Nokia is one of the earliest firms to venture in the phone manufacturing and selling business. Actually, it was the first company to make transportable phones back in 1984 which could be used in and outside of a car as well as the pioneer of the current mobile phones. In its prime years, the company used to make a lot of profits which often went up to a tune of more than 35% in almost all phones which it brought to the market. However, poor Market analysis which led to the delay in adoption of the drastic changes in the smartphone revolution dwindled the company’s profitability leading to its absorption by Microsoft in 2014. This paper therefore seeks to analyse the specific components of Marketing planning process which were least effectively conducted by the Nokia Company and their subsequent impact on the organisation’s marketing performance
Marketing planning process
According to Horáková et al (2017), marketing planning process is the act of generating and upholding a balance between what a business aims to achieve vis-a-vis its abilities to do that while operating in a dynamic environment. It represents the use of appropriate marketing resources with an aim of achieving certain marketing goals and objectives. Basically, this process is continuous in nature as the needs of customers as well as the operating environment of a business continues to evolve. Although the stages of this process may differ from one organization to another (due to the nature and the size of a business), the overall foundation of providing integral support towards the realization of a company’s goals and aspirations remains the same. At the basics level, marketing planning process will consist of five broader components which are made up of smaller integrals. These components are mission, situation analysis, marketing strategy, marketing mix, and implementation.
Evaluation of the least effective key components of the marketing planning process in Nokia
The Nokia sales deterioration from 2007 (appendix 1) depicts that something was going wrong in the marketing realm of the company. according to Laamanen (et al 2016), it is during this time when iPhone and touch screen android phones had started to become popular and big companies such as Apple, LG and Samsung were initiating their dominance in the market. On realizing this, Nokia released its first touch screen phone known as the 5800 Xpress Music. Although this phone got some big sales of approximately 800 million, the company had got no solid experience in this kind of phones and therefore it faced a stiff competition. This led to the reduction in its profits in the third quarter of 2008 by 30% while the profitability of the competitors increased (Laamanen, et al, 2016). Actually, at the same quarter, Apple recorded a profitability increment of 330 %.
In the struggle to remain relevant, Nokia collaborated with Microsoft via a strategic partnership to come up with windows phones in 2011. The results of this alliance was Nokia Lumia 800 and 710 of which despite being successful in sales could not match the competitors’ dominance. The final blow to the company came when it released Lumia 910 in 2012. This phone reconceived a lot of mixed reactions as some people criticised it of being bulk and of big size (Laamanen, et al, 2016). Unable to sustain its operational costs vis-a-vis the sales returns, the company sold its assets and services to Microsoft in 2014.
The problems of Nokia can be perfectly related to poor decision making from the side of its marketing department. Although the CEO of the company; Stephen Elop said in his speech back in 2013 that they did nothing wrong despite their loss, it is obvious that they stumbled when it came to the marketing planning process especially on the components of situation analysis and marketing strategy.
Situation analysis focuses on evaluating the internal and external parameters that affect the operations of a business. While planning marketing approaches, this analysis component will reveal the challenges as well as the threats which a business might face either from an internal or external environment (Cravens & Piercy, 2006). Therefore, when done appropriately, situation analysis will provide a candid outlook on the health of a business as well as denote the industry trends which might influence the position of a business in the marketplace. Several methods can be used to conduct this type of analysis. These include the SWOT, PEST, and the 5Cs analysis. In the SWOT method, the aim is to understand the strengths, weaknesses, opportunities, and the threats which a company might be experiencing or will probably face in future. When it comes to PEST, the concern here is on various macro factors which might influence the performance of a business. These factors are the political, economic, social, and technological factors. Finally, the 5Cs represents the various aspects about the customers, the company, collaborators, competitors, and the operation climate.
