Promotional Strategies of Nokia 1.

Customer satisfaction: Market research must be used to find out whether customers' expectations are being met by current products or services. 2. Customer perception: this is based on the images consumers have of the organization and its products, this can be based on; value for money, product quality, fashion and product reliability. 3. Customer needs and expectations: This is anticipating future trends and forecasting for future sales. This is vital to any organization if they wish to keep their entire current market share and develop more. 4. Generating income or profit: This principle clearly states that the need of the organization is to be profitable enough to generate income for growth and to satisfy stakeholders in the business. Although satisfying the customer is a big part of a companies plans they also need to take into account their own needs, such as: 5. Making satisfactory progress: Organizations need to make sure that their product is developing along with the market, if a product is developing well, then income should increase, if not then the marketing strategy should be revised. 6. Be aware of the environment: An organization should always know what is happening within their designated market, if it is changing, saturation, technological advances, slowing down or rapidly growing, being up to date on this is essential for companies to survive. There are also certain external factors that a company should be very aware of, such as P.E.S.T factors (political, environmental, social and technological) and also S.W.O.T (strength, weakness, opportunity and threat). A business must take into account all these constraints when designing and introducing a marketing strategy. P.E.S.T: Political factors- Legal constraints (such as the G3 technology constraints that Nokia have to take into consideration) must be taken into account because many businesses aim to make a profit so they may be tempted to mislead their customers about prices, quality of products and the availability of their products. They may also try to cut expenditure by using

lesser quality materials in their products (such as weaker materials for Nokia cases and batteries), also some companies may also dispose their waste in ways that damage the environment (pollution) and not ensuring high standards of hygiene and safety in the workplace and outlet stores, all of these are illegal and can leave companies in big legal trouble. The governmental bodies in the U.K have introduced new laws into the business environment, which ensure that none of these procedures take place; if a company is to be successful they must follow all of these laws. Environmental social and ethical factors- some businesses view profits are more valuable then a strong ethical code and this can govern behaviour and business conduct. Some un-ethical practices are against the law and companies can not become involved in them (I have mentioned these above) but there are also some practices that aren't illegal by law but are considered highly un-ethical by the consuming public, companies who engage in these practice's can lose a lot of market share if they are found out. An example of this is cosmetic testing on animals, it is legal but some of the consuming public are not happy about it and boycott Certain products because of it, companies must be very careful about how they conduct themselves. Nokia have managed to be quite environmentally friendly and have not done anything that the consuming public have taken huge offence to, they have been very careful about this and this is one of the reasons they are such a popular brand of mobile phones. Technological- In the communications market technology is perhaps the most important factor that companies like Nokia have to take into consideration. They have to keep up to date with all the newest technological advances (like camera and motion capture phones) if they are going to capture the biggest market share and stay ahead of their competitors (Sony and Seimens). S.W.O.T SWOT analysis is also another way of deciding on a successful marketing scheme, we must look at strength, weakness, opportunity and threat.

Strength (internal factors)- Is looking at the companies current market share and researching how recognised Nokia is amongst consumers in the target market. Nokia is currently one of the most popular Mobile communications companies in the industry, generating over 52,000 sales in 1997, which was a 34% increase from 1996. Nokia's net sales for the October-December period in 1997 came to a total of FIM 15 857 million (FIM 12 669 million in 1996). Weakness (internal factors)- This is basically looking at where the product is failing or not doing as well as it should in the market. Nokia's problems are that: 1. They are currently aiming their products at a saturated market segment. 2. Their wage costs are forever rising. 3. Higher import charges have now been put into place. 4. There are some quite high supply chain costs that Nokia are currently paying. Opportunity (external factors)- This is the area in which Nokia can make more profit, or gain more market share. There are 2 ways in which Nokia can currently do this: 1. Improve the technology that they are using to make their phones and use in their products, for example, camera phones and advanced picture messaging would attract new consumers to purchase phones under the Nokia brand name. 2. Using innovation to re-invent their products, change and develop within the market to offer something none of the competitors have. Also the fact that phone call charges are being forced to fall should prove to be an opportunity for Nokia to sell to the people, who previously may have not purchased a phone because of higher call charges. Threat (external factors)- This is looking mainly at the competition that are taking away Nokia's current market share and also government legislations (the total costs of 3G licensing in Europe is 110 billion euros) that could hinder Nokia's development as a company. For an existing product it is often useful to draw up an Ansoff's matrix, in order for Nokia to grow as a business we must look at: · Market penetration

· Market development · Product development and · Diversification Market penetration- the aim of market penetration is to sell existing products to an existing market, to do this Nokia must do a few things: 1. Change the pricing scheme (for example, penetration or competitor based) 2. Introduce discounting 3. Start up a different advertising campaign or consider changing an existing one. Market development- To complete market development successfully, Nokia must look into the following: · Researching and selling to a different market (in case of saturation or poor market share) · Change times that television adverts are aired at and alter the places in which print adverts are being displayed (this can help your products appeal to a whole new market segmentation) · Lower current prices to help the products appeal to a wider range of consumers. Product development- This area of the Ansoff's matrix involves keeping up to date with the latest technologies available in your chosen market and using them to appeal to different people (for example, WAP phones are aimed at more professional people while Camera phones are aimed at the youth market) Diversification- This refers to developing technology that offers consumers something new or different, this is the most common way of companies trying to gain greater market share and increase their profits.

