19/11/10

Part I: Environment Audit

Part II: Strategy Audit

Student Names:
Montserrat Tami Garcia
Steven Xu
Sigita Repsyte
cARLOS targetta

Module Name:
Marketing Instruments

Module leader:
Cecilia Marie Ward
 Marketing Environment and Strategy Audit

I
Environment Audit
The Macro Environment

 Demographic

Native-born Spanish citizens of all races and ethnic groups make up 88% of the total population, and
12% are immigrants. Among the immigrants, around 57% of them come from Spain's former colonies
in Latin America (including those from Cuba, Mexico, Chile and Uruguay), Africa and Asia. The rest are
mostly Eastern European (especially Russians, Serbians, Croatians, Bosnians, Ukrainians and
Albanians), North and West Africans (notably Moroccans)

Total population of Spain as of 1st of October 2010 est. is of 46,122,169.

Ref. Instituto Nacional de Estadistica, www.ine.es

Birth rate: 10.91 births/1,000 population (2010 est.)

Birth rate Percent Change

2003 10.08  
2004 10.1 0.20 %
2005 10.1 0.00 %
2006 10.06 -0.40 %
2007 9.98 -0.80 %
2008 9.87 -1.10 %
2009 9.72 -1.52 %
2010 10.91 12.24 %

Ref. Index Mundi http://www.indexmundi.com/spain/birth_rate.html

This entry gives the average annual number of births during a year per 1,000 persons in the

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population at midyear; also known as crude birth rate. The birth rate is usually the dominant factor in
determining the rate of population growth. It depends on both the level of fertility and the age
structure of the population. As Spain’s population grows, there are more potential customers arising
in the phone market. Furthermore, the birth figure per year is an important figure to consider in the
mobile market as these are the future of the technological markets.

Life expectancy at birth:

Male: 78.06 years

Female: 84.27 years (2010 est.)
This data could be significant
Total population: 81.07 years

Year Life expectancy at birth Percent Change

2003 79.23  
2004 79.52 0.37 %
2005 79.52 0.00 %
2006 79.65 0.16 %
2007 79.78 0.16 %
2008 79.92 0.18 %
2009 80.05 0.16 %
2010 81.07 1.27 %

Ref. Index Mundi http://www.indexmundi.com/spain/birth_rate.html

This entry contains the average number of years to be lived by a group of people born in the same
year. Life expectancy at birth is also a measure of overall quality of life in a country and summarizes
the mortality at all ages. All the years stated above form part of the Y generation, which are the
future (1989 onwards are considered Y generation). This is an important fact to keep into
consideration for Spain technology industry. The generation Y is growing up using the new
technologies and hence they adapt easier to future advances in technology than a 40 year old person
today (generation X those born less than 1988). This 40 year old person has been used to cooping

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 Marketing Environment and Strategy Audit

with traditional methods at home and at work making it hard for them to adapt to the new
technologies.

In the case of Nokia, demographic developments and trends pose more opportunities for them in the
market. Innovation is a risky business, its improving a current product or even introducing new things
that people are unfamiliar with. Specially considering the X generation that haven’t grown with
technology. An all time famous is the phrase “People are afraid of change. ” Therefore the major
threat of this business is innovating on time and with the most attractive futures for each target
segment to gain competition advantage.

The action taken by Nokia is to carry out continuous research and development in order to launch
innovative products that optimize to facilitate the populations communication wants and needs at
home and in the workplace. Not only technology wise but they also practice technological research
and development on environmental factors given that worldwide the population is becoming more
environmentally concerned.

Current Demographic Profile

of a developed country like Spain.

Ratio of 2:4:2
Children/ teenagers Working adults Senior generation

Current Demographic Profile

of a underdeveloped country like India.

Ratio of 3:6:1
Children/ teenagers Working adults Senior generation

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 Marketing Environment and Strategy Audit

Future preview of 2035:

Developed Country profile

Ratio 2:4:3
Children/ teenagers Working adults Senior generation

(Doesn’t work out. 5 people consuming only and maintained by the 4 of the working population.
Excess consumption and not enough production to satisfy all industry. )

Undeveloped country profile

Ratio 2:6:2
Children/ teenagers Working adults Senior generation

Nokia, the Finnish company was the first company to sell to the whole world specially undeveloped
countries. Nokia has a definite future perspective according to the above ratio expectancies.

Reference: http://www.nationmaster.com/country/sp/Age_distribution and Jose Luis Nueno

conference on the 15th November 2010 in Forum Mundial de Marketing y Ventas, Madrid.

 Economic

Spain has a mixed capitalist economy and is the 12 th largest in the world. Spains per capita income is
near to that of the GDP of countries like Germany or France. 69.6% of the GDP in Spain is based upon
the services sector.
Allocation of GDP by Sector in Spain, 2008:

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 Marketing Environment and Strategy Audit

Spain’s monetary system is the Euro, which is at the moment the strongest currency in the world, and
it is widespread through the whole of Europe, this would make it easy to sell through European
Union. Furthermore, from Spain to the EU no tariffs have to be paid.

At present most countries in the world are deploying fiscal stimulus packages in order to re-launch
the economy. Spain, contrary to world trends and the recommendations of the IMF, will implement a
fiscal reform in 2010 that will overall increase tax pressure for both companies and individuals.

VAT increases (starting from 1 July 2010)

Staring from the first of July 2010 there will be VAT increases on all goods as follows:

M The standard 16% VAT rate will increase to 18%.

M The reduced 7% VAT rate (affecting new property purchases, hotels and restaurants
and most food products) will increase to 8%.
The 4% VAT rate on primary necessity goods won’t change.

