Assignment Of Marketing Management ON Case Study Analysis on ‘Pricing Strategy of NOKIA’

Submitted To: Prof. Sonali Singh

Submitted By: Sancheeta Tendulkar

at a substantially lesser price. The mobile services were commercially launched in India in August 1995.5 millions. In the last few years there has been a huge exponential growth with addition of about 10 to 15 million subscribers per month to customer base. Over the years. At this point the Korean brands namely Samsung and LG established themselves after they tied up with CDMA operator Reliance Infocomm. However. the old order has changed today players like Samsung. In the initial days of mobile phone in India in mid 1990‟s the grey market accounted for 80 per cent of the mobile phone sales due to a huge price differential between the legally imported and the grey market phones. When mobile phones were introduced in India in the mid-90s. . LG. the monthly mobile subscriber additions increased to around 2 million per month in the year 2003-04 and 2004-05. Apple. a change occurred in Indian market hen CDMA technology was launched in the year 2003. people were able to get mobile phones with Reliance connection only for a initial cost of about Rs. In the initial 5–6 years the average monthly subscribers additions were around 0. Apart from this there is also a competition from imported unbranded Chinese mobiles which are avaible with lot many features of a typically high end say Nokia mobile but. after the number of proactive initiatives taken by regulator and licensor. Haier are all competing for a place in the market. After the initial dominance of Nokia from 1990‟s till 2002. Today the grey market comprises very small share of market. Sweden's Ericsson and Finland's Nokia dominated the handset market in India.1 million only and the total mobile subscribers base in December 2002 stood at 10.History and growth of mobile phone industry in India The real transformation came in the scenario of Indian telecom industry after announcement of National telecom policy in 1994. Even as the government slashed the duties at the same time various mobile manufacturers reduced their rates to induce the customers to buy a phone from authorized phone shop. Virgin. This was a breakthrough in India’s mobile phone industry since. Huawei. 500/-. US based Motorola.05 to 0. HTC. Gradually all the major players like Nokia. This opened up a mass market for mobile manufacturers in India. Motorola came up with their CDMA models and have been able to regain their market share.

2. 81% of mobile users are in urban area. mobile phone is a device which is frequently replaced in few years time. Increase in the reach of service providers covering ever nook and corner of the country.6% 41. 5. 2009. 2.7% 65.775. 3. 2009: 1. The major reasons for this boom have been: 1. India’s rural teledensity stands at about 12.0% 68. India has about 517 million subscribers by December. The penetration of mobile phones stands at about 30%.3% The result shows Nokia users are the most satisfied with their product followed by Sony-Ericsson and LG. 3. Fall in the prices of mobile handsets.In the last few years India has witnessed a revolution in mobile phone market with about 8 to 10 million subscribers being added to the customer base each month.6% 4. It is forecasted that sales of mobile handsets in rural India will grow at CAGR of around 17% from 2009 to 2012 Above figures clearly indicate that although mobile phones might have made significant inroads into the urban market & urban market may start moving towards saturation but. Falling tariff rates of telecom service providers . Models LG Motorola Nokia Samsung Sony-Ericsson Users Likely to recommend 57.6% 55. so. Scenario of Mobile phone industry Following are the highlights of mobile phone industry in India as on December. the brand which provides maximum . The results of above survey are important since. The survey was done on Indian Urban mobile phone users with Sample size of N=5. still lot of potential is to be explored in the rural segment Also to understand the satisfaction level which users of above brands express. the results of which are shown below. we look at a consumer satisfaction survey.

3.000/. 2. Nokia. 1.satisfaction to users will be able to maintain high loyalty and hence. Vertu have products only for the high end market of Rs. A segregation of Indian market on the basis of price bands is shown below. LG and Sony Ericsson have mobile phones avaible in all different price range and hence.900/. Also. Players like Motorola. 2. Players like Onida have mobiles in lower prices (Rs. 4.900/-.On the other hand there are players like Usha lexus whose product fall in the lower category with their products being available in price range of minimum of Rs. Companies like HTC.000/and more. are able to target all the different segments of the maximum Rs. Virgin mobile falls in the same category.000/-) to middle price range (till Rs. 15. 5. 2.000/- A close study of the product offered by various companies reveals following: 1.9. . We can see that mobile phones are available in various price bands from Rs. 900/-). 50. Apple. maintain its market share.& less up to Rs.