Market research A businesses success is based on whether they can give the customer what they want and when they want it. Market research involves the collection, collation and analysis of data relating to the consumption and marketing of relevant goods and services. The purpose of market research is really to find out whether there is a gap in the market for your product or service or whether you can make customers want your product through persuasive adverting. We already know that there is a market for mobile phones but the current market gap has become saturated (or if not saturated, almost saturated) so Nokia need to find a new market segment to aim their products at. In order to classify the wants and needs of the consuming population, companies need to gather information on the following: · Consumer behaviour- How do customers react to advertising? Whether they are partial to prize give-aways or free gifts? What are their reactions to new and developed products? · Buying patterns and sales trends- Organizations need to look at how buying trends and patterns are affected by class, gender, religion and region. They also need to understand how buying patterns change over time and what markets are expanding and are worth trying to enter and obviously which markets are contracting and companies shouldn't aim to enter into. · Consumer preferences- What customers are looking for in a product, for example, style, colour, technology, amount of outlets, customer service and promotional styles. · Activities of competitors in the market- Nokia need to examine how their rivals are adapting their prices and products to meet the consumers need's, how well the rivals are selling and what marketing strategies they are using. Market research should supply the company with all the information they require about consumers preferences, whether they buy certain products, what design

features are preferable and what kind of retail outfits are most frequently used for purchasing certain products. Sources of marketing information The information that companies collect through market research can be in one of two forms, either quantitative or qualitative data. 1. Quantitative data refers to data presented in numerical form, usually figures, for example, Nokia's operating profit in the 4th quarter of 1997 was 830 million. 2. Qualitative data is the information concerning the motives and attitudes of consumers; for example, more people buy Nokia phones then Sony phones because Nokia phones are more reliable. The two main sources of market research information are primary research (where the company has gathered the information about the markets themselves) and secondary research (when researchers use information that has been discovered by other companies). Methods of collecting primary data: · Face to face survey · Open ended interview · Telephone survey · Postal surveys · Consumer panels · Observations · Experiments Methods of collecting secondary data: Internal sources:

· Existing reports · Distribution data · Shopkeepers opinions · Stock records · Sales records · Accounting records External data: · Government statistics · Specialist business organization, for example, Mintel or Neilsons retail audit. · Consumer databases. To help decide what market segment to aim at companies can also look at the buying habits of customers. In order to make decisions about the type of products to make, what advertising to use, promotional tactics, pricing and packaging. Nokia will need to know about the following: 1. The types of goods customers buy 2. How much they buy 3. How often they buy There are also certain variables that can affect peoples buying habits, they include: 1. Age 2. Gender 3. Area they live in

4. Religion 5. Lifestyle 6. Taste 7. Fashion and preferences. Market segmentation In order to plan their product Nokia must look at what area of the market they want to aim the products at, as the current youth market is more or less saturated Nokia will have to research into a new market, I suggest the 55+ market as they will have lots of disposable income and my research shows that most people aged 55+ do not currently own a mobile device and could be persuaded to buy one by certain promotions and a good advertising campaign, also the drop in call prices should attract a lot of people who may have previously been hesitant due the high costs. Below is a table showing the population in terms of social grouping of the U.K in 1999: Socio-economic group % Of population A-Upper class 2.8% B- Middle class 18.6% C1- Lower middle class 27.5%

C2- Skilled working class 22.1% D- Working class 17.6% E-Low income earners 11.4% I think that Nokia should aim their products at the socio-economic group B (middle class) event though they aren't the biggest group they are the group that is most likely to spend their money on a mobile telephone as my questionnaire results showed. Investigating consumer trends As the main aim of market research is to develop an idea of market opportunities, an important part of this research must be to track sales in order to identify those products, which are likely to experience a rise in sales and to look at those in which the sales are likely to fall. Changes in customer demand, which continue in the same direction for more then 2 years, show a long-term trend or saturation is occurring within the market. This is definitely a bad market for businesses to be in (the mobile phone market is in the first year of a continuing trend) and the company must consider changing their market or product to a market or product that is currently showing a continuing upwards trend.

The marketing mix ----------------The marketing mix refers to the combination of elements within a companies marketing strategy, these are designed to give the customer what they want and in the long term are designed to maximise profits.

The marketing mix is based around the idea of the 4 P's: Product-The product is the centre of the marketing mix and the other three P's are based around it. Consumers purchase goods and services for a variety of individual reasons and a company must be aware of all of these when selling a product (that is why they conduct market research). Price-Is a key factor in the selling of a product, and is usually the one that is open to the most change based on different pricing strategies, for example, competitor based, penetration or skimming. The three main factors affecting the amount charged for a product or service, are; the cost of production, customer demand and competition. Place-This refers to the chosen outlets for a product or service, for a product to be very successful it must be easy to access, Mobile phones are very easy to access nowadays, they are sold in supermarkets, specialised outlets (either by network or brand) and all major department stores. Promotion-This involves providing information to the customer over a variety of media platforms, using radio, television and print advertising as well as using other promotional tools such as "money off deals" and "free giveaways".

The stages of marketing ----------------------1. Market and product research: * Finding out what your customers want * Technical research 2. Product launch * Test market * Pricing

* Branding * Packaging 3. Product promotion * Advertising * Merchandising * Publicity and P.R * Sales promotion 4. Sales and distribution * Managing the sales force * Type and amount of sales outlets * Local, national or international sales? * Transportation of goods 5. Monitoring and analysing the sales * Meeting customer satisfaction? * Does the product need modifying or replacing? * Is a profit being made? * Is customer service satisfactory? * Have the sales targets been met? * Is the promotion and distribution policy effective? If a company gets to section 5 of the marketing cycle and a

substantial amount of the goals haven't been met then they will have to consider re-launching the product or taking it out of the market completely and placing it in a different market or changing it to meet the needs of the current market.

Product life cycle- Mobile phones ---------------------------------

Introduction When mobile phones where first introduced they were low quality technology (bad reception, poor reliability and had a short battery life), high priced (around £100 for a basic model) and consumers had to be persuaded to buy mobile telephones, as they were not yet established as a necessity. When products are first released, companies can expect high promotion fee's as the public are probably not yet familiar with the product. Also when mobile phones were first released they were bulky and hard to use, as product design and development are a key figure in success, Nokia had to design phones that were smaller and simpler for consumers to use. As people had paid a lot for earlier, more primitive products they were obviously not going to pay the same high prices for later products so Nokia had to develop phones that could be sold for less and would last longer, this is where companies can expect to pay high production costs. When Mobile phones were first introduced they were not such a popular item and there weren't as many competing companies in the market. So Nokia and a few other companies (Sony and Panasonic) could charge higher prices then they would in the highly competitive market that they are in today, as there aren't so many companies competing for market share.

