Marketing Strategies for Consumer High-Tech Products - Marketing Essay Example

This paper provides information about the marketing strategies of mobile phones as high-tech consumer product - Marketing Strategies for Consumer High-Tech Products introduction. Marketing strategies used by famous mobile phone companies such as Nokia, Ericsson and Motorola are studied and explained in this paper. Secondary research method is used in this paper to find information about the topic. The mobile phone manufacturers should agree to a same standard that is not identical. If segmentation can be overcome by the manufacturers then the use of the mobile phone will be as easy as using a microwave and this will result in a rise in the mobile phone sales.

 

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Introduction

Mobile manufactures and service providers are under pressure to find out the ways in which their products can be market in every changing and attractive ways. This is due to increasing use of mobile phones as the mobile phones have become an important part of the new millennium’s life. Engaging the media-savvy consumer in what has become a market saturated with choice is a hard task. But it seems mobile communications companies are devising ever-more creative and unusual practices to engage a diverse and constantly evolving target market.

This paper provides information about the marketing strategies that Nokia, Ericsson and Motorola implement to become successful in the today’s highly demanding market.

 

Marketing Strategies of Nokia, Motorola and Ericsson

Nokia is one such global brand that has become synonymous with the latest in mobile technology. In August 2005, the company was ranked as the world’s sixth most valuable brand as part of the Business Week/Inter-brand ranking. As the only mobile phone manufacturer and the only European brand to make the top ten, the Finnish communications firm is obviously doing something right. Not bad for a company born out of a wood pulp mill in the 19th century (Walley 2005).

Today, Nokia’s strategy continues to place prominence on live communications exemplified by its ongoing commitment to employing below-the-line marketing strategies.

Nokia boasts an impressive portfolio of live projects. In the year 2005, alone the brand has had headline presence at the Prince’s Trust Urban Music Festival at Earl’s Court in April, the Isle of Wight Festival in June and for the first time had sponsored Haymarket Exhibitions’ Clothe-show Live event at the NEC in December. Even the worldwide phenomenon of Live 8 did not escape the grasp of Nokia, with the mobile firm signing up as a global sponsor (Carter 2005).

The marketing team is given the opportunity to flex its creative muscles when choosing which events Nokia partners, with the criteria based around the youth target market.

The main focus of Nokia is on youth. Mobile phones have become an integral part of every day life and Nokia is very good at marketing its products to the youth of 16-24 years old. Youth needs a new thing every day so Nokia believes to reinvent some thing new on regular basis (Cass et al., 2004).

But, of course, it is not just about sponsorship, Nokia remains committed to a hands-on approach that can only be fulfilled through live-marketing activity. The brand’s extensive sponsorship presence is often coupled with on-site activity. Nokia is focusing towards music. Nokia has also entered in sports by entering the sports festival named the Rip Curl Board Masters. In association with the surfing festival, a two-day event called the Nokia Unleashed Music Festival was launched. Taking place in Newquay, Cornwall, during August 2005, the event also allowed the brand to once again geographically spread its wings.

As Nokia continues to launch new products the marketing strategy must develop in tandem. In promoting the recent N-Gage gaming series, the team learnt the value of including live marketing. Heavy advertisement can used to market such products but it is expected that the advertising will not be taken as a serious matter by the target audience. The advertising may be considered as just a play. Nokia had entered into games by advertising in a traditional manner.

Nokia soon realized that it sould include face-to-face shows. So at the micro level, shopping centers were targeted because to get most of the customers from there and at the macro level, Nokia preferred to target the developers. Nokia advertised by sponsoring events as Joystick Junkie club nights. Nokia executives were present at that event and thus the industry had a chance to see the executives personally (Wasserman 2000).

With just two dedicated staff working internally on the events portfolio it has become essential to draw on external resources. Communications agency Haygarth has worked with the Nokia brand for 11 years and it can be said that the marketing team of Nokia has been extended.

Up to 25 staff at Haygarth work on the Nokia account divided into three teams; Mobile Phones, Multi-media and Enterprise Solutions. With such a high retention with the client, Haygarth has developed a clear understanding of the brand and its continued aims.

Developing Nokia’s strategy had increasingly focused on music, leading to the launch of additional music products in 2006. The Nokia Raw project seems to have become the epi centre of the firm’s marketing strategy.

The campaign ethos aims to bring music closer to the consumer via a number of initiatives. At the 02 Music Wireless Festival (which was a test format for the Carling Weekend event), fans won a chance to watch the bands play from the Nokia Raw Viewing Platform (Walley 2005).

