IMPROVING NOKIA’S MARKETING STRATEGIES FOR SMART PHONES FROM A

BRANDING PERSPECTIVE IN FINLAND AND THE UNITED STATES

Mikael Lauharanta

International Business

Bachelor's thesis

Supervisor: Phani Tej Adidam

Date of approval: 6 May 2011

Aalto University

School of Economics

Bachelor´s Degree Program in International Business

Mikkeli CampusAALTO UNIVERSITY

SCHOOL OF ECONOMICS

Mikkeli Campus

ABSTRACT OF

BACHELOR’S THESIS

Author: Mikael Lauharanta

Title of thesis: Improving Nokia’s Marketing Strategies for Smart Phones

from a Branding Perspective in Finland and the United States

Date: 6 May, 2011

Degree: Bachelor of Science in Economics and Business Administration

Supervisor: Phani Tej Adidam

Objectives

There were three main objectives to this study. First, Nokia’s aspired brand

image was resolved by interviewing Nokia’s Marketing and Brand portfolio

Manager. Secondly, people’s brand perceptions about Nokia and its

competitors were researched through conducting a survey in Finland and the

United States. Finally, the findings from the interview and survey were

compared and assessed from the branding perspective to see if the Nokia

brand should be revitalized and furthermore to suggest improvements to

Nokia’s marketing strategies in Finland and the United States.

Summary

The research unveiled important information on how Nokia is currently

perceived by the consumers and how their view differs from the brand identity

Nokia is trying to build with its smart phone marketing. The study also

indicated how Finnish consumers differ in their opinions when compared to

the Americans. The results of the research are helpful not only to Nokia, but

also to other firms who need to revitalize their brand in the face of increased

competition and declining market share.

Conclusions

As of late, the Nokia brand has inspired negative brand associations and

contributed to the sharp decline of Nokia’s market share. However, since the

core brand association of reliability is still descriptive of the brand, Nokia

should respond well to brand revitalization efforts and gain back market share

from competitors that have not yet established a permanent position in the

minds of the consumers.

Keywords: Nokia, cellular phones, brands, marketing strategy, consumers

Language: English

Grade:2TABLE OF CONTENTS

1. INTRODUCTION

1.1. Background

1.2. Research Problem

1.3. Research Objectives

1.4. Research Questions

2. LITERATURE REVIEW

2.1. Brand Equity

2.1.1. Customer-Based Brand Equity (CBBE)

2.1.2. Building Global Customer-Based Brand Equity

2.2. The Strategic Brand Management Process

2.3. Brand Revitalization

2.4. Designing Marketing Programs from a Branding Perspective

2.4.1. Integrating Marketing Activity

2.4.2. Personalization of Marketing

2.5. The Marketing Environment

2.5.1. Implications for Strategy

2.6. Conclusions on the Literature Review

3. METHODOLOGY

3.1. Data Collection Methods

3.1.1. Interview

3.1.2. Survey

3.2. Data-Analysis

3.3. Limitations

4. FINDINGS

4.1. Interview

4.2. Survey

4.2.1. Overall trends

4.2.2. People’s Brand Perceptions about Nokia

4.2.3. Brand Loyalty4.2.4. Nokia’s Marketing Efforts

4.3. Similarities between Nokia’s Aspired Brand Image and the Brand Perception

of Consumers

4.4. Differences between Nokia’s Aspired Brand Image and the Brand Perception

of Consumers

5. DISCUSSION AND ANALYSIS

5.1. Analysis of Interview and Survey Results

5.1.1. Interview

5.1.2. Survey

5.1.3. Key Differences in Opinions between Finnish and US Respondents

5.2. Analysis of Nokia’s Marketing Environment

5.2.1. Smart Phone Industry Analysis of Finland

5.2.2. Smart Phone Industry Analysis of USA

6. CONCLUSIONS

6.1. Main Findings

6.2. Limitations

6.3. Implications for International Business

6.4. Suggestions for Further Research

REFERENCES

APPENDICES1

1. INTRODUCTION

1.1 Background

Nokia has come a long way to evolve from a paper mill founded in 1865 to a worldrenowned mobile phone manufacturer and one of the most powerful brands in the

world. In 1992 Nokia appointed Jorma Ollila as the new CEO and concentrated its focus

on telecommunications. Throughout the 1990’s Nokia was known as a relentless

innovator and a pioneer that made the world’s first satellite call among many other

groundbreaking milestones. In 1998 Nokia became the world’s largest mobile phone

manufacturer with a turnover of 31 billion dollars.

Nokia is still the most influential company to the Finnish national economy, but Nokia’s

effect is far from what it was in the early years of the 21

st

century when Nokia accounted

for almost half of the economic growth in Finland and produced as much as five percent

of Finland’s annual Gross Domestic Product. In 2006, Olli-Pekka Kallasvuo replaced

Jorma Ollila as the CEO, but was not able to reverse the decline of Nokia’s market

share especially in the high end segment, where competitors like Apple, Blackberry,

HTC, Samsung, and phones using Google’s Android operating system captured market

share from Nokia at an alarmingly increasing rate. At the end of year 2010 Android was

already the most widespread smart phone operating system in the world and Nokia’s

market share in the smart phone segment had declined from 38 to 31 percent in one

year (Sokala).

In September 2010, the appointment of the Canadian Stephen Elop as the new CEO of

Nokia aroused adversarial feelings among people since Elop became Nokia’s first CEO

not to originate from Finland. Elop was hired to change the course of Nokia and to stop

the declining trend in Nokia’s global market share especially in the smart phone

segment. The first major decision was to start extensive cooperation with Microsoft in

February 2011.2

The title of the thesis is “Improving Nokia’s Marketing Strategies for Smart Phones from

a Branding Perspective in Finland and the United States” and the objective is to analyze

the dimensions of Nokia’s smart phone marketing that the customers do not agree upon

or simply do not know about and improve them from a brand managing viewpoint. By

narrowing the gap between Nokia’s aspired brand image and the brand perception of

the consumers, Nokia should be able to regain its impressive global market share also

in the smart phone segment.

1.2 Research Problem

The purpose of this Bachelor’s thesis is to find out if the Nokia brand can and should be

revitalized and if the current marketing strategies for Nokia’s smart phones in Finland

and the United States can be improved from the brand building perspective.

1.3 Research Objectives

The thesis has three distinct research objectives. First of all I will try to find out what is

the aspired brand identity and brand image Nokia is trying to convey with its smart

phone marketing. To achieve this I will conduct interviews with people who are

responsible for Nokia’s brand management and marketing.

The second research objective of my thesis is to find out what is the consumers’ brand

perception of Nokia at the moment. To answer this question I will conduct a

comprehensive smart phone brand perception survey to collect data from Finland and

the United States.

The last research objective of the thesis is improving Nokia’s current marketing

strategies for its smart phones from a branding perspective in the countries subject to

research. By comparing the results of the customer surveys with the company 3

interviews, I can detect where the aspired brand identity of Nokia does not meet the

brand perceptions of the consumers. By utilizing the existing knowledge and literature

on the topic, I should be able to come up with ways to improve Nokia’s smart phone

marketing in the two distinct geographical regions.

1.4 Research Questions

To help address my research objectives, I have invented three research questions, the

first one being “What is the brand image Nokia is trying to create in the minds of the

consumers?” The second research question is “How do consumers perceive Nokia’s

smart phone brands?” To tackle the third research objective, I will be asking “How can

Nokia’s marketing strategies be improved from the branding perspective?” 45

2. LITERATURE REVIEW

The purpose of this literature review is to discuss relevant writings on how to improve

marketing strategies from the branding perspective. First, important terms such as

brand equity and the concept of consumer-based brand equity are discussed. Secondly,

the brand management process is discussed from a strategic viewpoint with the help of

terms like brand revitalization and integrated marketing activity. The next part of the

literature review concentrates on analyzing the marketing environment. Finally, the last

section summarizes important conclusions on how the literature review relates to the

company being observed, Nokia.

2.1 Brand Equity

According to Kevin Keller, brand equity has been one of the most important marketing

concepts to arise in the last few decades. Also Davis regards brand equity as “a key

marketing asset” (2000). Moreover, Falkenberg states that brand equity is achieved

when a firm is able to gain favorable associations towards a brand among targeted

consumers (1996.) Keller conforms to this as the key to increasing brand equity, in his

opinion, is improving brand awareness and the strength, favorability, and uniqueness of

existing brand associations (53). Even though the literature on brand equity is rather

fragmented, researchers seem to agree that brand equity stands for the added value

transferred from the brand to the product (Farquhar 1989). Like Farquhar, Keller uses

the term brand equity to explain the different outcomes of marketing branded products

when compared to marketing products that are not branded (37). Aaker, on the other

hand, notes that brand equity might also be detrimental to the perceived value of a

product by defining brand equity as the set of brand assets and liabilities that are linked

to the brand name and add to or subtract from the value provided by a product or a

service to the firm (7-8).6

2.1.1 Customer-Based Brand Equity (CBBE)

In relevant literature, the complex construct of brand equity has been scrutinized from

two major perspectives: the financial and the customer-based perspective

(Christodoulides and Chernatony 46). The Customer-Based Brand Equity models help

understand consumer behavior and thus provide tools for the marketer to influence it.

