Nokia case

The variables they used for the separation were usage, income level and lifestyle. The four groups are s follows: features and low price. The range of this group could range from SEC (low socio- economic class) to SEC Al+ (very high socio-economic class). -Connect: users of this group demand more functionality, features and connectivity compare with the first group. GAPS, camera and music would be designed for this group. -Achieve: mainly enterprise users. Smart business tools, QWERTY keyboards and full Internet capabilities are applied as the users of this group mostly require business functionalities. Explore: this group needs cutting edge technology and latest styling. 5 2. 2 Customer motivations The customers of each segment have several motivations. For the first group, the most important motivation is that Monika produces phones that are basic and very easy to use. So anybody who buys a mobile phone for the first time can handle this phone. Another important motivation is that the Monika mobile phone is cheap. Monika produces cheap mobile phones so people from every socio-economic class can afford a mobile phone.

The second group, they also want a phone that is easy to use, but not a basic one. They want more connectivity. So Monika should design more functionality, features and music capabilities. For the third group it is import that their mobile phone has business functionalities, because they use it for their work. Business functionalities and full Internet capabilities are demanded. The last group wants to have a stylish phone with the latest technology. They do not Just use their phone for calling, testing and Internet. The newest applications are needed, too. 6 3. Competitor Analysis 3. Identifying Ionians competitors There are a variety of ways to identify Ionians competitors. As such we will first identify Ionians competitors based on their respective market shares (sales), and growth. After that we will take a look at the different strengths these main competitors’ posses. 3. 2 Market share and growth If we take a broad look at Ionians competitors we can identify four main competitors. By looking at the market share of all brands in 2007 those competitors are: Motorola, Samsung, Sony Ericson and LAG. These four brands make up a total market share of 43. %. Monika itself has a 37. 8% market share leaving 18. 9% for the rest of the brands active on this market. If we look at the market shares in 2006 we can see a number of quite radical changes. Most noticeably is Motorola, the number 2 on the market Enid Monika. It has lost nearly 7% of its market share in Just one year (21 . 1% to 14. 3%). Samsung, Sony Ericson and LAG have all seen its market share grow with 1. 6%, 1. 2% and 0. 5% respectively. The rest of the brands on the mobile phone market have also seen a slight growth in their market share with 0. %. 3. 3 Strengths and weaknesses Now that we have identified Ionians main competitors based on their respective competitors their main strengths. In the last couple of years the consumers’ expectation towards mobile phones has increased drastically. They demand a set of sigh-end features, such as high-resolution camera, MPH players and better screen quality. Monika has always focused strongly on communication. But other players, such as LAG and Samsung emerged from either an electronics based background or a consumer electronics based background.

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With the change in the consumers’ taste and demand this could pose a very serious threat. When we group the different brands together based on their backgrounds we can see a very clear separation. (Consumer) electronics Communication Samsung Sony Ericson Motorola Monika Exhibit II groups based on companies’ main strength . 4 Implications Monika has an excellent market position. With a 37. 8% market share it leaves other companies well behind it. Especially since the market share of the number two on the market, Motorola, has declined significantly in the past year, leaving it with only a 14. % share of the market. The change in consumers’ taste and demands regarding mobile phones however, might pose a serious problem. Considering Monika has always focused heavily on communication it might have a hard time adjusting to this change, especially when you consider the fact that all of its main competitors have a aground in (consumer) electronics and thus posses a huge advantage on this particular aspect. 4. Market analysis 4. 1 Market trends The size-, growth- and profit perspectives in the mobile handset market are strongly various depending on the geographic location.

The developed markets of the US and Europe are highly saturated, which implies these markets will only grow to a limited extent. In these markets, handset companies try to meet customer demands by adding PC-like capabilities to so called “smart phones”. Fast-growing markets like China and Pacific Asia however, show increasing growth rates (See Exhibit 1). Here, Ultra Low Cost handsets are introduced to compete with a strong second-hand phone market, which reduced the average selling price of mobile phones. 4. Internal analysis Customer expectations toward handset capabilities had risen strongly, which drove handset manufacturers to finely segment their market. Costumers became more influential, demanding high-end features such as high-resolution camera’s and displays, MPH-capabilities and wireless features on their handsets. Large, vertically integrated firms had set tall entry barriers, huge sums of R&D have been invested to improve handset performance and reduce phone sizes. However, with advances in technology and changing customer demands, mobile phones became more sophisticated devices, which increased the amount of outsourcing.

This trend enables the growth of local companies, as less technical know-how was needed, which lowered the barriers of entry. Internal competition in the handset industry is heavy, with several big players with different backgrounds that control the market. Market shares change relatively fast; for example Motorola lost 6. 8% market share in 2007, so being not able to compete in the handset market for a few years could be disastrous. 4. 3 External analysis Smartness are quite novel in the mobile phone market as they are full of potential growth.

Due to the short technical history, this product segment has a lower barrier of entry, which provides an opportunity for the existing companies to exploit. By developing operating systems, adding new features, improving performance and slimming down devices, companies will try to get ahead of each other. 4. 4 Key Success Factors Multiple factors could lead to success; By aiming at a cost leadership strategy, fully utilizing economies of scale and a company’s vertical integration, companies could be very successful (for example, Monika).