Growth In the growth stage of the product life cycle companies can expect

advertising and promotional costs to be as high as in the introduction stage as more companies will enter the market and competition for market share will increase. Advertising is a proven way of promoting technological advances within a market (as with the new company 3 promoting their new technology that allows people to watch video's on their handsets) so higher advertising costs can be expected as the technologies available get better and more advanced. The growth stage is also the stage that companies will (hopefully) start to make a profit, based on good market research and a strong sense of branding and a successful marketing scheme. In the growth stage profit isn't the only thing that will start to develop, as there are more companies in the market it is obvious that more technology will be developed and that will drive prices higher, this is how companies start to make profits (because consumers have accepted the product, in Nokia's case, mobile phones, as a necessity they will be more willing to pay higher prices for new phones that emerge in the market).

Maturity When a product enters the maturity stage, advertising and promotional prices should decrease, as consumers are more aware of the product and will research new additions to the market instead of being told what is new (this is because phones have been promoted as fashion items and will be desired by the consumers). At this point in the product life cycle the main producers (Nokia, Siemens, Sony etc) should be clear as they will have the most money to develop and promote their phones while the other, less popular producers of phones (Panasonic, Toplux and NEC) will be struggling to survive and will drop out of the market either here or they will seriously struggle in the next stage, decline.

Decline This is the stage that Mobile phones have entered (Nokia had recorded their first drop in sales earlier this year), and all the remaining companies are trying to re-launch their products by either developing

their products or entering new markets. At this point phone sales will be decreasing and promotion and advertising costs will start to rise again as companies fight for the remaining market share and struggle to make a profit. Below is a graph showing the product life cycle [IMAGE]

Sales Time [IMAGE]

Sales ----[IMAGE]

Time ----

With successful re-launching the product life cycle should look like the one above. --------------------------------------------------------------------

Branding -------Most forms of promotion are based around the idea of having an image

to go with the product. Brand imaging plays a dominant part in an organizations marketing strategy. This is because people make a purchase they aren't just buying a product, they are buying a lifestyle or an image. If branding can make people believe that the branded product is better then an un-branded product, more people will buy it and they will also be willing to pay higher prices for the "extra quality" and lifestyle they are receiving with the product. Because a lot of rival products are more or less the same (Pepsi and Coke) the main way of making your product stand out is through aggressive branding, This is usually achieved by companies using slogans, logos and distinctive packaging. Types of pricing strategies

Cost based pricing This involves calculating the cost of production for the product and then adding a mark-up for profit, usually 10% so a company can make enough profit to re-invest into the business so they can grow.

Marginal cost pricing This is the addition to total cost resulting from the production of an additional unit of output. If a decision is made to expand by one or more units it will be based on an assumption that the price of each unit will be least sufficient to cover marginal costs, so that the profit earned on all previous units is not lower then it previously was.

Demand based pricing This is usually pricing products based around the customer demand for a product, if the demand is high, the prices will rise. This is usually used when the product is unique, for example, a football match or concert. To use this strategy companies must carry out detailed market research to find out what prices the consumers are willing to pay so they don't over price their product.

Market skimming This pricing strategy is also known as price creaming and is usually put into place in markets where the competition is limited. Market skimming pricing involves charging a high price for new products because the customer is new and unique so (hopefully) the consumers will be willing to pay higher prices for them. This is the most common strategy in the mobile phone market, as consumers will pay the higher prices for phones that have the newest technology.

Penetration pricing Firms who are trying to establish themselves in a new market and gain instant market share usually use this strategy. It is a high-risk, high cost strategy that is only an available option to the bigger companies (like Nokia) who supply to mass markets. Penetration pricing is based around the idea that a company will set their prices low to encourage customers to buy their products instead of higher priced, more established brands. The organization may also boost sales by lowering prices if demand is price elastic. One problem with this strategy in the mobile communications market (or any other highly competitive markets) is that price wars will often develop with rival companies and this can limit to the amount of profit that can be made, and also generate losses due to under-pricing in an attempt to hold onto market share.

Price discrimination This is where companies can charge different prices in different markets, because of the consumers they are aiming at, for example, rail companies charge different prices for peak and off-peak travel cards and fares. This strategy is only available for use when the consumers are unable to undercut higher prices by reselling their products from low priced markets to high priced markets.

Destroyer pricing This is a more drastic and aggressive form of penetration pricing, used when a company's objective is to get rid of competition completely by lowering their prices to levels that other companies cannot afford to drop to. The down side to this strategy is that consumers may see the low price as a reflection of the quality of the product and stick to the higher priced products because they offer a product of higher quality.

External factors affecting pricing decisions -------------------------------------------Setting a price with regards to only production costs ignores the influence of external factors, such as: * Market conditions- how much are the customers willing to pay? Can advertising increase product image and price? Is the product aimed at a mass market or a niche market? (a niche market refers to when a company aims a product at a very small, select segment of the market) * Production costs- Prices must cover the costs spent in production if a profit is to be made. The price must cover variable costs (for the short term) and fixed costs (for the long term) otherwise a company will face closing. * Taxes and subsidies- VAT and customs duties will raise the price of a product. Government subsidies will allow businesses to charge lower prices. * Business objectives- Is the business looking to maximise profits? Or is the company looking to increase its market share? * Marketing mix- What stage is the product at in the life cycle? What forms of promotion are being used? Where is the product being sold?

