Nokia-Pricing strategies

Group 2

About Nokia
Nokia Corporation is a Finnish based multinational communications corporation that is headquartered in Keilaniemi, Espoo a city neighboring Finland's capital Helsinki. Nokia is engaged in the manufacturing of mobile devices and in converging Internet and communications industries, with over 132,000 employees in 120 countries, sales in more than 150 countries and global annual revenue of over 42 billion and operating profit of 2 billion. Its global device market share was 23% in the second quarter 2011. Nokias the most predominant player in the mobile phone market. In an industry characterized by constant innovation nokia was a step ahead in predicting change and strategizing accordingly. It uses multiple pricing strategies. Each segment is uniquely catered to through price and product differentiation.

Global market share of Nokia

Nokia-India
Nokias Entry in India: Nokia entered India in 1995. Third Largest Telecommunication Market 500 million mobile subscribers in India: The Indian market is adding about 10 million users a month. Nokia sees the Indian market as a growth opportunity particularly in the countrys rural areas. Rural penetration in India is still very low at 13 Indias Most Trusted Brand Nokias Made for India phones: In 2000, Nokia introduced the Nokia 3210 with a Hindi menu. In 2003, Nokia launched the Nokia 1100, a first Made for India phone. Nokias competitors in India: Motorola, Sony Ericsson, Spice, MacroMaxx, Karbonn, Lava, Lemon, Oscar

Market Share of Mobile Phone companies in India

others 3%

Motorola 3% LG 3%

sony ericsson 10%

samsung 10%

Nokia 71%

Pricing
Pricing is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the organisation. . Pricing is difficult and must reflect supply and demand relationship. Pricing a product too high or too low could mean a loss of sales for the organisation. Pricing should take into account the following factors: 1. Fixed and variable costs. 2. Competition 3. Company objectives 4. Proposed positioning strategies. 5. Target group and willingness to pay.

Different pricing strategies in Mobile handset industry

Penetration Pricing: This pricing strategy is followed by companies with the intention to maximize their market share. They believe that a higher sales volume will lead to lower unit costs & higher long run profit Example: In the year 2003, LG and Samsung along with Reliance came up with Rs. 500/- mobile scheme where both handsets along with connections were available for Rs. 500/-. This was something which revolutionized the mobile phone and telecom industry. Perceived value Pricing: In this case the pricing is done based on the customer's perception about the company and its product. Perceived value is made up of several elements such as buyer's image of product performance, the channel deliverables, warranty,quality and even softer attributes such as supplier's reputation.

Different pricing strategies in Mobile handset industry

Value Pricing: This is pricing strategy in which a company wins loyal customers by charging a fairly low price for a high quality offering. Product form pricing: Different versions of the same product are priced differently

Special Event Pricing In this case special prices are offered during special occasions like festivals to increase the sales. Low-Interest financing: Company can offer low interest financing to customer. This will reduce the burden of initial cost to the customer. Psychological Discounting: This is done to make the customer believe that product is priced cheaply or some cases just break the price barrier that customer has in his mind like price at price Rs. 999/ which is priced just below Rs. 1,000/

Market skimming strategy

The practice of price skimming involves charging a relatively high price for a short time where a new, innovative, or much improved product is launched onto a market. The objective with skimming is to skim off customers who are willing to pay more to have the product sooner; prices are lowered later when demand from the early adopters falls. The main objective of employing a price skimming strategy is, therefore, to benefit from high short term profits (due to the newness of the product) and from effective market segmentation. Nokia used this strategy for many of its high end products.

Nokia-segmentation
The first of these segments is Live . This segment comprises first time users whose basic need is to stay in touch, with voice as the main driver. This segment would be served basic handsets which would be low on features and price. These will be functional phones and the target group for these phones range from SEC C (low socio-economic class) to SEC A1+ (very high socioeconomic class) markets. The second segment Connect comprises more evolved users who look for more functionality, features and connectivity. Accordingly, phones in this segment would have GPRS, camera and music capabilities. The next two segments, Achieve and Explore , consist of high-end users who would be offered Nokia s top-end handsets. For example, Achieve segment comprises company executives who need to have business functionalities in their phones. Nokia s E-series (Enterprise series) is aimed at this segment with handsets having Qwerty keyboards and full Internet capabilities. Explore would be the most prominent segment for the company in the coming years. This segment comprises high lifestyle users. This segment would see the most vibrant growth in the coming years. The phones aimed at this segment will focus on five different functionalities: applications, imaging, mobile TV, music and gaming.