The basis for these models is the perspective of the consumer, because understanding

consumer needs and devising products to satisfy those very needs is the key to

successful marketing. Whereas brand equity was defined as the effect of the brand on

marketing efforts, CBBE is defined as “the differential effect that brand knowledge has

on consumer response to the marketing of the brand” (Keller 48). Despite mild criticism

towards Keller for relying strictly on consumer psychology, most conceptual research on

brand equity acknowledges that brand awareness and brand associations are essential

components of consumer-based brand equity (Christodoulides and Chernatony 47).

Keller’s CBBE model relies on four sequential steps in building strong brands. The first

step is establishing the brand identity in the mind of the consumer by ensuring

identification of the brand and associating it with a specific customer need or product

class. The second step involves establishing a brand meaning by linking both tangible

and intangible associations to the product using points of parity and points of difference.

According to the third step, positive customer responses to the brand identity and the

brand meaning should be encouraged. Last but not least the resulting brand responses

have to be converted into an active and loyal relationship between the brand and its

customers (Keller 59-60).

The Customer-Based Brand Equity Pyramid displays the four-step process with a

pyramid consisting of six so called brand building blocks. The six blocks are brand

salience, brand performance, brand imagery, brand judgments, brand feelings and

brand resonance. Significant brand equity results only when the top of the pyramid is

reached (Keller 60). The first block, brand salience, refers to the breadth and depth of

awareness. The second stage of the pyramid consists of brand performance and brand 7

imagery, where performance describes how the product or service meets customers’

functional needs and imagery describes the abstract imagery associations consumers

have of user profiles and usage situations. The third stage is formed by brand

judgments and brand feelings. Judgments represent the customers’ personal opinions

about the brand and feelings stand for the emotional responses and reactions to the

brand. The fourth and final step of the pyramid includes the brand resonance block,

which depicts the level of customer identification with the brand (Keller 60-72).

Figure 1: The Customer-Based Brand Equity Pyramid

2.1.2 Building Global Customer-Based Brand Equity

When brands become global, they will have to be built around needs of a wide range of

consumers with different cultural backgrounds (Marketing Week 2006). As there was

much debate around the components of brand equity, there has also been a vivid

discussion considering the key components of global brand strategies. According to

Baker, a strong global branding strategy not only enhances, but also protects a firm’s

market position from competitors (591-594). Another critical issue in global branding is

maintaining the accumulated brand equity in the long run (Samli and Fevrier 207).8

1. Understand similarities and differences in the global

branding landscape.

2. Don’t take shortcuts in brand building.

3. Establish marketing infrastructure.

4. Embrace integrated marketing communications (IMC).

5. Cultivate brand partnerships.

6. Balance standardization and customization.

7. Balance global and local control.

8. Establish operable guidelines.

9. Implement a global brand equity measurement system.

10.Leverage brand elements.

Figure 2: The Ten Commandments to Global Branding (Keller 607).

In his Strategic Brand Management textbook, Keller suggests that Ten Commandments

of global branding, that guarantee global success, can be identified (Figure 2). The logic

behind these commandments is that the key to global success is taking advantage of

local consumer behavior. Even if customers in different regions have similar

preferences, they may have totally opposing reasons for those preferences that reflect

cultural, situational, and individual differences (Arnould, Price, and Zinkhan 288). The

sources of brand equity and the means of acquiring it may indeed vary between

countries, but a sufficient level of brand awareness and enough strong, favorable, and

unique associations still have to exist before brand equity can be built further and

leveraged (Keller 608-609). Samli and Fevrier, on the other hand, suggest that in an

effort to empower global brands, a sequential three-step process consisting of strategic

action, brand empowerment, and sustaining brand equity should be applied (208). The

two approaches do not differ much from each other since they both emphasize the

importance of strategic preparation, brand empowerment, and creating sustainable

global brand equity.9

2.2 The Strategic Brand Management Process

Keller divides the process of strategic brand management into four steps: Identifying

and Establishing Brand Positioning, Planning and Implementing Brand Marketing

Programs, Measuring and Interpreting Brand Performance, and finally Growing and

Sustaining Brand Equity (38). At the heart of the process is the understanding of what

the brand represents and how it should be positioned against competitors. After all,

sustainable and competitive brand positioning is all about “creating brand superiority in

the minds of consumers.” According to Aaker (1996) a brand position can be defined as

a value proposition that is actively communicated to the target audience and that clearly

demonstrates an advantage in comparison to competing brands (176). Positioning

should also clarify the points of difference (PODs) and points of parity (POPs) a

company has over its competitors. Furthermore brand positioning should specify the

most important core brand associations that characterize the particular brand. Defining

a brand mantra or in other words defining the brand promise is also extremely useful in

explaining to the consumers what a brand actually stands for (Keller 38).

The second step in Keller’s Strategic Brand Management Process is Planning and

Implementing Brand Marketing Programs. As mentioned earlier, a prerequisite for

building brand equity is creating enough awareness to the brand and also linking strong,

favorable, and unique associations to the brand (Keller 39). This process for knowledgebuilding is dependent on three factors.

First of all it depends on the initial choice of brand identities and elements, where the

brand identity includes everything that makes the brand unique and meaningful

(Janonis, Dovaliene, and Virvilaite 70). Secondly, the effectiveness of planning and

implementation depends on how well the brand is integrated into the marketing activities

and the supporting marketing program. Later, the term Integrated Marketing

Communication (IMC) will be discussed in more depth, since it is a critical component of

brand equity related strategies (Madhavaram, Badrinarayanan, and McDonald 69).

Thirdly, secondary associations “indirectly transferred to or leveraged by the brand as a 10

result of linking it to some other entity” have a large effect on the outcome of the brand

equity building process (Keller 39). This notion has been reinforced by other

researchers as well. The clever choice for a partner brand, for example, “enables the

brand to extend past its traditional competencies” (Uggla 105).

Measuring and Interpreting Brand Performance is the third step of the Strategic Brand

Management Process model used by Keller. Like Keller, Doyle gives significant credit to

brand performance in determining the success of an entire business (qtd. in De

Chernatony, Harris, and Christodoulides 16). To understand the effect brand marketing

programs have on brand equity, extensive marketing research should be applied to

assess brand performance (Keller 40). Measuring the effectiveness of a brand strategy

is no easy task, however, as Srivastava points out in his article in the Journal of

Strategic Marketing (487). Some tools that have been coined to help in measuring

brand performance are the brand value chain and the brand equity measurement

system. The first one of the two, the brand value chain, is a convenient tool for tracing

the value creation process of a brand, because it helps to perceive the financial impact

of investments in brand marketing. The brand equity measurement system, on the other

hand, supports profitable brand management by providing “timely, accurate, and

actionable information” for marketers to balance their tactics between short-term and

long-term profits (Keller 41).

The final step in the strategic brand management process is Growing and Sustaining

Brand Equity. Managing a brand effectively calls for an intricate mixture of short-term

view accompanied with long-term goals. Short-term marketing actions change brand

knowledge and thus affect the success of future marketing actions as well. An emphasis

on the long-term view, however, is also important, because it produces proactive

strategies that enhance brand equity over time. Another essential consideration is

accounting for different types of consumers across geographic and cultural

boundaries—equity has to be built on specific knowledge about the behavior of the

different market segments (Keller 41). Sometimes, however, effective brand equity

management calls for active brand management in the form of brand revitalization in 11

addition to the long-term perspective (Keller 1999). The concept of brand revitalization

will be discussed in the next section of the literature review.

2.3 Brand Revitalization

A brand is most likely to respond well to revitalization efforts if there are clear and

relevant brand values that have been ignored lately in the marketing communication

and hurt by product related problems or cost reductions. Evidence that the brand values

were once contributors to the brand’s popularity is a good indicator of the future success

of the revitalization process. Furthermore the extent to which the core brand

associations still correctly position the brand by functioning as points of parity and points

of difference is another factor of utmost importance (Keller 562).

Aaker (1991) states that the goal of brand revitalization is not only increased sales, but

also basing this increase on enhanced brand equity (242). According to Keller,

revitalization strategies range from “back to basics” strategies to the pure reinvention of

brands. Another important notion by Keller emphasizes that product failures, in which

the brand fundamentally fails to deliver on its customer promise, are far more damaging

than failures in marketing, where an insufficient amount of consumers are attracted to

the brand (564).

When a company understands the current and desired brand knowledge structures, the

customer-based brand equity framework provides guidance on “how to best refresh old

sources of brand equity or create new ones to achieve the intended positioning” (Keller

565). The model consists of two options: expanding the breadth and depth of

awareness and improving the strength, favorability, and uniqueness of brand

associations that make up the brand image.

Increasing the breadth of brand awareness by expanding usage and finding new uses

for the brand is a powerful way to increase brand equity (Keller 566). Identifying new 12

usage opportunities and reminding consumers of them through marketing

communication increases the frequency of use, which is a lot easier to manipulate than

increasing quantity of consumption. According to Aaker, products can also be

positioned for more frequent use, the usage can be made easier, additional incentives

can be provided, and undesirable consequences of usage can be reduced in order to

increase usage.

