Nokia's Failure

8/13/2019 Nokia's Failure

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Consumer Behaviour

Lifestyle Marketing - "Nokia's failure to adapt to changinglifestyle." .

Submitted By

Manav Suri D 19

Abhiram Kartha D 43

Rohith Thampi D 44


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Introduction

Lifestyle is the way in which a person or group lives. This has changed to a great extent over the

past one decade. The need, requirements and want of consumers has changed a lot. People

started consuming products that serve and fulfill their growing needs. The market always looked

for new products that can server better. The reasons behind these changes are globalisation,

increase in level of income and internet to a great extent. Through globalisation several

international products were introduced into a countrys domestic market and people started

consuming them and they demanded for the same quality or higher quality products from there

on. Companies started manufacturing products as per the changing demands. The curry powders

were a start for this change in the food segment. Earlier people used to dry the spices and powder

it themselves and consume them. With a change in the lifestyle and when people got busy with

their works, they started to prefer prepared curry powders and many companies came into the

market with the same. Now things have again changed, people are using ready to eat products

and they prefer fast food restaurants so as to avoid the burden of cooking. This led to an open for

lot many entrepreneurs.

Marketing is the action or business of promoting and selling a product or service. It is all about

identifying and providing goods and services to the consumers with proper promotion at the righttime.

Lifestyle marketing is the right blend of marketing as per the changing lifestyle of the people.

Consumer habits, particularly those related to brand selection, brand loyalty and the purchase

decision process have undergone a significant evolution over the past decade. All brands are

thinking to effectively market to the changing habits of the new generation of consumers. Some

companies are successful to change through providing solutions to the new and latest needs of its

customers whereas some are not. Those companies which changed for their customers were able

to retain their customers and those who failed to lost their customers. Samsung is an example for

a company who successfully identified the current lifestyle and moved accordingly and at the

same time Nokia is an example for a failure in the same segment.


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We decided to take upon the case of Nokias failure to adapt to the changing lifestyle after

reading the following article which was found online. This article explains what went wrong with

Nokia.

Nokia seeks better connection in survival fight (September, 2012 by Richard Milne)

Nokia has been in many turnaround situations in its up-and-down history. But the struggle the

Finnish group currently finds itself in could be its most serious.

After largely missing the smart phone revolution, the one-time largest in the world maker of

mobile phone handsets is down on its luck, outflanked by the likes of Apple and Samsung. So

Nokia has tied its fate to Microsoft, hoping to make the Windows platform the third big mobile

operating system behind Apple's iOS and Google's Android.

But with its most recent phone launch that of the Lumia 920, its flagship model to run on

Windows 8 widely viewed as disappointing, some are starting to wonder if Nokia really can

win its latest fight for survival. With its shares down by more than 90 per cent from its peak, the

usual funds that look at distressed situations are starting to sniff around the company.

For some observers, this seems unfair as Stephen Elop, the chief executive recruited from

Microsoft two years ago to rescue Nokia, has done much right in his restructuring of the group.

If you look at Nokia and see what they have done in the past year you can't fault them. They

have done all the things you would expect them to: restructured the operations, taken costs out,

simplified things in the business, and furiously launched new smart phones into the market, says

Michael Weyrich, co-head of the telecoms, media and technology practice at AlixPartners, the

restructuring consultancy.

But there is still a sense that the company could quickly get into trouble.

Credit analysts at Society General noted in the summer that the Finnish company could

effectively exhaust its cash reserves within little more than a year at the rate it was burning cash.


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That can seem strange as Nokia ended the second quarter with net cash of ! 4.2bn and gross cash

of ! 9.4bn. Although the net cash number was down 14 per cent from the previous quarter, all of

that was due to a dividend payment. It generated positive net cash from its operations, purely

down to a large pre-payment from its well-regarded patent portfolio. But tech industry experts point out that companies in the sector often go bankrupt with significant amounts of cash,

pointing to Nortel, the Canadian telecoms group that went bust in 2009 with several billion

dollars of cash.

Mr.Weyrich says it is never a good sign when a company prominently refers to its cash levels in

its earnings reports. He adds: It is a costly game they are in and it is a game that is changing

rapidly. You can improve very rapidly but given the market dynamics it can also go downhill

very rapidly.

For many credit investors, however, Nokia does not have enough debt to get them excited. It has

only ! 3.25bn in debt outstanding from four bonds all issued in the spring of 2009 compared with

dozens for most companies of the same size.

They just dont have enough bonds to make them interesting for us. We did play the credit

default swaps [insurance on bonds in case of default] for a while but even that is less interesting

now. Really, Nokia is a distressed equity play, says the chief investment officer of one of the

world's biggest investors in corporate debt.

Anecdotal evidence bears this out with large proportions of Nokias shares borrowed out to

short-sellers. The shares themselves have been on a rollercoaster ride, falling to a 16-year low in

July, before more than doubling in the space of a month.

A senior Nokia executive says: I really dont know what is going to happen. I guess there are

going to be lots of chances for investors as there will probably be lots more ups and downs to

come.


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Nokia- About the company and its history

Nokia Corporation is a Finnish multinational communications

and information technology corporation headquartered in

Keilaniemi, Espoo, Finland. Its principal products are mobile

telephones and portable IT devices. It also offers Internet

services including applications, games, music, media and

messaging, and free-of-charge digital map information and

navigation services through its wholly owned subsidiary Navteq. Nokia has a joint venture with

Siemens, Nokia Siemens Networks, which provides telecommunications network equipment and

services.