Reference:
http://www.velascolawyers.com/en/articles-and-publications/fiscal-law-and-taxes/90-fiscal-reform-
in-2010-new-changes-in-taxation.html

For almost 15 years the GDP growth in Spain has been continuous and positive until 2007 with the
start of the crisis. Since the world crisis, unemployment has reached higher levels and the buying
power of consumers has been highly reduced.

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 Marketing Environment and Strategy Audit

In December 2009 the unemployment of Spain reached 18.2%. The construction sector, one of the
engines of economic growth in Spain over the last decade, is now faced with company closures and
rising unemployment. The collapse of the construction sector in Spain has injured Spanish economy
and the government is trying through subsidies to increase consumption. Banks in Spain now have
reduced their interest rates and banks have begun lending out money with more ease since the
beginning of the crisis, credit now is available. Therefore companies can benefit from asking for a loan
at this moment as a low interest rate will be available.

Purchasing power decreases in the country in response to the crisis situation and increased
unemployment rate. Furthermore, most company’s to solve survival issues lowered the wages of
employees. Therefore Nokia as well as other mobile phone corporations where obliged to provide
special promotion offers. Phone brands and telecommunication brands have joint contracts where
they offer the customer a mobile phone at a much lower price or even at 0 Euros if they sign that they
will be loyal to that telecommunication company for a certain period of time. This was indeed an
effective promotion system. Of course customers will prefer to assign for a promotion offer than to
buy a new phone that can cost much more with a prepaid card. It is to say that both the
telecommunication company and the phone brand win from the situation. The telecommunication
company wins a loyal customer for a year given the signed contract, and Nokia is paid back the value
of the phone with returns each month until it covers the price.

 Environmental

Nokia aims to be a leading company in environmental performance. Company strives to reduce the
environmental impact of its products, solutions, and operations. Although Nokia is not an energy
intensive company and most of the CO 2 emissions take place either in component manufacturing by
its suppliers or in the use phase of products, Nokia wants to show its leadership by reducing their

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own CO2 footprint, raising consumer awareness on measures they can take to reduce their own
footprint, driving best practices in industry and influencing other industries to make full use of the
potential of ICT and mobility in reducing emission.

Nokia’s environmental work is based on life cycle thinking. This means that company aim to minimize
the environmental impact of its products throughout operations, beginning with the extraction of raw
materials and ending with recycling, treatment of waste, and recovery of used materials. Nokia
achieves this by better product design, close control of the production processes, and greater
material reuse and recycling.

Reference: http://www.nokia.com/environment/strategy-and-reports/environmental-strategy
For example, all of materials in mobile phones can be used to generate energy or make new products:
- batteries > batteries stainless steel magnets;
- components (rechargers, earphones, etc) > jewelry, electronics, musical instruments;
- covers > traffic cones, park bench, car bumpers;
- packaging > newspapers, egg cartons, paper towels.

That is organized by Nokia’s initiate “WE: RECYCLE”. Consumers can drop off their phones at any
Nokia flagship store as well as other selected retailers. There are also close to 5000 Nokia Care points
globally, each taking back mobile devices and accessories.

To participate raising public awareness Nokia signed an international communiqué, along with over
150 other global organizations, ahead of the December 2007 United Nations Climate Change
Conference in Bali, Indonesia. It urged world leaders to develop policies and measures for the

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 Marketing Environment and Strategy Audit

business sector to contribute to building a low carbon economy to help tackle climate change. Nokia's
participation demonstrates its support for the belief that the benefits of strong, early action on
climate change outweigh the costs of doing nothing.

Since January 2008, Nokia has been a member of WWF's Climate Savers, a programme where WWF
and businesses collaborate to address climate change. Being a member of this programme reinforces
company’s commitment to energy saving in operations, ways of working and products.

Nokia's climate strategy includes specific targets covering areas that contribute to its direct and
indirect CO2 emissions. The four main areas are:
 Nokia products and services
 Nokia operations
 Nokia facilities
 Leveraging mobile and virtual tools in the way of working and management practices.
Nokia are still developing its strategies and practices that support environmental sustainability.

 Technological

Nokia is the world’s leading mobile phone supplier and a leading supplier of mobile and fixed telecom
networks including related customer services. Nokia has recently become an internet-like company
delivering overall solutions and experiences to customers relying on strong position on the mobile.

The effects of technology on family and community, can only be understood in the details of daily life.
Technology is binding the world of work and the world of home in ways that redefine what is means
to be in each. Some changes are dramatic, others are subtle, but the changes are experienced in the
mundane activities of everyday life.

Mobile phones are owned by 82.28 per 100 people in Spain’s population. With a 14 th position out of
43 countries.

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 Marketing Environment and Strategy Audit

Reference: http://www.nationmaster.com/graph/med_mob_pho-media-mobile-phones

Modern technology is a major evolutionary transition. The major changes in product and process
technology have to do with work- home relationship and with personal individuals concerns on global
issues. Global issues such as global warming caused by pollution. Hence all the new technology used
to provide environmentally friendly products by Nokia.

Research and development are very expensive. Hence when creating new products in mobile phone
business, the small step to take is to tweak a current product saving up significant time and money on
already available research and development. An example could be changing the design.

The big step usually involves investing into research and development to produce a totally new
innovative product or feature for a mobile. This step involves changing the technology process. An
example could be the change in technology process when manufacturing environmental products.

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 Marketing Environment and Strategy Audit

Other brands such as SonyEricsson, Iphone, blackberry have specialized in certain specific features to
reach out to their target markets. However, Nokia tends to have a wider target market perspective.
In regards to Nokia, Blackberry is probably the greatest threat. They not only reach out to
entrepreneurs, but recently they are also targeting young people. They are becoming specially
popular within the young adults population due to the blackberry messenger. iPhone is also a great
threat regarding the entrepreneurs due to internet access facility. However its main target is still
young people with its knowledge base of music and games features. SonyEricsson is a threat mostly
considering music and camera features given its experience and knowledge in that industry sector.
However, again SE focuses on standing out for specific features which are can be a threat to Nokia in
the case that customers appreciate much more one future than another on a phone.