Fundamental changes are sometimes necessary to improve the strength, favorability,

and uniqueness of brand associations and thus the entire image of the brand. To

accomplish this repositioning, fading positive associations have to be bolstered,

negative ones have to be neutralized, and additional positive associations have to be

created. Repositioning of the brand comes down to simply introducing more compelling

points of difference and establishing points of parity on some key image dimensions. To

convey the new meaning to the public, the brand elements may also have to be

reconsidered (Keller 568).

Figure 3: Brand Revitalization Strategies (Keller 583).

BRAND

REVITALIZATION

STRATEGIES

Refresh old sources of

brand equity

Expand depth and breadth

of awareness and usage of

brand

Increase quantity of

consumption

Increase frequency of

consumption

Identify additional

usage opportunities

Identify new ways to

use the brand

Create new sources of

brand equity

Improve strength,

favorability, and uniqueness

of associations

Bolster fading

associations

Neutralize negative

associations

Retain vulnerable

customers

Recapture lost

customers

Identify neglected

segments

Attract new

customers

Create new

associations13

2.4 Designing Marketing Programs from a Branding Perspective

2.4.1 Integrating Marketing Activity

The improved connectivity, growing disintermediation, increased customization, and

blurring of industry boundaries among other drivers have provided consumers and

companies with unforeseen abilities (Keller 185). For consumers, these abilities include

the consumer’s capability to obtain large quantities of information about practically

anything and the capability to conveniently interact with other consumers. For

companies the change has meant that they now have an augmented geographic reach

and that they are able to customize their offerings more efficiently. Marketers around the

world are increasingly waiving so-called mass-market strategies in the face of new

approaches. The marketing environment of the 21

st

century has altered the way

marketing programs are developed. Especially personalization and integration of

marketing communication have become essential requisites for building strong brands

as activities are built to appear more and more meaningful to specific target markets

(Keller 186).

Integrated Marketing Communication is simply “the integration of advertising and

promotional activities” (Luck and Moffatt 311). Despite recently becoming something of

a standard for marketing organizations, integrated marketing communication is still

prone to cultural divergence and some underlying weaknesses in its current processes

can be identified (Kitchen, Ilchul, and Schultz 531). Drobis goes as far as saying that

IMC as we know it is dead, because it stands for many things, but nothing in particular

(1). Knowing the shortcomings of the traditional Integrated Marketing Communication,

Finne and Grönroos offer an interesting concept called relationship communication,

where the responsibility of integrating the marketing messages is transferred to the

consumer. After all, it is the receiver who decides if the marketing messages are well

integrated in the end (193).14

2.4.2 Personalization of Marketing

Keller writes that to address the consumer desire for greater personalization of

marketing, concepts such as experiential marketing, one-to-one marketing, and

permission marketing have been exploited lately (188).

Experiential marketing refers to the idea of connecting the product with pleasant

experiences and to the idea of enriching a customer’s life. According to Bernd Schmitt

“The degree to which a company is able to deliver a desirable customer experience—

and to use information technology, brands, and integrated marketing communication

and entertainment to do so—will largely determine its success in the global marketplace

of the new millennium” (qtd. in Keller 188).

The fundamental reasoning behind one-to-one marketing is that marketers are better

able to create customer value if they listen to the information consumers provide to

them and use it to generate rewarding experiences. This approach not only creates

switching costs, but it also maximizes the utility for consumers, which in turn helps in

building profitable relationships between the firm and its customers (Keller 190).

According to Keller, one-to-one marketing is based on simple strategies. First of all

consumer databases should be taken advantage of by focusing on individual customers

and treating them differently according to their preferences, because customers have

different needs. Majority of the marketing efforts should also be steered towards the

most valuable customers, because not all customers have the same value to the firm in

the long run. Secondly consumer dialogue should be interactive, which is in sync with

the goal of increasing brand resonance that occupies the top of the Customer-Based

Brand Equity Pyramid. Thirdly products and services offered by the company should be

customized to address particular needs and to encourage positive brand associations of

uniqueness (Keller 190-191).

Permission marketing is the third concept that has been introduced following the

growing focus on personalization of marketing. It refers to those marketing efforts that 15

start only after gaining the permission from the consumers. Permission marketing aims

at reaching a contact with the customer and crafting customer loyalty. The key to

success is respecting the wishes of the consumers. By eliciting consumer cooperation

amidst the miscellaneous marketing communication of today, marketers are more likely

to develop strong and long-lasting customer relationships, because consumers

deliberately express their willingness to become more involved with the brand (Keller

192). Technological advances in areas like software development and database

management allow companies to store and efficiently process loads of customer data to

come up with personalized and targeted marketing messages to customers. Over time

the ultimate goal is to create profits by leveraging the permission given by the consumer

(Keller 192-193). Although permission marketing cultivates the idea of improving the

dialogue between the consumer and the firm, it is somewhat restrained by the fact that it

assumes that consumers know exactly what they want. Instead of relying totally on the

consumers, marketers must instead cooperate with the consumers to come up with

innovative solutions on how to best satisfy customer needs (Keller 193-194).

2.5 The Marketing Environment

The rivalry resulting from the threat of new entrants, the threat of substitute products,

the bargaining power of suppliers, the bargaining power of buyers, and the rivalry

among existing competitors illustrates the competitive interaction within an industry.

These underlying determinants of profitability are more or less the same regardless of

the industry. The competitive structure, manifested in the above mentioned five forces,

measures the long term attractiveness of a particular industry by determining how the

economic value is divided between the parties involved—the competitors, the suppliers,

and consumers (Porter 78-93)16

2.5.1. Implications for Strategy

Careful analysis of the five forces of the competitive environment provides strategists

with many opportunities. One important implication is that the relationships between the

five forces may reveal positioning opportunities in the industry such as establishing

strong links with the most important suppliers. In addition, understanding the principles

behind industry profitability helps companies shape the industry structure and standards

more to their liking by inventing new ways of competing inside the industry. Whenever

sophisticated understanding of the principles exists, all changes in the industry can be

considered as opportunities to claim a more profitable strategic position in the

competitive landscape (Porter 78-93).

When using the five forces model to assess market attractiveness, it is important to

remember that the forces are heavily interdependent and cannot be evaluated

separately. Furthermore the traditional model is often described as static since it does

not take into account the effect of time and industry cycle on the five forces. When these

additional factors are added to the analysis, the resulting perspective is much more

dynamic and comprehensive (Grundy 213-229).

2.6. Conclusions on the Literature Review

According to the literature discussed, brand equity is without a doubt an important

marketing concept that either adds to or subtracts the value of the product or service.

According to Interbrand, Nokia was still among the ten most valuable global brands in

the world in 2010 with a brand value of nearly 30 billion US dollars, but its brand value

had declined 15% in one year whereas Apple’s brand value had soared up 37% (Best

Global Brands Ranking for 2010). The often cited consumer-based brand equity model

approaches brand equity from the consumer’s perspective. It can be described with a

pyramid model consisting of different levels of attachment between the brand and the 17

consumer. In Nokia’s case it is important to determine, which step of the pyramid they

are currently occupying in which countries in order to continue forward progress.

A prerequisite for building and leveraging accumulated brand equity is creating enough

strong, favorable, and unique brand associations in the minds of the consumers. This

claim is not dependent on whether the firm is operating domestically or internationally.

Another interesting implication of using the customer-based brand equity model is that

the way brand associations are created is no longer as relevant in the modern world of

marketing—what matters nowadays is simply the resulting awareness and the strength,

favorability, and uniqueness of the brand associations. In other words the impact of

marketing on brand equity should be equal between different types of marketing

activities as long as the associations created are identical. Hence marketers should

concentrate on creating marketing programs that consist of seamlessly integrated

solutions and customer experiences that increase awareness, precipitate demand, and

embrace loyalty (Keller 187). This means that Nokia is not restricted to any certain type

of marketing communication, as long as they can create awareness and encourage

positive brand associations.

The first and most important step in the strategic brand management process is brand

positioning. If Nokia wants to gain a competitive advantage over other smart phone

brands, it has to find a way to differentiate from the others in a meaningful way. As

Nokia was once considered as the pioneer in the mobile phone industry, revitalization

efforts should yield positive results, if people are willing to agree that the core brand

associations are still intact.

From a branding perspective, the new approaches to marketing are useful in forming

positive brand responses and encouraging brand resonance. Experiential marketing,

one-to-one marketing, and permission marketing all strive for getting consumers actively

involved with a particular brand. Even though they concentrate on reinforcing different

building blocks of the Customer-Based Brand Equity Pyramid, they simultaneously add

to brand equity by strengthening the bond between the consumer and the brand.18

Nokia’s task is to choose the right tools from the pool of new approaches to marketing in

order to climb up the brand equity ladder.

