Marketing mix of Nokia and Motorola


Published on

Published in: Business
1 Comment
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Marketing mix of Nokia and Motorola

  1. 1. Nokia Strategy MixMajor elements of the new strategy include:- Plans for a broad strategic partnership with Microsoft to build a new global mobile ecosystem;Windows Phone would serve as Nokias primary smartphone platform.- A renewed approach to capture volume and value growth to connect "the next billion" to the Internetin developing growth markets- Focused investments in next-generation disruptive technologies- A new leadership team and organizational structure with a clear focus on speed, results andaccountability"Nokia is at a critical juncture, where significant change is necessary and inevitable in our journeyforward," said Stephen Elop, Nokia President and CEO. "Today, we are accelerating that change througha new path, aimed at regaining our smartphone leadership, reinforcing our mobile device platform andrealizing our investments in the future."Nokia plans to form a strategic partnership with Microsoft to build a global mobile ecosystem based onhighly complementary assets. The Nokia-Microsoft ecosystem targets to deliver differentiated andinnovative products and have unrivalled scale, product breadth, geographical reach, and brand identity.With Windows Phone as its primary smartphone platform, Nokia would help drive the future of theplatform by leveraging its expertise on hardware optimization, software customization, languagesupport and scale. Nokia and Microsoft would also combine services assets to drive innovation. NokiaMaps, for example, would be at the heart of key Microsoft assets like Bing and AdCenter, and Nokiasapplication and content store would be integrated into Microsoft Marketplace. Under the proposedpartnership, Microsoft would provide developer tools, making it easier for application developers toleverage Nokias global scale.With Nokias planned move to Windows Phone as its primary smartphone platform, Symbian becomes afranchise platform, leveraging previous investments to harvest additional value. This strategy recognizesthe opportunity to retain and transition the installed base of 200 million Symbian owners. Nokia expectsto sell approximately 150 million more Symbian devices in the years to come.
  2. 2. Under the new strategy, MeeGo becomes an open-source, mobile operating system project. MeeGo willplace increased emphasis on longer-term market exploration of next-generation devices, platforms anduser experiences. Nokia still plans to ship a MeeGo-related product later this year.In feature phones, Nokia unveiled a renewed strategy to leverage its innovation and strength in growthmarkets to connect the next billion people to their first Internet and application experience. Market Analysis of MotorolaOverall Market AnalysisAccording to the Porter’s Five Forces analysis, the threat of substitute products, threat of new entrants,bargaining power of customers, bargaining power of suppliers, and the competitive rivalry within theindustry play an important role. The threat of substitute products can be seen as the quality ofsemiconductors keeps changing constantly. It gets smaller, cheaper or faster. The price and thefunctionality changes in few months and therefore the price can fall nearly 50% of its original value(Investopeida, 2009). Moreover, the cell phone industry is so dense and demanding, that people areshifting to substitute products due to functionality, price or size. Moreover, the excessive demand whichis ahead of supply creating shortage and people switching to competitors. The threat of new entrantsalways exists in the market for any industry, but specifically for Motorola, new entrants like Apple, LG,Samsung and other companies which were first dealing in consumer electronics have now entered themobile phone category to compete with Motorola. Therefore, increase in new competitors and thepressure of existing competitors has reduced the market share of Motorola in all the product categories.The bargaining power of consumers is strong as the market is consumer driven and since Motorola is nota monopoly business, the consumers do have strong bargaining power as they might shift to thecompetitors. The bargaining power of suppliers is very less in the case of Motorola as it has created astrong and robust operation system with its suppliers globally over the Internet. In order to reduce costsand at the same time increase productivity, Motorola had to reduce the time frame and the effortsrequired to negotiate with the suppliers, organize the process and to increase efficiency while savingcosts. The most convenient way was via the Internet. The suppliers were connected with Motorola overthe Internet and various functions like bidding, negotiating, and purchasing can be done between thesuppliers. Motorola also issued awards towards the suppliers for their efforts and excellent servicewhich created competition amongst suppliers (Informs, 2005). The competitive rivalry within theindustry is prominent as technology evolves rapidly and innovative products are launched by the existingcompetitors. Motorola’s main competitors in the area of mobile phones were Nokia, Erickson, Lucent
  3. 3. and Nortel. Nokia crossed Motorola in terms of sales and became the world leader. Erickson joined Sonyand Sony-Erickson was formed which took over the second position of Motorola.Marketing MixThe 4 P’s involved with a communications giant like Motorola is very important as they are directlylinked to the customer’s preference.ProductFor a successful marketing mix, creating the product according to the demand in the market is veryimportant. The major products in the portfolio of Motorola include mobile phones whose technologychanges frequently with new features added every time, Internet services which include video phonesand TV through broadband cables, wired and wireless networking equipment to link different networksworldwide, and to provide solutions to businesses, industries, and government in areas of informationtechnology and communication.PriceThe price is an important factor as it decides the level of interest of the consumer towards the product.Higher prices than required will not attract adequate consumers, and lower prices will be considered ascheap quality products. Usually in the technology sector, the prices are directly linked with the productlife cycle. During the introduction phase, prices are comparatively high as the product is new in themarket and there is no direct competition. Therefore to skim the market and cover up the Research andDevelopment cost, the prices are set high. To initiate the growth stage, the prices are reduced whichresults in increase in sales. During maturity stage, promotional offers are added to increase the sales.And during decline stage, either a newly advanced technology product is introduced as its successor oronly few changes are made and a new variant is introduced. Depending on the technology and the easeof imitation, the product enjoys high pricing. If the product is highly advanced and hard to imitate, thenit enjoys high prices for a long time.PlaceThe place of distribution is very important as it should be convenient for the consumer to access it andshould be available at various locations. Motorola has several distributors around the globe which formthe medium of retailers for the consumers. In every country, there are certain retailers where Motorolaproducts are available. Like Dubai has Cellucom, Plugins, Carrefour, etc. Similarly, the network providersin respective countries provide Motorola products too.PromotionMotorola performs both above the line and below the line forms of advertising. The type of promotionmix used directly depends on the product life cycle as during the launch of the product extensivepromotion is done throughout the globe. During growth stage the budget is reduced but not cutcompletely. During maturity stage, the budget for promotion is increased in order to recall the