Made in India– A detailed analysis In April 2005. was succeeded in administrating marketing strategies in India markets. . Nokia considers India to be one of its most important markets. In 2004. This level of manufacturing involves a total of 8 billion components per annum. the state capital of Tamil Nadu in southern India. Nokia Corporation said.”4 India was ideal for Nokia's new production facility. “Establishing a new factory in India is an important step in the continuous development of our global manufacturing network. as a manufacture of mobile communication devices. “This Finnish Company’s debut at the top of the heap says two things. The company's Code Division Multiple Access (CDMA) 5 facilities is located in Mumbai and provides software and technical support to CDMA consumers in India and other Asia Pacific countries. The magazine wrote. Nokia India. Nokia's manufacturing facility needed to be located close to a major international airport or sea port for quick supply of components. The company has been carrying out sales & marketing. a subsidiary of Finland-based Nokia. requiring strong logistical support. where the production was expected to begin in the first half of 2006. The reason is that Nokia delivers better products which cater to the needs and preferences of Indian consumers. announced that it was setting up a manufacturing facility for mobile devices in Chennai. Nokia was the market leader in mobile communication devices in India. customer care and research & development activities in the country. Each mobile handset has more than 400 parts and the average production capacity of each manufacturing unit of Nokia is around 20 million units. and also enjoyed cheap manpower costs and proximity to the rapidly growing Asia Pacific markets. President and Head of Customer & Market Operations. Nokia planned to invest US$ 100-150 million in the facility. Besides. Nokia was chosen as “the most respected consumer durables company” by Businessworld6.NOKIA Nokia. India met all these requirements. Pekka Ala Pietilä. Nokia .

Mobira Cityman. unlike its competitors.16 per minute and.. The company delivered the first GSM network to Radkilinia. well established distribution channels and being 'most preferred' by the consumers. Nokia provided GSM services to 90 operators across the phones and telecommunications networks. India's apex industry association. In the late 1970s. most of which offer a slew of durables.” In 2005. After all. more importantly. Nokia also had to face tough competition from other powerful global players like Motorola. In the 1990s. and later on in 1922. But. Another significant move of the company during this period was the divestment of its non-core operations like IT. Nokia created the NMT mobile phone standard in 1981 and launched the first NMT phone. All the three companies were merged in 1967 to form the Nokia Group. . Siemens and Ericsson.are respected. a Finnish company in 1991. Finnish Rubber Works became a part of the company.was introduced. Finnish Cable Works joined them. In 1920. usage charges were at Rs. The tariffs levied on importing mobile phones were as high as 27%. at these high rates.One.. and in 1992. The first ever GSM call in India was made on a Nokia 2110 mobile phone on its own network in 1995..a precursor for all Nokia's current GSM phones . Nokia's win is also an endorsement of the importance of the ubiquitous cell phone as a durable in today's world.. Sony. that its strategies . The company focused on two core businesses . the telecom policies were not conducive to the growth of the mobile phone industry. Nokia started taking an active interest in the power and electronics businesses and by 1987. About Nokia Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing company. consumer electronics became Nokia's major business. When Nokia entered India. Nokia is mostly a cell phone company. in 1987. The company was chosen for this award because of its high brand recall. Nokia 1011 . Between 1992 and 1996. consumers did not take to mobile phones.including ones like developing a phone specifically for India . the company exited from the rubber and cable businesses as well. Nokia was recognized as the „Brand of the Year by the Confederation of Indian Industry. Nokia entered the Indian market in 1994.

. Globally.Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market share. a multimedia division was formed. Market segmentation There are different types of mobiles for different needs of an individual. the company's sales reached 7. Nokia applies skimming strategy with all the products. during the first quarter of 2005. The marketing division of the company concentrated on making distributors in small towns sell high-end products. The objective of a price skimming strategy is to capture the consumer surplus. the process was streamlined and the results started to show. It is a temporal version of price discrimination/yield management. Nokia targets the entire segment with his variety. the distributors were skeptical to start with. Nokia also surpassed Samsung in color mobiles in the GSM segment. The division's Indian operations concentrated on promoting the concept of highend telephones in smaller towns while going in for higher volumes in larger cities. Nokia continued its leadership in GSM with a market share of 74% in March 2005. then theoretically no customer will pay less for the product than the maximum they are willing to pay.4 billion euros. At this point. It allows the firm to recover its sunk costs quickly before competition steps in and lowers the market price. recording a share of 55% in the same month Nokia reorganized itself at the global level in 2004. In India. Price skimming is sometimes referred to as riding down the demand curve. by the end of 2004.  Top Segment----------------Classy Products  Middle Segment-----------Best alternative  Low End Segment---------High Tech Product at Low Price Pricing Strategy of NOKIA Skimming Pricing: Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first and then lowers the price over time. Though. In practice it is impossible for a firm to capture this entire surplus. with the company selling 54 million phones during the period. If this is done successfully.

Premium pricing. They form the bases for the exercise. penetration pricing. economy pricing. and price skimming are the four main pricing policies/strategies. .