Nokia Company in China

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Executive Summary

Communication is an integral part of human life; with increase in technology more communication methods are devised. Mobile technology has taken center stage all over the world. There are many companies that are targeting the increased market. Nokia is one of the leading world producers of mobile phones.

China has the world largest population and this makes the country a fertile market for Nokia phones. As a leader in phone industry, the company has to devise a marketing plan that can penetrate Chinese market despite competition from other international phone companies and Chinese local phone manufacturing industry.

Business strategies involve all measures that are aimed at creating awareness and developing a competitive edge of a company’s product. It includes internal and external audits, market segmentation, developing product differentiation mechanisms and having an effective marketing mix.

Introduction

Nokia is an international company which has an international recognition. It has a strong brand all over the world; the company’s positioning statement is “technology connecting people”. Its positioning statement is rooted to the people to develop a close connection with the people that it targets with its products. The company is favored by a pool of experience that has been built over a period of time.

Nokia entered Chinese market in 1985, when its first company was established in Beijing. Since then the branch has expanded and has now employed over 600 employees. The company implements different strategies in its move to dominate in the Chinese market. In the country there are two research centers to ensure that they assist the company in its implementation of programs (Nokia Official website, 2010).

This marketing plan will be divided into segments that discuss different marketing issues administered by the company. The first part discuses the marketing strategy adopted by the company in Chinese market, it will look into market segmentation done by the company. The second part will concentrate on competitive strategy adopted by the company. In conclusion the paper will give a general view of Nokia Chinese business strategies.

China

China is a Middle East country that has undergone rapid economic growth rate in the recent past. The economic growth is a major determinant in making decision on whether to make an investment in the country. China has highly modern developed infrastructures; these are both of transport and those of communication.

The systems are advanced so well that asses to the country from any corner of the world is highly enhanced, the airports, the sea port, and internal transport are well managed and assessable.

The communication network within and without is of high-tech. This is an asset to the business since it reduces the cost of doing business, on the other hand the international market are enhanced at all lengths. The sectors have seen the private and public participation, this boosts the efficiency of the systems and thus one can trade with approximate assumptions.

China has well developed financial sector with the privatized and government participation in the sector. The banks are stable enough to sustain the growing economy. On the other hand, although this may not have a direct impact on our business there is the emergence of micro finance institutions in the country, the institutions are giving a lot of support to the small scale trader evident in the country.

Thinking of the economy from that angle, it means that the manufacturing businesses will eventually benefit. Insurance companies are also a backbone of investment sector of an economy and China is not left behind. The insurance companies are stable enough and can handle big losses without going under. At the same time, there are reinvestment insurance companies that help in maintaining stability even further. The banking sector has enabled firms to get loans at favorable rates.

The insurance and the banking sectors will thus have a direct and indirect effect. From a direct point it means we stand to benefit the efficiency of these institutions and from an indirect point is that as the other sectors get empowered the benefit trickle down to my business (Zi-Lin, Kwanghui and Pho-Kam 2006).

Nokia’s Marketing Objectives in China

The company has gained recognition all over the world and aims to enlarge its leadership in telecommunication industry in the competitive Chinese market. It targets to be the leader in mobile technology in the country. To attain this noble general objective, the company aims at analyzing the market, and segmenting the market into smaller units.

From its positioning statement, the company aims at creating a human-technological interface where it approaches its strategies from a psychological angle. It poses to give solutions to people and by so doing it is able to market its products effectively.

Considering the future, the company aims at continually improving its business strategies and products so that they can remain competitive. The most recent development in phone industry, which the company has adopted is I-phone, touch screen phones and I Pods technology (Nokia Official website, 2010).

The Target Market Strategy of Nokia in China

One duty of a marketing manager is determination of a market segment. Market segmentation is a continuous process used by marketing managers to determine the markets for their products. A segmented market is a homogenous subset of the main market. It has some similarities in characteristics; they demand similar goods.

To be able to sell, there is need to simulate the mind of potential customers to buy ones products. A segment is also stimulated by similar factors. After developing a marketing segment the next step is to develop mechanisms to enable selling in the segment; one of the ways is to ensure that there is a target market in the larger segment whose can be directly targeted. One of the ways to enter in the target market is marketing mix.

An effective marketing mix ensures that goods are available to the target customer, when they need them and they are affordable. In china before the company decides on the particular market, the first point is to collect adequate market data and analyze the data. The company uses business intelligence tools to collect a wide range of data essential for its operations.