* Marketing structure- How much competition is there in the market? What prices is the competition charging? Nokias current marketing strategy The marketing mix Price- The phones that Nokia produce are usually sold at high prices (new phones can be expected to enter the market at around £200+, if they carry the latest technology). The price of the new phones usually decreases after an introductory period, which is usually around 2 months long. Nokia's prices are usually competitor based, in such a way as, they try to keep their prices a bit lower then those of the closest competitors, but not as low as the "smallest" competition as consumers do not mind paying the extra money for the "extra quality" they will receive with a well known brand, such as Nokia. Place- Nokia phones are generally sold at all established mobile phone dealerships such as Carphone Warehouse and The Link, although they are also sold at other retailers such as Dixon's and other electrical suppliers. The products are only sold in the electrical suppliers and stores other then dedicated phone dealerships after the introductory period so the phones can remain limited edition, as this will encourage younger consumers to buy them. Promotions- Nokia tend to promote the new technologies and mobile devices they create using one big advertising campaign that focuses on a singular technology instead of each individual handset so they can appeal to a lot of different markets with one campaign. Product- Nokia phones tend to include all the latest technology and a lot of the consumers favourite aspects such as text messaging and games like Snake and Memory. When the phones came out they were big and bulky and quite unattractive but now they are all quite sleek and stylish with phones now getting small enough to fit in the palm of your hand as standard. Most of the phones produced nowadays have accessories that consumers must buy with them (carry cases, hands free kits and in-car chargers) these generate Nokia a lot of profit, as they are very high priced.

Nokia's marketing mix has worked very well until recently as the market they are aiming at has become more and more saturated and after looking at all the mobile phone sales figures, it looks as if the phone companies can aim at this same youth market for about another 2 years until they need to change, but they should change sooner so they can start making a bigger profit and get a head start on the competition who will also have to change the market they are aiming at. Nokia's current promotional strategy is working very well as they are able to "talk to" a large number of consumers in different markets rather then the niche markets the old promotional strategies where restricted to. Market segmentation Market segmentation refers to the different areas of the population that companies can aim their products towards. The market segment that Nokia has chosen to aim is the youth market focusing on students aimed 13-19 as market research has shown that some of the youth market are receiving large amounts of pocket money and most have no real commitments to spend it on and that means they have lots of disposable income and will be able to spend a lot money on new mobile phones. As a big company Nokia are able to do a lot of promoting and advertising that smaller, less successful companies, may not be able to afford, such as television advertising and sponsoring lots of events that will be viewed or heard by large amounts of people in their chosen market segment (events such as music festivals and music awards are a goldmine for companies as they are viewed by millions of people worldwide). Adverts such as television and print adverts will be put into certain areas so that they can attract their chosen market segment, Nokia tend to put a lot of their print adverts in men's magazines such as FHM and Loaded so they can appeal to all of their readers instead of a smaller percentage of the readers they would attract in magazines such as Lifestyle and Good Housekeeping. I think Nokia's way of promoting is very good as they can appeal to mass markets and large amounts of people in their chosen market segmentation with certain advertisement's and with sponsoring large events like the ones I have previously mentioned. Pricing strategy

Nokia's current pricing strategy is based on 2 main theories: 1. Penetration pricing- although this strategy is usually for companies that are trying to gain instant market share in a new market, companies who are already well known in the market still do it with new products that carry new technologies so they can take more market share form their competitors. 2. Competitor based pricing- this is used when there is a lot of competition in the market and a company is looking to take another companies market share by offering the same or similar products for a lower price, this happens a lot in the communications market and this strategy is used by every mobile phone producing company that is still in business. Nokia's pricing strategy has proven very effective, this is down to the fact that they first sell their products for high prices and have very limited sales but make big profits on each sale, they then lower the price of their product and have lots more sales but they make less profit, but they still make a large profit due to the amount of sales, the other reason that they are so successful is that they offer high quality products and they sell them for the same price and sometimes even lower prices then the competition and have now built up the highest market share, they currently have 37.2% of the mobile phone market share and are the biggest selling mobile phone company in the world.

Branding Nokia phones are seen as being of the highest quality and this is reflected in their massive sales figures. The fact that they are seen to be such high quality products is partly down to successful branding, they have a highly recognisable packaging style and the style of their handsets is similar in every line of production with the company name printed just above the screen and just below the earpiece. The fact that Nokia operate such an aggressive marketing strategy has elevated them above the competition as consumers are fooled into believing that branded products are "better" then

un-branded products or products produced by lesser-known brands such as One Tel and other lesser-known phone producers in the market. Product life cycle-Nokia Introduction When Nokia phones were first introduced they required a lot of promoting and advertising as they weren't established enough to sell based on their quality and what they offer to the consumer, so this is where Nokia spent the largest amount of money promoting their products and establishing their brand as a leader in the communications market. Also when mobile phones were first available there were only a few companies as well as Nokia in the market (Sony e.t.c) so they could charge higher prices then they can at the present time in the product life cycle because no companies would dare to enter a price war with such a new product. Growth This stage of the life cycle also has high promotion costs involved in it, this is due to the fact that mobile phones are becoming established as a consumer necessity and lots of other companies decide to enter the growing market, although companies do not need to assure customers that they need a mobile phone, Nokia have to assure the customers that they want a Nokia phone and this is where the high promotional costs come from. Maturity In this stage the promotional costs do decrease as the more popular brands, such as Nokia and Samsung, have gathered the majority of the market share and only have to show customers that they have a new model out and it will sell well, as they have been established as a quality brand and customers no-longer need to be persuaded to buy Nokia brand technology. Decline This is the stage that the mobile communications market, including

