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Product and Innovation Management of Nokia Evaluation Essay



As competition in the markets intensifies and the consumers become increasingly sophisticated and selective in their consumption behaviors, companies have no option than to improve their innovation strategies and management techniques (Duncombe 2006).

Companies are nowadays seeking new ways to enhance the characteristics of their products to make them more appealing to the consumers.

The Wall Street Journal reveals that mobile phone companies are some of the major industries that have witnessed remarkable growth in innovation (Gecevska, Chiabert, and Lombardi & Cus 2010).

As a multinational communications company, Nokia has improved its product innovation and is continually producing products that attract the consumers in the telecommunication industry.

With its focus nowadays turned to the manufacturing of smartphones, Nokia has set its aims at ensuring that the company uses modern technologies (Kirshin 2014).

This paper examines the market performance of the Nokia Lumia smartphones and explains the reasons for their outstanding performance.

Overview of Nokia Lumia Smartphones

One of the technological wonders that surprised the consumers of the 21st century was the integration of hi-tech operating systems into the mobile phones (Cagan & Vogel 2002).

After being superior in the business of computer technology for quite sometime, Microsoft Corporation collaborated with Nokia Corporation and entered the smartphone market (Anwar 2014).

Nokia Corporation managed to introduce a new form of mobile technology that uses Windows 8.1 operating system rather than Android.

Smartphones, being the trend and the most popular among communication technologies, have spurred a new wave of anxiety among the majority of the youngsters, which means investing in them is a worthy idea nowadays.

Since 2013, Nokia Corporation has been radical in its innovation that has resulted in the development of the Nokia Lumia 435, Nokia Lumia 730, Nokia Lumia 535, Nokia Lumia 620, Nokia Lumia 830, Nokia Lumia 520, and now the Nokia Lumia 920.

Smartphones are small laptops that people have found reliable and convenient in their communication, use, and maintenance (Grieves 2009). What makes the Lumia smartphones amazing is that they offer a new platform that includes the use of the innovated Windows operating system.

Nokia and Microsoft experts have integrated mobile firmware that allows handset users to install and uninstall Windows mobile apps, access the Internet with ease, and surf there with the fastest speed (Kirshin 2014).

The Nokia Lumia smartphones come in varieties of different colors, and consumers can choose the color they prefer, within the available range of colors.

The powerful high definition front and back cameras allow the smartphone users to take photos of their colleagues, or take personal photos, which they can use for their social media activities (Hussein 2012).

Global technological reports claim that Nokia Lumia smartphones are increasingly becoming popular and steadily dominate the Asian, African, and American markets.

The Theory of Diffusion of Innovation

Innovation is a realistic subject that began reshaping in its practice and literature back in the 1960s, when industrialization became a significant growth aspect for the modern towns (Bernard & Tichkiewitch 2008).

Towards the end of the 1960s, E.M. Rogers came up with an innovation theory known as the diffusion of innovation model. Born by a father who loved electromechanical innovations, E.M Rogers got interested in understanding the process of the diffusion of innovation (Chigona & Licker 2008).

In 1962, Rogers published the theory of Diffusion of Innovation that had changed the modern perceptions about innovations. In his view, Rogers claims that there are five main categories of innovation adopters, as the process is pragmatic and with various sections of transformation (Webb 2000).

Rogers presumes that in an innovation process, there are five major categories of adopters, which include innovators, early adopters, early majority, late majority, and the laggards. The five main categories of adopters have unique definitions that are relative to their innovation roles.

According to Rogers, innovators are the kind of people who initiate the innovation idea and invest in it regardless of its risky factors and other preliminary problems.

The early adopters are a group of people that represent the opinion leaders (Molla & Licker 2005). These kinds of adopters often enjoy associating with leadership roles and embracing change opportunities.

The third group of the adopters is the group of early majority, which is the group of people that needs to see substantial evidence that the innovation is really working for them to venture into the business of adopting or working with it (Chigona & Licker 2008).

The fourth group of people is the late majority, who are the kind of persons, skeptical about an innovative change and trying the innovation only when the majority population have tested it (Stark 2004).

