ABOUT NOKIA• Nokia Corporation a Finnish multinational communications corporation, headquartered in Keilaniemi, Espoo, a city neighboring Finlands capital Helsinki. Nokia is focused on wireless and wired telecommunications. Nokia India is a subsidiary of Finland-based Nokia Corporation. Nokia has played a pioneering role in the growth of cellular technology in India. In the past one decade, Nokia has emerged as one of the most recognized brands in India, surpassing some of the Indian business conglomerates in terms of revenues. The case describes the marketing strategies of Nokia in India and examines how the Nokia brand has become synonymous to mobile phones in the country. While Nokia considers India as one of the most important markets for its future growth, the company has been facing stiff competition in the recent years from Sony Ericsson, Korean
NOKIA’S MARKET IN INDIA• By most accounts, India is among the worlds fastest-growing markets for mobile phones. The country has some 170 million subscribers and adds 6 million to 7 million more each month. (China, in contrast, adds 5 million subscribers, and the U.S. 2 million subscribers a month.) Recognizing this potential, several global telecom giants jumped into the fray when the Indian government first opened up the countrys telecom market to private enterprise in 1994. Among them, one company -- Finland-based Nokia -- forged ahead of rivals and today commands a 58% market share for mobile phones (also called "handsets"). In specific segments, such as GSM telephony, Nokias market share in India is as high as 70%. (GSM, which stands for Global System for Mobile, is the worlds most popular standard for mobile communications.)
POWER TO FOCUS• D. Shivakumar, Nokia Indias vice president and country manager, believes that focus played a key role in the companys growth in India. "If you look at the [mobile phone] landscape in 1995, anybody could have succeeded if they had done the same things as Nokia did," he says. "But all the other companies had something else to focus on, some other business. Nokia was completely focused on mobile phones; others had consumer electronics, home appliances, etc." Nokias focus was not just on handsets, of course. The mobile infrastructure business -- then part of Nokia India -- was equally important. But, as of April 1, 2007, Nokias joint venture with Siemens for mobile infrastructure has become an independent entity. Thus, Nokia India has become even more sharply focused
THE DISTRIBUTION EDGE• Investment in people is difficult to judge; every company claims to have the best talent in the business. But when it comes to distribution, Nokias lead is clear. Today, India has some 95,000 outlets that sell mobile phones. "In 50,000 of them -- and thats a conservative estimate -- only one brand is available, Nokia," says Shivakumar.• Nokia started distributing its phones through a partnership with HCL (formerly Hindustan Computers Ltd.), which had already built an extensive network for its own products. Recently, Nokia has decided to supplement that with its own distribution efforts. "Both companies realized that there was a tremendous growth opportunity and it was best that we utilized the resources of both organizations in an optimum manner," says Nokia India director of sales Sunil Dutt. "We decided that we would address some markets jointly, and that we would individually address some of the other markets."
INVESTMENT IN MANUFACTURING• The other big investment area that has set Nokia apart from other telecom firms is manufacturing facilities and R&D. Nokia has several R&D centers and labs in India. More importantly, it established a $150 million handset manufacturing facility in Chennai in 2005. The total production at this unit has crossed 25 million handsets. "Some 30% of our production is being exported to neighboring countries," says Sachin Saxena, Nokia India director of operations in charge of the factory.• Other companies, such as Motorola, LG and Samsung, have also lined up similar investments or are in the process of setting up manufacturing units, but Nokia has had a clear head start. Also, the Chennai factory is devoted to handsets, whereas other companies are planning to make a whole range of consumer electronics products. "Domestic manufacturing has worked to Nokias advantage," says Ravinder Zutshi, deputy managing director, Samsung India Electronics. "Samsung India is looking at making its Chennai facility a global hub for its consumer electronics products."
BUILDING THE BRAND• Another crucial aspect of Nokias investment strategy focused on building its brand. Here, the company ran into a problem. The Nokia range available in India extends from Rs 1,499 ($37) at the lower end to Rs 45,000 ($1,125) at the high end. Marketing theory says a brand cannot be all things to all people.• But Nokia has a problem promoting other brands under its corporate umbrella. "Unlike the FMCG (fast-moving consumer goods) market -- where the product lifecycle is at least 10 and sometimes 50-100 years -- models have a lifespan of 15-24 months here. With such a lifecycle, promoting various models would mean watching money go down the drain in a couple of years. Instead, Nokia is promoting platforms -- music, for instance. With this approach, one model can replace another while the branding remains the same, or is extended slightly with the E series and N series
AN EXPANDING MARKET• The Indian market for mobile phones, in addition to its base of 170 million subscribers, is also one of the most cost-effective in the world. Call rates in India are among the lowest anywhere -- making a mobile phone call costs two cents in India, compared with about four cents in China. The market also has tremendous growth potential. So far, most of the growth has been penetration-led, which means placing devices in consumers hands. The bulk of the growth going forward will be replacement-led, where consumers come back for more. In India, consumers tend to change their phones faster than in most other places. And whenever they change their phone, 60% are willing to pay a higher price.
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