Nokia has around 97,798 employees across 120 countries, sales in more than 150 countries and

annual revenues of around ! 30 billion. It is the world's second-largest mobile phone maker by

2012 unit sales (after Samsung), with a global market share of 22.5% in the first quarter of that

year. Nokia is a public limited-liability company listed on the Helsinki Stock Exchange and New

York Stock Exchange. It is the world's 143rd-largest company measured by 2011 revenues

according to the Fortune Global 500.

Nokia was the world's largest vendor of mobile phones from 1998 to 2012. However, over the

past five years it has suffered declining market share as a result of the growing use of smart

phones from other vendors, principally the Apple iPhone and devices running on Google's

Android operating system. As a result, its share price has fallen

from a high of US$40 in 2007 to under US$3 in 2012. Since

February 2011, Nokia has had a strategic partnership with

Microsoft, as part of which all Nokia smart phones will

incorporate Microsoft's Windows Phone operating system

(replacing Symbian). Nokia unveiled its first Windows Phone

handsets, the Lumia 710 and 800, in October 2011. After this

move, sales were not impressive and Nokia made 6-consecutive


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loss-making quarters from Q2 2011 to Q3 2012. The Q4 2012 results saw Nokia return to profit

after strong sales of its new Windows Phone 8 handsets, particularly the high-end Lumia 920.

Nokia's history started in 1865 when mining engineer Fredrik Idestam established a ground wood

pulp mill on the banks of the Tammerkoski rapids in the town of Tampere, in southwestern

Finland in the Russian Empire and started manufacturing paper. In 1868, Idestam built a second

mill near the town of Nokia, fifteen kilometers (nine miles) west of Tampere by the Nokianvirta

river, which had better resources for hydropower production.

The seeds of the current incarnation of Nokia were planted with the founding of the electronics

section of the cable division in 1960 and the production of its first electronic device in 1962: a

pulse analyzer designed for use in nuclear power plants. In the 1967 fusion, that section wasseparated into its own division, and began manufacturing telecommunications equipment. A key

CEO and subsequent Chairman of the Board was Vuorineuvos Bjorn "Nalle" Westerlund (1912

2009), who founded the electronics department and let it run at a loss for 15 years.

In the 1970s, Nokia became more involved in the telecommunications industry by developing the

Nokia DX 200, a digital switch for telephone exchanges. The DX 200 became the workhorse of

the network equipment division. Its modular and flexible architecture enabled it to be developed

into various switching products. In 1984, development of a version of the exchange for the

Nordic Mobile Telephony network was started.


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Nokia- Way Through The Years

1962: A pulse analyser designed for use in nuclear power plants was the first electronic device of

Nokia.

1970: The company changed its focus to telecommunications industry by developing the Nokia

OX 200.

Up to 1987 it was a Finnish state owned company and in 1987 its shares were sold to Nokia and

in 1992 the name was changed to Nokia telecommunications.

1989: Nokia introduced its independent handset NMT-900.

1992: The first GSM phone Nokia 1011 was launched.

1994: Nokia ringtone was introduced with the Nokia 2100 series.

2003: Nokia launched its Nokia 1100 handset with over 200 million units shipped, was the best-

selling mobile phone of all time and the world's top-selling consumer electronics product.

2007: Nokia released its first touch screen phone, the Nokia 7710, which was also a huge

success.

At the Nokia World conference in December 2007, Nokia announced their "Comes with Music"

program: Nokia device buyers are to receive a year of complimentary access to music

downloads.

2008: Nokia released the Nokia E71 which was marketed to directly compete with the other

BlackBerry type devices offering a full "qwerty" keyboard and cheaper prices.

2009: Nokia launched two new music and social networking phones, the X6 and X3.

2011: The Nokia Lumia is a series of smart phones from Nokia first introduced in November, all

of which use the Windows Phone operating system.


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2011: Nokia switched from their ageing and declining Symbian platform and chose Windows

Phone as their primary smart phone OS. This partnership with Microsoft was confirmed on

February 11, 2011.

Nokia switched from their ageing and declining Symbian platform and chose Windows Phone as

their primary smart phone OS. This partnership with Microsoft was confirmed on February 11,

2011.

Windows Phone 8 is the second generation of the Windows Phone mobile operating system from

Microsoft. It was released on October 29th, 2012, and like its predecessor, it features the

interface known as Metro.

2012: Nokia launched for the Indian market two new Asha range of handsets equipped with

cloud accelerated Nokia browser, helping users browse the Internet faster and lower their spend

on data charges.


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Nokia- SWOT Analysis

Strength

a. Strong brand name and company image in the global market.

b. Has its own manufacture and networks.

c. Ability to produce phones economically for middle class.

d. Largest distribution of mobile phones in mobile industry.

e. User friendly with many accessories.

f. Have high resale value compared to others.

Weakness

a. Unwillingness to adapt to changing lifestyle.

b. Few customized operator specified handset.

c. No promotion undertaking to target the lower class of the society.

d. Poor after sales service.

e. Not able to find a competitive software against android and iOS.

Opportunity

a. The emerging market in developing countries such as Latin American, India and China.

b. Emerging market for high end mobile phones.

c. It can use an android OS to recapture the market.


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Threats

a. Facing more new competitors.

b. Nokia is losing global market share after arrival of many new companies, especially in

the lower segment.

c. The market share has reduced due to competition from Android and iOS phones.


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Conclusion

Mobile market is determined by the youth to a great extend. So the first step that Nokia has to

take is to make a tie-up with google and launch handsets with the Android OS. After recapturing

the youth through this they has to do some R&D so as to recapture the market of business people

who prefer handsets in the same platform. While recapturing if necessary Nokia can develop a

new Android/IOS competing OS of their own trademark and launch phones independently and

bring their tagline "Connecting People" to greater levels to compete with other Handset

manufacturers.

Documents

Nokia's Failure