The data is interpolated in terms of age, sex, region, education, income, and lifestyle. This assists the company in knowing the products that it will develop if it has to remain competitive. Its research centers offer great assistance in ensuring that all is set in terms of data available for decision making (Earl, 1996).

Generally the company has divided markets in four different segments, they are improving market segmentation, the products of Nokia have been more and more mature. This ensures that the company is able to reach all categories of people in the country. In china, which is the second largest economy in the world only after United States of America, there are all levels of life (Nokia Official website, 2010).

There are peasants and well to do in the society. When such an approach is taken, it does not limit Nokia’s market but it cuts across all classes in Chinese market.

SWOT / TOWS analysis

Strengths

Nokia strength is ventured in its strong brand name that is internationally recognized. There is a wide recognition of these products in all parts of the world. The strength of the company is undoubtedly engineered by its internal managerial mechanisms. In order to have a competitive edge in selling its product and services, it will be advisable for the company to take advantage of its ability to compete favorably with equal players in the market. A strategic marketing plan is the only way out.

Through this arrangement, Nokia-China will be able to adopt different modalities and outreach programs of reaching out to its consumers. In a market mostly controlled by the efficiency and the affordability of the products as well as quality, it will be an open strength for the company to explore more on innovations. In retrospect, strategic marketing plan should be in a position to explicitly document the various channels that can be used by the company to allocate more resources towards improving quality.

Weaknesses

There is no one company that is perfect; there is always an area that offers a weak point. One of the weak points that the company will undergo through are internal while others are from the external environment. Weaknesses refer to stumbling blocks that may deter the company from progressing towards a particular direction.

One of the weaknesses is attitude that customers have upon new things introduced in the market. Phones are expensive commodities which no one would be willing to have a try and test method. When discussing the concept of strategic market planning, we discover that resources are vital for an organization to effect significant changes. Another area of inevitable weakness is an expansion plan which entails diversifying the level of the company activities.

This may take different forms. A critical look at geographical expansion depicts a glaring possibility of other stringent market uncertainties. Right at the onset, strategic planning will demand strategic resources, both human and financial, to make any significant move.

Besides, implementation of the proposed market research will require mutual consent from all the affected divisions in the company. This will not only consume time as decisions are being made, but a lot of uncertainties abound especially on the verdict of the company (Michael 1997).

Opportunities and Threats

Opportunities and threats are external forces that a company has minimal control over. These are outside factors which may work to the benefit or danger of the company. Opportunities for the company are dependent on both the internal and external assessment criteria of the company’s profile of operation.

Similar to the weaknesses discussed above, the company can still optimize on the various opportunities available to bring about sustainable growth through effective competition. Some of the underlying opportunities for this company in regard to the macro environment are the diversification of its activities.

The company may opt to not only run on large scale, but also produce variety of products. This concept of variety may be approached from different angles like micro lending’s via collaboration with local banks. In striking for the right opportunities, the company will have to analyze its main market rival.

The strategies being employed by the competitor should be critically assessed and evaluated for necessary counter action. In addition, the general plan of the competitor in a bid to control the market is a vital toolkit which this company can use to estimate the competitive edge of the market (Oster, 1994).

Pricing Strategy

Phones are priced differently depending on the level of technology that has been adopted in them. Most modern and expensive ones are the touch screens which are as high as $1000. On the other hand, there are phones with as low as $30. The difference is meant to target all the category of customers.

The price of a commodity is an element of total cost plus a profit margin. When a target market has been established, there is need to determine the price affordable to the customers. A marketer should be aware of consumers’ trends and their potential. The social class that the product is targeted will influence the price of the products.

The price parameter can be approached from the actual product price or the possibility that the product can be divided into smaller parts, not necessarily cheap, but to enhance affordability. From a broader point of view the market can be divided into three sections; the high class, the middle class, and the lower class. The high class is not interested on how expensive a product is, but their point of interest is the utility that the product is going to give.

When they are buying things they are looking for something extra that can make them feel special and different. To target this group, the product should try to show how it is different from others, the price can be set high since the possibility is this group will think that the higher the price the higher the utility.

The middle class buy the common goods in the market. When they are the target group, the price should be harmonized with competitor’s prices. When the target is the lower class, price is the determinant of the market, the lower the price the better. The products can be packed in smaller quantities at “lower prices”. Understanding of the market segment is thus crucial (Peter, 2006).