Nokia, have recently entered (Nokia had reported the first drop in sales in the first quarter of 2002), and companies are now promoting, heavily, their new MMS products to the market in an attempt to get out of decline and back into growth, with a new generation of technologically advanced phones that offer motion picture capture, camera technology and the opportunity to watch television on your handset. If a company has entered decline it needs to look at the S.W.O.T forms of analysing their market strategy, which I have fully evaluated on page's 3 and 4. What I have found out by analysing S.W.O.T is that Nokia's main weaknesses are: 1. They are currently promoting their products to a market that is verging on saturation- Nokia need to re-launch some of the older models to a different market and only promote new products to the existing market segment. 2. Their wag costs are already high, and are always risingTo solve this they can try and invent or discover machines that can increase productivity so that the number of staff currently employed (The average number of employees in 2002 was 52714 and this was a decrease from 57716 in 2001). 3. High import charges are being implemented by the governmentTo counter this Nokia need to set up factories in more companies, this will have high start up costs but will eventually start to save Nokia money on import and export charges. I have also discovered that Nokia have established themselves as one of the most popular mobile communications companies in the market with a total of over 52000 sales in 1997 which was a 34% increase from 1996's sales. There are many external factors that can affect a marketing strategy from developing; this is where you must use P.E.S.T analysis. I have

outlined P.E.S.T analysis on pages 2 and 3 but have further analysed the effect of these external factors on the development of Nokia's marketing schemes below: Political factors- Legal factors, such as the G3 technology licensing which has cost companies a total of 110 billion euros so far, are always around to stop Nokia from properly developing strategies and further conquering the communications market. Also taxes such as import and export have an affect on Nokia's development and these are more-or-less impossible to avoid unless a company can afford to run factories in every country and continent in the world. Environmental, Social and ethical factors- Many companies may view profit as more important then ethical practice and this can lead them to making illegal decisions and this has been a big contribution to many companies going out of business or loosing all their market share to eco-friendly companies. Technological factors- In the communications market this is probably the most important external factor in affecting a companies development of their marketing strategy as they must always keep up to date with every change within the market if they are to be successful and hold on to their market share ad hopefully gain more. Nokia's current marketing strategy has helped them become the biggest selling brand in the communications market to date, but now sales are starting to decrease with the saturation of the current market segment so Nokia will need to do one of the following; Re-launch their products with an aggressive promotional scheme; Target a different segment of the market that has not been entered so Nokia can instantly gain 100% of the market share (although this is risky as the market might not take to their products and the demand might be low, so sales will also be low and prices will have to be high and this will further stop people from purchasing Nokia's products); Differentiate their products to offer something no other company can offer to the market or simply try and offer a different product altogether, such as landline phones or televisions. Market research

Nokia's business strategy (statement taken from "Our business objective is to strengthen our position as a leading communications systems and products provider. Our strategic intent, as the trusted brand, is to create personalised communication technology that enables people to shape their own mobile world. Nokia are currently creating innovative technology to allow people to access Internet applications, devices and services instantly, irrespective of time or place. Achieving interoperability of network environments, terminals and mobile services is a key part of our intent. Nokia need to capitalise on our leadership role by continuing to target and enter segments of the communications market that we believe will experience rapid growth or grow faster then the industry as a whole. By expanding into these segments during the initial stages of their development, Nokia have established themselves as one of the worlds leading player's in wireless communications and significantly influenced the way in which voice and other services have been transferred to a wireless, mobile environment. As demand for wireless access to an increasing range of services accelerates, Nokia are planning to lead the development and commercialisation of the higher capacity networks and systems required to make wireless content more accessible and rewarding to the end user. In the process, we plan to offer our customers unprecedented choice, speed and value. Nokia has a history of contributing to the development of new technologies, products and systems for mobile communications. Recent examples include: the commitment to the open mobile alliance; the co-development of the new operating system for the future terminals with symbian; short-range wireless connectivity with bluetooth; the development of wireless LANs for enabling local mobility in fixed LANs; and MMS for enabling mobile multimedia messaging. In addition, Nokia have continued to be active in IP convergence. They

have established alliances with other service providers in order to make mobile access services easier for the end user. Nokia in 2002: IAS reported Nokia's net sales in 2002 decreased by 4% compared with 2001 and totalled EUR 30 016 million (EUR 31 191 million in 2001). Sales in Nokia Mobile Phones were flat at EUR 23 211 million (EUR 23 158 million) and decreased in Nokia Networks by 13% to EUR 6 539 million (EUR 7 534 million). Sales decreased in Nokia Ventures Organization by 22% to EUR 459 million (EUR 585 million). Their operating profit in 2002 increased by 42% and totalled EUR 4 780 million (EUR 3 362 million in 2001). Operating margin was 15.9% (10.8% in 2001). Operating profit in Nokia Mobile Phones increased by 15% to EUR 5 201 million (EUR 4 521 million in 2001). Operating loss in Nokia Networks decreased to EUR 49 million (operating loss of EUR 73 million in 2001). Operating margin in Nokia Mobile Phones was 22.4% (19.5% in 2001), while the operating margin in Nokia Networks was -0.7% (-1.0% in 2001). Nokia Ventures Organization showed an operating loss of EUR 141 million (operating loss of EUR 855 million in 2001). Common Group Expenses totalled EUR 231 million (EUR 231 million in 2001). During 2002, the operating profit was negatively impacted by goodwill impairments of EUR 182 million and net customer financing impairment charges related to MobilCom of EUR 265 million. Financial income totalled EUR 156 million in 2002 (EUR 125 million in 2001). Profit before tax and minority interests was EUR 4 917 million in 2002 (EUR 3 475 million in 2001). Net profit totalled EUR 3 381 million in 2002 (EUR 2 200 million in 2001). Earnings per share increased to EUR 0.71 (basic) and to EUR 0.71 (diluted) in 2002, compared with EUR 0.47 (basic) and EUR 0.46 (diluted) in 2001. At December 31, 2002, net-debt-to-equity ratio (gearing) was -61% (-41% at the end of 2001). Total capital expenditures in 2002 amounted to EUR 432 million (EUR 1 041 million in 2001). By the end of 2002, outstanding long-term loans to customers totalled EUR 1 056 million (compared with EUR 1 128 in 2001), while guarantees

given on behalf of customers totalled EUR 91 million (EUR 127 million). Nokia also had financing commitments totalling EUR 857 million (EUR 2 955 million) at the end of 2002. Of the total outstanding and committed customer financing of EUR 2 004 million (EUR 4 210 million), EUR 1 573 million (EUR 3 607 million) related to 3G networks. Global Reach In 2002, Europe accounted for 54% of Nokia's net sales (49% in 2001), the Americas 22% (25%) and Asia-Pacific 24% (26%). The 10 largest markets were US, UK, China, Germany, Italy, France, UAE, Thailand, Brazil and Poland, together representing 60% of total sales. Research and development In 2002, Nokia continued to invest in its worldwide research and development network and co-operation. At year-end, Nokia had 19 579 R&D employees, approximately 38% of Nokia's total personnel. Nokia has R&D centres in 14 countries. Investments in R&D increased by 2% (16% in 2001) and totalled EUR 3 052 million (EUR 2 985 million in 2001), representing 10.2% of net sales (9.6% of net sales in 2001).

