5C Analysis
Nokia was the world’s top mobile handset manufacturer, at least until 2012. In September 2013, Microsoft obtained the company’s Device and Services business, making it a sad ending for a once handset giant. Nokia led the telecom industry for decades in networking and handsets. Starting from a pulp and paper manufacturer in the 19th century, the company moved on to become a consumer electronics manufacturer in the 1980s and then turned their attention towards manufacturing mobile phones in the 1990s. The company has, in many instances, took the path of reinvention, depending on their flexibility in responding to altering markets and focusing on engineering innovation and design (Nokia 2017). However, the late 2000s brought in threats in the form of competition from new low cost Asian mobile manufacturers and the release of iPhone by Apple in 2007 in the form of smart phones. All these pressurized Nokia at the market’s both high and low end which resulted in the dropping of the company’s revenues in 2011 significantly. The deal with Microsoft was supposed to strengthen the financial p[position of the market, which was not the case in the end (Alcacer, Khanna and Snively 2014). This report is aiming to find out what Nokia could possibly do to gain back their previous market dominance.
To positively satisfy all the needs of the customer, an organization must initially comprehend the internal and external situation that comprises of the market environment, customer needs and the business’s own capabilities. Additionally, they need to forecast the trends of the dynamic environment where it operates.
A functional framework that can help in performing this kind of situational analysis is the 5C analysis. 5C analysis is a form of environmental examination of five different areas that are related to marketing decisions. The situations covered by this analysis are internal, macro-environmental and micro-environmental factors. It is an extended analysis of the 3C analysis that comprised the factors of customers, company and competitors, in which some marketers added the 4th C of collaborators and then the macro-environmental factor of climate, resulting in a 5C analysis framework (Hollensen 2015). Following is the 5C analysis for Nokia has been carried out to find out what Nokia can depend on to advance in the market:
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Company |
Nokia has an experience of almost 150 years, in which it was one of the top brands before the advent of Android Or IOS smartphones. They have the factor of being user-friendly and durable, and are still remembered for that. They invest a lot in their R&D for maintaining their user base. They have a vast range of products for their customers at all levels. On the contrary, they lack in innovation department, manufacturing less stylish products. Their high range sets have market-skimming prices as a negative factor. Nokia took a long time to enter the productive smartphone market, which in turn resulted in a huge loss of market share (Still et al. 2013). |
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Collaborators |
Nokia has collaborators that comprise of some Japanese OEMs like Fujitsu, and some other small community of partners. Their partnership with Microsoft was not able to provide the expected results, but Nokia can bank on the partnership and use Microsoft’s positive aspects for their own good. |
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Customers |
Nokia needs to target customers of the ages 25-50, as that makes up 805 of the mobile phone market. Customers are looking for something different now from their smartphones, on which Nokia must focus. The main consumers of their phones must be teenagers and business class people as they are the ones who can bring the maximum revenue for the organization (Virki, Carew and Rigby 2012). |
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Competitors |
Nokia needs to tackle the high competition provided by the market players like Samsung, Apple, Ericsson and Huawei. They need to up their game by adapting to the latest technological advances in the field of wireless infrastructure space (NASDAQ.com 2017). |
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Climate/Context |
Nokia needs to consider the external environmental analyses like lack of support from government, which had once forced them into the alliance with Microsoft. European economic downturn limited the buying capacity of the people. On the other hand, Nokia failed to tap into the expanding Chinese markets. They lack access to economic resources that are available to its competitors. They could not handle the widespread adoption of smartphones, even with their collaboration with Microsoft. Development of android operating systems radically changed the mobile phone market, to which they failed to adapt (Grünewälder 2014). |
Table: 5C Analysis of Nokia
Concentrating on the current market scenario, every organization needs to concentrate on the market competition accordingly every organization needs to undertake several functionalities that can be beneficial for the future prospects.
STP Adjustments
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Segmentation |
Nokia needs to offer new and innovative designs, features and functionality to their customers to cater to their needs and compete with its competitors. Nokia must cater to the premium customers too with high-end phones. Customers today are looking for design and functionality for their active lifestyle. Seamless connectivity and smart balancing features are also necessary for today’s fast moving customers. Nokia should adapt innovative technology for enhancing their features. Special offers must be provided during special occasions and festivities. Regional approach should be taken up by the company to reach a larger number of customers. Targeting both male and female, Nokia must reach out to customers between the age group of 25-50. Women have always been the major target market, on which Nokia must focus on again (Bouwman et al. 2014). |
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Targeting |
The main target market for Nokia must be the males and females between the age of 25-50. Teenagers and business class people would be most focused on consumers. Women would be the major section of these customer groups. They must target people who are looking for something different and strive to cater to their needs. The emerging smartphone markets comprise of teenagers, on whom Nokia must put in the maximum focus (Agnihotri 2015). |
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Positioning |
Nokia must use their partnership with Microsoft and bring in a completely new operating systems for their mobile phones. Innovative handsets must be brought in the market to compete with the advanced models of the competitors. Nokia needs to create a distinct brand position in the minds of the customers with the help of best customer services (Bruggerman et al. 2012). |
Table: STP Adjustments for Nokia
This section would be aiming at providing business and corporate level strategies for Nokia so that they can achieve a strategic focus in the market. To carry this out, SWOT findings would be used to generate both short term and long term options. The opinions generated would then be determining which strategies would be best suited for Nokia to implement.