Finally, the different marketing environments of Nokia both in Finland and the United

States have to be carefully analyzed in order to constitute a comprehensive

understanding of the principles and forces behind the competitive environments. These

insights can then be used to take advantage of the inherent opportunities.19

3. METHODOLOGY

This Bachelor’s Thesis is a case study with a conceptual research design since it

consists of a defined research problem, clear research objectives, and exact research

questions that lead to conclusions on a real-life phenomenon. The thesis includes

empirical as well as descriptive elements. There are several contexts to the research,

because the aim is to improve Nokia’s existing marketing strategies in different regions

based on potentially differing brand perceptions prevalent in these areas. To tackle the

research objectives, both qualitative and quantitative methods are utilized.

3.1. Data Collection Methods

3.1.1. Interview

Qualitative research and analysis methods were used to assess the depth interview

(Appendix 1) conducted on the fourth of February, 2011, with Mr. Pekka Somerto, the

Vice President of Nokia’s Brand and Marketing Portfolio Management. The interview

was conducted at Nokia’s headquarters in Keilaniemi and it lasted for approximately an

hour. The interview consisted of thirteen questions and the purpose was to find out

about the brand identity Nokia tries to create with their marketing. The questions asked

were chosen based on the literature discussed in the literature review, and with the

overall goal of improving Nokia’s marketing strategies for smart phones from the

branding perspective. The results of the interview not only helped in reaching the

research objective, but they also provided useful ideas and additional questions for the

consumer survey.20

3.1.2. Survey

To find out consumers’ brand perceptions of Nokia, quantitative research and analysis

methods were utilized. An online consumer survey (Appendix 2) was created with the

Qualtrics-software and distributed to approximately 400 people in Finland and the

United States through e-mail and social media networks. The survey itself consisted of

23 actual questions and five classification questions. The survey was started 155 times

and completed 125 times with a completion percentage of 81%. Thus the respective

response rate was 38.25 percent. Of the respondents, 63% were male and 37% female.

Similarly to the gender distribution, approximately 60% of the responses came from

Finland and 40% from the United States.

A clear majority of the respondents study in a University or have a University

background, but some respondents also study in a Polytechnic institute or have at least

a master’s degree. The average respondent was approximately 25 years old, the

youngest being 19 years and the oldest 42 years old. Most respondents earn less than

50.000 US dollars annually and very few exceed annual earnings of 150.000 US dollars.

The questions of the survey were based on the literature discussed in the second part

of the thesis, the research questions, and the depth interview conducted with the

company representative of Nokia. The objective of the survey was to find out if the

consumers perceive Nokia similarly to Nokia’s aspired brand identity. The survey had

four distinct parts where the first part concentrated on questions about smart phones in

general, the second part on Nokia’s smart phones and their marketing, the third section

on brand loyalty, and finally the fourth part on classification of the respondents.21

3.2. Data Analysis

The data analysis of the survey results started with a general analysis of the averages

and apparent trends. It was followed by the identification of significant regional

differences between the responses with the help of cross tabulations

3.3. Limitations

Only one interview was performed to find out Nokia’s aspired brand image, so the

results were heavily dependent on the personal opinions of the interviewee. In addition,

the questions were shown to the respondent only half an hour before the interview, so

all of the answers might not reflect the exact position of the company since the

respondent did not have the chance to go through the answers with anyone else from

the company.

The biggest limitation of the survey, on the other hand, was the narrow sample size,

where university students were overrepresented when compared to the actual

demographic structures of the targeted countries. In addition not all people answered all

of the questions, which somewhat diminished the applicability of the rest of their

answers.2223

4. FINDINGS

This section lists the most important findings from the interview and the customer

survey. The aspired brand image of Nokia was deducted from the depth interview with

the company representative and the brand perceptions were determined from the

answers to the international customer survey. Later on the similarities and differences of

the findings between the interview and the survey are highlighted.

4.1. Interview

According to the interview with Mr. Pekka Somerto, Nokia’s Vice President of Brand and

Marketing Portfolio Management, Nokia’s so called brand promise since the 1990’s has

been “connecting people.” This idea is clear to all employees at Nokia despite the fact

that over the years the meaning of the phrase has evolved to connecting with everything

instead of just other people. This is important, because if a brand is to be successful,

the brand has to deliver on its promise to the customers and furthermore all the

employees have to know what the brand stands for.

Throughout their stint in the mobile phone manufacturing industry, Nokia has wanted to

be known for producing reliable mobile phones that are easy to use, innovative, and

stylish. What was surprising about the interview was that the most important brand

associations Nokia strives for, in addition to reliability, are sustainability and

environmental responsibility. These two associations are rather vague from a marketing

standpoint, since they do not have much in common with the other traits Nokia wants to

be known for and they seem like irrelevant associations to some key influencers of the

smart phone market segment.

The interviewee believed that the most important smart phone features for users are the

amount of applications available, and the possibility to customize the user experience

as much as possible. Furthermore he added that the major breakthroughs in the near 24

future would be made in the user interface development of smart phones to enable

effortless control of the smart phone device. To generate positive emotional

associations, however, the company mainly emphasizes the functional benefits of Nokia

phones such as voice quality and battery life.

Nokia segments its customers in different destinations based on demographic data and

the purchasing power of the people who live there. They target the active participants in

the cell phone market and concentrate especially on the first movers in the industry.

Nokia would like to appear younger in the eyes of the consumers and they would also

benefit from being more agile in reacting to the fluctuating markets. One of the most

important findings of the interview was that Nokia wants to emphasize how their

products can improve the quality of life in all aspects.

The interview also pointed out that Nokia wants to achieve a unified visual approach in

its marketing, but at the same time they are applying principles of hyper-locality. Their

latest smart phone advertising campaign revolves around the theme of re-defining

success, which underlines that Nokia smart phones help individuals determine their own

success by allowing them to express themselves freely.

4.2. Survey

4.2.1. Overall Trends

According to the survey findings, over 70% of the respondents that live in the US did not

mention Nokia among three smart phone brands that compete in their home country.

More alarmingly, approximately one third of the respondents from Finland did not

mention Nokia as a competitor either. Apple was clearly the most popular choice as

over 85% of the respondents mentioned it as a competitor both in Finland and the

United States. 25

Mentioned among competitors

Apple Blackberry HTC Nokia Samsung

Finland 91,5 % 25,4 % 39,0 % 64,4 % 39,0 %

USA 85,7 % 36,8 % 44,7 % 28,9 % 15,8 %

Figure 4: Percentage of mentions among the top three smart phone brands

Almost half of the respondents (46 percent) said that Apple’s iPhone is their preferred

smart phone brand. Nokia was the second most preferred brand far behind with 18

percent. When asked about which smart phone brands the respondents actually own,

however, Apple was only a few percentage points ahead of Nokia. This result indicates

that Apple’s dominant position is not solely based on personal use experience, but

rather on brand image and word of mouth appraisal.

The most important smart phone feature for the respondents was Internet connection

with a mean of 4.60 on a five-point scale. Battery life came in second with a mean of

4.52. Longer battery life was also the most common suggestion for improvement among

the respondents. Reliability of functions was number three with a mean of 4.51 closely

followed by ease of use (mean 4.44). The most unimportant feature for the respondents

was camera (mean 3.68). Interestingly, the results did not vary significantly between the

countries subject to research.26

# Question Not at all

Important

Unimportant Neither Important Nor

Unimportant

Important Very

Important

Responses Mean

1 Applications (Apps) 4 6 27 70 43 150 3.95

2 Battery life 0 1 7 55 87 150 4.52

3 Camera 1 16 41 64 28 150 3.68

4 Design 0 7 16 81 46 150 4.11

5 Ease of use 0 1 14 53 82 150 4.44

6 E-mail 3 13 23 48 62 149 4.03

7 Internet connection 0 3 9 33 105 150 4.60

8 Memory capacity 0 10 28 76 36 150 3.92

9 Reliability of functions 0 1 8 54 87 150 4.51

10 Screen size and resolution 0 4 19 93 34 150 4.05

11

Technical aspects such as

voice quality

2 7 23 64 54 150 4.07

12

Additional features such as

calendar, navigator, etc.

2 6 33 77 32 150 3.87

13 Other, please specify: 2 1 7 5 18 33 4.09

Figure 5: Smart phone feature appreciation

Practically every respondent was familiar with the cell phone brand Nokia (99 percent),

but still only 30 percent indicated they have at some point actually owned a Nokia smart

phone. When asked about the level of satisfaction with Nokia’s smart phones, the

majority indicated that they were satisfied with the phone, but the average was only

slightly above neutral stance. Moreover, only 8.5% of the respondents indicated that

they were very satisfied with their Nokia smart phone. When asked about the perceived

quality of Nokia’s smart phones, 23% of the people did not have an opinion. Of those

who had an opinion, 45% responded that they are of good quality. The average score

among those who had an opinion was between “Neither Good or Bad” and “Good”.27

The respondents were also asked to assess the perceived value of Nokia smart

phones. Most of the respondents (32%) thought that the value of Nokia’s smart phones

is “Neither Low nor High, but 27% thought they actually offer “High” value. Only 2% of

the answers indicated “Very High” perceived value, however. The results quite clearly

indicate that the reason for the mediocre consumer satisfaction is not caused by

problems with the perceived quality or the perceived value of Nokia’s smart phones.