People The average number of personnel for 2002 was 52 714 (57 716 for 2001). At the end of 2002, Nokia employed 51 748 people worldwide (53 849 at year-end 2001). In 2002, Nokia's personnel decreased by a total of 2 101 employees (decrease of 6 440 in 2001). Employee Value PropositionIn a move to further attract and retain a skilled workforce, this year Nokia developed an employee value proposition framework. The adaptation of this has already started at country levels to reflect and respond to local employee needs and expectations. The four fundamentals of the proposition are (1) the Nokia Way and Values, (2) performance-based rewarding, (3) professional and personal growth, and (4) work-life balance.

Nokia Mobile Phones in 2002 Nokia Mobile Phones continued to renew its industry-leading product line-up, launching a record 33 new products during 2002, incorporating colour, imaging, multimedia, mobile games and polyphonic ring tones. Of the total new phones launched, 14 had colour screens and multimedia capability. This attests to the growing share of feature-rich phones offering advanced mobile services in the company's product portfolio. During the year, Nokia launched its first WCDMA mobile phone, the Nokia 6650, which began deliveries to operators for testing in October 2002. The company also commenced shipments of its first CDMA2000 1X mobile phones in the Americas. These included the Nokia 6370, the Nokia 6385, the Nokia 3585, and the Nokia 8280. In imaging, Nokia began shipping its iconic camera phone, the Nokia 7650, expanding the scope of the mobile market from voice to visual communications. Feedback from customers and users across the board has been extremely positive. In the enterprise segment, the company expanded its product offering from the Nokia Communicator 9200 series to include the Nokia 6800 messaging device, with full QWERTY keypad optimised for personal and enterprise mobile e-mail. In entertainment, Nokia announced it would bring mobility to gaming by offering console quality games for its new mobile game deck device category. Under a collaboration agreement with world leading games publisher, Sega, the two companies will develop games for the new Nokia N-Gageâý¢ mobile game deck, which will run on the Nokia Series 60 platform and the Symbian operating system. For the full year 2002, Nokia volumes reached a record level of 152 million units, representing faster than market growth of 9%, compared with 2001. Backed by Nokia's ongoing product leadership and user brand preference, Nokia has again increased its market share for the fifth consecutive year reaching about 38% for the full year 2002, bringing the company closer to its target of 40%. During the year, Nokia Mobile Phones took steps to accelerate growth

and enhance both agility and scale benefits with the introduction of a new operational structure. From May 1, nine new business units were each made responsible for product and business development within a defined market segment. This allowed Nokia to optimise its activities in these vertically focused areas, while continuing to achieve broad economies of scale from horizontal functions such as application software development and the company's market-leading demand-supply network. Nokia Networks in 2002 During the year, Nokia Networks signed 20 GSM network deals in Asia, China, Europe and the US, including three new customers. Mobile Multimedia Messaging Services (MMS) became a reality in 2002, with its rapid implementation into most GSM operator networks. By year-end, Nokia Networks had delivered MMS solutions to well over 40 operators. WCDMA 3G technology implementation moved to pre-commercial and commercial phase towards the end of 2002. Nokia signed 10 new 3G deals in Austria, Belgium, Germany, Ireland, Japan, the UK and Taiwan. In September, Nokia became the first vendor to commence volume deliveries of EDGE hardware across all major GSM bands and in all continents. In broadband access, Nokia signed nine new contracts in 2002, and launched the Nokia D500 next generation multiservice broadband access platform for the US and ETSI markets. The company also further strengthened its GSM/EDGE/WCDMA product family with several new products and solutions. Key launches included a high-availability server platform for use in All-IP mobility networks, and the Nokia LTX, a linear transceiver product family of base station modules that support the definition of Open IP Base Station Architecture. During the year, Nokia took measures to align its operations to better reflect current market capacity and conditions, reducing the number of employees in its delivery and maintenance services as well as in production. Nokia also streamlined its professional mobile radio unit

to reflect the slower than expected take-off of this market. Nokia Ventures Organization in 2002 Despite overall flat IT spending and slow growth in the corporate network security market throughout 2002, Nokia Internet Communications maintained the same level of sales and market share in the enterprise firewall/VPN appliance segment as the previous year, as well as significantly improving its operational efficiency. Highlights for the year include the introduction of a record number of new products and solutions that both expand Nokia's network security appliance portfolio and respond to emerging market opportunities. Extending mobility to enterprise workforces, protecting corporate e-mail content and providing firewall/VPN benefits to remote offices were promising growth areas addressed with new product offerings from Nokia. To help foster the creation of new security applications to complement Nokia's own solutions, the Nokia Security Developers Alliance was launched in July. Looking forward to 2003, Nokia Internet Communications remains committed to building a leading position in the corporate network security market and extending mobility to enterprises. For Nokia Home Communications, sales in 2002 clearly declined as the unit began a migration towards emerging horizontal markets with the launch of new types of terminals focused on horizontal terrestrial and satellite markets, providing digital viewers access to a broad range of digital services. Products, such as the Nokia Mediamaster 230 S, introduced Bluetooth-enabled interoperability to the home environment in the second half of the year. Dividend Nokia's Board of Directors will propose a dividend of EUR 0.28 per share in respect of 2002.