The last group of the adopters is the laggards group of individuals who are naturally conservative people. Unless highly persuaded, laggards can hardly adopt an innovation.

With regard to such theoretical assumptions, most of the users of Windows handsets across the world have had their own opinions concerning the three mobile phone operating systems (Rigby 2014).

When Microsoft and Nokia merged efforts to produce the Nokia Lumia handsets, the first impression was that Microsoft was trying to regain its lost market dominance in the telecommunication industry (Rigby 2014).

Nevertheless, the company has been very resilient about the criticisms that the two companies have failed to produce innovative smartphone designs that will influence the international mobile consumption trends.

When they first announced their debut in 2011, after successful market trials, consumers had already familiarized with Android phones as well as iPhones (Rigby 2014).

Creating a plan to enter the competitive market was a challenge for the investors of the Nokia Lumia smartphones. The initial process of venturing into these Windows mobile phones was tiring and challenging for these creative investors.

While figuring out the billions of money that the companies were to invest and the amount that was to come as returns, the investors understood that there would be early adopters, the early majority consumers, the late majority consumers, and the laggards (Rigby 2014).

To beat the market odds and maneuver with a new brand of smartphones, the Nokia Corporation and the Microsoft Corporation designed a strategic production and marketing strategy that has supported their continual survival in the handset business.

The companies understood the need to incorporate the 4Ps marketing mix strategy to increase their market share and product revenues in the presence of the established Android smartphones and Apple iPhones.

To provide an all-round strategic move, the Nokia Corporation and the Microsoft Company focused on the 4Ps (Von 2003). The 4Ps that formed the aims of production were the Product (Nokia Lumia smartphone), the Price (low pricing), the Promotion (strategic marketing), and the Place of distribution.

With the 4Ps as their marketing strategy, high technological innovation and unique and user-friendly smartphone design are some of the product development initiatives that Nokia Lumia began adopting.

The pricing strategy of Nokia Lumia delved on the low pricing technique to win the business partners and new groups of consumers (Anwar 2014). Low pricing meant that the investors would sell more and earn low but regular profits.

As their places of distribution, the Nokia Lumia marketers began targeting the most populated nations, such as China, Russia, and most of the Sub-Saharan Africa regions. These regions form the group of developing nations.

These developing nations have a lot of late majority and the laggards groups of consumers and investors (Cooper & Edgett 2009). These groups of people may have been skeptical about Androids and iPhones because Androids were relatively new and iPhones were extremely expensive. Such strategies have made Nokia Lumia suceed.

The Current Market Performance of the Nokia Lumia Smartphones

Nokia Corporation has generally been successful in the handset business. In 2006, Nokia generated an income that for the first time in Finland’s history, seemed to be excess.

Based on the assessment report of the Wall Street Journal, which is the leading business and innovation magazine, Nokia Lumia has been performing incredibly well as the demand for smartphones increases.

In this $7.2 billion deal, Microsoft and Nokia Corporations have been ripping some extensive profits from the manufacturing and distribution of the Lumia windows smartphones (Fakhrutdinova, Fakhrutdinova, Kolesnikova, & Yurieva 2015).

The Nokia Lumia smartphones targeted the American smartphone markets, the Asian smartphone markets, and the African smartphone markets, which had been growing rapidly over the past five years (Fakhrutdinova et al. 2015).

In a 2013 report about business innovation, it has appeared that Nokia possesses approximately 40% market dominance, with the Lumia smartphones contributing to about 16% in the increase of its market share.

Perhaps, what remains unknown to most of the consumers is that the Nokia Lumia phones have been increasing their market reputation in a steady process.

The estimated profit returns are slowly regaining momentum and the process of dominating the major markets is on a gradual development (Fakhrutdinova et al 2015).

Just before the end of two years after its launch, Microsoft’s quarterly financial report revealed that the Nokia Lumia smartphones had generated about $23.20 billion worth of profit.

In the subsequent year on 23 August 2014, Microsoft announced a growth of its profit margin to approximately 26.5 billion, which was a 10% increase in the net profits (Fakhrutdinova et al 2015).

In a separate financial report that Nokia released independently on 24 Oct 2014, Nokia Lumia smartphones had a sales record of $9.3 billion, even though the overall sales for Nokia phones had decreased by 14%. These statistics indicate an incredible performance of the Nokia Lumia smartphones.

