The Nokia Brand
The primary core strength of Nokia is its capacity to exploit economies of scale which enable the company to not only produce enough handsets to meet global demand but also enable the company to sell them at a lower cost. The company brand is relatively well known and trusted around the world as a result of its initial efforts in leading the mobile phone market during the late 1990s which creates a considerable degree of brand clout in the international market (Hernandez, 2009). While the Nokia brand is a ubiquitous and popular label, the fact remains that it is often associated with affordability which makes it far more appealing to a large percentage of the present-day global market (Lev-Ram, 2014).
Cost Difference in Comparison to Rivals
It can be seen that despite Apple, Blackberry and the Android operating system being the pre-dominant smartphone/smartphone software in the global marketplace, the fact remains that smartphones as a whole are far more expensive as compared to a Symbian based Nokia mobile phone (Data monitor, 2009). While it is true that Nokia has actively pursued First World markets, its focus on expanding into Third World economies by providing cheap yet effective mobile phones has enabled the company to encompass a much larger user base as compared to companies such as Apple that focus solely on the development of technology that appeals to the middle to high-income consumers (Steinbock, 2001).
Acquisition by Microsoft
With Microsoft’s recent acquisition of the mobile phone division of Nokia in late 2013, this may herald a change in the company’s lack of software innovation since Microsoft has had far more experience in developing a variety of software applications (Steinbock, 2001). Combined with Nokia’s focus on developing functionality and aesthetics while keeping phones affordable, this should result in an increase in the amount of Nokia smartphone sales in the future.
Research and Development Strategies
Furthermore, another facet of Nokia that should be taken into consideration is its continued foray into smartphone markets through an assortment of new product offerings such as the Nokia Lumia series that runs on a modified Windows 8 operating system. While not as popular as the Apple OS (operating system) or Android, Nokia phones that run on Windows 8 software show considerable promise when taking into consideration their capacity to sync with a laptop that also has Windows 8 software installed.
Future Potential of the Brand
Nokia continues to possess one of the best supply chains in the world which, along with its skilled workforce of factory employees and developers, continues to make the company a viable corporate in the current highly competitive mobile phone industry (Datamonitor, 2013). With the ubiquitous nature of the Windows operating system and the general level of affordability that the Nokia Lumia has (roughly 60% cheaper than the Apple iPhone in some areas), this creates the potential for the company to capture a significant portion of the smartphone market in the next few years (Datamonitor, 2013).
Competitive Weakness of Nokia
The main competitiveness weakness of Nokia is based on three distinct issues: its software development, lack of leadership initiative and lackluster branding campaigns.
Software Development Issues
First off, while the Symbian operating system that was utilized in a vast majority of Nokia phones has stood the test of time, there was little effort in developing a better version or simply scrapping the software itself in favor of a new type of software that could adapt to the growing sophistication of mobile phones in general. Nokia grew complacent with its dominating market position during the mid-1990s to early 2005 (Data monitor, 2011). The company paid for its complacency with the popularization of smartphone technology embodied in the Apple iPhone and Android-based systems which resulted in considerable erosion of its market share (Data monitor, 2013).
Lack of Leadership Initiative
While it is true that the company makes aesthetically pleasing devices and sells them at an affordable rate, its leadership division should have planned for changes in the technological landscape and acted accordingly. Evidence of this lack of leadership initiative can be seen in its current online store that is meant to mimic the Apple App market. The store has barely one-fifth of Apple’s vast array of potential software choices and there simply was no initiative in helping developers “port over” software that ran on the Apple OS over to the Nokia based version (International Business Times, 2013).
Google’s Android App store, on the other hand, has successfully ported over hundreds of different types of software through its open-source development platform as well as various methods of developer assistance in helping App makers to adjust content meant for Apple over to Android.
Lackluster Branding Campaigns
One of the main reasons why Apple dominated the smartphone market for years was due its ability to make the Apple iPhone seem more “exclusive” in that it was only meant for a certain “type” of the individual (McBain, 2013). This is evidenced by its various commercials and branding campaigns. It is due to this that in comparison the Nokia brand does not seem as appealing to a vast majority of smartphone consumers. Nokia has attempted to address such an issue through its Nokia Lumia campaigns which advertise the phones as being more “hip” and “exclusive” which has resulted in a considerable degree of increased sales of the handset (McBain, 2013).
Competitive Threats to Nokia
One of the main competitive threats to Nokia is the potential proliferation of cheaper Windows 8 based phones or even a lack of adoption of the company’s new offerings by mobile phone users (Maisto, 2013). At present, Android-based smartphones continue to be one of the most popular and ubiquitous phones. The open-source nature of the software combined with its adoption through an assortment of different manufacturers has resulted in consumers attaining a diverse choice of potential smartphones to buy.