Net sales by business group Jan. 1.-Dec. 31 2002

% 2001 % Change EURm EURm % Nokia Mobile Phones 23 211 77 23 158 74 Nokia Networks 6 539 22 7 534 24 -13 Nokia Ventures Organization 459

1 585 2 -22 Inter-business group eliminations - 193 - 86 Nokia Group 30 016 100 31 191 100 -4 Operating profit, IAS, Jan. 1-Dec. 31 2002 % of 2001 % of EURm

net sales EURm net sales Nokia Mobile Phones 5 201 22.4 4 521 19.5 Nokia Networks -49 -0.7 -73 -1.0 Nokia Ventures Organization -141 -30.7 -855 -146.2 Common Group Expenses -231

-231 Nokia Group 4 780 15.9 3 362 10.8 Primary research results [IMAGE]





Average Rating (from 1-10. 1 being the best and 10 being the worst Battery life 1 Exchangeable covers 5

WAP 9 MMS 10 The style of the phone 3 SMS 2 Games 6 Picture messaging 8 Organiser 7 Ringtone features 4 [IMAGE]

Analysis of my research ----------------------For my primary research I handed out 30 questionnaires but only 20 of them got answered, and above I have compiled all the quantitative data

into the Bar and pie charts. When giving out my questionnaire I had to be very selective about who I asked questions to, as I had to make sure that I had a representative sample population so I can make generalisations about the entire consuming population. From my research I have found out that 55% of people do already own a mobile phone, but I also found out that 100% of the student population (aged 11-21) did already own a mobile phone and the majority of the older people in the sample (aged around 40 and 50) didn't own a mobile phone, and I found out that everyone over 65 did not own a mobile phone. My results show that the current youth market has already been capitalised on by the communications companies, and the market has become saturated or is definitely near saturation. This is reflected in the fact that Nokia's sales have decreased by 4% and this has been said by many Wall Street writers to be the tip of the iceberg and they are prophesising that sales will continue to decrease until the marketing strategy is revised. The majority of the people who answered my questionnaire had an income of £30000-£40000 and this shows that the current market certainly has enough money to purchase a new phone, the youth market had an average of under 10000, but as they have the most disposable income are more likely to buy new models of mobile phones, but if the majority of the population has a large income they can afford mobile phones but as a lot of them have families and other financial commitments they may be a bit apprehensive about spending a large amount of money on a new mobile phone, so if a phone was launched at this market it should be a available at a lower price then the phones aimed at the youth market. My research also showed that "pay as you go" was the most popular pricing option for the entire population, especially the youth in which 100% of people had chosen this plan, but in the more mature consumers they said that they would probably choose a "pay monthly" system as they would not be bothered with the hassle of "toping up" every time they ran out of call time. Also I found out that some 75% of the youth market will change their payment plan to a "pay monthly" system as the "pay as you go" system had proven to be very expensive, due to the high call rates to other mobile networks, and because on the "pay monthly" system you can get free text messages (SMS) and free call time, but the amount depended on the network you had a contract

with. My primary research backed up my secondary research and showed that Nokia was the biggest selling brand of mobile phones, with 75% of my participants claiming that they owned a Nokia phone, compared to a very small 7% for Nokia's closest rivals, Sony. This has shown me that Nokia are already a very well established brand amongst the consumers and that they do not need to spend any money (or a small amount if entering a new market) on promoting the brand as a whole and should concentrate the majority of their promotional expenditure on singular models or new technologies that are being discovered or being released. My research showed that the most popular places that mobile phones are bought in are Carphone warehouse and The link which accounted for 85% of the sales of mobile phones to the people I questioned. Small dealerships such as selective network outlets and major household appliance stores, like John Lewis or the O2 stores accounted for a very small amount of sales (less then 10%). If a phone is to be successfully distributed it is only logical that it should be released in the main dealerships before the other smaller outlets if it is going to reach its maximum selling potential. According to my research the three most important things that consumers are looking for in a mobile phone are; long battery life, a stylish casing, and good SMS (text messaging) features. If a phone is to be successful in the market environment it must include all of these, but the consumers have to be told that your product has these available, this is what the company should try and promote through advertising and not just the brand name. I have found out that most people do not conduct heavy research, if they do any research at all (only 65% did research into mobile phones), and the most common forms of research are magazines and window-shopping. This means that it is important for a product to stand out to the consumer and look good statistically in a magazine so that it will stand out to the consuming population who research in magazines, and the people who ask floor sales people for advice on which handset to purchase.

Price was a difficult variable to analyse as my research has shown that it was a 50-50 split between people who said price was a key factor, and those who didn't really care about the price as long as the phone was offering everything they wanted, although upon further inspection most people would not like to spend over £175 on a handset, but could be persuaded to pay a little more by a strong advertising campaign or a good all-round package, that includes; cheap call rates, free text messages and some free accessories, for example, a hands free kit or an in car charger. I have also found out that the most popular food shops are Sainsbury's and Marks & Spencer, this gives us an idea of where to put promotional fliers and leaflets about up and coming releases into the market, and as people are usually bored while waiting in lines for a till, they will want something to look at and if a flier is conveniently placed near in the lines then that could get more customers interested in a Nokia mobile phone instead of one of their competitors, also people who shop in these 2 main supermarkets tend to be either middle or upper class and will pay extra for "quality" in brand name products. Revised marketing strategy As Nokia's current sales figures are decreasing and they show no sign of increasing again In the near future, I have come up with a revised marketing strategy that will re-launch Nokia and its products and increase sales to what they have been in the past, and probably higher then they have been since they were first released. My marketing mix Product- The phones will continue to be of a high quality, but will not be as technologically advanced as the recent phones that have been released. The phones will be easier to use and carry the less advanced technology with WAP being the most advanced feature available in the new range of phones that will be released, as my market research showed that most of the people aged 40+ were technophobes or wanted mobile technology to be easier to use if they were going to purchase a mobile phone.