To find out about consumer perceptions on innovativeness, the respondents were

asked to name the first smart phone brand that comes to mind when speaking of

innovative smart phones. Approximately 65% of the respondents thought of Apple first,

while the second most common response was HTC with about 16%. Nokia was

mentioned as the most innovative brand by only 3% of the respondents in Finland and

quite astonishingly by none in the United States. Furthermore, when asked about trendy

smart phone brands, Apple was even more dominant. 77% of the respondents

mentioned Apple’s iPhone as the trendiest smart phone on the market. HTC came in

second with 9% of the nominations while Nokia did not receive any consideration.

The Most Innovative Smart Phone

Brand

Apple HTC Nokia

Finland 64,4 % 16,9 % 3,4 %

USA 68,4 % 13,2 % 0,0 %

Figure 6: People’s perception of the most innovative smart phone brand on the market

4.2.2. People’s Brand Perceptions about Nokia

To assess consumers’ brand perceptions on Nokia, the respondents were asked to

describe Nokia’s smart phones with a few words. The most common positive

characteristics mentioned were reliability and good quality. However, Nokia’s products

were also frequently described as old-fashioned and outdated. When the respondents 28

were asked to describe Nokia as an organization, the most common adjectives

appeared to be big, slow, and unimaginative. Finally, people were asked to describe

Nokia if it was an actual person. The clearest consensus between the respondents was

that while Nokia is smart and reliable, it is also unexciting and old when thought of as a

person.

Another interesting notion from the survey was that people could not consistently

pinpoint how Nokia differentiates itself positively from the competitors in the smart

phone market. Only few people mentioned Nokia’s superior camera or the

complimentary navigation service as points of difference. Moreover many respondents

wrote that it is hard to differentiate between smart phones and now that Nokia has

abandoned its own Symbian operating system it will be even harder for Nokia to

differentiate from competition in the future.

4.2.3. Brand Loyalty

The results of the survey indicated that people consider themselves rather loyal to smart

phone brands. The largest percentage of the respondents, 28%, chose to agree with the

statement: “I am loyal to smart phone brands.” When asked about brand loyalty towards

specific brands, it turned out that people are the least brand loyal to Nokia and the most

loyal to Apple. This finding is also supported by a Finnish mobile analytic and market

research firm Zokem, which surveyed over 1,500 smart phone owners in the United

States (Barrett). Interestingly, Apple was also the most polarizing brand among the

brands surveyed. Most people indicated it would be “Very Unlikely” for them to switch to

another brand if they owned an Apple smart phone, but at the same time the largest

number of respondents would also “Very Likely” switch to another brand if they owned a

smart phone by Apple. Although important, availability, discounts, and positive word of

mouth recommendations were far less significant when deciding when to switch

between smart phone brands compared to the actual usage experience.29

4.2.4. Nokia’s Marketing Efforts

Quite shockingly, the majority of the respondents (57%) could not remember any

marketing efforts by Nokia. Most commonly remembered marketing efforts were

sporting event sponsorships and the campaign for the N8 phone. Many people could

also recall Nokia’s slogan “Connecting people.” The effectiveness of Nokia’s marketing

efforts did not receive much praise either. Only 7% of the respondents combined

thought Nokia’s current marketing efforts are either “Very Effective” or “Effective”. In

contrast, 58% judged Nokia’s marketing either “Ineffective” or “Very Ineffective”. On top

of that 17% of the respondents could not even form an opinion on the level of

effectiveness based on their rare encounters with Nokia’s marketing communication.

4.3. Similarities between Nokia’s Aspired Brand Image and the Brand Perception

of Consumers

Several similarities between the aspired brand image of Nokia and the brand

perceptions of the consumers can be identified by comparing the answers to the

interview and the survey. First of all, the image of Nokia as a brand that facilitates

communication with other people is clear for both the organization and the consumers.

Furthermore Nokia is usually seen as a reliable brand that does not fail to deliver on its

fundamental customer promise. Recently, however, Nokia has had some reliability

issues especially when it comes to adhering to pre-determined deadlines.

Nokia also agrees with the respondents that the ease of use of smart phones is of

particular importance. Unfortunately Nokia has not yet been able to successfully

produce smart phones that would substantially stand out with their user friendliness.

Another thing Nokia has been trying to emphasize lately is the functional benefits of

Nokia’s smart phones such as battery life. As we saw from the survey results, battery

life is also the most important feature for many smart phone users.30

4.4. Differences between Nokia’s Aspired Brand Image and the Brand Perception

of Consumers

Despite many similarities, the research also showed numerous issues where Nokia’s

management seemed out of sync with the consumers. To begin with there was a clear

contradiction between Nokia’s aspiration for innovativeness and agility and the opinion

of the respondents. In the survey, Nokia was often referred to as a sluggish and oldfashioned company. Another noticeable difference was that Nokia received no credit for

its attempts at environmental responsibility although it was clearly stated as one of the

top priorities by the management.

The interviewee firmly believed that applications are the most important feature for

smart phone users alongside an easily customizable interface. The survey results

nevertheless implied that applications are nowhere near the top priorities of smart

phone users. All the same, probably the biggest surprise was that Nokia’s marketing

efforts are commonly regarded as hard to recall and ineffective.31

5. DISCUSSION AND ANALYSIS

In this section the findings from the interview and survey will be analyzed in the light of

the literature discussed in the literature review.

5.1. Analysis of Interview and Survey Results

5.1.1. Interview

Brand Equity

As the literature review pointed out, improving the strength, favorability, and uniqueness

of brand associations is a key factor in building brand equity. Hence by consistently

underlining the importance of reliable products, Nokia has been able to successfully

strengthen the favorable association of reliability towards its brand name in the minds of

the consumers. Furthermore, understanding that easily customizable products are seen

as more unique by the consumers, Nokia is trying hard to link associations of

uniqueness to its products. Being able to differentiate from competition in the smart

phone market is considered to be hard, which makes pursuing uniqueness an even

more justifiable goal.

Nokia’s willingness to change and become more customer oriented can clearly be seen

from the interview. The effort is understandable, since the customer-based brand equity

pyramid shows that the most profitable results are achieved only when an active and

loyal relationship between the firm and the customer is established. Moreover, as the

section on personalization of marketing indicates, such relationships can be formed

through providing the customer with rewarding experiences and understanding his or

her special needs.32

Marketing

According to the interview, Nokia makes changes to its marketing mix in different

countries based on demographic data and the purchasing power of the people. As we

learned from the literature review, paying attention to the local consumer is important

and the starting point should be the special needs of the local consumer. Furthermore,

when assessing the overall attractiveness of the market, tools such as the five industry

forces model by Michael Porter should be utilized as an integral part of the strategic

preparation process.

Currently Nokia is running a global advertising campaign called success re-defined, in

which different people tell how Nokia’s smart phones enable them to redefine success

for themselves and help in expressing it forward. In Finland, snowboarders and models

are used to endorse Nokia’s products in an effort to leverage the equity of the celebrities

and to elicit more positive brand associations towards Nokia. Self-expressive benefits

are an integral part of marketing for Nokia, but still the consumers are not aware of such

benefits. Through more thorough personalization of marketing efforts, however, Nokia

should be able to remind consumers more effectively about the small improvements to

the quality of life that Nokia believes can be made with their smart phones.

All Nokia’s marketing aims for a unified visual approach with the blue color being the

common factor. Integrating all marketing communication at least from a visual

standpoint is justifiable, if only the needs of consumers with different cultural and

economical backgrounds can be taken into account sufficiently at the same time. In that

case it is up to the receiver of the messages to decide if the brand is communicated in a

meaningful way and that the communication is enough integrated to reinforce similar

associations between different media.

Analysis of the company interview revealed that the positioning of Nokia in regard to the

competitors in the market is not totally clear even to the employees. In the future

Nokia’s positioning should be more clearly communicated inside the company as well 33

as to the public. In addition only the most relevant points of parity differentiation should

be emphasized in all marketing efforts. As it was discussed in the literature review,

these efforts should be directed at Nokia’s most valuable customers instead of the key

influencers among smart phone users, since the key influencers are not a homogenous

group and engineering compelling marketing messages for these people is much

harder.

Brand Revitalization

Brand revitalization is all about refreshing former sources of brand equity or alternatively

creating new ones to achieve an intended positioning in relation to the competition. In

Nokia’s case, the reasoning behind the revitalization efforts is the intention to regain the

fading associations of innovativeness, agility, and transparency and to negate the

negative associations of sluggishness and obsoleteness. According to the literature

review, Nokia should respond positively to the revitalization endeavors since the

positive values being bolstered were actually once the determinants of success for

Nokia and the recent struggles have not been caused by fundamental product failures.

