Nokia has long established identity (1898); lots of available resources (financial, etc.)
Schmohl is experienced in international marketing (Adidas and Uniroyal)
Nokia has high penetration rate in Europe, especially in Northern countries (close to 100%)
Nokia Consumer Electronics has access to innovative technology through group companies
Lack of centralized marketing strategy and champion; completely different positioning strategy depending on the country
Too many brand names (100) in one market; problem trying to find balance
Corporate culture is highly technical and operational: “So what if the customer does not understand!”; lack of customer service priority
Potential for brand name sales in Europe = differentiation
Growing replacement and supplement television market
NCE has opportunity of using its technology to enhance user-friendliness
The market for color TVs and VCRs is a mature/saturated market; consumers are buying less often and only to replace older units (same trend for all countries across Europe)
Can’t differentiate based on technical advancement or price; competitors too fast to match
Impact of recent purchases (for example, Sony) and mergers is unknown; competitors are getting larger and integrating supply chains
Competitors (Samsung, Goldstar, Daewoo) quickly and successfully building brand name and image
In the colour TV market, neither technology nor price provides a competitive advantage. The decision a consumer makes to purchase is primarily motivated by emotion, and is driven largely by comfort level with a particular brand. A successful branding strategy for NCE is, therefore, critical to gaining a competitive advantage. Specifically, NCE should brand for the following reasons:
Competitive advantage is gained through brand name (not technology or price)
According to brand awareness studies, Nokia is recognized most of the time (in Germany, France, Italy, UK and Norway), but not necessarily affiliated with consumer electronics such as TVs and VCRs
Consumers buy televisions based on emotion
Consumers perceive value in features that are marketed as user-friendly
In the past Nokia has relied heavily on its ability to innovate—it is a strong technology company. However, it is not good at introducing or packaging this technology for consumers. Schmohl must introduce a new mindset to NCE; a strategic shift that encourages customer service and international marketing.
Schmohl faces at least two challenges within NCE that he must address immediately:
1. Lack of a marketing champion in corporate headquarters
2. A continued reliance on technology as the main marketing approach. For example, the remote control TV mouse is centered on technology and may frighten away potential customers who may perceive it as too technical.
Options for solving these include: (1) “push down” his ideas and force all to comply using his positional power; (2) “soft approach”—gradually getting buy-in to his plans from technical representative, sales and marketing. Option 1 is not viable since even though it may result in short-term agreement, it will result in resignations, poor morale and distrust in senior management over the long run. Since the change process can be slow, Schmohl should adopt option 2 that means getting buy-in at the senior management level. If there is disagreement at the highest level of the company on international marketing strategy, then the same can be expected throughout the ranks of the company. For example, the vice-president of engineering may agree on the surface, but tell his employees to continue to do what they have always done (don’t play the new marketing tapes at the fairs, etc.).
Getting Buy-in from the Dealer Network
The dealer network is critical to their branding strategy. If a dealer is not satisfied or confident with a manufacturers market position, they may lead a potential buyer to a competitive brand. NCE must maintain its strong brand-marketing program. And it needs to dealers to support them or they will fail. To do this, Schmohl should be willing to increase margins to dealers or incentive programs to encourage them to sell the Nokia brand vision and concept. Ultimately a successful marketing campaign will draw customers into the dealer’s door. If Nokia is foremost in their mind, we want the dealer to sell them Nokia, not attempt to switch to a competitive brand.
Customer Brand Awareness and Association
The Nokia brand name has limited awareness across the European markets. Studies indicate that on average when a person is asked if they have heard of the company the answer is usually answered yes well below 50% of the time. Worse, however, is when asked to name a consumer electronics company, Nokia is very rarely the answer; typical answers are Philips, Grundig or Sony among others. This indicates a problem associating the Nokia brand name with consumer electronics (TVs and VCRs). Therefore, the challenge is not only getting the brand name in front of consumers, but ensuring they think of Nokia when buying a TV.
Networking and Distribution Strategy
In order to make the Marketing Campaign successful, the selection of a proper distribution channels would be a crucial element to make the “Seagull” flies. In this section, different options of distribution channels were discussed and recommendations for each brand were made.
Summary of the recommendation of channels for each brand is illustrated on the table below:
High turnover (53%) with 58,000 outlets, high market penetration
Strong in some countries like Italy, Germany and UK. But weak in others like in France.
Mix of product line, could be a “cherry picker”.
Potentially high Traction cost because of decentralization.
Suitable for selling from low to high end product.
Based on the above characteristics, it is recommended that both Nokia and Luxor should be distributed through independents channels in order to maximized the market penetration since these two brands focus on user friendly, long term quality, reliability and security to low or middle end users. However, it is recommended that Luxor should only be marketed in the Scandinavian countries since it has no appearance in the other countries.
2. Specialist Capital chains or Multiples
Strong in France and UK (41% & 22% resp.).
Relatively lower market penetration
Suitable for middle to highend products with innovative technology.
Relatively lower transaction cost since dealing with smaller number
Based on these characteristics, it is recommended that Salora and Nokia should be distributed through this network because of they are relatively higher end positioning with innovative technology and user-friendly features. It is also recommended that special focus should be paid on the countries such as France and UK (regional sales of 41% and 22% respectively) since Multiple channels take an important role in those region.
Plays as an important channels in Spain, Germany, Spain, and France
Consumer electronics products are only parts of the goods being sold.
High traffic pattern and potential shoppers, suitable for well-established and traditional brands with proven technology that required minimum after-sales service.
Relative low transaction cost due to well established and highly centralized.
According to these characteristics, it is recommended that both Nokia and Luxor should also be marketed through Generalists because these are proven products and well known brands. Salora is not recommended in this channel because it is a higher end product that required more product knowledge and selling skills which is not suitable in this environment.
