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Motorola case study


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Case study for marketing MBA class about Motorola\\’s marketing in China.

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Motorola case study

  1. 1. Motorola: China Experience Group 6 PATRICK J. JOINER ROSS M. SPARKMAN HIROKAZU YABUUCHI
  2. 2. Company Background • 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 the 1980s • Became a leader in cable modems and set-top terminals
  3. 3. Motorola China • 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
  4. 4. Motorola China(cont.) • 2+3+3 strategy – 2: to turn China into both a global production base and a R&D base of Motorola – 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 products
  5. 5. Discussion Questions • Why do you think that Motorola entered the China mobile phone market considering the depth of products they produce? • Why did Motorola think that their 2+3+3 strategy would lead them to gain higher market share in China? Dial
  6. 6. Market Structure • Distributors – State-funded network – Larger distributor networks • Wireless Service Providers – China Mobile – China Unicom • Retailers – China mobile – Department stores – Retail outlets
  7. 7. Competition Local Chinese Firms 47% Nokia 22% Others 5% Siemens 3% Motorola Samsung 13% 10% Market Share of Chinese Cell Phone Market (as of 1st Quarter 2005)
  8. 8. Competition • 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
  9. 9. Questions • What problems for foreign companies might be introduced by government ownership of the wireless networks? • What is Motorola’s competitive advantage compared to other foreign manufacturers? Local manufacturers? Dial
  10. 10. Consumers Motorola’s primary consumers can be broken down into four primary segments: • 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. Enthusiasts Fashion • Young females 20 – 40. They tend to keep up with the latest trends and are fairly affluent. Seekers Social-Life • Average income consumers, who love to socialize and make new friends. Family tends to Lovers be very important.
  11. 11. Motorola’s Strategy 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 local demands. - Sourcing through local suppliers.
  12. 12. Key Issue Why is there so little brand recognition amongst Motorola's four brands in the Chinese market?
  13. 13. BRANDZ Model – Brand Identity Bonding Nothing else beats it No Advantage Does it deliver something Yes better than the others? Performance Yes Can it deliver? Relevance Does it offer me Yes something? Presence Do I know about it? No
  14. 14. Key issue (cntd) • Need to increase brand knowledge. i.e thoughts, feelings, images, and beliefs. 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 segments. Adaptable • the brand should be adaptable and updatable. • The brand should be legally and competitively Protectable protectable.
  15. 15. Discussion Questions • What are three benefits that Motorola could gain from local sourcing? • What type of market segmentation (ie demographic) is Motorola utilizing? Dial
  16. 16. Case Questions • 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 segment? • 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?