5.1.2. Survey

Positioning

The survey indicated that Apple has been able to establish superiority particularly in the

minds of the consumers since many people prefer Apple’s smart phones even when

they have never owned them. At the moment, most of the brand associations

associated with Nokia are actually detrimental to the brand and it faces a tough battle

trying to revitalize the brand and position it in a way that attracts customers that are

currently using competitors’ products. The key here is to differentiate Nokia’s products

in a meaningful way to the target market and to consistently deliver on the brand

promise and the new positioning.34

Brand Equity

Another finding highlighted by the survey was that in Finland Nokia is stuck on the

second step of the Consumer-based brand equity pyramid since it cannot evoke

unanimously favorable and unique brand associations even though people have broad

awareness of its products and the performance of its products is mostly perceived in a

positive manner. To get to the upper levels of the pyramid where brand responses and

relationships can be fostered, Nokia has to first revitalize the correct brand associations.

In USA, Nokia’s situation is even more worrying, for Nokia’s identity is not clear to the

majority of consumers and there is not much depth to the brand awareness. Pairing up

with Microsoft was a good way to increase people’s awareness, but it is another thing to

be acknowledged than to create a positive brand image and encourage favorable brand

associations. It will be interesting to see if Nokia and Microsoft can leverage each

other’s positive brand equity and rise up to the challenge of the currently dominant

players in the highly competitive US smart phone market.

A worrying finding from the survey was that Nokia does not seem to be a part of the

smart phone consumers’ consideration set. This is in clear conflict with Nokia’s object of

appearing attractive to the key influencers of the target market. The results are a clear

indication that Nokia is often not even seen as worthy of consideration when thinking of

purchasing a smart phone. This is also apparent when comparing Nokia’s take on the

most important features of a smart phone with the opinion of the consumers. Lately

Nokia has been concentrating on differentiating with a superior camera, while the

consumers think that it is one of the most irrelevant features in a smart phone. If Nokia

does not start listening to the consumers more, it will not be able to turn around and

stop its decline in the smart phone industry.35

Marketing

Nokia’s marketing efforts were not found to be very effective. Many people could not

specify even a single marketing effort by Nokia. The perceived marketing was not

necessarily ineffective because the marketing was of low quality, but because it was not

quoted by the receiver in the first place. What was promising about the survey results

probing the effectiveness of Nokia’s marketing was that people could easily recall

Nokia’s brand promise “Connecting people”, which is a sign that the consumers agree

with the promise. Another positive indicator was that people remembered Nokia

sponsoring the recent snowboarding world championships. Establishing a successful

presence in an event full of young smart phone users is a good way to appear more

youthful in the eyes of the public. Furthermore the combination of using snowboarders

in their advertisements and being visibly present in the snowboarding scene is a perfect

example of integrating marketing activity in a meaningful way.

5.1.3. Key Differences in Opinions between Finnish and US Respondents

According to the survey, the key differences between the opinions of the Finnish and

US respondents have to do with the organizational associations of Nokia. People from

Finland and the United States seem to agree that Nokia’s products are reliable and of

good quality, but their images of Nokia as an organization are more distant. In Finland,

most people at least regard Nokia as an important player in the smart phone industry,

whereas in the US most people think that Nokia is downright irrelevant and

uninteresting. Furthermore Nokia’s brand personality in Finland is thought of as modest,

but in the United States people think that Nokia is shy as it has not reached out for them

aggressively enough.36

5.2. Analysis of Nokia’s Marketing Environment

5.2.1. Smart Phone Industry Analysis of Finland

Rivalry among Existing Firms

In Finland, the rivalry among existing smart phone brands is significant since there are

several strong competitors in the market such as Nokia, Samsung, Apple, ZTE, and

HTC. Furthermore the relative size of the competitors is evening out as the old

powerhouses are losing market share to the newcomers thus creating a balanced and

less concentrated market. Additional proof of the intensity of rivalry can be seen in the

recent and sharp decline of market share of previously strong competitors such as

Motorola and Sony Ericsson. The smart phone industry as a whole is growing fast,

which increases the strategic stakes of competitors in the market. In addition not many

brands have been able to substantially differentiate from competition thus keeping the

switching costs between brands low.

Threat of New Entrants

The threat of new entrants to the Finnish smart phone market is also considerable,

which has been proved true by the late surge of new competitors such as ZTE and

many other manufacturers capitalizing on the hugely successful Google Android

operating system. All in all it is hard for the existing competitors to protect their market

share since the industry is growing rapidly, the products already on the market are not

that diverse, and there are not major switching costs for the buyers since the phones

are not strictly bound to different operators. There are, however, some substantial

barriers to entry as well. First of all entering the smart phone market requires large

capital investment and it is hard for the entrants to catch up with the existing economies

of scale of the established competitors. In addition some brands have already been able

to differentiate in a positive manner—Nokia is one of the most popular business phones

among companies. Last but not least Finnish people consider themselves rather loyal to 37

smart phone brands according to the survey conducted, which makes it harder for the

new entrants to attract new customers away from competitors

Bargaining Power of the Buyers

In Finland, buyers’ bargaining power is rather high, because there is a wide range of

brands on offer and there are not many buyers relative to the sellers. Thus the sellers

have to compete over the consumers. On the other hand, smart phones are constantly

becoming more valuable for the consumers because of their versatility, which

decreases buyers’ bargaining power slightly.

Bargaining Power of the Suppliers

The bargaining power of suppliers is at a very high level in Finland, because the

suppliers are concentrated, and there are not many substitute supplies available for the

buyers. There are also considerable switching costs present in switching suppliers and

altering the distribution channels. In Finland, the smart phone manufacturers have had

to conform to the delivery problems of the suppliers since there is no significant

competition between hardware suppliers in the smart phone industry.

Threat of Substitute Products

Substitute products are an interesting topic when speaking of smart phones, because

they act as substitutes for so many products themselves that it is hard to take into

account all the products that may in return act as substitutes for smart phones. Some

examples are laptops, TVs, and tablets. As the smart phone features become more

numerous, the number of possible substitutes becomes larger, but at the same time

smart phones become more invaluable as their versatility increases. In Finland the

threat of substitute products is on one hand low, because tablets and other newly

introduced products are not yet widely popular, but on the other hand, the threat of 38

substitutes is high, because some people still prefer laptops and other more traditional

products in daily use.

5.2.2. Smart Phone Industry Analysis of USA

Rivalry among Existing Firms

Rivalry in the USA is even fiercer than in Finland. There are more noticeable

competitors such as Blackberry by RIM and the Windows Phone and the competitors

are also more evenly matched. Furthermore there are larger switching costs to buyers

since smart phones in the US have traditionally been closely tied into particular

operators.

Threat of New Entrants

New entrants are always a threat in the US market, but because smart phone

companies have a restricted access to the distribution channels due to the small

number of operators, the threat is not as big as in the Finnish market.

Bargaining Power of the Buyer

The buyers’ bargaining power in the United States is high, but less significant than in

Finland, because the ratio between buyers and sellers is larger and there are more

inevitable switching costs to the buyers.

Bargaining Power of the Suppliers

The suppliers in the US have an equally strong position when compared to their

counterparts in the Finnish market. Since there are not many suppliers to choose from,

the availability of substitute inputs is nonexistent, and the importance of the suppliers’ 39

input is of utmost importance, buyers do not have much say when negotiating with the

suppliers. Furthermore the threat of backward integration by the buyers is very small.

Threat of Substitute Products

As in Finland, there are a variety of substitute products available, but in USA the

situation is even more threatening, because people are more used to the latest

technological appliances and are better informed of the latest trends.4041

6. CONCLUSIONS

6.1. Main Findings

The key differences between Nokia’s own brand image and the image shared by the

consumers have to do with the perceived agility, innovativeness, and accountability of

Nokia. Even when Nokia’s products are still commonly regarded as reliable, Nokia as a

company is starting to be seen as somewhat undependable, because they have

consistently been late with the launches of their smart phones since 2009 (Hardawar).

Moreover Nokia has spent a lot of time developing new hardware, especially when

compared to competitors like Apple and HTC who have enjoyed the most success as of

late. As a result, Nokia is perceived by some as lazy, arrogant, and unwilling to react to

competitors by becoming more agile and innovative.

Nokia is definitely no longer the forerunner in the mobile phone industry it once was,

which is especially true for the smart phone segment. The research on the topic has

shown that the positive brand associations people have about Nokia are eroding quickly

in the face of negative ones and that Nokia is becoming an increasingly irrelevant player

in the smart phone market. However, according to the literature and findings, Nokia’s

future is not necessarily doomed. It has become obvious that the once admired Nokia

brand can and should indeed be revitalized. Furthermore Nokia should respond well to

the revitalization efforts, if only these efforts focus on meaningful values such as

reliability and innovativeness that used to describe Nokia at its prime.

The research has demonstrated that there are multiple ways in which Nokia can

improve its current smart phone marketing strategies. An important feature of these

fresh approaches to marketing such as relationship communication and personalized

experience marketing is that they do not ignore the important aspect of brand building.