Motorola Takes Aim at Scrappy Scandinavian Rivals

In the early 1990s, Motorola seemed all but invincible, a kind of Midwestern Microsoft. It so completely dominated the world of mobile communications that no one paid much attention to a couple of floundering firms from (of all places) Scandinavia. One of them, Swedish rival Ericsson, was in financial trouble and lacked a recognizable brand name in the U.S. market. The other, Nokia, based in Finland, was engaged in the improbable task of transforming itself from a paper-mill company into a telecommunications heavyweight. The two companies were betting their futures on a new European digital phone technology that was largely unknown in the United States. For both, it seemed like Mission: Impossible.

Well, mission accomplished. Today, Ericsson and Nokia are the leaders in the U.S. digital mobile phone market and mighty Motorola, which clung to an old analog technology for too long, is scrambling to recover. It had to take $2 billion in losses earlier 1998 and announce 15,000 layoffs. Its share price, even before the most recent financial gyrations, was trading below $50, a far cry from the days when it was a Wall Street bellwether (Houck 2001).

Motorola is finally launching a serious comeback bid, but it won’t be easy. Ericsson and Nokia keep hitting with new products that are either smaller or offer more functions, such as jazzier liquid crystal display screens and infrared ports that talk to computers. A whole new raft of competitors also has sprung up around San Diego-based Qualcomm and its rival digital phone technology. Aside from making its own phones, Qualcomm licenses to titans like Japan’s Sony and South Korea’s Samsung, and they continue to roll out new products. Samsung, for example, has introduced a 5.4-ounce digital phone on which calls can be made by voice command (Ericsson and Qualcomm 1999).

Street Rumors. For manufacturers, it promises to be a brutal showdown, and not everyone will necessarily survive. Wall Street has already begun speculating that a giant like Lucent Technologies will soon attempt a takeover of Nokia. But for now, the key fight is in the marketplace.

Roughly half of all mobile telephones that are sold each year typically change hands between the back-to-school buying season and the Christmas holidays. Those sales had reached 26.4 million units in 1998 and 33.1 million in 1999, according to Dataquest. Equally important, Dataquest estimated that digital handsets, which account for about half of all sales in 1998, had dominated the market in 1999, accounting for 70 percent of sales. As in the PC industry, intense competition has resulted in falling prices (Jones 2000).

For consumers, of course, that’s good news. The promise of the digital telephone–seamless mobile communications at a reasonable price–is drawing closer by the day. AT&T Wireless, Sprint PCS, PrimeCo., and others are rapidly building national and regional networks that will allow digital phones to be used much more consistently. That’s important because the market is so fractured. In big cities like Chicago, for example, as many as six mobile telephone providers can vie to provide service with an alphabet soup of different technologies, both digital and analog.

But as the digital networks are built and prices come down for phones, there is hope that greater clarity will emerge. Some experts liken the battles to the war between Sony’s Beta standard and Matsushita’s VHS standard, which eventually begat the videocassette recorder industry. Others compare it to the PC industry before Windows or to the Internet before browsers. Those developments all turned promising but imperfect technologies into something the mass audience could really use.

Right now, the biggest guessing game is how quickly Schaumburg, Ill.-based Motorola can snap back. The firm still dwarfs the two European companies–it had nearly $30 billion in sales 1997–and it won an important $100 million contract from Bell Atlantic Mobile earlier in September 1998 for digital phones. But Motorola faces the daunting challenge of reordering itself for the digital era. For years, its divisions and other operating units have engaged in a “warring tribe” mentality in which engineers fought for their own technologies and wouldn’t cooperate with other parts of Motorola. It bred an inward-oriented–some say arrogant–culture that overlooked what customers wanted (Bright 2004).

Head Start. While Motorola was insisting on its analog technology, Ericsson and Nokia were benefiting from a European governmental decision to adopt a single digital standard across Western Europe called Global System for Mobile Communication (GSM). That gave the two companies a head start in designing attractive multi-featured digital phones, which in most cases offer better sound quality than do their analog counterparts. Europe’s common standard also has afforded them economies of scale. Qualcomm argues that its Code Division Multiple Access (CDMA) method is better than GSM and the closely related Time Division Multiple Access (TDMA). By Dataquest’s reckoning, Qualcomm was third in digital mobile phones in 1997, Samsung was fourth, and Sony was fifth, all ahead of Motorola (Motorola adapts training 2002).

In response, Motorola launched a massive reorganization, smashing four divisions that deal with mobile communications into a single enterprise headed by Executive Vice President Merle Gilmore. Those four divisions encompass 75,000 people and represent $22 billion in sales, a majority of the firm’s overall revenues. It is CEO Chris Galvin’s most decisive managerial step since taking over in January 1997. Since Gilmore can now manage the four divisions as a single entity, he says he is shifting engineers and other resources from less promising units into the digital fight. As a result, Gilmore had promised that digital versions of the company’s popular StarTAC will be on sale in October 1998 and that a new generation of even smaller digital products called the V series will hit the shelves by the holidays, ahead of the originally planned launch in the first quarter of 1999. These V series phones are about the size of an economy-size pack of chewing gum (Bemowski 1995).

