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Nokia Case Study

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Running Head: CASE STUDY

Case Study Assignment in MKTG 311

Case Study Assignment in MKTG 311

Fredrik Idestam founded Nokia in 1865 on the southern side of Finland. The company began as a wood pulp mill on the banks of the Tammerkoski rapids. Later Idestam founded another mill on the Nokianvirta River (Nokia, 2007). In 1871 he named the company Nokia Ab. In 1982, Nokia designed its first digital telephone switch system, the Nokia DX200, and launches it into operation. From 1984 to 1991 Nokia's evolution in the mobile communication market grew sharply with their first mobile phone, the Mobira Talkman, the invention of the first handheld NMT phone, and equipment used to make the world's first GSM call (Nokia, 2007). In 1998, Nokia became the world leader in mobile phones and their market continues grow with new devices that include high-speed Internet, mobile online gaming, and multimedia functions. Since the case study presented in our text a new CEO has taken the helm at Nokia. In 2006, Olli-Pekka Kallasvuo has become the new CEO of Nokia. Nokia has been utilizing market segmentation to implement their products into different cultures around the world and they continue to do so as they expand into the year 2008 and on.

Question One - Why has segmentation been a successful marketing strategy for Nokia?

Market segmentation has been a successful marketing strategy for Nokia. The reason that market segmentation has been successful is that Nokia uses information regarding their consumers' usage, lifestyles, price sensitivity, and individual preferences to market their products (Kerin et al. 2006). At the time of the publication of our text Nokia was using a market segmentation that consisted of six different categories of consumers: "basic," "expression," "active," "classic," "fashion," and "premium." Using the information collected about each of these six categories, Nokia would design their product to cater to each one individually based on their needs. After researching Nokia's official website I have come to the conclusion that they still follow this market segmentation strategy for the most part. While there is no direct evidence of the market segments presented in our text on the website, the products they market follow the outline of each market segment very closely. The phones still range from the 1000 and 2000 series to the very high-end models such as the N91 and the E70. Although the names and features of the products have changed they still seem to fit into the categories defined by our text quite well.

Question Two - What customer characteristics were used by mobile phone marketers during the industry's early stages of growth? Which customer characteristics and segmentation variables does Nokia use today?

There were several customer characteristics that were used by mobile phone marketers during the industry's early stages of growth. Nokia introduced the Mobira 450 car phone in 1982. This demonstrates that a lack of completely mobile phones would cause marketers to look towards the segment of the population that drove. It would not be in Nokia's best interests to penetrate into a market where the need for their product was unnecessary. The Nokia website also states that in 1987 Nokia launched the Mobira Cityman, it was the first handheld mobile phone for NMT networks. It also states that the phone cost approximately 4,560.00 Euro or $5,993.86. This means that early marketers would more than likely direct this product towards a high-earning group rather than a low-earning group. There was very little need for entry-level phones because of the extremely high cost of the first mobile phone. These early methods of market segmentation have made way for the company that provides the world with the majority of the mobile phones they use everyday.

Nokia combines the various usage needs of its consumers with the different lifestyles of the same consumers to produce the product categories they use in the market segmentation today. The entry-level products are affordable and easy to use with innovative product services that provide quality service at a good price. These products are aimed at individuals with low-earning potential, such as students, but still want a quality product with nice features. The expression level products have additional features not available on the entry-level products such as color displays and changeable face covers so the products are still affordable but the user still feels socially connected. This segment is aimed at users who are more socially involved than the entry-level users and have more discretionary income as well. The active category includes features such as stopwatches and digital compasses for the consumer who is active in sports and fitness (Kerin et al. 2006). Consumers who utilize fall into this market need a product that is tough and durable but still aesthetically pleasing and has quality features. The classic line allows consumers to roam between various global networks (Kerin et al. 2006). These phones are aimed at a more business conscience consumer who must stay connected at all times. The fashion segment includes phones for people who wish to "show off." The 7000 series of phones allows consumers to have a device with unique styling and materials that allow the owner to communicate their individual sense of style (Kerin et al. 2006). Finally, the premium line of mobile phones appeal to consumers who want



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