The following study will determine the reasons behind the decline of Nokia market share in the telecommunication industry. In fact, according to Nokia financial results, their global device market share decreased to 23% whereas their converged mobile device market decreased by 7%, results combined with the increase of the Market share of Nokia competitors, mainly Apple. In addition, “both Apple and Samsung passed Nokia in worldwide smart phone sales” according to ABI Research. As such, Nokia risks losing more market share and consequently their margin of profit will shrink.
During the research, we will examine the existing image that consumers have of Nokia products in regard to their price, their design and their mobility. The team will rely on data gathered using both qualitative research using focus groups and interviews, and quantitative research in the form of 200 questionnaires. The research will last for 9 weeks starting from mid January whereas the cost will be minimized by the research and will account for 172 pounds.
Nokia is a multinational company based in Keilaniemi, Finland. Its product line ranges from networking equipment, cellular phones, and internet mobile services to personal computers. In over 150 years of existence, Nokia has evolved from a paper mill to what is now known as one of the worldwide leaders in telecommunications.
According to Nokia financial results, Nokia operates mainly in Asia with 39% of sales, and in Europe with 30%; it also employs 129,355 people around the world. In addition, Nokia was voted the fourth most influential company by Forbes in 2010.
Nokia produces mobile devices for all the major market segments and protocols; in addition, it offers Internet services such as maps, GPS navigators and music. Since Nokia is operating in this specific industry, it can target a large number of customers with different needs by providing them with a large choice of products.
Compared to its two direct competitors : Samsung and Apple, Nokia has many advantages such as the largest network distribution with over 650,000 points of sale worldwide and it has also a larger care network (Nokia Official Website). As of 2010, Nokia global annual revenues account for over €42 billion and it has an operating profit of €2 billion (Nokia Annual Results 2010). According to the same report, “its global device market share fell to 23% in the second quarter of 2010”. “Nokia's estimated share of the converged mobile device market was 31% in the fourth quarter, compared with 38% in the third quarter 2010” (Nokia Annual Results 2010). As the above results show, Nokia is losing market share at a relatively high speed; in fact, Nokia has been over taken by Apple as Igor Zuev, an analyst for Rietumu argues, “Over the last few years Apple’s products have been increasingly popular around the world”. As such, the following research will assess the actual situation and the reasons behind such decline in market share; it will also try to come up with applicable solutions for the issue.
Nokia has also been making huge research and developments investments which have been, as results showed, ineffective. According to Bernstein Research, “Nokia spends 3.9 billion on R&D in 2010, almost 3 times its peers”; in fact, the company “invested 13.8 of its sales on R&D in 2010 and 14.4 in 2009; on the other hand, Apple was 2.7 and 3.1” (see appendix 1), and had better financial results. In addition, Apple had produced a number of revolutionary products such as the Ipod, Ipad and Iphone. The high expenditure for R&D and the creativity limitations of Nokia seem to be one of the main reasons why Nokia could not secure its place of Market leader.
Research Question and its components:
Management Decision Problem: (1) “Should Nokia redesign its products and consequently change its advertising campaign.
Marketing Research Problem: (1) To determine the