In respect to Nokia future in the market, it is likely to survive for quite a while given that PC’s are now
being replaced by Smartphone’s. Smartphone’s are becoming more popular than PC’s now our days
as they share most of the features that a PC has. In fact, a great market gap would be Smartphone’s
for undeveloped countries. This would fulfill their needs and help them to be up to date with the
world’s technologies. Smartphone’s are becoming the future of communication, whilst PC sales are
already decreasing as they are being left behind.

 Political
The company acquires resources from government such as the economical, scientific and
technological policies. The success of Nokia has obtained the resources from the Finnish policies
which assist Nokia to advance its products.

The Finnish policies are the most important factors contributing to Nokia. To operate
efficiently, a modern knowledge and technology based on the economy that is highly
specialized; internationalized and undergoing rapid structural change requires active support
from the public sector. In its widest sense, industrial policies, science and technology policy
comprise all those measures by which the public sector shapes the operating environment for
business and this faster are public welfare. These both policies for the Finnish government
and parliament are crucial for the development both of the Finnish economy and of the National
information society. Finnish government best facilitate the efficient functioning of
the economy by directing resources to the reduction of market failures. The state must also

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 Marketing Environment and Strategy Audit

pursue an industrial and economic policy that provides a stable macro-economic environment
for enterprises, general macro-economic stability, low interest rates, stable currency
conditions, and international competitiveness of the law system and also the political stability
of the country. The positive political factors are helping Nokia to build a name in the
telecommunication world.

 Cultural

The rise of the so-called information society has made telecommunications increasingly more
important to consumers, both in terms of work and leisure. Users are more aware of mobile phone
handset choice and advancements due to increased information availability.

The Micro Environment

 Markets

Share and share capital

Nokia has one class of shares. Each Nokia share entitles the holder to one vote at general meetings of
Nokia.
In 2009, Nokia issued 7 500 new shares upon exercise of stock options issued to personnel in 2004.
Effective March 25, 2009, a total of 56 million shares held by the company were cancelled. The
issuance of new shares and cancellation of shares did not impact the amount of share capital of the
company. Neither the issuance of shares nor the cancellation of shares had any significant effect on
the relative holdings of the other shareholders of the company nor on their voting power.
In 2009, Nokia did not repurchase any shares. In 2009, Nokia transferred a total of 10 351 876 Nokia
shares held by it under Nokia equity plans as settlement under the plans to the Plan participants,
personnel of Nokia Group. The amount of shares transferred represented approximately 0.2% of the
total number of shares and the total voting rights. The transfers did not have a significant effect on

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the relative holdings of the other shareholders of the company nor on their voting power.
On December 31, 2009, Nokia and its subsidiary companies owned 36 693 564 Nokia shares. The
shares represented approximately 1.0% of the total number of the shares of the company and the
total voting rights. The total number of shares at December 31, 2009, was 3 744 956 052. On
December 31, 2009, Nokia’s share capital was EUR 245 896 461.96.
Information on the authorizations held by the Board in 2009 to issue shares and special rights
entitling to shares, transfer shares and repurchase own shares as well as information on the
shareholders, stock options, shareholders’ equity per share, dividend yield, price per earnings ratio,
share prices, market capitalization, share turnover and average number of shares may be found in the
Annual Accounts.

Industry and Nokia outlook for 2010

» Nokia expects industry mobile device volumes to be up approximately 10% in 2010, compared
to 2009, based on the industry mobile device market definition applied by Nokia beginning in 2010.
» Nokia targets its mobile device volume market share to be flat in 2010, compared to 2009,
based on the industry mobile device market definition applied by Nokia beginning in 2010.
» Nokia targets to increase its mobile device value market share slightly in 2010, compared to
2009, based on the industry mobile device market definition applied by Nokia beginning in 2010.
» Nokia and Nokia Siemens Networks expect a flat market in euro terms for the mobile and fixed
in- frastructure and related services market in 2010, compared to 2009.
» Nokia and Nokia Siemens Networks target Nokia Siemens Networks to grow faster than the
market in 2010, compared to 2009.

Introduction on the organizational structure to aid understanding of

their industry

First an introduction to the organizational structure designed to position Nokia for a world where the
mobile device, the Internet and the computer are fusing together.

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Mobile Solutions is responsible for developing and managing our portfolio of smartphones and
mobile computers. The team is also busy developing a world-class suite of internet services under the
Ovi brand, with a strong focus on maps and navigation, music, messaging and media. Mobile Phones
is responsible for developing and managing our portfolio of affordable mobile phones, as well as a
range of services that people can access with them. Markets manages our supply chains, sales
channels, brand and marketing activities, and is responsible for delivering our mobile solutions and
mobile phones to the market.

Nokia Siemens Networks, jointly owned by Nokia and Siemens, provides wireless and fixed network
infrastructure, communications and networks service platforms, as well as professional services to
operators and service providers.

NAVTEQ is a leading provider of comprehensive digital map data and related location-based content
and services for automotive navigation systems, mobile navigation devices, Internet-based mapping
applications, and government and business solutions.

Risk factors on customer tendencies

These risks, either individually or together, could adversely affect our business, sales, results of
operations, financial condition and share price from time to time.

