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About nokia
1. ABOUT NOKIA
• Nokia Corporation a Finnish multinational communications
corporation, headquartered in Keilaniemi, Espoo, a city neighboring
Finland's 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
2. NOKIA’S MARKET IN INDIA
• By most accounts, India is among the world's 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 country's 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, Nokia's market share in India is as high as 70%.
(GSM, which stands for Global System for Mobile, is the world's most
popular standard for mobile communications.)
4. POWER TO FOCUS
• D. Shivakumar, Nokia India's vice president and country manager, believes that
focus played a key role in the company's 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." Nokia's 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, Nokia's joint venture with Siemens for mobile
infrastructure has become an independent entity. Thus, Nokia India has
become even more sharply focused
5. 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, Nokia's
lead is clear. Today, India has some 95,000 outlets that sell mobile phones.
"In 50,000 of them -- and that's 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."
6. 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 Nokia's 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."
7. BUILDING THE BRAND
• Another crucial aspect of Nokia's 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
8. 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.