Product/Service Description, Situation Analysis

Nokia has different types of phones and thus will target different markets using the four marketing approaches adopted (methods discusses in the first statement). The market segment that the marketer want to target, will influence the distribution that he is going to use. Where the customer is more likely to be found should be the place that the goods are provided.

If the target customers are people who value recognition, most of them are in the high class, they are more likely to be found in the shopping malls and “designer” shops. The products should be displayed on these stalls. The possibility that these kind of client will be in the back street shops is unlikely and thus the products should not be there.

The common market is also a place that they are unlikely to go. If the products are targeting the lower class, they should be distributed in the supermarkets that are expected to be less expensive than the shopping mall. There are also some places that are regarded to be the high class estates. These are found in the areas that people of a certain class live.

If the target is the low class the goods should be available in the local slum and suburbs’ shops. If the target is for the middle class where the competitor products are, the focus should be more on strategies to persuade them. The middle class are known to be looking for something extra at the same price. There will be no harm if the products are distributed in the competitors’ area; efforts should be the way we display what we are offering extra (Kotler & Armstrong, 2001).

Promotional strategy

Promotions are done in the effort to either introduce a new product or increase the market segment. To engage in a promotion, the first thing to understand is the availability of the target customers. Where are they likely to be found? Are they free in the mornings, is it in the afternoon? After realizing their availability and when they can give you time, and know the age of the market.

The promotion for the youth should be designed to target the youth. The behavior of the youth is that they don’t want something that feels so common, let the promotion give a different good-feel on the customer. If the promotion focuses on introducing a new product, then a lot should be invested in assuring the client of better quality than what is offered by the competitor. The existence of opinion leaders should be evaluated.

Customers are likely to follow the opinion leaders in making their decisions. The existence of groups in the society and their matching lifestyles can also be of great use. If the promotion is for an already existing product in the market, the approach should be from the angle that we are thanking our customers. If the customer feel appreciated and recognized he will develop loyalty and influence other to follow his way (Reid, Plank & Richard, 2004).

Promotion Budget

To create awareness the company will adopt various promotional/advertising/marketing strategies. The budget can be as follows;

Advertising tool cost in $ in millions

Television – 120

Radio – 32

Internet – 12

Newspapers (Weekly and Daily) – 34

Magazines – 10

Outdoor Advertising – 44

Yellow Pages – 8

Miscellaneous other advertising – 8

Social Media – 8

Advertising Agency services

Public Relations services (publicity, etc) – 12

Sales Promotion (what you have created, e.g., magnets, coffee mugs; Trade show participation) – 23

Direct Marketing program (Direct Mail, “Permission Marketing,” etc – 23

Personal Selling – 10

Total – 334

Channels of Distribution

When a company is developing a product or entering a new market, there is a need that the product is supposed to fulfill. The higher the utility the customer gets, the higher the demand for the product. When products are developed, the team should always invest in offering something extra to the consumer.

If target customers are aware of the expected ingredients, the campaigns should have a lot of emphasis in the ingredient used. On the other hand, if the customers are not much interested in the ingredients, or they even are not aware of the ingredients, the focus should be the outcome that the product will give.

The marketing campaigns should explain to the customer what benefit he will derive from using the goods. What does the target customers expect, what are they likely to be moved by? What is the age of the target customer? If the target customer are children- by extension the parents, the products should have attractive bright colors that are more likely to attract children. If the target markets are the youth, then the fashion should be of emphasis.

Packaging should give a sense of superiority to the product. The youth will always want to have a better product than their peers. Effort should be made to ensure that the product is portrayed to give the impression of superiority. The language on the product packaging should be targeted at the desired group age.

If the prices have reduced and are lower than the market prices, it is important to include them on the package. In all the marketing of the products whether they are target to the high class, middle class, low class, the old, and the youth, the marketer should assure the customers of the availability of the products at all times. Understanding the target market segment cannot be overlooked (Sadler, 2003).

Marketing Channel Strategy of Nokia

The company has different marketing channels that are aimed at ensuring that there are available products at one particular point when they are needed. Distribution of good may be from a central point or the company can establish a manufacturing channel in the country. This will assist in ensuring that those products required are made at relatively cheap price since the cost of labor in China is low.