In addition, a differentiation strategy could be successfully exploited, for instance, Sony Ericson was successful with their Coversheet phones. Those handsets which are equipped with high quality camera sensors can attract customers who want to make pictures like a compact camera with their cell phones. Finally, choosing an operator co-branded strategy, e. G. Handset manufacturer ETC cooperating with wireless operator Orange developed handsets, which allows better control of distribution channels and better use of the wireless traffic spectrum, could be prosperous.

There’s definitely not a ‘one-best-way- approach, but companies should distinguish themselves by choosing one or two specific strategies. 5. SOOT Analysis and Matrix Strengths 1. Economical Scale 3. Effective communication 4. Strong Branding 5. Large global manufacturing network Weaknesses 1 . Shortage in innovation in Smartened area 2. Not enough promotion compare with its competitors 3. Slow renewal in its software and APS 4. Short product width Opportunities 1 . Wide ranges of products and different prices lead to good opportunity to expand its business 2.

People’s purchasing ability and demand on mobile phones has increased rapidly 3. External advanced technologies and increasing trend of outsourcing 4. Globalization enhance the communication of information Threats 1 . Economic downturn. It reduces the customers purchasing ability 2. Large number of competitors enter the market segment because of low barrier of entry 3. Rapid change of customer preference 4. Mature market and environment implies increasing price pressure, intense competition and slower growth 5. 1 SOOT Manta analysts A SOOT Matrix for Monika 1. Economical scale 2.

Leading position in low-end market 5. Large manufacturing network 1. Shortage in innovation in Smartened area 2. Not enough promotion versus its competitors SO Strategies WOO Strategies 1 . Wide ranges of products and different prices 2. People’s purchasing ability and demand increase rapidly 3. External advanced technologies and increasing trend of outsourcing 4. Globalization enhance the communication of information Focus on strengthening mutual communication and bring novel elements to Increase the sales through the promotion as a result of strong branding and alternatives.

SISSIES Market penetration By means of increasing more control and investment over R to create differentiation and emphasize competitive advantage. WI W20104 Forward integration By means of increasing more control over suppliers to avoid copy and technologies imitation. WWW Backward integration SST Strategies WET Strategies 1. Economic downturn. 2. Various competitors because of low barrier of entry 3. Rapid change of customer preference 4. Mature market and environment Use economical scale model to full-utilize high-tech resources. SSL TIT Develop new foreign markets and export to other countries.

41ST 12TH Market development Try to approach other electric industry. Walworth Diversification strategy Take over potential competitors by new or improved competitive advantages and ewer cost. Walworth Horizontal integration Conclusion According to the matrix table, it is obvious that through diverse matching, it comes out various strategies that belong to the classifications of intensive strategy, vertical integration strategy and diversification strategy respectively. In order to determine the final strategy, we need a further analysis about the data collected. . Alternative Strategies 6. 1 Alternative Strategies As stated in the first section, Monika needs to maintain its leading position and hold the 37. 8% market share in the next three years. For one hand, Monika has to stabilize in the low-end market. For another hand, Monika should seek for new solution in order to compete in the high-end market. The one of the criteria of selecting the best strategy for Monika is to consider whether the strategy is practical to solve the previous stated problem. Other criteria can be defined as feasible, profitable and competitive.

Specifically, feasible means the strategy is practical and achievable, not a fade one. Profitable is necessary for the development of the company. To keep the competitiveness in this mature handset market, the strategy must be competitive. However, the most important for choosing a best strategy is whether it help Monika to maintain 37. 8% market share in the next three year or not. Accordingly, the strategy can be concluded from two sides: A. For high-end market: cooperate with consumer electronics companies to compete in the smart-phone market.

The competition in the high-end market is increasingly severe. The weakness of Monika is the shortage in in the innovation of new software and services. So Monika can search another way to survive in this tough competition by cooperating with consumer electronics companies who possess the best technology. This way can not only increase the competitiveness in the existing market but can also save the cost in develop new cosmologies. B. For low-end market: using low cost materials and men power in Asia to lower the price of the cell phones in order to penetrate the existing market.

Low- end market is always the biggest market for Monika. The handset market growth in the developing countries is dramatically. But the consuming ability in those countries are not as high as the Europe and Northern America, low price handset will be attractive to the customers. If the cost of making the phones can be lower, this huge market will be very profitable. If Monika can continue to attract more customers from the low-end arrest, it is feasible to stay its leading position and hold 37. 8% market share in the next three years. 6. 2 Implementation of the Strategies A.

High-end strategy We want to create a Joint venture with a company active in the consumer Electronics market. Important is that this company is not active in the mobile phone market because we do not want competition between the companies in the Joint venture and we do not want to risk losing our intellectual resources to a competitor. For marketing implementation, Monika will still use its own brand to deliver advertisement as the Monika has a strong brand. The new technologies can be the new hit for the market and attract new customers.

B. Low-end strategy We want to continue the current strategy in providing low cost phones. We also want to expand on by acquiring new deals with low end material suppliers to cut further on the cost. We want to use a lot of the same components in the low end phones to acquire economies of scale. We will offer a limited amount of different variations of the phones to minimize cost. Monika can provide customers with pricing signals that reflect real economic costs and encourage the desired market response.

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