Introduction

Nokia Corporation is an international information technology and communication

business based in Finland (Nokia). They have manufactured many different products
including rubber boots, tyres and television sets. Nokia found its way into
telecommunications in the early 1960s. Over the past 150 years the company has
become a global leader in telecommunications, connecting over 1.3 billion people
around the world. They now specialize in mobile and portable IT devices alongside
services such as messaging, games, music and application. The company have over
123,000 employee, with sales in over 150 countries. In 2012 they made a gross
profit of 8390 EURm however this is a 26% decline from 2011 when they made a
11,359 EURm gross profit (Nokia Corporation 2013). In 2013 Nokias profits fell
further, in the third quarter it fell by 33% (BBC 2013).
Nokia could improve their profits through their marketing strategy. A marketing
strategy is a plan that allows a business to achieve long-term objectives (Bradley
2005). An example of a marketing objective could be to become the market leader
through achieving customer loyalty. A marketing strategy covers all aspects of the
procedure that needs to be taken in order for an organisation to satisfy the market,
such as market research, promotion and price.

An important factor Nokia must consider in its marketing strategy is the external and
internal factors that can affect the business. They can review these using PEST and
SWOT analysis. A PESTEL analysis looks at a companys political, environmental,
social, technological, economic and legal factors (Law 2009) where as a SWOT
analysis looks at the strengths, weaknesses, opportunities and threats of a company
(Hill and Westbook 1997). In this essay Nokias political, economic, social and
technological factors are discussed.

Pestel Analysis

Political factors:
Political factors are an important factor for Nokia as they are an international
business (Nokia 2014) therefore any political changes around the world can affect

Nokia. For example, if the government change import and export prices then Nokias
sales would be affected.

Economical factor:
Economic factors all around the world can also affect Nokias. For example, the
economic rescission around the world led to Nokias market decreasing. Their
financial report shows this In 2012 they made a gross profit of 8390 EURm however
this is a 26% decline from 2011 when they made a 11,359 EURm gross profit
(nokia.com) In 2013 Nokias profits fell further, in the third quarter it fell by 33%
(BBC). In quarter one of 2012 Nokia lost 1.34 billion. Revenue was down almost a
third compared to the previous year. The recession has also led to jobs cuts for
Nokia. In 2012 they cut 4,000 jobs and moved their manufacturing to Asia where
labor costs are cheaper (Guardian).

Social factors:
Social factors can include factors such as fashions, trends and the ageing population
of the UK (CIPD 2014). These factors are important as they can affect marketing
strategy and market segmentation. Nokia need to make sure they meet the needs of
their customers in their market plan for it to be successful. They have done this
through market segmentation which is explained in the next section of this essy.

Technological:
In the communications market technology is one of the most important aspects that
companies like Nokia have to take into consideration. Nokia has to stay up to date
with the newest technological advances, e.g. camera and motion phone technology,
in order to have a large market share and stay ahead of competitors such as
Samsung and HTC.

Nokia have been market leaders in the past due to their innovation however they
have struggled to compete with their rivals e,g, Apple. Competition in the market has
been rising and Nokia has dealt with this by focusing on investment into technical
advancements and gaining a large number of patents. Another technological factor
that has helped Nokia to gain market share is the partnership with Microsoft (Nokia
Press 2013). This partnership has allowed Nokia to gain technological advantage for

example, Nokia are able to integrate Microsoft Windows Phone mobile system into
their phones, which has said to be threat for Android phones.

Environmental
Examples of environmental factors include ecological and environmental aspects
(CIPD 2014), for example climate change. Climate change can affect certain
industries, such as insurance, therefore environmental factors are important to
consider. It is important for Nokia to have awareness of the possible effects that
climate change can have to the company as climate change and environmental have
had effects on creating new markets and weakening others. For example, climate
change has affected the farming industry through floods, dry periods and how the
crops grow.
According to the Carbon Disclosure Project (CDP) Nokia is one of the top companies
in the world for climate change. This is because environmental issues are an
extremely important factor to Nokia, this can be supported by evidence on their
website; We make each and every Nokia device with the environment in mind
(Nokia 2013). Nokia also encourages their customers to think about the environment
e.g. through environment focused applications such as Climate Mission 3D.