By revising their marketing strategies there is no doubt Nokia will be able to improve its

positioning in the smart phone market and conquer at least some market share back

from the recently emerged competitors.42

In order to improve Nokia’s existing smart phone marketing strategies from the branding

perspective, quite a few concrete suggestions can be made. First of all Nokia should

continue unifying the visual elements of their marketing communication, which is in

accordance with the principles of integrated marketing communication. An example of

this integration would be the common blue color theme Nokia is utilizing in different

media. Another way to improve the effectiveness of their marketing is to increase the

amount of sponsorship agreements and celebrity endorsers. According to the survey

conducted, these methods are clearly the most efficient in an effort to increase

awareness and appear more youthful and approachable among smart phone

consumers. Sponsoring events like the snowboarding world cup is a powerful way to

shape Nokia’s image for the better and also to shake off the reputation as the choice of

exclusively the business people.

Furthermore, paying close attention to the brand revitalization framework introduced

earlier would significantly improve Nokia’s marketing. According to the framework, to

refresh Nokia’s old sources of brand equity, the usage of the brand has to be increased

through identifying and introducing additional usage opportunities. As Nokia is already

popular and trusted among companies and business users, launching a tablet device

with Microsoft that has the ability to take full advantage of Microsoft Office would be

ideal in order to increase the usage of the Nokia brand in a way that is hard for the

competitors to match or to retaliate. Entering the tablet device market would also refresh

people’s perceptions about Nokia’s innovativeness and gain them a foothold in a market

that is growing steadily and should only gather more momentum in the upcoming years.

According to the brand revitalization framework, the strength, favorability, and

uniqueness of brand associations have to be improved to create new sources of brand

equity for Nokia. This can be done through either bolstering fading associations,

neutralizing negative associations, or creating new ones. All these measures contribute

to retaining vulnerable customers, recapturing lost ones, attracting previously neglected

segments, and simply accumulating new customers. To bolster the fading association of

agility, it is of utmost importance that Nokia launches any kind of product together with 43

Microsoft no later than the end of the present year 2011. This would also contribute to

creating positive buzz around the recently announced collaboration agreement between

Nokia and Microsoft that was originally not met with much excitement. Nokia cannot risk

becoming even more sluggish in the eyes of smart phone consumers by postponing yet

another important launch date to the distant future.

To negate the unpleasant associations of being old-fashioned, Nokia should engage its

consumers more relentlessly in the social media. By giving the consumers a chance to

have a say on Nokia’s future direction Nokia would also create new associations of

customer-centricity. So far Nokia is widely considered as an engineer-driven

organization that has little interest in what the consumers actually want from smart

phones. A good way to generate interest among company followers in the social media

is taking advantage of user-generated content by setting up competitions that result in

the winners being acknowledged for their work. As Meego and Symbian, Nokia’s current

operating systems in use, are inevitably going to be put down as a result of the

cooperation with Microsoft, Nokia could use social media to turn people’s frustration

towards the unsuccessful systems into actual solutions they could take advantage of

when developing the operating system together with Windows.

Another key to Nokia’s success is discovering how to best leverage Microsoft and other

possible brand partners to benefit the most from each other’s competencies. On top of

addressing all the above-mentioned issues of the brand revitalization framework, Nokia

should not forget to concentrate on its core competency of producing excellent

hardware. At the same time Microsoft should focus on producing stellar software to its

products to reach the most desirable outcome from both parties’ perspective. By

underlining the respective competencies in their marketing, Nokia and Microsoft should

be able to start convincing the public of their capability of producing high performance

smart phones worthy of comparison to any other competitor on the market.

As Nokia currently stands on different steps of the Customer-based brand equity

pyramid in Finland and the United States, their marketing efforts should also be 44

concentrated on different goals. In Finland, Nokia needs to fortify the positive brand

imagery people have about them so that they can start to encourage more positive

feelings and judgments towards the brand. In the United States, they have to

concentrate on deepening people’s brand awareness about Nokia so that the

consumers in the USA become more interested in the brand and start to consistently

form positive opinions about Nokia’s performance and brand imagery.

6.2. Limitations

This bachelor’s thesis is not absolutely dependable and in all fairness a few notions of

its limited applicability have to be made. First of all the sample size used to gather the

primary data from consumers was not necessarily large enough to accurately describe

the opinions of the public. Secondly the original purpose of the thesis was to assess

Nokia’s performance and possibilities in a developing market as well, but due to the lack

of responses to the survey from all of the intended locations, the research concentrated

only on Finland and the United States, where an appropriate number of responses to

draw conclusions from could be gathered.

Furthermore, as personnel from the marketing department of Nokia were not

interviewed, a holistic picture of Nokia’s current marketing efforts around the globe

could not be formed. Consequently, the concrete suggestions given to the company

were based on a limited amount of information on their marketing strategies in different

media.

Finally, the topic chosen was so broad that only a small amount of methods for

improving marketing strategies could be comprehensively analyzed. Confining the

methods to the brand building perspective, however, helped in choosing only the most

relevant approaches to the topic.45

6.3. Implications for International Business

The research done during the process has some useful implications for international

business. Now that the global economical recession is finally becoming a thing of the

past, people’s future expectations are improving hand in hand with their willingness to

spend. For marketers this means increased budgets, but also increased competition

over the attention of the consumers. Those firms that can meaningfully differentiate in

the eyes and minds of the consumers will rise above the competition to form mutually

beneficial relationships with customers.

If Nokia succeeds in its efforts to revitalize the Nokia brand, it should lead to an increase

in its market share and eventually a more balanced competition in the smart phone

market. Thus the pressure to lay off designers and other employers of Nokia would also

be smaller. In addition, an evenly matched competitive landscape would not only be

beneficial for Nokia, since smart phone consumers would benefit from the different

brands having to figure out how to differentiate from others by improving their products

and enhancing their value propositions.

Finally, one of the biggest effects this thesis has on the way in which international

business is conducted, is showing that a company-specific brand equity structure is not

merely a way to measure the success of marketing activity. It is also a useful tool in

deciding how to convincingly position a company against industry competitors and how

to improve the effectiveness of marketing strategies without forgetting the principles of

building strong brands.

6.4. Suggestions for Further Research

As far as Nokia is concerned, possible future research topics could be for example

digging deeper into the reasons behind Nokia’s recently announced partnership with

Microsoft. Most experts do not see much light at the end of the tunnel, but according to 46

some, Nokia is on the brink of acquiring a huge competitive advantage if everything

goes according to the plan and the next Windows operating system can be transferred

as it is to Windows Phones—something that no other smart phone brand has been has

been able to do so far with their operating system (Kuittinen 13).

Another interesting research topic would be to examine how the partnership between

Nokia and Microsoft is perceived by smart phone consumers. It will be intriguing to see

if the parties can shake off the slow start and leverage each other’s complementary core

competencies to differentiate from competition and to start building the foundation for a

sustainable competitive advantage. To continue exploring the partnership between

Nokia and Microsoft, a model for the most beneficial role for Nokia in the partnership

could be formed and utilized to assess other potential future partner brands for Nokia.47

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APPENDICES

Appendix 1: Nokia’s Brand Image Interview February 4

th

2011

The purpose of this interview is to find out about the aspired brand image Nokia is trying

to create in the minds of the consumers. The answers to this survey will be compared to

the results of consumer surveys to find out whether there are differences in Nokia’s

aspired brand image and the actual perceptions of the consumers. The findings will be

used to analyze Nokia’s marketing strategies for its smart phones and improve them

from a brand building perspective.

1. What are Nokia’s core brand values? Are these values clear for all the

employees?

Mr. Pekka Somerto, Nokia’s Vice President of Brand and Marketing Portfolio

Management:

Nokia’s brand promise since the 1990’s has been connecting people. That underlying

idea is definitely clear to all employees. The meaning of the brand promise, however,

has evolved. Nowadays it stands for connecting everybody instead of just connecting

houses and people with each other. Along with smart phones the meaning has further

evolved to cover also the idea of connecting with everything like music, e-mail, and

especially the Internet.

2. What is Nokia’s customer promise?

Mr. Somerto: “Connecting people” can also be seen as a customer promise, but other

than that Nokia has always tried to offer the public cell phones that are trustworthy,

reliable, easy to use, innovative, and stylish.52

3. Do you think Nokia has succeeded in delivering on or exceeding its customer

promise in the smart phone segment? If not, have the problems been caused by

internal or external factors?

Mr. Somerto: Recently Nokia has seen some decline in delivering on its promise for

reliability, trustworthiness, and ease of use of its products. The problems have mostly

been caused by internal factors. Suppliers have sometimes been late with their

deliveries, but a bigger issue has been the rapid pace of change that has picked up

lately and added a lot of pressure on Nokia’s weakest links. The increased speed and

complexity of the markets has made delivering on the promises harder than before.

4. Do you think there is a difference between Nokia’s aspired brand image and the

brand perception of the consumers? Why does this gap exist and what measures

have been taken to tackle this issue? Are there regional differences in the brand

perceptions of the consumers?

Mr. Somerto: Obviously there are differences between Nokia’s aspired brand

image/identity and consumers’ brand perceptions. Not surprisingly there are huge

regional differences between brand perceptions. In Finland and in emerging markets

like China and India Nokia is a very trusted brand. Nokia’s impressive market share and

success in Russia is another noteworthy matter. However, Nokia is unfortunately a

rather irrelevant player in the US market at the moment. A concurrent theme is that

Nokia is trying to appear younger in the eyes of the consumers all around the world.