» They need to have a competitive portfolio of high quality products and services and their
combination that are preferred, purchased and used by current and potential customers. If they fail

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to achieve or maintain a competitive portfolio, their business, sales and results of operations may be
significantly adversely affected.
» Their sales and profitability have been, and continue to be, driven to significant extent by their
success in the traditional mobile device market. Increasingly, however, their sales and profitability
depend on their success in the market for con- verged mobile devices. Their failure to effectively,
timely and profitably adapt their business and operations to the developing requirements of the
converged mobile device market could have a material adverse effect on their business, results of
operations, particularly their profitability, and their financial condition.
» Allegations of possible health risks from the electromagnetic fields generated by base stations
and mobile devices, and the lawsuits and publicity relating to this matter, regardless of merit, could
have a material adverse effect on their sales, results of operations, share price, reputation and brand
value by leading consumers to reduce their use of mobile devices, by increasing difficulty in obtaining
sites for base stations, or by leading regulatory bodies to set arbitrary use restrictions and exposure
limits, or by causing them to allocate additional monetary and personnel resources to these issues.
» Competition in the various markets where they do business traditional mobile devices,
converged mobile devices, digital map data and related location-based content, and mobile and fixed
network infrastructure and related services, is intense. Their failure to maintain or improve their
market position or respond successfully to changes in the competitive environment in those markets
may have a material adverse effect on our business, sales and results of operations.
» Any actual or even alleged defects or other quality, safety and security issues in their products
and services and their combinations, including but not limited to the hardware, software and content
used in their products, or any loss, improper disclosure or leakage of any personal or consumer data
collected by them, made available to them or stored in or through their products and services, could
materially adversely affect their sales, results of operations, reputation and the value of the Nokia
brand. Now our days, with the use of the internet and social networks and many other, customer
information is very easy to obtain. It is important that its privacy is not used incorrectly for the
reputation of businesses in power of that information.
» They are a global company and have sales in most countries of the world and, consequently,
their sales and profitability are dependent on the development of the mobile and fixed
communications industry in numerous diverse markets, as well as on general economic conditions
globally and regionally.
» Their net sales, costs and results of operations, as well as the US dollar value of their dividends
and market price of their ADSs, are affected by exchange rate fluctuations, particularly between the
euro, which is their reporting currency, and the US dollar, the Japanese yen and the Chinese yuan, as

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well as certain other currencies.

» They depend on a limited number of suppliers for the timely delivery of sufficient quantities of
fully functional components, software, applications and content and for their compliance with their
supplier requirements, such as customers’ and consumers’ product quality, safety, security and other
standards. Their failure to deliver or meet those requirements could materially adversely affect their
ability to deliver their products and services and their combinations successfully and on time.
» They are developing new technologies, products and services, including applications and
content, in collaboration with other companies. They believe that success in the converged mobile
device market in particular requires such collaboration and partnering. If any of those companies
were to fail to perform as planned or if they fail to achieve the collaboration or partnering
arrangements needed to succeed, they may not be able to bring products and services to market
successfully or in a timely way and this could have a material adverse effect on their sales and results
of operations.
» Their products and services and their combination include increasingly complex technologies,
some of which have been developed by them or licensed to them by certain third parties. As a
consequence, evaluating the rights related to the technologies they use or intend to use is more and
more challenging. The use of these technologies may also result in increased licensing costs,
restrictions on their ability to use certain technologies in their products and services and/or costly
and time consuming litigation, which could have a material adverse effect on their business, results of
operations and financial condition.
» Their sales derived from, and assets located in, emerging market countries may be materially
adversely affected by economic, regulatory and political developments in those countries or by other
countries imposing regulations against imports to such countries. As sales from those countries
represent a significant portion of their total sales, economic or political disorder in those countries
could materially adversely affect their sales and results of operations. Their investments in emerging
market countries may also be subject to other risks and uncertainties.
» Changes in various types of regulation and trade policies in countries around the world could
have a material adverse effect on their business.

In addition to the risks described above and applicable to whole Nokia Group, the following are risks
primarily related to Nokia Siemens Networks that could affect Nokia.

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» In response to its declined market share and deteriorated financial performance, Nokia
Siemens Networks announced in 2009 a plan to improve its financial performance by reducing
operating expenses and other costs and increasing profitability. If Nokia Siemens Networks is unable
to execute its plan effectively and timely or if the plan fails to achieve the desired results, that may
have a material adverse effect on Nokia.
» The networks infrastructure and related services business relies on a limited number of
customers and large multi-year contracts. Unfavorable developments under such a contract or in
relation to a major customer may have a material adverse effect on Nokia business.
» Some of the Siemens carrier-related operations transferred to Nokia Siemens Networks have
been and continue to be the subject of various criminal and other governmental investigations
related to whether certain transactions and payments arranged by some former employees of
Siemens were unlawful. As a result of those investigations, government authorities and others have
taken and may take further actions against Siemens and/or its employees that may involve and affect
the assets and employees transferred by Siemens to Nokia Siemens Networks, or there may be
undetected additional violations that may have occurred prior to the transfer or violations that may
have occurred after the transfer of such assets and employees that could have a material adverse
effect on Nokia Siemens Networks and Nokia itself.

 Customers

The two major target segments in the mobile phone market in general are: entrepreneurs and young
adults. A major demographic development has been technology advances; specially considering the
working environments and students. In regards to entrepreneurs, they demand for mobile phone
devices that facilitate their communication within their corporate environment. Features such as
internet connection, networks, email facilities, document downloads, red pointing light (for
presentations), USB storage phone use…etc. In conclusion they search for a useful business tool.

On the other hand we have the young adults. These look for entertainment rather than application to
their studies. Therefore they demand for features such as video call, internet access, Facebook direct
access icon, quality camera, design, music storage and a good audio…etc. In conclusion they search
for a fashionable entertainment tool.