Nokia has a vertical, horizontal, and hybrid marketing strategy where it aims at having a just in time method of delivery of both finished and raw materials.

The company uses 5C principle as its marketing channel strategy; 5C principle refers to;

Capital

This is both to dealer of the companies produce and the internal capital. The company ensures there is adequate capital to finance its projects at any one time. It ensures that dealers are able to market the company’s product and are located at strategic points of sale to ensure they tap a large population base.

Credibility

There are a number of counterfeits products in the market; the company aims at ensuring that the integrity of its products has been maintained. This is through making secret codes that a customer can know whether a product is genuine or not.

Channel

Channels are both distributional channels and raw material supply chains. The company ensures at any one point it has all the resources required to remain competitive. Goods must be delivered where they are required in the right time.

Cooperation

There is facilitated communication between company employees (internal communication) and external communication. Business communication is vital for success in all businesses. Success in this context means, being able to accomplish a particular task or to achieve a specific objective.

Good business communications in relationships either with fellow staffs or customers is needed in order to prosper. Business success can be measured in terms of the practicability of business relationships which is directly proportional to the quality of communication. When there is a well coordinated communication, the company will be able to attain its targets (Ketels, 2006).

Management

Management is the driving force of an organization the kind of approach that they give to different issues dictates the success of an organization. Decisions are the driving force in an organization. The quality of decision that managers make give their organization direction and focus.

The growth and competitiveness of an organization is influenced by the quality as well as acceptability of decisions made by managers at all levels. To come up with a good decision there are three main stages that a manager should follow they are; defining the problem, data collection, and choosing the best alternative.

Always a good manager considers the urgency of the decision before making one. Nokia has a central management at the head quarters but give power to various branches to make decision pertaining countries needs. This will not be different in this China branch. It will ensure that they understand trends in the market and make decisions with that light in mind (Hooley Saunders, 1993).

Competitors & Substitutes

Competition in China will be from two angles. Competition from local phone making company and from international markets, however, every situation or opportunity has its own unique potential that an entrepreneur must capture if he will be successful. This will be in consideration of business risk; business risk is the uncertainty on to whether the kind of business that one has engaged in will be of success.

This is in both existing business when they want to extend their business to other areas of a start up business. Businesses are driven by market for good produced; thus an entrepreneur must ensure that there is potential in the chosen location. When investing in some kind of a business there is the initial and subsequent running expenses.

In a business environment the proceeds from the business should cover all these and there remain a portion that is the profit of the investor. Before Nokia making a decision to venture in Chinese market, it must have seen a potential market than it targets. This is what the company should focus on (Arch, 1975)

Competition is a good element in the business arena since it ensures that quality of goods and services are provided; it is the one that keeps the business men on their toes to ensure that they earn customer loyalty. This calls for continuous improvements of its products and services.

Two things must be considered then, whether the Nokia Company will be able to enter the market and whether she is capable to improve his products always. However, there are areas that competition is so high that an entrant will risk so highly and possibility of entering the market effectively becomes a problem, all this are factors that should be considered before making the go-ahead decision (John & Mowen, 2004).

The following are companies that will offer competition to Nokia Company in China;

Motorola China

The company was established in Beijing in 1987 with two main agendas; tap the Chinese market and benefit from cheap labor and high technology in the country to produce products for exports. Since its incorporation in the country the company has acquired wholly owned companies and 9 joint ventures and 24 subsidiaries.

The following are the nine ventures that it has joined hands

Guangzhou Jinpeng Cellular System Co., Ltd.
Shanghai Motorola Telecom Products Co., Ltd.
Beijing Huamin Smartcard System Manufacturing Co., Ltd.
Hangzhou Eastcom Cellular Phone Co., Ltd.
Leshan-Phoenix Semiconductor Co., Ltd.
Huamin Smartcard System Co., Ltd.
Hangzhou Eastcom Cellular Equipment Co., Ltd.
Shanghai Zhongmei Automotive Electronics Co., Ltd.
Motorola Qiangxin (Tianjin) IC Design Co., Ltd.

It employs more than 12,000 employees; these employees are mostly Chinese and thus the company is able to penetrate the market as a local company. After making its goods, there are some which are exported and sold at relatively lower prices (Motorola official website, 2010).