While performing the marketing planning process, the Nokia Company did not effectively conduct this component of situation analysis. If it did, the company could have noticed the changing trends in the mobile phone industry and adjust its marketing tactics appropriately by modifying its products. However, the scenario evident is that of a firm which learns about the existing gap in the market when the competitors have already occupied the gap and positioned themselves firmly. Therefore, it becomes difficult to displace the competitors and still manage to dominate the market. According to Cravens & Piercy (2006), the impact of conducting a poor situation analysis while planning marketing approaches is coming up with ineffective decisions which might compromise the sales of a given firm. This what happened to Nokia which due to ineffective assessment of situation analysis made it to remain adamant in embracing the change at its early stages. This rendered the company irrelevant considering the largest share of market had been absorbed by the likes of Apple, Samsung, and LG who had adopted the android technology at its infancy stages.
Another component of marketing planning process which was done ineffectively by the Nokia Company was the market strategy. According to Houben et al (1999), a market strategy is a plan of action which is crafted by an organization to enhance the promotion as well as the selling of its goods and or services. A marketing strategy consist of three aspects; characterisation of the target market, setting of SMART goals, and developing a budget. In order to evaluate the success of a market plan, it is imperative to have goals which can be easily measured. These goals should be specific, attainable, and relevant from a business point of view. When it comes to budget, it is all about allocation of resources which are enough for effective implementation of the marketing plan. Finally, the target market characterization has to do with understanding the needs and the preferences of the customers. Here, the marketers have to continually analyse what the customers want and propose effective customization of product(s) to fulfil the ever changing needs of customers.
This aspect of customer characterization as an integral of market strategy is where the Nokia failed. If this characterization had been done effectively, the company could have noticed early enough that a new customer need had been created by the competitors in the mobile phone industry. For the company to know that, it ought to have got a continuous assessment of its market strategy so as to ascertain any developments in its marketing niche. Therefore, this was a weak point which might have highly contributed to the downfall of this telecommunication giant. According to Houben et al (1999), when the market strategy, as a part of marketing planning process is poorly executed, the ultimate impact upon implementation of the marketing plan is poor satisfaction of the customer needs and preferences.
Marketing planning process starts by defining the mission of a company and identifying its goals and objectives. This is followed by formulation of a strategic path of a business and subsequently finding the opportunities which can make it grow further. All this is done in consideration with the resources at the exposure of a business. When done in the right manner, marketing planning can help managers to forecast developments, get ready for change, and respond quickly to unexpected occurrences. This will avert imminent down surge in market performance which is likely to occur if these parameters cannot be accommodated appropriately. This will also enhance the likelihood of utilizing the opportunities in the market as well as eliminate threats which are likely to occur in a volatile business environment. In line with these facts, the following would have been the recommendation to Nokia Company if it had to retain its position as a global giant in the telecommunication sector:
Implement a bi-annual situation analysis: the company should have carried out a SWOT analysis twice per year. In doing so, it could have identified the level of threat to its existence as well as understand the opportunities at the market. Being the first company to invest in mobile phones technology, the company had all the means and capabilities to identify the market gap in android technology and act appropriately. Therefore, carrying out a SWOT analysis twice per year could have helped the company identify the potential areas for further growth and elimination of stiff competition.
Continuous assessment of the needs of target market : since the needs and wants of customers are ever changing, it is important to constantly conduct an assessment survey to determine whether customers have developed other preferences in the same line of services and or products. Therefore, Nokia could have carried out a continuous analysis of its target market with an aim of understanding the new development in technology consumption behaviour. In doing so, there is high probability that the company could have noticed the drastic shift towards smartphones early enough and act appropriately.
Cravens, D. W., & Piercy, N. (2006). Strategic marketing (Vol. 7). New York, NY: McGraw-Hill.
Horáková, H., Švarcová, M., & Volf, L. (2017). Marketing planning process-reflection on the comp lex of activities that affect all aspects of business life. Marketing Science & Inspirations, 12(2).
Houben, G., Lenie, K., & Vanhoof, K. (1999). A knowledge-based SWOT-analysis system as an instrument for strategic planning in small and medium sized enterprises. Decision support systems, 26(2), 125-135.
Laamanen, T., Lamberg, J. A., & Vaara, E. (2016). Explanations of success and failure in management learning: What can we learn from Nokia’s rise and fall?. Academy of Management Learning & Education, 15(1), 2-25.
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