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Mature Workers (1930-1945)

This segments are the least familiar with new technologies as they didn’t grow up with it, they usually
stick to a phone once they’ve learnt how to use it and will fear change. They have low phone
purchase turnover.

This age group consists of retired people mainly, therefore they where never forced with the need of
adapting to new technologies.

They tend to look for a simple user interface, no complications of the modern world technologies.
They tend to stick to “ phones are for making calls, that’s their function” and not the concept we have
adapted today. Where phones serve for messaging, even video messages, and other things that
separate from the real function of a mobile phone, such as camera phones, etc.

Mature workers basically search for the core values of a phone; simple, big numbers (no letters for
sms) and long battery life.

This segment isn’t really worth focusing on, as the present has prospered much and the futures
demanded by this segment have no future.

Baby Boomers (1946-1963)

This generation didn’t grow up with a like technology advances to today’s world. However, this group
have faced technology changes during their working life. Company’s adapted the new technologies to
facilitate work issues in company’s. Therefore baby boomers had to adapt in order to survive in
today’s dominated technology world.

They look for simple user interface and technology advances much faster than what they lived when
they were young. Therefore most still have issues for adaption and they stay reluctant to the
unknown.

Purchase turnover is higher than mature workers because they had no choice but to bear the changes
in technology within the workplace.

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For personal use, they tend to stick to the traditional house phone which complies its utility of just
making calls.

Generation X’ers (1964-1981)

These have lived through he beginning of the technology era. Where the first black and white TV was
invented to house phones. By the time they started working, phones where recently invented
therefore they didn’t have much significant changes within technology. Today technology advances at
a much faster rate than then and is losing its core function.

Purchase turnover is considerably higher that Baby Boomers because since they are young the
technology industry was at the introduction of its life cycle and they where use to seeing updated
changes every now and then. However nothing compared to today’s growth rate of this industry.
Since they lived step by step of technology advances, they are not afraid of the new technologies and
therefore they don’t have a problem with the latest technologies such as Smartphone’s and they
adapt to various user interfaces.

This generation now our days, tend to be people that work, and that probably have a family.
They tend to want to be up to date with their children and inculcate in them the use of technologies
to facilitate their future encounters. They depend on phones for work and home relationships. Some
like to separate work from home time and even have two phones. However, what’s most common in
this group is to have one phone preferably for both uses.

Generation Y’ers (1983+)

The first mobile phone launched into the Spanish market, was a Motorola. It was launched as a luxury
product and not many could afford it. About 13 years later phones where mass marketed. This
generation was born with new technologies and therefore its their everyday life. They don’t fear it at
all, in fact, they want more everyday. Purchase turnover is high, specially now that during the
recession mobile phone promotions have revolutionized the market prices. Not only purchase
turnover is high but new products are launched much more often than at the introduction stage of
this technology. Basically the mobile phone market is now at maturity and it bases itself on tweaking
existing products, therefore time is saved from marketing and research and development, allowing

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products to be launched in short periods of time. When a product reaches maturity, tweaking is the
method to maintain it there. However, in order to avoid assured falling into decline stage, product
development must occur to make the current product grow. This new product development in the
mobile phone industry has been the Smartphones. No our days almost everyone has one.
Smartphones characteristics are Internet facility, MMS messaging, high pixel camera integrated, etc.

This technology advance has not turned only essential for current entrepreneurs in their working
environment, but also for students.

Young adults main phone preference is definitely not the ease of the user interface in a mobile
phone. They want a fashionable “ cool “ mobile phone. There is a great variety of offer considering
phones now our days; music, camera, touch screen, design, wifi connection, etc

Young adults differ from other countries, and even in the same country. Individual tastes vary a lot
through the wide range of offer. It depends on what usage preference the individual has in respect to
the mobile phone. For example, music. They will choose a phone with a high memory storage and
good sound reproduction. Now most phones can even be used as mp3, and even mp4 (videos).
Another example could be a student, whose preference is the internet connection. Internet has
practically become an essential part of students life’s. Therefore, to search, check their emails, and/or
now our days, popular within all, Facebook. Then there is the young adult entrepreneurs. These
usually look for ease of receiving emails, having an agenda and contact list.

This last generation has a wider spectrum of customer preference because they have a wide range
offer that differs from individual to individual. The different offers are targeted to different
individuals. There is so much offer and power that a mobile phone can reflect a persons personality.

 Competitors

Nokia’s major competitors in Spain are:

 Samsung
 LG
 Motorola
 Sony Ericsson

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 Blackberry
 Apple
 And others

Here are some Spain statistics on the handset market share as at the 1 st quarter of 2009 compared to
the last quarter of 2008:

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We can see that Nokia’s sales went down from 4 th quarter of 2008 to the 1 st quarter of 2009 by 1.5%.
Along with Motorola and Sony Ericsson. Whilst Samsung grew by a significant 5.37% during the same
period. Nonetheless Nokia was still the dominator of the market. On the 2 nd quarter of 2009 the
market share of Nokia became a positive growth rate. Sony Ericson and Motorola which increased
their percentage growth rate but are still negative. On the other hand we have Samsung and LG

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dropped in percentage growth rate but are still positive.

Reference : http://www.mobileisgood.com/statistics.php#current

The Triple Bottom Line Model

1. Share of Mind:

Nokia has a strong economic value of the company.

The world’s best and long-lasting brands were typically created by a divergence from an existing
product category. Nokia was the 2 nd mobile phone creator brand after the first mobile phone brand
ever, Motorola. Brands like Nokia continue to survive not because of their ‘share of market’ but for
being first in the mind of consumers when talking about the company with strongest economic value
in the mobile market.