But deep skepticism persists simply because Motorola is starting out so late in digital. True, Motorola has an excellent manufacturing capability and distribution system.

Not only are the technologies and products changing at a dizzying pace, but the way digital phones are sold also is shifting in a way that makes brand name more important than ever. Traditionally, a service provider such as Bell Atlantic or Omnicom gave a phone to a customer, often subsidizing it as part of a long-term service deal.

But as demand for mobile phones keeps growing, customers are increasingly making the decision about what phone to buy as they stand in the aisles of a RadioShack, Circuit City, or Office Depot. Motorola so far hasn’t demonstrated that it can cater to that mass audience. Its current $100 million advertising campaign dubbed “Wings” focuses on corporate image, not people using products (Fletcher 2005).

Playing the image game, however, is what Ericsson has excelled at. It enjoyed a coup in the James Bond flick Tomorrow Never Dies: Agent 007 used an Ericsson phone to maneuver his car at high speed and escape his attackers. The company won the right to sponsor the 1998-1999 “Let’s Talk About Love” tour of pop chanteuse Celine Dion. Overall, Ericsson had spent $80 million on advertising and marketing in the United States in 1998 (Houck 2001).

Ad Strategy. Ericsson’s big marketing splash is partly defensive. Nokia has been faster to market in 1998 with hit products such as the 6100 series, and its alliance with AT&T Wireless also is helping give it a big boost in sales. Nokia said that it will acquire the number 1 position in digital meaning it hopes to knock off Ericsson as No. 1 in digital. Ericsson acknowledges that it has lost some U.S. market share, but as the overall pie keeps growing, the firm says it can continue reaping sales growth and stay ahead of the pack.

Apart from cheaper, smaller, and better phones, the consumer’s best hope is that sheer competitive pressures will force manufacturers toward greater standardization. There is evidence that is already happening. Based largely on Ericsson technology, a consortium that includes both Scandinavian firms, Intel, IBM, Qualcomm, and Motorola were working on a new open standard nicknamed “Bluetooth” that had defined how cell phones communicate with laptops, personal organizers, and other devices. In old times, they could communicate through an infrared system, but only if the phone is in eyesight of its companion device’s infrared port. Bluetooth allows to use wireless short-range radio to make it easier (Houck 2001)..

Conclusion

The big question is whether the leading manufacturers can agree on a common standard for so-called third-generation phones, with analog being considered first and existing digital technologies being second. It’s a messy multisided fight, but the Europeans appear close to agreeing on a standard that is similar, but not identical, to Qualcomm’s CDMA. If the manufacturers can overcome their fragmentation, making digital phones as easy to use as, say, a microwave oven, sales could boom even more. More consumers would have to ask themselves, “Why do we need old-fashioned phones that are plugged into the wall?”

References

Anonymous. (1999). “Ericsson and Qualcomm reach global CDMA resolution.” http://www.ericsson.com/pressroom/Archive/1999Q1/19990325-0007.html. accessed on May 23, 2007.

 

Anonymous. (2002). Motorola adapts training to modern business demands. Human Resource Management International Digest. Bradford: Sep/Oct. Vol. 10, Iss. 6; p. 21.

 

Bemowski, Karen. Motorola’s fountain of youth. Quality Progress 28, no.10 (October 1995): 29-31.

 

Bright, Julian. (2004). End users cut the strings, slowly. Total Telecom Magazine, 17401267.

 

Carter, Ben. (2005). Nokia in experiential drive for Fashion line.  Marketing (00253650), 00253650.

 

Cass, Shawna, Echagüe, María Soledad, Gray, Dan, Tanguy, Elisabeth, Greene, Cloreth. (2004). Describe a specific branding or marketing campaign and what made it successful.  Communication World, 07447612, Sep/Oct, Vol. 21, Issue 5.

 

Fletcher, Mike. (2005). Only the ‘full experience’ will link brands with new trends. Event, 1477738X.
Houck, J.B. (2001). For Ericsson, Motorola, Nokia – It Takes a Wireless Village. NewsFactor Network.

 

Jones, Sandra. (2000). More Hang-Ups in Motorola’s Cell Strategy. Crain’s Chicago Business, 01496956, Vol. 23, Issue 43.

 

Walley, Nigel, (2005). Nokia. Marketing (00253650), 00253650.

 

Wasserman, Todd. (2000). Fashion Statement. Adweek Midwest Edition, 02766612, Vol. 41, Issue 42.

 

 

 

 

 

 

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