Price- If the technology released with the phones is not as advanced, the price does not need to be as high as the prices of the phones in the market at the moment, as less money is being spent on product development and the phones wont cost as much to produce, there is no need to keep the prices so high. I have decided to lower the price due to production costs, and it is also down to the fact that nearly all of the people who I intend to have set as the new target market (the 40+ market) said that phones cost to much and so did call rates, but if phones were a lot cheaper (around £125 per phone on "pay as you go" and free if a contract method of payment is selected). Place- Nokia phones will continue to be sold at the main communications outlets (Carphone warehouse and The link) but will also be sold at the three main supermarkets; Sainsbury's, Safeways and Tesco as my market research has shown that this where my new target market do the majority of their food shopping at these outlets, it would be an excellent place to sell phones as there is also no competition distributing their products in these locations, and Nokia could have 100% of the shoppers business, and it would also be a way of promoting Nokia for free as people will look at almost anything while waiting in supermarket queues. Promotion-As Nokia would be aiming their new line of mobile phones at a completely new market; there would be high promotion costs involved as there is at the introduction stage of any product life cycle. The best places to put print advertisements would be in supermarkets near the tills so people in the queue can read them and hopefully become interested in buying a Nokia brand mobile phone. Also print adverts should be placed in magazines and newspapers where the target market will see them, my market research showed that the most read magazines by people aged 40+ was Lifestyle, and Vogue for the women, and the most read by men was the observer magazine as not many men admitted to buying a magazine regularly. The most popular newspapers were The Observer and The Guardian on weekends and the Evening standard during the week, so it is obvious that these are the magazines and newspapers that adverts should be placed in as they would be seen more by the new target market. Because we do not want to cancel out any people outside our target market (avoiding a niche market), Nokia should continue to place poster adverts in places that will be viewed by a massive

selection of people (such as London's West End and other popular shopping centres). Marketing principles Any marketing scheme that has been developed must be based around the principles of marketing, and my revised Nokia strategy is no different, below I have analysed how I have followed each marketing principle: * Customer satisfaction- Before developing my strategy I had to found out exactly what the consumers wanted, I found out that they wanted phones that were; high quality (with long battery life, good reception and good SMS features), low priced (priced lower then £150, but could be higher if call charges dropped), and I have offered this in the new line of phones that are being specially developed to meet the needs of the 40+ market (simpler technology). * Customer perception- I had found out that Nokia was viewed as the highest quality brand name in mobile communications, and it was also the most trusted brand, 8 out of 10 people said that they would look for a Nokia phone that they liked, before they would look at another brand. Nokia's prices were considered a bit expensive, and this was partly why I have decided to decrease the prices of the new range of phones, although people said they didn't mind paying the extra money for the quality they think they will receive with a branded item. * Customer needs and expectations- This is where you companies need to anticipate future trends and forecast for future sales. In my market mobile phones are not considered a necessity yet so it is hard to anticipate future trends as no company has yet created a foothold in the market and the customers cant say what they would like to see in future products if they do not have any at the moment, so a good thing to do would be to create a feedback group with some prototype phones and see what changes they would like Nokia to make to them. * Generating income or profit- This is the reason why I had to

review Nokia's current strategy, the sales were starting to decrease and this was starting to reflect in the income and profits, and decreases in these will not satisfy the main stakeholders in Nokia. * Making satisfactory progress- If a product is developing with the market then they are fulfilling this marketing principle, Nokia are actually achieving this with their current marketing scheme, but they are spending huge amounts of money on product development and the sales are not currently reflecting well on the decisions to spend that amount of money on product development. * Awareness of the surrounding environment- This is the reason ever company must complete market research, from my research I know what the customers want, where they shop, what they watch on television, what radio stations/programs they listen to, what the average income is and what features people rate highest in phone technology. There are also many external factors that can affect your marketing style and the decision of which strategy to use, we can evaluate these using P.E.S.T: Political factors- Legal constraints are the hardest external factor to try and avoid making any serious impact on any pricing, or marketing choices made. The only legal constraint that my new strategy "dodges" is the G3 licensing, as the new style of Nokia product doesn't need any of the newest technologies under the G3 frame. Environmental and Social factors- Nokia have never really had any of these affect the way in which they operate because they have never done anything that is really anti-environmental, the only problem is the fact that the mobile phones let of radiation and has been said to increase the risk of cancer in mobile phone users, but this has not been highly documented and hasn't affected how Nokia have conducted themselves. Technological factors- This is the most important external factor in the communications as mobile phones are based around technology and new discoveries. The new strategy does have to be careful with

technological advances as Nokia do not want to make the new phones to complicated as my market research discovered that this is exactly what the target market does not want, they want phones that are simpler to use. Pricing strategy As Nokia will be entering a new market as part of the new market strategy, I have decided to change the current pricing plan to a mixture of two theoretical pricing approaches: Market skimming and demand based pricing- Market skimming is where the competition in a market is slim or non-existent and a company can charge what ever price they want because there is no other company to offer a lower one. As Nokia will be entering a new market, we will be able to choose whatever price we want to start selling mobile phones at, and I think they should first be introduced at around £150, as my market research showed that consumers in the new target market would be hesitant to pay any higher, and this is the part that relates to demand based pricing. Market segmentation The market segment the Nokia was previously aiming at had become saturated, my research showed that 100% of students already owned a mobile phone and where not about too buy another one in the near future. Due to the fact that this youth market is saturated, I analysed the Ansoffs and Boston matrixes, and decided to undertake in market penetration. The new market that I am aiming Nokia's products is the middle aged people, because my research showed that very few middle aged people owned mobile phones and could be persuaded to buy a phone if the product was what they wanted and the price was right, and of those people who said that that didn't want a phone, most of them said they could be persuaded by strong advertising and branding. Evaluation My revised strategy has a lot of advantages over Nokia's previous strategy, and I have listed them below:

· My target market is one that has never been entered before, so Nokia will instantly gain 100% market share, whereas the current target market is saturated and competition for market share is very strong. · The products that are being released do not need to be as technically advanced as the ones in the current market, because my market research showed that the 40+ market do not want phones that are to complicated and hard to use. · If product research and development is not needed as much anymore then Nokia can afford to decrease its employment numbers and this would save Nokia a lot of money every year. · When entering a new market with no competition a company can charge whatever prices they want, Nokia's prices can be higher then they currently are and this will increase income and profitability.

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