Motorola: China Experience
PATRICK J. JOINER
ROSS M. SPARKMAN
• Founded in 1928
• Produced car radios and television receivers
• Expanded into international markets in the 1960s
• Invented cellular phone technology*
• Became the leading supplier of cellular phones by the end to
• Became a leader in cable modems and set-top terminals
• Employees : 10,000
• 1 wholly-owned factory, 1 holding company, 8 joint ventures,
18 R&D facilities, and 26 sales offices
• Opened China office in 1987
• Produced beeper-pagers, mobile phones, wireless
communications facilities etc
• One of the biggest export companies in China
• At one point held the largest market share for mobile phones
• 2+3+3 strategy
– 2: to turn China into both a global production base and a R&D base of
– 3: An annual output value of US$10B, a total investment of US$10B in
China, and US$10B purchasing of accessories and services from China
– 3: To lay emphasis on the development of digital trunking,
semiconductors, and broadband
• Utilized joint-venture partners to focus on its expertise in
developing and distributing cell phone technology and
• Why do you think that Motorola entered the China mobile
phone market considering the depth of products they
• Why did Motorola think that their 2+3+3 strategy would lead
them to gain higher market share in China?
– State-funded network
– Larger distributor networks
• Wireless Service Providers
– China Mobile
– China Unicom
– China mobile
– Department stores
– Retail outlets
Local Chinese Firms
Market Share of Chinese Cell Phone Market (as of 1st Quarter 2005)
• Economies of scale
Nokia • Not much differentiation
• Synergy with Samsung group
Samsung • Lack of focus on cellular products
• Diverse businesses in China
Siemens • Falling market share in 2004-2005
• Focused on niche marketing, comfortable
Ericsson • Partnership with Sony (manufacturing)
• Government support
Local/others • Fragmented
• What problems for foreign companies might be
introduced by government ownership of the wireless
• What is Motorola’s competitive advantage compared to
other foreign manufacturers? Local manufacturers?
Motorola’s primary consumers can be broken down into four
• Busy professionals for whom cell phones are an
Heavy Users absolute requirement (high income).
Technology • Primarily males 25 – 45, highly educated and
fascinated by the latest technologies.
Fashion • Young females 20 – 40. They tend to keep up
with the latest trends and are fairly affluent.
Social-Life • Average income consumers, who love to
socialize and make new friends. Family tends to
Lovers be very important.
Originally pursued a global marketing strategy in China.
This strategy quickly met resistance and Motorola
adjusted by changing to a more localized strategy.
Localized strategy included:
- Adapting models and software to meet specified
- Sourcing through local suppliers.
Why is there so little brand recognition amongst
Motorola's four brands in the Chinese market?
BRANDZ Model – Brand Identity
Bonding Nothing else beats it
Advantage Does it deliver something Yes
better than the others?
Can it deliver?
Relevance Does it offer me Yes
Presence Do I know about it? No
Key issue (cntd)
• Need to increase brand knowledge. i.e thoughts, feelings, images,
Memorable • Making the brand recognizable and recallable.
• The brand should be creditable and suggestive
Meaningful of the targeted consumer.
• The brand should be aesthetically appealing,
Likable visually, verbally, and in other ways.
• The brand should be able to add brand equity
Transferable across geographic boundaries and market
Adaptable • the brand should be adaptable and updatable.
• The brand should be legally and competitively
• What are three benefits that Motorola could
gain from local sourcing?
• What type of market segmentation (ie
demographic) is Motorola utilizing?
• How should Motorola appropriately react to the emerging local brands, head-
to-head competing or cooperating in some fields?
• Will licensing manufacturing technology to Chinese manufacturers weaken
Motorola’s core competency?
• Facing the expanding low-priced segment, how should Motorola, traditionally
known as a brand for high-end mobile phones, position itself?
• Is the company’s current branding strategy effective in penetrating this
• If not, what kind of marketing strategy should Motorola follow?
• What should Motorola do in order to effectively cut cost in developing a low-
priced mobile phone?