However, in Spain, iPhone’s tends to be the share of mind in the recent two years when talking about
Smartphone’s. Mainly as a result of their promotion that consumes customers minds. They basically
became outstanding Smartphone’s because Apple was known well for other markets such as PC’s,
software’s, and music. Hence putting all good quality and separately popular products into one,
revolution the Smartphone market. Therefore the iPhone share of mind was gained in name of
establishing a high quality brand that was known to be best at all it does. People talk about it, even if
they don’t or cant have it. Therefore, iPhone is the top thought brand in this market.

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Iphone might have the biggest share of mind, but it currently only owns about 2% of the phone
market, whilst Nokia owns around 40%. Nokia is specially thought of when it comes to an affordable
Smartphone. Whilst Iphone is thought of by those who “want” it but can’t, and those who have it and
show off creating “want “ within others. Given Nokia also targets underdeveloped countries it has a
wider customer spectrum and hence it is worldwide known. Iphones are a luxury product aimed at
high end market customers.

2. Share of Heart:

Refers to the social progress of a company. In the case of Nokia, it is definitely people orientated. It
not only has a wide variety of products targeted at different age group personalities and uses, but it
also sells all over the world, to developed and underdeveloped countries. In fact it was the first
company to target underdeveloped countries. They see the potential in underdeveloped countries
for the future, and seen in previous statistics of this marketing audit, we see that underdeveloped
countries are our future at the rapid growth rate they are going.
This makes Nokia gain a share of heart.

3. Share of Spirit:

This refers to environmental health (planet oriented health). Nokia has many environmental social
responsibility involvement. For example, they raise customer awareness on measures they can take
to reduce their own carbon dioxide footprint. They consider every single part of the production
process as future recyclable materials and try to make it as environmentally friendly as possible by
encouraging its recyclability. Furthermore, Nokia has participated in raising awareness to the world
on environmental issues such as the Climate Change Conference in Bali. In addition it is also a
member of the WWF ( the global environment conservation organization.

As it is known, now our days, the environment is an important issue. The share of spirit is gained
through showing the whole planet you care. Nokia manages to achieve this goal.

 Distribution and dealers

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Nokia doesn’t sale its cell phones directly to individuals, they sale them through operators and to
distributors also to traders who are intermediate who are responsible for the marketing of Nokia
products with the small distributors.

The supply chain management of Nokia is very strategic because of the market expansion. It’s a
market who grows slowly, so they should optimize resources and the capacity of production. Another
point that shows the importance of supply chain manager holds that the competition is exacerbated.
One of the operators have manufactured in the Scandinavian countries, so Nokia has to take
decisions to optimize the supply chain to counter their offer.

 Facilitators and Marketing Firms

“Nokia is about enhancing communication and exploring new ways to exchange

information”

They are feasible and realistic. They have evidence of being the world’s leader in mobility and they
have been the first to throw into the market innovative ideas in the communication industry. This
information can be found on the section of “Story of Nokia” on the link:
http://www.nokia.com/about-nokia/company.

Where the mention that Nokia formed a new unit responsible for driving offering of solutions, with
the aim of integrating the mobile device, services and content into a unique and compelling offer for
the consumer.

 Publics

The relationship between Nokia and the rest of the world is very strong. The company accepts the
responsibility of their worldwide position. One aspect of their corporate responsibility is to be
connected with the communities they affect in order to channel that impact into a positive societal
contribution.

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 Marketing Environment and Strategy Audit

Nokia is committed to supporting various communities’ trough donations, sponsored programs and
partnerships. Nokia has accordingly chosen to support publics organizations and projects which
reflects its values. Many of their programs contain young people such as “Le boulevard des jeunes
musicians “ in Morocco. Supporting such programs also has a wider social impact as they directly
benefit teachers, parents and other members of the community. The use of mobile technology help
bridge the communication gaps between various communities around the world. The village phone
and “Bridgeit” are good examples.

Nokia’s Design by Community project was supposed to allow the general public to choose their
favorite specifications and design traits for a future smartphone concept. The public voted and the
result were 3 sketches, with a single one picked by Nokia and turned into a real design by its
specialist.

II
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 Marketing Environment and Strategy Audit

Strategy Audit

 Business Mission

“Nokia’s vision is a world where everyone can be connected”

Two business mission stated that are market oriented most known examples are:

“Nokia is the world leader in mobility, driving the transformation and growth of the
converging Internet and communications industry.”

“Nokia is about enhancing communication and exploring new ways to exchange

information”

They are feasible and realistic. They have evidence of being the world’s leader in mobility and they
have been the first to throw into the market innovative ideas in the communication industry. This
information can be found on the section of “Story of Nokia” on the link:
http://www.nokia.com/about-nokia/company.

Where the mention that Nokia formed a new unit responsible for driving offering of solutions, with
the aim of integrating the mobile device, services and content into a unique and compelling offer for
the consumer.

 Marketing Objectives and Goals

Companys’ marketing objectives are clearly stated to guide the marketing planning as they are
concerned about:
- maintaining positive, strong growth every quarter;
- achieving a steady increase in market penetration;

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and the expected growth rate of two years;

maintaining its reputation.

Their objectives and goals are enough to guide the marketing planning and performance
measurement. However they cant be assured to happen. Therefore the company must be prepared
and create a “what’s if” back up plan in case of other situations.

These objectives are appropriate given the company’s competitive position, resources and
opportunities. It is one of the oldest company in this sector and therefore it has competitive
advantage as it has lived through many economic cycle situations in many countries. It has the
advantage to apply that knowledge and experience to situations that may arise.

 Strategy

Nokia’s goal is to be truly consumer driven company as they want to become the leading provider of
mobile solutions, because: in the mobile converged space consumers expect seamlessly integrated
solutions; to deliver these solutions requires continuous relationships with consumers and vibrant
ecosystems.