The above statistical facts stress the essence of the Nokia-Microsoft partnership in the smartphone business.

It is important to consider that although majority of the ordinary consumers may not have the overall knowledge on how the Nokia Lumia smartphones have spurred a unique competition in the world of smartphones; the performance of the smartphone is incredible (Rigby 2014).

The Nokia Lumia smartphones have blended well with the creatively designed windows-operating systems.

The major sectors that may have caused an incredible market performance that has come within the shortest period of the investment are the management sectors, the production sectors, and the marketing departments (Fakhrutdinova et al 2015).

The three sectors were important in the product development and distribution because there was innovation in the management, innovation in the production, and innovation in the marketing departments.

The ability of Nokia and Microsoft to provide an enabling environment for the existence of the partnership was a noteworthy idea.

Reasons for high Performance of Nokia Lumia Smartphones

The success or failure of a certain tech product relies on several aspects of production, management, and marketing (Eisenhardt & Martin 2000).

With the changing market demands, the complex consumer behaviors, and the increasing market competition, the performance of technological products has to rely on the stability of the management, the suaveness of the marketers, and the design of the products (Garcia & Calantone 2002).

Core innovation strengths, strategic management techniques, and efficient marketing skills are some of the major performance determinants that determine the performance of tech products (De Wit & Meyer 2010).

Since its debut into the smartphone business in 2011, Nokia Corporation has developed several strategic moves to enable the telephone products to maneuver in the smartphone market.

To make a sensational market dominance, the Nokia Corporation has enabled a smart strategy that entails the strategic use of mobile designing technologies, the strategic planning of the management systems, and the strategic development of the marketing techniques that match the market demands.

Innovation in the Product Designing

An important factor that makes a mobile phone worthy and appealing to the modern consumers, who are nowadays very knowledgeable, is the techniques used in designing the phones (Eisenhardt & Martin 2000).

The innovation that Nokia Corporation has used in manufacturing of the Nokia Lumia smartphones is exceptional and outstanding.

Nokia Lumia smartphones use the famous windows operating systems, although mostly the windows 8 operating system that has numerous tech features that are appealing to the phone users (Fakhrutdinova et al 2015).

Although windows 8 operating system initially recorded a diminutive market performance in the computer technology, the operating system has boosted the selling of the Nokia Lumia smartphones.

Nokia Lumia phones are 3G and 4G compatible, have powerful photo-sharing capabilities, and have features that enhance social media communication (Carlson, Walden & Bowman 2006).

Nokia Corporation collaborated with Google and Skype to allow consumers to enhance their access to social media communication in the Lumia smartphones. Nokia also collaborated with Yahoo Corporation to allow photo sharing through their Flicker service.

Innovation in the Marketing Strategies

The marketing technique of companies is one of the foremost determinants of the market performance for any new product that is seeking a quick market penetration (Roman 2003).

Since the Nokia Corporation ventured into the smartphone business, the company designed radical marketing strategies that supported a market growth for the Nokia Lumia smartphones.

Nokia Corporation designed a strategic market penetration approach that dwelled on the modern advertising platforms to maneuver (Grieves 2009).

As Anwar (2014) claims, the company used the advantage of the growing influence of the digital televisions, the social media platforms, and the unique printed media.

Concerning the strategic use of social media, Nokia Corporation implemented attractive mobile photos, effective product description techniques, and an easy communication to attract consumers in Facebook, Twitter, and MySpace (Anwar 2014).

The Microsoft-Nokia alliance opened an online marketing website, attractive facebook pages, and several tweeting platforms that constantly updated the users about the new Lumia arrivals. Digital televisions also played a vital role in advertising Lumia Smartphones.

Innovation in the Pricing of the Phones

One of the elements that can make a product in the telecommunication industry to permeate into the market and gain an incredible performance is the idea of strategic pricing (Bailur 2006).

While launching the Microsoft-Nokia partnership of manufacturing and distributing the Nokia Lumia smartphones, Nokia Corporation knew the essence of using a strategic pricing plan that would enable an easy market penetration.

