mktg fin-case ppt
TRANSCRIPT
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CASE STUDY
Ekta Manghwani
Roll no.33
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Guess the company
5 letter word.
It has topped the list of the most trusted brands of India for3 years in a row from 2008-2010.
Tag line- C_ _n _ _ t_ n_ P_ _ _l _
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INTRODUCTION
Nokia launched its first mobile phone, the Talkman, in 1984.
The machine was large and heavy by today's standards but
the company was sure one day everyone would want one.That prediction proved correct.
It became the most successful European company of the
1990s.
Dominant player in Indias Rs.30,000 crore handset market.
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HANDSET MARKET ININDIA-2009
Only 5 local manufacturers in 2008 and the
number stands at 28 now!
Local manufacturers have grabbed 17.5%market share [from 0.9%, a year back]
Nokias market share fell from 56.2% share in
2008 to 54.1% in 2009.
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Contd
Top 5 Local manufacturers of 2009 & 2010
Of the local manufacturers, Micromax leads therace and has increased its market share from 4.8%in 2009 to 8% in 2010.
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Problems
1. Unwillingness to re-invent its business,even if it
meant completely changing its products.
2. It was never located at the heart of theIT industry
, among competitors who might force it to keep
innovating.
3. Since AppleInc. introduced its iPhone in Jan.,
2007,Nokia shares have fallen by 47%.4. Shrinking profit margins & market share.
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Lateentry in dual sim phones
Tariff wars haveresulted in consumers picking upprepaid cards from new entrants to utilizeultra-cheap call rates
So they are opting fordual sims, the USP of mostdomestic handset makers.
Forexample, Micromax launched this feature in 23of the 26 models.
Nokia did not have presence in thisspaceuntil lastmonth when it launched 2 low-cost handsets with thisfeature.
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Main consumer market leaded by
Samsung.
17% market share.
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Micromax giving tough competition to
Nokias low-price models.
Micromax is a challenger brand in the highly competitive
mobile handset market.
It is shaking up the market dominated by MNCs.
It was in 2008 that Micromax ventured into the mobile handsetmarket.
Launched its first phone in the rural market with a very unique
USP- 30 days battery standby time. Micromax X1i priced at
Rs 2150-successful.
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Contd..
Severe logistics pressure -distribution channel
Micromax created a distribution network comprisingof 34 superdistributors, 450 distributors and
around 55,000 retailers.
One of the highlights of theirdistribution strategy
was that Micromax managed to make thesedealerspay in advance by offering them more margins.
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Competition from domestic players
Heavy investment in distribution models in ensuring qualitystandards by domestic players.
Huge pricedifference between the products of domestic
players & that of Nokia. Micromax, Karbonn, Lava & otherdomestic players offer
featurerich phones, providing more value for less money,targeting Nokias core customer base.
Difficult forNokia to match up to its competitors products. Consumers go fordomestic players products because of
price & featuresdespite of quality issues.
Difficult forNokia to compete at this level (Rs.3000) &also match them at features front.
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Contd..
Local manufacturers* have grabbed 17.5%
market share [from 0.9%, a year back]
Only 5 local manufacturers in 2008 and the
number stands at 28 now!
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Global
Handset
Vendor
(Market
share %)
2008 Q1
2009
Q2
2009
Q3
2009
Q4
2009
2009 Q1 10 Q21
0
Nokia 39.8% 38.15% 37.8% 37.3% 37.6% 37.7% 37% 36.1%
Samsung 16.7% 18.7
%
19.1% 20.7
%
20.4% 19.8% 22.7% 20.7
%
LG 8.6% 9.2% 10.9% 10.9% 10.1% 10.3% 9.3% 10%
RIM 2% 3% 2.9% 2.9% 3.2% 3% 3.6% 3.6%
Sony
Ericson
8.25% 5.9% 5.1% 4.9% 4.3% 5% 3.6% 3.6%
Others 24.85% 25% 24.2% 23.3% 24.4% 24.2% 24.4% 26%
Declining global market share of Nokia
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From Porters 5 force model
Rivalry
High concentration ratio-industry dominated by few
players-Nokia, Samsung, Micromax, Karbonn, Spice,
Videocon, Lava
Existence of Cut-throat competition
To regain its market share, Nokia should make
competitive payments to its dealers. Rural distribution model should be strengthened.
Increase the margin of distributors from current level.
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Target Scope
Advantage
Low CostProduct
Uniqueness
Broad
(Industry Wide)
Cost Leadership
Strategy
Differentiation
Strategy
Narrow
(Market Segment)
Focus
Strategy
(low cost)
Focus
Strategy
(differentiation)
Porters generic strategies
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Cost leadership strategy
Cost leadership strategy used by domestic players.
The firm sells its products either at average industry
prices to earn a profit higher than that of rivals, or
below the average industry prices to gain market
share.
As the industry matures and prices decline, the firms
that can produce more cheaply will remain profitablefor a longer period of time.
Nokia should also invest in its technology to
provide a feature-rich phone at competitive prices.
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Differentiation Strategy
Development of a product or service that offers
unique attributes that are valued by customers and
that customers perceive to be better than or different
from the products of the competitors.
The value added by the uniqueness of the product
may allow the firm to charge a premium price for it.
Successful execution of this strategy by Apple iPhone.Corporate reputation for quality and innovation.
Nokia should come up with innovative models to
save its declining market share.
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Focus Strategy
The focus strategy concentrates on a narrow segment
and within that segment attempts to achieve either a
cost advantage or differentiation.
Examples :-
Micromax in lower segment.(CA & differentiation)
Samsung in middle segment.(CA & differentiation)
Apple & Blackberry in high-end segment.
(Differentiation)
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Measures
Become competent in smart phonesegment.
Entry in high-enddevises.
Nokia is launching 3 smartphones this Christmas-E7,
C7 & C6.
Nokia must innovate in midsegment Rs.5000-Rs.8000-new features with low price.
Be proactive to competition.
In Porter's view, thedynamism of markets isdrivenby innovation.
Innovation is the key to success.Nokia must innovate.