Mobile phone product life cycle and strategies applied

When mobile phones where first introduced they were low quality technology (bad reception, poor
reliability and had a short battery life), high priced (around £100 for a basic model) and consumers
had to be persuaded to buy mobile telephones, as they were not yet established as a necessity. When
products are first released, companies can expect high promotion fee's as the public are probably not
yet familiar with the product.

Also when mobile phones were first released they were bulky and hard to use, as product design and
development are a key figure in success, Nokia had to design phones that were smaller and simpler
for consumers to use. As people had paid a lot for earlier, more primitive products they were
obviously not going to pay the same high prices for later
products so Nokia had to develop phones that could be sold for less and would last longer, this is

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where companies can expect to pay high production costs.

When Mobile phones were first introduced they were not such a popular item and there weren't as
many competing companies in the market. So Nokia and a few other companies (Sony and Panasonic)
could charge higher prices then they would in the highly competitive market that they are in today, as
there aren't so many companies competing for market share.

Growth Stage

In the growth stage of the product life cycle companies can expect advertising and promotional costs
to be as high as in the introduction stage as more companies will enter the market and competition
for market share will increase. Advertising is a proven way of promoting technological advances
within a market (as with the new company 3 promoting their new technology that allows people to
watch video's on their handsets) so higher advertising costs can be expected as the technologies
available get better and more advanced.

The growth stage is also the stage that companies will (hopefully) start to make a profit, based on
good market research and a strong sense of branding and a successful marketing scheme. In the
growth stage profit isn't the only thing that will start to develop, as there
are more companies in the market it is obvious that more technology will be developed and that will
drive prices higher, this is how companies start to make profits (because consumers have accepted
the product, in Nokia's case, mobile phones, as a necessity they will be more willing to pay higher
prices for new phones that emerge in the market).

Maturity Stage

When a product enters the maturity stage, advertising and promotional prices should decrease, as
consumers are more aware of the product and will research new additions to the market instead of
being told what is new (this is because phones have been promoted as fashion items and will be
desired by the consumers). At this point in the product life cycle the main producers (Nokia, Siemens,
Sony etc) should be clear as they will have the most money to develop and promote their phones
while the other, less popular producers of phones (Panasonic, Toplux and NEC) will be struggling to

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survive and will drop out of the market either here or they will seriously struggle in the next stage,
decline.

Decline Stage

This is the stage that Mobile phones have entered (Nokia had recorded their first drop in sales earlier
this year), and all the remaining companies are trying to re-launch their products by either developing
their products or entering new markets. At this point phone sales will be decreasing and promotion
and advertising costs will start to rise again as companies fight for the remaining market share and
struggle to make a profit.

Market segmentation basis

As a big company Nokia are able to do a lot of promoting and advertising that smaller, less successful
companies, may not be able to afford, such as television advertising and sponsoring lots of events
that will be viewed or heard by large amounts of people in their chosen market segment (events such
as music festivals and music awards are a goldmine for companies as they are viewed by millions of
people worldwide). Adverts such as television and print adverts will be put into certain areas so that
they can attract their chosen market segment. I think Nokia's way of promoting is very good as they
can appeal to mass markets and large amounts of people in their chosen market segmentation with
certain advertisement's and with sponsoring large events like the ones I have previously mentioned.

Examples of positioning products for different market segments:

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 Marketing Environment and Strategy Audit

Magazine advert – usually read by women young adults (teens – adults). Designed with both style and
elegancy to appeal this segment.

Again another magazine advert. Mainly aimed towards young adults specially teenagers. Now our
days our worlds famous social network to stay in contact. It’s the best way for company’s to promote

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themselves in this new technological world where internet is the leader. As you can see above the
Nokia Facebook groups are very visited. The one with most followers adds up to 2,071,440. People
part of this group receive updates on Nokia phones. They can consult doubts on the products, and
even see Nokia’s portfolio on the page commented by other current owners or potential customers.
(As well as links to their official website. As seen on the first screenshot of Facebook Nokia). This way
of promotion is essential now our days where TV is watched much less given the new medias
available. Furthermore, advertising this way brings awareness to all age groups, specifically young
adults who as we discussed before in the market segment targets are the future.

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Another world famous website, Twitter. Most used in the united states. This websites is similar to
facebook, but mainly transmits Nokia news. Facebook is worldwide popular and also contains this
news feature.

Well our marketing audit focuses mainly on Nokia in Spain. Facebook includes a great portion of users
of all ages in Spain. However, the younger population in Spain tend to have a Tuenti as well as a
Facebook, or simply just one or the other.

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This screenshot shows one of the Nokia groups on Tuenti. With 93.350 users following. Nokia
promotes new phones, applications, news etc for different phones on this web. It even links to other
Tuenti groups opened for specific products.

The marketing mix

Price- The phones that Nokia produce are usually sold at high prices (new phones can be expected to
enter the market at around £200+, if they carry the latest technology). The price of the new phones
usually decreases after an introductory period, which is usually around 2 months long. Nokia's prices
are usually competitor based, in such a way as, they try to keep their prices a bit lower then those of
the closest competitors, but not as low as the "smallest" competition as consumers do not mind
paying the extra money for the "extra quality" they will receive with a well known brand, such as
Nokia.

Place- Nokia phones are generally sold at all established mobile phone dealerships such as Carphone
Warehouse and The Link, although they are also sold at other retailers such as Dixon's and other
electrical suppliers. The products are only sold in the electrical suppliers and stores other then
dedicated phone dealerships after the introductory period so the phones can remain limited edition,
as this will encourage younger consumers to buy them.