NOKIA-PRODUCT LINE
The Nokia 1000 series include Nokia's most affordable phones. They are mostly targeted towards developing countries and users who do not require advanced features beyond making calls and SMS text messages, alarm clock, reminders, etc. The 2000 series are entry-level phones. Many new 2000 series phones feature color screens and some feature cameras, Bluetooth and even GPS such as in the case of the Nokia 2710. The Nokia 3000 series are mostly mid range phones targeted towards the youth market. Some of the models in this series are targeted towards young male users. Nokia 5000 series

Active series

Many of the 5000 series phones feature a rugged construction or contain extra features for music playback.

NOKIA 500-700 SERIES

The Nokia 6000 series is Nokia's largest family of phones. It consists mostly of mid range to high end phones containing a high amount of features. The 6000 series is notable for their conservative, unisex designs, which make them popular among business users. Nokia 7000 series Fashion and Experimental series Most phones in the 7000 series are targeted towards fashion conscious users, particularly towards women. Some phones in this family also test new features. The 7000 series are considered to be a more consumer oriented family of phones when contrasted to the business oriented 6000 series. Nokia 8000 series Premium series This series is characterized by ergonomics and attractiveness. Nokia 9000 series Communicator series

NOKIA-PREMIUM SERIES
The Nokia Cseries is an affordable series optimized for social networking and sharing The Nokia Eseries is an enterprise class series and includes business optimized smartphones The Nokia Nseries is Nokia's most advanced smartphone series. It is for people who wish to have advanced multimedia and connectivity features and as many other features as possible into one device The Nokia Xseries targets a young audience with a focus on music and entertainment The Nokia Lumia series is a series running Windows Phone OS.

Models where NOKIA used Skimming strategy

The Nokia 8250 was, at the time of its release in 2000, the smallest, lightest Nokia mobile phone on the market, thus its selling point was based on its design and customization, with removable covers. Due to underdeveloped infrastructure base only the premium segment was targeted with the then price being 18000 In 2004,after easing of government regulations, increased competition, the product was made available at 8000 10000

NOKIA-6600
The Nokia 6600 is a mobile phone launched in Q2 2003, costing 21000 22000. In november 2004, the price was 15000 1600 Later in 2005 the price is 9000 10000 It was Nokias high-end model of the Business Series of mobile phones. At the time of release, it was the most advanced product ever launched by Nokia, and it runs on the Symbian OS-based Nokia Series 60 platform. It also featured a VGA camera,

NOKIA 9500
Nokia 9500 Communicator is a smartphone produced by Nokia, introduced in 2004. It runs on the Symbian-based Series 90 platform. Connectivity features of the 9500 include: Bluetooth, infrared, USB, WiFi, GPRS Built-in software includes a word processor , spreadsheet and presentation program, which are compatible with the Microsoft Office suite equivalents; also featured is an MP3 player. In make full use of the unusually large and wide screen, so that many existing Java games will run, but only use the top left hand

Analysis on Nokia s Pricing strategy

The aforementioned examples highlight how Nokia effectively
used the market skimming strategy for its products. This strategy was used at the right time and in right order of models released. Market skimming is an apt strategy specially for high end products. As a high price would mean high quality in the minds of customers. For every new release of a snazziest model Nokia successfully skimmed the market. After the early adopters, the company decreased price to target the late adopters. Its pricing strategy for many of its products was successful in propelling Nokia to be the global as well as Indian Market leader.

Analysis on Nokia s Pricing strategy

Penetration pricing would have been ineffective on several grounds: Difficult recovery of R&D costs Smearing Brand image Not much effective for premium segment. Penalized entry of other competitors. Limited scope for product differentiation.

Conclusion
Pricing is an element of marketing mix. A company can remain in the business for a longer time only if it uses all the elements of marketing mix successfully. Nokia is threatened by competitors in price and product fronts. For it retain its leadership it must concentrate more on the product element along with rest of marketing mix elements.