Nokia Product Categories

MARKETING MANAGEMENT

November 2007

Nokia cell phones have been arranged into four different categories, according to use, price, need etc. The four categories are Multimedia, Business, Lifestyle and Connect and each category contains several different phone models. Here for this exercise, I shall evaluate these different business units in relation to the 4Ps model of marketing.

1) In what way are the 4P issues different in Nokia's different mobile phone business units?

The business units were created as a means of product segmentation. Each of these units caters to a different market segment and has a different target audience. Concerning product development, each of these units sets out from a different starting point. The business phone development unit would not consider appearance and fashion-forwardness as its first priority; it would prioritize connectivity (as in internet connections, WAP, Bluetooth etc.) and time management applications such as the calendar. That is not to say that business users are not interested in the appearance of their phone, but when choosing which they want to pay for, appearance or functionality, they choose functionality. Therefore, developing the functions that business users use is more important for the E-series product development than the N-series, which is targeted at an audience of young users who want to use their phones to connect to the "wireless world" and also as a multimedia unit which allows seamless use between the phone and the pc. The business unit phones are most likely to be priced according to the value-based method, because most of these users are not buying it for status or psychological reasons. They need it in their work and therefore are willing to pay a price, even if it is higher, to make working easier. Also often business phones are paid for, at least in part, by the employer which allows for a bit higher price. Business phones can be distributed in slightly different ways than normal consumer phones. When considering the business user as the target consumer, the distribution channel can be for example through the employer. Business phones are often bought by the employer or then leased so that the end consumer might not be directly in contact with the seller or distributor. So when thinking about distribution and marketing, it might be prudent to think about who in fact is the buyer of the business phone. Due to the fact that employers are often the people who make the decisions about which phones to provide for their employees, it is in fact quite easy in the case of the E-series to evaluate the performance of promotion. The number of new orders to come in from companies is quite a good indicator as to whether or not the promotion for the phones has been effective. No employer would make the decision of ordering a hundred cell phones of the same brand if they were not happy with the message that the promotional tactics were conveying.

The N-series consumer group, who are often young, urban and fashion-forward, wants their phones to be tools for communicating and staying in touch with their surrounding world and its phenomena. It is a way, also, to communicate to others their interest in technology and willingness to stay abreast of technological development. Thus, this is the group that needs a lot, if not the most work in product development. These consumers are willing to try new things and will eagerly start using applications that other consumer groups either are not ready or are not capable of trying. The N-series is a relatively new concept for Nokia and has had a good start. The N-series phones are very popular among affluent young adults and have created new business opportunities for companies creating mobile applications, thus proving that this was, until recently, an untapped market segment and has been a lucrative venture for Nokia. The N-series phones are likely to be priced according to the psychological pricing principles as well as the value-based pricing ones. The N-series phones do add value to the users, such as increased access to online entertainment, new mobile applications and connectivity in general, but also they are phones that are a part of the user's status in society and therefore the psychological pricing allows for the price to be higher than if it were just value-based pricing. The N-series phones are mostly distributed through channels that are perceived as "hip" and "new". A very good example of this is for example the new Nokia flagship store in Helsinki which is a showroom for most Nokia phone models. Here customers are surrounded by a hip atmosphere which would especially appeal to these young, urban consumers who are the target group of the N-series phones. The atmosphere of the store is in synch with the image of the phones, so it is an ideal situation for getting them to buy the phones. As to whether or not promotion has played a part in getting the consumers to actually buy the phones is a bit more difficult in the case of multimedia phones. Of course sales volume plays a part, but it is not necessarily directly related to the effectiveness of promotion. Instead we can measure factors such as the amount of times particular applications are used. For example, say the N95 phone offers an application to download the daily wind report to your phone, we can calculate the amount these downloads increase due to a promotion. This will give some indication of the effectiveness of promotion in multimedia phones.

The third business unit is the connect unit, that makes phones for everyday use for users who don't require quite as much from their phones as the previous groups I have mentioned. The phones in this unit are stylish and have the latest technology, but are still basic and easy to use. They are equipped with features such as internet, camera, mp3-player etc., but don't necessarily have the best camera or the fastest internet. The users are not willing to pay for this, because they don't see it as sufficiently necessary in their lives to compensate for the added cost. So in this business unit, product development decisions should be more based on appearance of the phone and the ease of use rather than fancy applications. This group consists of different types of users such as young students, who don't yet have very much disposable income and therefore are not willing to pay a high price for their phone, but still want it to be trendy and modern appearance-wise. Also in this group are users from growing/emerging markets, where users are still learning the use of mobile phones and therefore can only handle the basic functions and often don't have sufficient income to pay for a more expensive phone. Therefore the phones from the lower price group and