Marketing strategy of Motorola China

The company uses the joint venture as its marketing points alongside other marketing strategies. Also to ensure that it dominates the market the approach is from developing efficient low priced goods; this will be as a result of enjoying the benefits offered by the country. The company also uses the bottom of the pyramid strategy; Bottom of the pyramid is people who are not well to do in the society. It should be noted that they also have expenses just like the very fortunate.

They are important in two aspects i.e. as laborers and the consumer of the products. China has the biggest population in the world. Thus, the availability of labor is good. The labor market takes two angles the highly skilled and the low skilled people. For expertise purpose the skilled and experienced will be of great help and the semi-skilled can be deployed for manual work.

The higher population is available for cheap labor; however the labor union of the country is advocating for better terms the truth is the labor still remains favorable. This favorable rates of labor has made several multinational companies to have export producing zones (popularly called assembling points) in the country, this is a proof of favorable rates of labor. On the other hand, the population provides the market for the manufactured goods.

The company also adopts 4Ps marketing mix as its strategy. The company has a number of social corporate responsibilities which include; Higher education scholarships, disaster relief, sports sponsorship, environments, and West China Development (Motorola official website, 2010).

ZTE

This is a Chinese local company that was established in 1985 and has the lion’s shares in phone market in China. It produces a variety of phone products aimed at fulfilling the needs of different customers. Since its inspection it gained an A status in Shenzhen Stock Exchange since 1997.

It was the first Chinese company to hold an A and H status in The Stock Exchange in Hong Kong. To remain competitive the company operates in different names which are China Mobile, China Telecom, and China Unicom in China. It also has developed a long term relation with other established companies to assist it in marketing its products. Such companies include France Telecom, Vodafone, Telstra, Telefonica, among others (ZTE Official website, 2010).

Marketing Strategy of ZTE

The company is favored by having a strong brand name in the country; the fact that it is a local company makes the population see it with a positive point of view. The government in the effort of encouraging local investments gives subsidies and tax holidays to local companies and thus the company benefits reduced costs in production.

Being a local company, it understands the markets betters and thus it has devised products that fit the entire population. There are very cheap phones and some which are expensive depending with the target customer that the company aims to get.

In its implementation of 4Ps marketing mix, it has concentrated more on Chinese market. It ensures that there are products at a particular point when they are required. There are areas that have low class people and the company has embarked on social corporate responsibilities in such area. These responsibilities include providing pumped water, electricity, and environmental conservation mechanisms (ZTE Official website, 2010).

Recommendation

Chinese market is a potential phone market for Nokia phones. There is need to develop effective marketing strategy to ensure that there is continuity in business and the company can venture and dominate the market.

China has the world largest population which offered two opportunities that need to be tapped; local market and cheap labor. When products are produced at relatively low price they can be exported to other countries and this will facilitate general business of the company. One of the problems that the company faces is language barriers; this is between the top management and Chinese market.

To overcome this there is need to learn the language by the top management. There is a marketing strategy that the company adopts, however, it should be appreciated that each country is different from another and thus offers different need. The approach may be the same but the plan set different. One of the tasks that a marketing manager should undertake effectively is to develop a team of experts to address various issues.

This will assist in offering solutions to problems as they arise. It is not always the case that a business set up will be successful, there are times that it may fail; when starting a business this should be taken into consideration. Business dynamics cannot be predicted with a 100% certainty. If the trends fail to favor a business, then the business is more likely not to meet its obligation.

It may be a failure in the market, change of fashion, calamities or negative goodwill created; they may hinder continuity of a business. To cater for this in eventuality, there is need to have an exit plan. Mitigating any loss that is likely to result from loss of business is one of the common ways to have an exit strategy that will not hurt the entrepreneur.

Conclusion

Mobile technology has taken center stage all over the world. There are many companies that are targeting the increased market. Nokia is one of the leading world producers of mobile phones. China has the world largest population and this makes the country a fertile market for Nokia phones. To venture in the market the company has to embrace an effective marketing strategy. Generally, Nokia has divided markets in four different segments, they are improving market segmentation.

The products of Nokia have been more and more mature. This ensures that the company is able to reach all categories of people in the country. Competition in China will be from two angles. Competition from local phone making company and from international markets, however, every situation or opportunity has its own unique potential that an entrepreneur must capture if he will be successful.

There are different opportunities that the country offers to the company, they include cheap labor, market (both local and as an international), developed technology, good infrastructure (both institutional and physical), and positive economic growth rate. However, phone industry competition in the country is high.

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