vs Nokia Lumia 930: Specs Comparison. Retrieved 11 11, 2014, from Android Origin: http://www.androidorigin.com/apple-iphone-6-vs-nokia-lumia-930-specs-compare/
2 History of the Nokia Company
2.1 From a Pulp Mill to a Paper Industry
2.2 The Finnish Rubber Works
2.3 Cable Industry
2.4 The Merger
2.5 Information Technology and Telecommunication
3 Nokia in the Finnish Society and Economy
3.1 Nokia’s impact on the working culture
3.2 Nokiazation of Finland
3.3 Nokia and Finish Economy in Numbers
3.3.1 Nokia’s impact on the Finish GDP and labour-force
3.3.2 Nokia’s impact on the R&D expenditure
4 Future Challenges
4.2 Future of Nokia-led Finland
“Nokia-Connecting People”: this slogan is known all over the world. Nokia employs 50, 000 people in 120 countries. Currently every third mobile phone sold in the world is a Nokia.
The Nokia Company is today one of the world’s leading high tech companies. Its rapidly growth in the 1990s coincided with a basal structural change of the Finnish economy and industry. In this restructuring process Nokia played an important role. Despite the fact that Nokia is a leading multinational company, a major part of its business is located in Finland. Nokia plays a significantly role in the economic growth of Finland, which has been one of the fastest in whole Europe.
But the roots of the Nokia Company go back to the 19th century when in 1865 a forest industry enterprise in the small town Nokia in South Western Finland was established by mining engineer Fredrik Idestam. At the turn of the 20th century technology came with the founding of the Finnish Rubber Works in 1898 and the expansion of electricity into the homes and factories which led to the establishment of the Finnish Cable Works in 1912. With this development the manufacture of cables for the telegraph industry followed and supported so the new-fangled device, the telephone. The three companies (Paper, Rubber and Cables) were merged to the Nokia Corporation in 1967.
Since the 1990s the Nokia Company focuses especially the telecommunication industry.
The following essay deals with a detailed overview of the history of the Finnish Nokia company. But besides this, it is also mentioned the importance of this company for the Finnish economy. At the end of the essay I will give an overview of the future challenges for the Nokia Company and its surroundings.
At first I start with the development of the Nokia Company; from its roots as a forest industry to a world’s leading telecommunication enterprise.
2 History of the Nokia Company
2.1 From a Pulp Mill to a Paper Industry
The forest industry has the longest tradition of all Nokia businesses. Frederik Idestam established a pulp plant in 1865 in Nokia. Idestam's wood pulp invention was awarded a Bronze Medal in the 1867 Paris World Exposition.
Abbildung in dieser Leseprobe nicht enthalten
The industrial centre of Nokia. Pictured here is the paper mill of the old Nokia Company, now owned by Georgia-Pacific, and the energy company Nokian Lämpövoima Oy.
Source: Virtual Finland (a), A town called Nokia, [WWW document],
In 1880 the first papermaking machine was acquired for the pulp if Idestam. But the years of the First World War closed the foreign markets. The procurement of paper machinery and raw materials became difficult (the same situation in the Second World War). The close of the Russian market was tragically, because Finland had a very intensive trade relation with Russia, one reason was the status of the Grand Duchy.
After the war Nokia could expand its international business again. The main export markets were England, France, the USA, Germany and the Soviet Union.
After the merger in 1966 the new Nokia group under its President Björn Westerlund focused especially on energy politics and the cable business. The management was not interested in developing the forestry industry.
In 1970, the production was expanded to include the production of crepe paper in order to keep up with Serlachius, the main competitor. Kari Kairamo who became the in 1972 the head of Nokia’s forest industry (later in 1977 the head of the whole Nokia Group) increased the investments and implemented certain business acquisitions.
Nokia and Serlachius became 100% owners of British Tissues Ltd in 1977; two years later, Nokia bought Serlachius out. Despite these successes Nokia's management continued to disagree about the forestry business: on the one hand, the company wanted to sell it off, on the other, it was the target of large investments. Because of this fact the forestry industry started to look forward for growth opportunities as well as new acquisitions.
The economic recession in 1975-76, which was the result of the oil crisis, had an impact on the wood processing, especially on the cellulose and paper industry.
Kairamo presented in 1982 a business strategy for the paper industry. He preferred to raise the investments and to build up a second cellulose factory. But managing director Simo Vuorilehto favoured discontinuing it. This resulted in serious disagreements within the management. In the spring of 1989, Nokia sold off half of its paper industries. Nokia's tissue paper business was merged with the American James River and the Italian Ferruzzi to become the largest tissue paper company in Europe.
In 1990-1991, Nokia sold off the rest of its paper industry holdings, thus ending its involvement in the forestry industry. The main reason for the sold out was the fact that the Nokia Company wanted to focus on consumer electronics.
2.2 The Finnish Rubber Works
Eduard Polón, together with some businessmen and investors, founded the Finnish Rubber Works in Helsinki in 1898. In the 1920s the management decided to have a corporate acquisition with Nokia Ab, consisting of the wood industry and the Finnish Cable Works.
In the first years of the company the main products were shoes, boots and some clothes for industrial use. In the 1920s and 30s sports shoes, rubber toys, bike and car tires were introduced. In the following years the rubber company could expand their business. In nearly every Finnish household there was at least one product of the Nokia Rubber Works.
In the 1960s the company expanded its business to foreign markets. The number one of the export goods were the winter tires under the branch name “Hakkapeliitta” and footwear. The first winter tire was invented in 1938 in the Finnish Rubber Works. The tire industry was de-merged in the 1980s with the new name Nokian Renkaat Oy. Renkaat Oy found an ally in the Far East, the Sumitomo Company in Japan. This cooperation brought in the production of Dunlop tires. The cooperation was extended in 1988 when the company became a shareholder of Nokian Renkaat Oy. Nokia maintained a minority shareholding until early 2003 when it sold its shares to Bridgestone.
The exit from technical rubber and footwear took place in 1988-1991 through selling off of the companies.
2.3 Cable Industry
Nokia's cable industry started with Suomen Punomotehdas Oy, established in Helsinki by Arvid Wikström in 1912. The demand for cables was increasing in the early 1900s because of the fact that electricity, telephones and telegraphs spred. Punomotehdas was the first industrialized factory which specialized in wires and cables. It started to produce wires and cables especially for power plants.
The war caused the same problems as for the wood industry, raw material for the production shrinked and the costs raised.
The 1920s and 30s were decades of considerable growth of the Cable Works so that it became a dominant player in the Finnish cable industry.
In the 50s, the Cable Works extended its product range from telephone cables to coaxial cables used in radio and TV business. The company also exported to the Middle East and other markets outside Europe.
In the 60s, the Cable Works expanded its business to include the manufacture and sales of computers. The established electronic department focused firstly the sales of computer products and secondly the R&D and production of Nokia’s own products. After the merger of the three companies in 1967, cable manufacturing was the main business, and the cable industry was the company's most profitable and independent business unit.
The oil crisis in the 1970s led cable business increase so that the company could expand to Europe, USA and Asia.
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