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 Marketing Environment and Strategy Audit

Promotions- Nokia tend to promote the new technologies and mobile devices they create using one
big advertising campaign that focuses on a singular technology instead of each individual handset so
they can appeal to a lot of different markets with one campaign.

Product- Nokia phones tend to include all the latest technology and a lot of the consumers favourite
aspects such as text messaging and games like Snake and Memory. When the phones came out they
were big and bulky and quite unattractive but now they are all quite sleek and stylish with phones
now getting small enough to fit in the palm of your hand as standard. Most of the phones produced
nowadays have accessories that consumers must buy with them (carry cases, hands free kits and in-
car chargers) these generate Nokia a lot of profit, as they are very high priced.

Nokia's marketing mix has worked very well until recently as the market they are aiming at has
become more and more saturated and after looking at all the mobile phone sales figures, it looks as if
the phone companies can aim at this same youth market for about another 2 years until they need to
change, but they should change sooner so they can start making a bigger profit and get a head start
on the competition who will also have to change the market they are aiming at. Nokia's current
promotional strategy is working very well as they are able to "talk to" a large number of consumers in
different markets rather then the niche markets the old promotional strategies where restricted to.

As a big company Nokia are able to do a lot of promoting and advertising that smaller, less successful
companies, may not be able to afford, such as television advertising and sponsoring lots of events
that will be viewed or heard by large amounts of people in their chosen market segment (events such
as music festivals and music awards are a goldmine for companies as they are viewed by millions of
people worldwide). Adverts such as television and print adverts will be put into certain areas so that
they can attract their chosen market segment, Nokia tend to put a lot of their print adverts in men's
magazines such as FHM and Loaded so they can appeal to all of their readers instead of a smaller
percentage of the readers they would attract in magazines such as Lifestyle and Good Housekeeping. I
think Nokia's way of promoting is very good as they can appeal to mass markets and large amounts of
people in their chosen market segmentation with certain advertisement's and with sponsoring large
events like the ones I have previously mentioned.

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Pricing strategy

Nokia's current pricing strategy is based on 2 main theories:

1. Penetration pricing- although this strategy is usually for companies that are trying to gain instant
market share in a new market, companies who are already well known in the market still do it with
new products that carry new technologies so they can take more market share form their
competitors.

2. Competitor based pricing- this is used when there is a lot of competition in the market and a
company is looking to take another companies market share by offering the same or similar products
for a lower price, this happens a lot in the communications market and this strategy is used by every
mobile phone producing company that is still in business.

Nokia's pricing strategy has proven very effective, this is down to the fact that they first sell their
products for high prices and have very limited sales but make big profits on each sale, they then lower
the price of their product and have lots more sales but they make less profit, but they still make a
large profit due to the amount of sales, the other reason that they are so successful is that they offer
high quality products and they sell them for the same price and sometimes even lower prices then
the competition and have now built up the highest market share, they currently have 37.2% of the
mobile phone market share and are the biggest selling mobile phone company in the world.

Strategy conclusion

"Our business objective is to strengthen our position as a leading communications

systems and products provider. Our strategic intent, as the trusted brand, is to create
personalized communication technology that enables people to shape their own
mobile world. “
statement translated from www.Nokia.com/es

Nokia are currently creating innovative technology to allow people to access Internet applications,
devices and services instantly, irrespective of time or place. Achieving interoperability of network
environments, terminals and mobile services is a key part of our

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intent.

Nokia need to capitalize on our leadership role by continuing to target and enter segments of the
communications market that we believe will experience rapid growth or grow faster then the industry
as a whole.

By expanding into these segments during the initial stages of their development, Nokia have
established themselves as one of the worlds leading player's in wireless communications and
significantly influenced the way in which voice and other services have been transferred to a wireless,
mobile environment.

As demand for wireless access to an increasing range of services accelerates, Nokia are planning to
lead the development and commercialization of the higher capacity networks and systems required
to make wireless content more accessible and rewarding to the end
user. In the process, we plan to offer our customers unprecedented choice, speed and value.

Nokia has a history of contributing to the development of new technologies, products and systems
for mobile communications. Recent examples include: the commitment to the open mobile alliance;
the co-development of the new operating system for the future terminals
with symbian; short-range wireless connectivity with bluetooth; the development of wireless LANs for
enabling local mobility in fixed LANs; and MMS for enabling mobile multimedia messaging.

In addition, Nokia have continued to be active in IP convergence. They have established alliances with
other service providers in order to make mobile access services easier for the end user.

In conclusion, based on all the information of this section “ strategy” we conclude that Nokia has
developed an effective positioning and marketing mix for each target segment. Nokia is using the best
basis for market segmentation to invest in future customer loyalty (aiming at young people mainly) as
well as servings those with less off a future such as entrepreneurs etc (because they retire, and don’t
need business applications etc in their smartphones. Therefore Nokia has developed accurate
profiles of each target segment.

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RESOURCES:
(Other resources apart from those mentioned on the document)

Books:
Kotler,P. “Marketing 3.0”, Editorial: Prentice hall, 2010
Steinbock Dan, “The Nokia Revolution. The sotry of an Extraordinary company that transformed an
Industry.” , Editorial: Amacon, 2001

Articles:

Online Article: Macroeconomic conditions and distribution of Income in Spain, Lidia Farre-Olalla,
Francis Vella. December 2007. ftp://repec.iza.org/RePEc/Discussionpaper/dp2512.pdf

Websites:

http://investors.nokia.com/phoenix.zhtml?c=107224&p=irol-irhome
http://www.nokia.com/about-nokia/company/vision-and-strategy
http://www.nokia.com/about-nokia/company/story-of-nokia/nokias-first-century
http://www.nokia.es
http://research.nokia.com/

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