When Nokia merged with Microsoft to develop the Lumia smartphones, the companies agreed on the high-production, low-pricing strategy as their market entry strategy (Anwar 2014).

To compete effectively with the Iphone and the android smartphones, Nokia Corporation endorsed a marketing strategy that concentrated with the low-pricing approach.

Even for the first-time buyers who admired the smartphones, Nokia sold its Nokia Lumia phones at as low as $200 (Rigby 2014).

The focus of Nokia Corporation concerning the pricing of the Nokia Lumia smartphones has been persistent with the issues of regional assessment of the markets and production of affordable smartphones.

Proper Financing of the Product

Financial stability of a company in the marketing and promotion of a recently launched product is a crucial success factor that determines the performance of a product (Gorski 2003).

When Nokia ventured into the business of manufacturing and distributing smartphones, the partnership deal with Microsoft considered the essence of financial stability in the production process.

Since the year 2013, Microsoft has been offering Nokia with financial backing to support the mass production of cheap smartphones (Hussein 2012).

Such an innovative financial strategy assisted the Nokia Corporation to regain market momentum within the large markets like China, Russia, and America. Recently, Microsoft Company has produced an extra of 2.3 billion to support Nokia Corporation to develop low-end Nokia Lumia smartphones (Anwar 2014).

Despite Iphones and Androids having significant market dominance, adequate financing of the Nokia Lumia project has made the Nokia Corporation to expand their market share in Africa, Asia, and parts of America.

Innovation in the Service Sector

Nokia, being a leading brand in the telecommunication industry, understood the need to improve the customer service while marketing its Nokia Lumia smartphones across the nations.

According to Fakhrutdinova et al. (2015), the first service innovation that Nokia thought was essential, was the incorporation of the physical customer care services where consumers could send complaints about the phones, receive an instant assistance on technical problems, and fix the problems associated with the windows mobile-phone operating systems.

In each of the countries that Nokia invested in the marketing of its smartphone products, there were strategic physical offices that consumers could send inquiries concerning the operations of the phones and the challenges that pertained to the performance of the Lumia smartphones (Fakhrutdinova et al. 2015).

Although the Nokia Lumia smartphones needed the physical offices from the Nokia Corporation to enhance their customer care, the phones already had user-friendly interfaces that supported easy phone operations. Such strategic moves made Nokia to perform incredibly fair in the competitive smartphone market.

Innovation in the Management Sector

One of the important factors that support radical innovation is an efficient strategic management (Aspara, Lamberg, Laukia, & Tikkanen 2011). The theory of Diffusion of Innovation (DOI) states that when innovation is in progress, there is a group of people known as the innovators (Hofstede 2003).

In Nokia Corporation and Microsoft Corporation, leaders were the innovators who were venturesome, opinionated, skilful and with creative ideas (Fakhrutdinova et al. 2015).

Most of the leaders from the Microsoft team and from the Nokia Corporation were sure about their dedication and risk taking approaches towards the improvement of the Nokia Lumia ideas.

The two companies found the best innovators who could strategically incorporate the features of windows 8 in the mobile phones (Sell, Mezei & Walden 2014).

The leaders also knew the importance of collaborating with giant Internet companies, such as Google and Yahoo, to incorporate their best features in the mobile phones. The leaders motivated aggressive research and development strategies that supported in the marketing of the phones.


The assumptions of Rogers concerning the Diffusion of Innovation are paramount in understanding the concepts of product development and management. The five forms of innovation adopters help companies design strategic marketing plans.

Product innovation and management are two aspects of the commercial world that continue to pose concerns for the surviving businesses. The mobile phone industry is one of the principle sectors where innovation seems to influence product marketing, distribution, and performance.

With a special attention given to the phones that come with computerized operating systems, innovation seems to affect the presence and performance of the modern smartphones. Nokia Lumia smartphones emerged through a partnership deal between Microsoft and Nokia Corporations.

Despite the dominance of the Android smartphones and the Apple smartphones, the windows-based Nokia Lumia smartphones are increasingly gaining prominence.

This occurs because the two partners focused on understanding the 4Ps of marketing. Innovations in the product marketing, product pricing, and product management have been fantastic.


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