(MVentur) Nokia - it's time to switch (from technological features to social benefits)
MVentur memo: Q1 2013Nokia - It’s time to switch: fromtechnological features to social benefits
What does Nokia need to do now?Nokia’s key proposition needs to evolve from features (design and formfactor) to benefits (social utility).Focus on Total Cost of OwnershipNokia’s core brand position in the eyes of its Fans is based on TotalCost of Ownership.Total Cost of Ownership doesn’t just mean calls and devices but alsorepairs, apps and accessories.TCO is a key selling point for both the customer and the mobileoperator. By demonstrating a strong TCO Nokia is able to: • Help the mobile operator understand where Nokia fits in to their device portfolio and provides clarity on how they should market/ price it accordingly • Help retailers identify the key messages to market and sell the device in store and online • Help the customer understand the Nokia value proposition relative to Apple and SamsungFor competitor brands like Apple, the accessory market may be lucrativefor the retail business but for Nokia, this market is off the company P&L.This means that a device that doesn’t need accessories (covers,fascias, unique chargers etc) has a lower TCO for the customer.If Nokia continues to focus on Maps & Music, it delivers a messageinconsistent with its valued TCO. Fans see Nokia as reliable; Battery life,camera quality, speed of call connection and the robustness of itshandsets rank highly in our research (Fan articulations of the brand).What Nokia has to do is let go of its tightly controlled brandmanagement approach to the narrative and work with these Fans toallow them to tell the story too.Less TCO = More ChoiceRather than focus on the features of the Nokia handset, Nokia needswork with Fans to articulate and emphasize the benefits of owning adevice with low TCO.Youth spend 36% of their disposable income on mobile phones. Thatmeans any increase in mobile spending is a cannibalization of existing
spending habits (e.g. entertainment, travel, eating out etc). Buying acompetitor brand like Apple means forfeiting future spending on thesemeaningful activities. Devices that offer a lower Total Cost of Ownershipoffer more choice in youth social life.By demanding less ongoing ownership costs, Nokia devices offer youthmore choice - more money and time to spend on shopping,entertainment etc. “Spend less on your phone, spend more time withyour friends.”Don’t compete on price or technology, compete on Social BenefitNokia marketing needs to emphasize these social benefits rather thanthe tangible features of the handset. People buy on emotion but justifywith logic. While youth may say they “like” Windows 8, what they love isvery different (spending time with friends, being significant etc).Fans have their own interpretation of TCO that will differ from the storytold by Nokia and the ad agency. Our research shows that even at thisearly stage of Lumia’s life, Nokia Fans have ignored the officialmonolithic story given by the ad agency and created their own.Nokia needs to go beyond the traditional approach on using ad agenciesto sell the Nokia story to engaging its Fans offline (at the daily brandtouch points) and understanding how these influencers defined theSocial Benefit of low TCO for Nokia phones.
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