  4. 4. consumers of the product and the brand in general. During the decline phase promotions like offers anddiscounts are introduced.Customer Value and AnalysisProviding best value to the Consumer is very important as the consumers always expect higherperceived benefits and comparatively low price. Since Motorola has large number of competitors andthe boom in the product category of mobile phones, it is very important for Motorola to segment themarket, understand the needs of the different type of consumers and provide products accordingly.Currently, mobile phones and other forms of wireless communications have become very common andavailable to everyone. Therefore, every consumer belongs to the target market of Motorola. But it canbe segmented into two groups, Casual segment and Business Segment. The requirements and theexpectations of both these segments differ widely from each other and the customer value depends onthe segment. The casual segment includes consumers of both genders, all age groups, and people whouse the mobile phone for regular usage like calling, messaging, listening to music, taking photographs,etc. It typically includes teenagers, students, professionals excluding businessmen, housewives, etc whouse the mobile phone for recreational purposes only. They comprise of 30% of the total mobile phoneconsumer market. Their use of the mobile phone is comparatively less when compared to the othersegment. Their main criteria’s of concern are the cost, ease of use, the type of technology, therecreational features offered, the durability of the product, and the overall value of the product.Motorola has introduced many products like Razr and Pebl collection of mobile phones which cater thissegment. Whereas the other segment, that is the business segment comprises of the remaining 70% ofthe total mobile phone user population. Their main criteria’s of concern are the ability to use businessfunctions like email and internet connectivity, organizers, synchronization with computers, reminderfunction, maximum coverage, battery life and voice clarity, and other functional uses. Price is not animportant issue for them as they don’t mind paying premium price for a good quality product which istechnological advanced.Marketing StrategyMotorola Inc. is renewing itself once again by concentrating and focusing on the consumer’s needs andexpectations from the products. Their previous products were customer oriented but did not completelysatisfy the customer’s expectation leading to the decrease in the market share of mobile phones fromthe year 2007 onwards. The products were repetitive and did not have any latest technologyadvancement. Many workers were laid off and the mobile phone division posted a loss of $1.4 billion.Motorola tried selling their mobile phone division, but there were no potential buyers. The market sharedecreased from 18.4% in 2007 to 9.7 in 2008 (Wikipedia, 2009). According to the chief marketing officerof Motorola, the company was not changing its products in terms of colors, functions, design, etc, butwhereas it was changing on the whole in terms of the experience of the consumers with the Motorolaproducts. For people interested in using the mobile phone device as a music player, a new series wasintroduced known as the Rokr series which had advanced music features, better sound output, easy touse and advanced music software, and a special Bluetooth wireless headphone for the ease of listeningto music. It even formed an alliance with Napster to ease the use of loading the songs through the
  5. 5. computer and to download them, similar to iTunes and Apple iPhone. This series is specially created tocater the niche of music lovers. It is even launching the new Z8 mobile phone which will have advancedfeatures like mobile TV, music, and movie playing. Along with the new releases, it will continue itstagline known as ‘Hello Moto’ as it has proved to be a major success (Cuneo, 2007).Motorola previously was working with 180 advertising agencies across the globe. This way, the agenciescould not understand the company with its past history and the present statistics, and therefore theirmarketing campaigns did not follow an integrated pattern. Therefore, Motorola decided to cut offmostly all the agencies and continue working with a couple of them and form a long term bond withthem, so that they can focus on the company. This way, they will be able to have an IntegratedMarketing Campaign around the globe and not separate campaigns which do not relate to each other(Cuneo, 2007).The investors of Motorola are expecting profits from the company by changing its pricing strategy.Motorola cannot win in price war against Nokia, as Nokia has numerous varieties of phones cateringeach segment in the market. Therefore the only way to increase profit is to reduce cost. Currently,Motorola outsources more than 50% of its production of mobile phones which increases costs.Moreover, their staff salaries and numbers are comparatively higher than its competitors. So in order toreduce cost, Motorola must shift the production of cell phones in-house in order to control costs and toreact to the market demand, and lower the wages of the staff or lay off some employees. Moreover, theresearch and development cost is very high but the rivals are introducing better technology earlier thanMotorola. Therefore it requires revision in that area. If the costs are reduced, the rate of profit willincrease and this way Motorola can introduce more models in the market (Carew, 2007).ConclusionMotorola Inc. has a history over decades and was once a market leader in its business. Its majorstrengths were research and development in terms of technology, and the position of extreme reliabilityof the product. Due to various factors during the dot-com bubble burst, the company is finding hard tolead in its business. Moreover, earlier Motorola was able to compete head-to-head with its Japaneserivals, but recently, Motorola is finding it hard to compete against rivals like Nokia, Sony-Erickson, etc.This is due to old-fashioned management style, lagging in terms of technology advancements, andvarious other factors. Motorola Inc. must restructure itself and be focused towards its consumers,understand their needs and expectations from the products and provide maximum Customer Value.