Many of this device cost 1/3rd of the price of a Nokia Lumia with many more becoming affordable as newer models are released (PR Newswire, 2013). The current smartphone market is overly saturated with a multitude of vendors and devices resulting in Nokia, though being one of the largest companies in the world, being overwhelmed through the sheer amount of competitive forces that are in the market. This is even though Nokia has one of the world’s best-known brands. When it comes to marketing strategies involving customer orientation, a company utilizes its available resources in gathering data on the needs and behaviors of the consumer segment that it is targeting.
The same can be said for competitor orientation marketing strategies, however, in this case, it focuses on competitors within the same market instead. Either method though has a distinct weakness; focusing too much on consumer orientation can blind a company to changes in the market or may stifle innovation since the company focuses too much on consumer satisfaction rather than changing based on trends (Lev-Ram, 2014).
Focusing too much on competitor orientation on the other hand results in too much time and capital being placed on competitive activities which results in companies at times neglecting their consumer bases and focusing too much on getting ahead of the competition (Lev-Ram, 2014). In this context, it can be seen that Nokia is guilty of focusing too heavily on a competitor oriented strategy making its phones cheaper and has neglected to utilize a consumer-oriented approach as well.
The inherent problem with a competitor oriented approach in the current global marketplace is that due to globalization many potential competitors with sufficient capital can merely go to China, make a contract with a local company and they would be able to have their phone model with its distinctive branding which would run on the free Android operating system (Data Monitor, 2013).
The barriers to entry that used to exist such as having to build a factory and developing a supply chain are no longer an issue which has resulted in a proliferation of different types of mobile phone brands (Data Monitor, 2009). Even Polaroid, which used to focus on film and the sale of instant photo cameras, has been able to release its brand of mobile phone and tablet PC without having to create the technology and factory to do so (Palenchar, 2014).
This ease of entry should be a definite concern to Nokia since its previous strategy of leveraging economies of scale and efficient supply chains as a means of developing a competitive advantage is no longer as competitive as it used to be. In the future, it may be possible for potential competitors to produce a Windows 8 capable phone in China and have the software installed. Since Windows 8 can be bought and is not exclusive to the Nokia Lumia series, this means that Nokia products could be potentially duplicated in the future on a mass scale (Hernandez, 2009).
Taking this into consideration, Nokia should plan for this eventuality and create a means to draw consumers through exclusive offers and promotions that other competitors simply cannot match. By doing so, Nokia will continue to remain competitive and will not be rendered an obsolete brand.
Conclusion
Overall, while it can be seen that Nokia, despite being one of the largest companies in the world, is being overwhelmed through the sheer amount of competitive forces that are in the market. It has to deal with the competitive pressures from Apple as well as the proliferation of cheap smartphones through the open-source Android operating system. Success for the company will be determined in the next few quarters as it leverages its Lumia phone series with its Windows 8 operating system. Whether or not the company will succeed with such a plan has yet to be determined, however, with its superb development team and supply chain it is likely that the company will put up a tough fight.
Reference List
‘Datamonitor: Nokia Corporation’ 2013, Nokia Corporation SWOT Analysis, pp. 1-10.
‘Datamonitor: Nokia Corporation’ 2011, Nokia Corporation SWOT Analysis, pp. 1-10.
‘Datamonitor: Nokia Corporation’ 2009, Nokia Corporation SWOT Analysis, pp. 1-10.
Hernandez, P 2013, ‘Nokia Shareholders Back Microsoft Deal’, Eweek, p. 12.
International Business, T 2013, ‘Nokia Lumia Smartphones: Nokia Camera Beta App Now Available For Other Nokia Lumia Windows Phone Handsets’, International Business Times, p. 17.
Lev-Ram, M 2014, ‘Can Nokia’s Lumia take on Apple and Google?’, Fortune.Com, p. 1.
Maisto, M 2013, ‘Nokia, Finally Selling Lumias, Looks Forward to a Phone-Free Future’, Eweek, p. 15.
McBain, S 2013, ‘What Nokia should do next’, New Statesman, vol. 142, no. 5175, p. 19.
Palenchar, J 2014, ‘Tablets: Still Room For Small Suppliers At The Table’, TWICE: This Week In Consumer Electronics, vol. 29, no. 1, p. 33.
PR Newswire 2013, ‘Microsoft to acquire Nokia’s Devices & Services business, license Nokia’s patents and mapping services’, PR Newswire US, p. 2.
Steinbock, D 2001, The Nokia Revolution : The Story Of An Extraordinary Company That Transformed An Industry, New York: AMACOM, pp. 2-20.