Legal:
Legal constraints must be taken into account because many businesses aim to make
a profit so they may be tempted to mislead their customers about prices, quality of
products and the availability of their products. They may also try to cut expenditure
by using lesser quality materials in their products all of these are illegal. So legal
factors are very important for Nokia. As Nokia is running their business globally so it
is very important factor to aware about global legal issue.

Porters 5 Forces
PESTLE analysis allows a business such as Nokia to look at external and internal
factors (Law 2009) that can effect a marketing plan. However, businesses should
also understand competitors within an industry. By doing understanding competitors
Nokia can assess the potential opportunities and learn how to differentiate them self

from competition that sell similar products. Porters Five Forces Model would allow
Nokia to analyse their competitors (Grundy 2006). This model was created by
Michael E. Porter (Porter 2002) It looks at threats of new entrants, power of
suppliers, power of buyers, threats of new substitutes and competitor rivary (Grundy
2006). These factors are explained below in more detail:

Threat of new entrants:

Nokia operates in the mobile phone industry (Nokia 2013). This is a very well
established market therefore the threat of new entrants are low, this is because the
market is well established the barriers to entry in the mobile industry are high. New
entrants would need a large investment, extensive research and development,
advanced technology and expensive marketing campaigns. New entrants would
struggle to compete against Nokia, in 2011 the BBC News declared that Nokia held
29% of the market. This information suggests that Nokia do not need to worry about
threats of new entrants due to the high start-up costs and barriers to entry.
Power of suppliers:
The suppliers are very important to Nokia as they supply the equipment they need to
produce their phones. Nokia are a global organisation (Nokia 2013) and hold a large
proportion of the market. Many equipment suppliers would happily have Nokia as a
client therefore Nokia are in the position where they can bargain and negotiate with
their suppliers. If Nokias current suppliers attempt to bargain for more money then
Nokia could easily swap suppliers. However, if Nokia did get in this position they
would need to take into account other factors, such as the relationships they have
gained with their suppliers. If Nokia have established a good relationship with their
supplier then they would gain benefits such as better credit terms, high bargaining
power and possibly lower unit costs. If Nokia swapped suppliers they could lose
these benefits.
Powers of buyers:
Competition in the mobile phone industry is very competitive and buyers have a lot of
choice therefore having a lot of power. Customers can choose to go to Nokias rivals
if Nokia dont meet the customers needs. When Nokia implement their marketing

strategy they need to make sure they have looked at the social aspect of the
PESTLE analysis (CIPD 2013) to ensure the needs of the customers are met.
Nokia do not have a store to operate from, they sell their products through other
companies such as Carphone Warehouse (Carphone Warehouse Group PLC 2014).
Carphone Warehouse sells Nokias products a long side their rivals who have similar
products such as Samsung. This makes it easier for the buyers to compare prices.
Consumers are always on the lookout for the best deals therefore they are more
likely to buy the cheaper phone. If Nokias phones are not cheaper than their rivals
then they will lose customers thus losing market share and profit. This suggests that
customers have high buying power because if they do not buy from Nokia because
of the prices then Nokia would have to lower their prices to meet the markets needs.
Threats of substitutes products
Mobile phones have become an essential in peoples lives as they allow people to
constantly stay in contact through phone calls, text messaging and the internet.
There is no other device that allows people to do this therefore substitute products
that can effect Nokia are very limited unless technology develops further. On the
other hand, other devices such as tablets and netbooks have internet available to
them therefore people can use these to communicate e.g. through email and social
networking. However, people cannot make phone calls on these devices. Nokia
develops tablets e.g. Nokia 2520 so they can compete with the potential substitute
products. No matter what the consumers needs are there are no real substitutes for
mobile phone devices therefore the threat of substitutes effecting Nokia are very low.
Competitive rivalry:
The market Nokia operates in is highly competitive with little differentiation between
them. Due to Nokias competition, e.g. Apple, becoming more popular Nokia have
lost market share. This could be a result of Nokias slow progression into the
Smartphone market. Apple released new products before Nokia therefore they
gained a competitive advantage and gained market share while Nokia lost market
share. To compete successfully Nokia need to spend money on research and
development to develop at release their products to market before their competitors,
this would allow Nokia to stay a head of the game therefore allowing them to gain
back competitive advantage.

