Consumer Behaviour!

Lifestyle Marketing - "Nokia's failure to adapt to changing lifestyle." .!

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Submitted By! Manav Suri D 19! Abhiram Kartha D 43! Rohith Thampi D 44"

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 right time.! 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."

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.!

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.!

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

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 was separated 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 bestselling 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.!

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.!

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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.!

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. !

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