Mr. Somerto: Interestingly enough one of the strictest critics of Nokia is the company

itself. Nokia’s internal control is extremely active and it constantly raises the bar for

Nokia’s performance. Despite the negative publicity Nokia has recently received from

the press, Nokia has at the same time been delivering well on products like the N8

according to extensive consumer panels.53

5. How are Nokia’s smart phones positioned against competitors?

Mr. Somerto: Nokia offers a larger smart phone portfolio than most of its competitors.

Nokia tries to differentiate from competition by emphasizing effective distribution and

global availability of its cell phones.

6. What are Nokia’s points of difference and points of parity when compared to

the competition in the smart phone industry? Does Nokia have a sustainable

competitive advantage over its competitors?

Mr. Somerto: The point of parity between brands in the smart phone market is that

smart phones look pretty much the same. They are rectangular in shape and usually

employ a large touch screen. The challenge today is to offer the consumer the best

possible user interface—something that Nokia has not yet been able to consistently

deliver.

Mr. Somerto: One of Nokia’s biggest assets and sources of sustainable competitive

advantage is its global reach accompanied with a locally tailored presence. It is hard for

competitors to enter markets like India where Nokia has already established a strong

presence.

7. Do Nokia’s smart phones offer functional, emotional, and self-expressive

benefits to customers? Please give some examples.

Mr. Somerto: Nokia has always excelled in offering functional benefits to consumers.

Nokia’s phones are known for great voice quality, well-functioning mechanics, long

battery life, reliable connection, and so on. By delivering well on the functional aspects,

Nokia has simultaneously created positive emotional associations like trust towards the

brand. In recent years Nokia has appeared more serious than in the past when it

emphasized the fun-side of cell phones in its marketing. The self-expressive benefits

are the most apparent in developing markets, where Nokia phones are used for many 54

unorthodox purposes like for paying bills and for using the phone as a flashlight. For a

consumer in an emerging market a cell phone conveys a clearer message about the

user than in the more competitive markets.

8. What are the most important brand associations Nokia aspires to create in the

minds of the consumers? (Product, organization, person, symbol)

Mr. Somerto: The most important brand associations Nokia looks to create are trust,

reliability, sustainability, and environmental responsibility. The underlying idea in all this

is that Nokia wants to show the public that it tries to improve the quality of people’s lives

and also make the world a better place to live. In addition Nokia would like to be

perceived as a more youthful and agile organization.

9. In general, what do you think is important for smart phone users? What are

some of the most important features in smart phones?

Mr. Somerto: The single most important smart phone feature today is the multitude of

applications (APPS), which also reflects the growing consumer-centricity of the smart

phone market. Consumers have to be able to decide and choose what is most important

for them and use the smart phone as a sort of an all-in-one apparatus. Aside from the

APPS traditional features like bandwidth, storage space, and speed of connection are of

course also important.

10. Can you think of any customer needs that are currently not met in the smart

phone industry? If there are any, is Nokia actively trying to fulfill those needs in

the future?

Mr. Somerto: It is hard to pinpoint anything concrete, but the future innovations are most

likely going to come from the direction of user interface development. The way of using

smart phones can be changed through advanced sensor technology. In the future smart

phones will be controlled with much less effort thanks to the rapid advancements in 55

technology. A good comparison would be the innovative automated braking systems

and augmented reality windshields of the modern car manufacturers.

11. How is Nokia’s position communicated? Please identify if there are

differences in the marketing communication between Finland, Russia, and the

United States.

Mr. Somerto: The current theme in Nokia’s advertising is “success redefined” meaning

that Nokia’s phones liberate users to dictate and decide what is success for them an

enable them to express themselves freely. A modern successful person does not have

to go the office every day, because a smart phone enables him or her to do all the

necessary work from anywhere.

Mr. Somerto: Nokia strives for a unified visual approach in its marketing, but it

incorporates local adaptation by choosing the appropriate marketing mix depending on

the peculiarities of the different markets. In other words Nokia is applying the principles

of hyper-locality.

12. What is Nokia’s target audience in the smart phone segment? Is the target

audience same regardless of the country?

Mr. Somerto: Everyone can and is welcome to buy Nokia’s smart phones, but the

marketing efforts are concentrated towards people who have a strong influence on

others. Put differently Nokia targets the so called “active participant segment” of the

smart phone market. The active participants are diligent networkers who influence the

purchase decisions of others. They are often early adopters or even first movers to a

product category and thus have a say in which products will eventually be successful in

the marketplace.

Mr. Somerto: When speaking of different countries, the marketing efforts are chosen

based on demographic data and the purchasing power of the inhabitants. Due to this 56

the same product is sometimes targeted to a different audience abroad and thus might

become popular among a very different market segment.

13. Do you think there is a need for change at Nokia? Is there a trade-off between

agility and consistency?

Mr. Somerto: There is definitely no trade-off between agility and consistency. At Nokia

there is a need to become more agile and more responsive to customers’ needs—Nokia

has to become a customer-driven organization instead of engineer-driven. Nokia’s large

brand portfolio is advantageous, but the strategy has to be altered from push to pull in

all stages of the value chain. This would also further enhance the new customer-centric

approach at Nokia.57

Appendix 2: Smart Phone Brand Perception Survey

Write the names of three smart phone brands that compete in the country where you

live. (Or less if you cannot name three.)

What is your preferred smart phone brand, why?

If you own a smart phone, which smart phone brand is it?

If you own a smart phone, for how long have you had the smart phone?

Please indicate how important each of the following smart phone features are for you.

Not at all

Important Unimportant

Neither Important

Nor Unimportant Important Very Important

Applications (Apps)

Battery life

Camera

Design

Ease of use

E-mail

Internet connection

Memory capacity

Reliability of functions

Screen size and resolution

Technical aspects such as

voice quality

Additional features such as

calendar, navigator, etc.

Other, please

specify:58

Is there anything you would hope from a smart phone that is currently not offered by any

smart phone brand?

Next you will be asked questions about Nokia specifically. Some questions might seem

repetitive by design if you own a Nokia phone.

Are you aware of the cell phone brand Nokia?

Yes

No

Do you have or have you ever had a Nokia smart phone?

Yes

No

Please indicate the level of satisfaction with your most recent Nokia smart phone.

Does Not Apply (I have never had a Nokia smart phone.)

Very Dissatisfied

Dissatisfied

Neutral

Satisfied

Very Satisfied

How would you describe Nokia's products in a maximum of three (3) words?

How would you describe Nokia as an organization with a maximum of three (3)

adjectives?

If Nokia's smart phone was a person, how would you describe that person with a

maximum of three (3) adjectives?59

What is your perceived quality of Nokia's smart phones?

Does Not Apply (No Opinion)

Very Bad

Bad

Neither Good nor Bad

Good

Very Good

What is your perceived value of Nokia's smart phones?

Does Not Apply (No Opinion)

Very Low

Low

Neither Low Or High

High

Very High

If you own a Nokia smart phone, do you feel like you can express yourself through

using/owning the product?

Does Not Apply (I do not own a Nokia smart phone.)

Yes

No

How would you say Nokia differentiates itself from the competitors in the smart phone

market?

When you think of an innovative smart phone brand, what is the first brand that comes

to your mind?

When you think of a trendy smart phone brand, what is the first brand that comes to

your mind?60

Please indicate your level of agreement with the following statement: "I am loyal to

smart phone brands."

Does Not Apply (No Opinion)

Strongly Disagree

Disagree

Neither Agree nor Disagree

Agree

Strongly Agree

If you owned a smart phone brand mentioned in the list, how likely would it be for you to

switch to another smart phone brand? Please choose an option for all the brands.

Does Not

Apply (No

opinion) Very Unlikely Unlikely Undecided Likely Very Likely

Apple

Blackberry by RIM

HTC

Nokia

Samsung61

How important are these factors when deciding whether to switch between smart phone

brands?

Does Not

Apply (I don't

switch

between smart

phone

brands.)

Very

Unimportant Unimportant

Neither

Important Nor

Unimportant Important Very Important

Availability

Discount

Use experience

Other, please

specify:

What do you think of the number of smart phone brands offered by Nokia?

Does Not Apply (No

Opinion) Too Few Brands

Appropriate Number of

Brands Too Many Brands

Nokia offers

Do you remember any marketing efforts by Nokia (such as advertisements,

commercials, sponsorships)?

Yes, please specify:

No

How effective is Nokia's smart phone marketing in your opinion?

Does Not Apply (No Opinion)

Very Ineffective

Ineffective

Neither Effective nor Ineffective

Effective

Very Effective62

The following five questions are only going to be used for classification.

In which country do you live at the moment?

In what year were you born? (YYYY)

What is your gender?

Female

Male

What is your educational background? (Choose the one you currently attend or most

recently attended.)

Elementary school

High school

Vocational school

Polytechnic

University

Other, please specify:

What is your estimated annual family income in dollars?

$9.999 or less

$10.000-$49.999

$50.000-$99.999

$100.000-$149.999

$150.000-$199.999

$200.000 or more