Market Segmentation

Marketing segmentation is the process of dividing a broad market into subsets of

consumers who have similar needs or similar buying patterns e.g. according to
geographic, demographics, social and other factors (Reid 2009). Kotler 2005
suggest that there are requirements of effective segmentation. Successful
segmentation must be measurable, sustainable, and accessible and act according to
the market segments needs. Dibb 1998 suggests successful market segmentation is
the result of understanding the customer and competitors, effective resource
allocation and strategic market planning.

According to 1998 markets can be segmented according to:

Behaviouristic Factors volume, usage, brand loyalty, price.

Demographic Factors age, gender, ethnicity, income, education ect.

Geographic Factors population, climate, city size etc.

Psychographic Variables lifestyle, personality

Nokia has many different segments as it has a broad target market. Nokia has
customers of all demographical, behaviourist, geographic and psychographic
segments. For example, the N-series is designed for those on a low income such as
students whereas the E-series is designed for those with a higher income, such as
businessmen.
Nokias way of promoting allows them to target mass markets and large amounts of
people in market segmentations. Because Nokia is a large company they are able to
target many segments through their advertising compared to smaller companies who
are unable to afford extensive advertising campaigns. For example, Nokia are able
to advertise on television and sponsor events or programmes which are viewed by
many different segments of customers, smaller companies or new entrants would not
have the funds to do this therefore could only target a small segment. This gives
Nokia a competitive advantage over smaller customers and also develops barriers to
entry into the industry.

Nokias Segment Markets

Segment markets are very important to Nokia and their marketing strategy. As said
in the section above different segments have different needs and the marketing
strategy need to take this into consideration. The director of Nokias America Brand
Marketing suggested Different people have different usage needs. Some people
want and need all of the latest and most advanced data-related features and
functions, while others are happy with basic voice connectivity. Even people with
similar usage needs often have differing lifestyles representing various value sets.
For example, some people have an active lifestyle in which sports and tness play
an important role, while for others arts, fashion and trends may be very important.
(Kerin et al 2010)

Through research Nokia has found six segments which they target. These segments
are known as: Basic, Expression, Fashion, Classic and Premium (Kerin et al 2010)
each segments have different preferences to what they want in a phone. Nokia have
used innovation to develop mobiles that meet each segment (Kerin et al 2010). For
example, the basic segment want low prices with voice connectivity therefore Nokia
has developed low-priced, simple to use phones for the Basic segment. Examples of
phones that fit into this segment are the Nokia 206 (39.95), Nokia Asha
210(39.95) and the Nokia 113 (14.95). All of these phones are good examples of
the basic segment as they are low priced and are simple to use (Carphone
Warehouse Group PLC 2014).
Conclusion
In conclusion, Nokias marketing strategy is effected by many different factors such
as competitors, customer needs and customers income. When producing a
marketing strategy Nokia needs to take into account external and internal factors,
they can do this through a PESTLE analysis and other marketing tools. Nokia could
use a SWOT analysis to analyse the decisions they are making in their marketing
strategy. This would allow them to know the strengths, weaknesses, opportunities
and threats of the decisions they are making.

Customers needs are very important to Nokias marketing strategy. Nokia needs to
ensure that their products meet the customers needs in order for people to buy
them. If Nokias products do not meet the needs of the customers then the
customers will go to Nokias rivals, such as Apple, leading to Nokia losing more
market share and in turn losing profit. To ensure that everyones needs are met
Nokia has divided their customers into six segments therefore allowing them to
produce products that meet everyones needs. However, consumers needs are
always changing therefore Nokia need to carry on investing money into research and
development so they learn about these needs and changes as soon as possible.
Research and development will allow Nokia to carry on producing innovative
products so they can compete against their rivals effectively, which is extremely
important as the mobile phone market is very competitive.

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