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of the following principles will be high on the agenda: 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. 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 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. Market research
Nokia's business strategy (statement taken from www.nokia.com) "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. 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.
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