Short Term Options
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Short or Medium term options |
Strengths · Coordination for acquisitions and alliances · R&D capabilities and knowledge transferring · Developed primary value added services · Flexible corporate governance and decision making · Established brand name and market knowledge |
Weaknesses · No strategic direction · No knowledge ownership · Reactive to market pressures · Extremely high line product diversification · Rigid corporate structure · R&D not fully exploited for innovation |
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Opportunities · Strong market growth · Altering consumer needs and behavior · Focused towards development of differentiation |
· Consolidated product portfolio for focusing on star products · Developing of cloud services or OS |
Increased investment in R&D and innovative product development for expanding the market |
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Threats · Altering industry standards · Heightened price sensitivity of customers · Probable new entrants like IBM, Dell, Panasonic |
· Building or extending strategic partnerships and alliances · Increases vertical integration · Developing entry level products for developing markets |
Reallocating the investments of R&D for their feature phones for creating additional cost efficient production abilities. |
Table: Short or Medium term options for Nokia
Source: (Bala and Singh 2016)
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Long term options |
Strengths · Exploiting new advanced market growth · R&D capabilities in new markets · Increasing brand awareness or power in the new markets · Human capital · Set market experience · Production capacities · Experienced and tested technology and innovation · Knowledge of human resources · Strategic alliances with major industry leaders |
Weaknesses · Partial loss of human capital to developing competition · Poor use of R&D capacities · Loss of financial resources because of decrease in market shares · Sensitive mindset · Limited technology and innovation · Short of financial resources due to vertical integration · Overly dependent on network providers as distribution channel |
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Opportunities · Higher extra cash of clients situated in recently created markets · Advertise entrance/development · Less expensive business costs in declined markets · Key Alliances and Partnerships/Joint-Ventures with contenders and complimentary · Refocus on standard cell phones for rising markets · Forward vertical incorporation for Nokia · Key partnerships with system administrators · Move toward becoming provider of R&D and creation capacities to network administrators |
Increase in production capacity and knowledge of product for increasing economies of scale and economic competence |
Decrease in spending and product consolidation |
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Threats · Trade rates between recently created showcases and declined markets · Increment in cost of crude materials and parts · Asian-isation of items · Absence of information and innovation possession · Negative consequences for brand notoriety because of absence of advancement · Purchasers’ debilitated power · New participants who can cross-sponsor and approach and connections to end-costumers |
Increase in product innovation and product development |
Outsourcing of R&D and focusing on the reduction of production cost |
Table: Long Term options for Nokia
Source: (Franek and Zmeškal 2013)
Product variation: Nokia can bring in product variation strategy for themselves. They can create a main product and then create variations from it. Each variation can have their own specifications (Monroe 2012).
Add-on benefits: Nokia can initiate tie-ups to provide value added services for their customers. During special occasions, they can offer special discounts or coupons for their customers. Alternatively, they can also invest in new applications.
Promotion: Nokia needs to build an interactive and innovative website so that the customers can navigate through it properly and acquire the information they are searching for (Faryabi, Fesaghandis and Saed 2015).
Nokia’s competitive advantage includes:
- Inherent brand image
- Proper and seeded design of products
- Supplier of all forms of mobile phones
- Quality products
- Level of prestige
- Outstanding customer service
- Proper knowledge base (He 2012)
Drivers:
- Real intellectual property
- Dynamic product offerings
- Cost improvement for cause
- Lock on customer base
- Strong differentiation and focus (Rothaermel 2015)
Conclusion
For creating a sustainable competitive advantage, Nokia would require processes, services and value-creating products that would be unmatchable by competitors in the market. Nokia must plan the content for maintaining a position as they scale. They need to have access to adequate resources, growing market, positive marketing, and great human capital to deliver it.
References
Agnihotri, A., 2015. Low-cost innovation in emerging markets. Journal of Strategic Marketing, 23(5), pp.399-411.
Alcacer, J., Khanna, T. and Snively, C., 2014. The rise and fall of Nokia.
Bala, R. and Singh, D.P., 2016. Nokia: Its not over yet, A Come Back in 2016. International Journal of Management, IT and Engineering, 6(2), pp.222-234.
Bouwman, H., Carlsson, C., Carlsson, J., Nikou, S., Sell, A. and Walden, P., 2014. How Nokia failed to nail the Smartphone market.
Bruggeman, J., Grunow, D., Leenders, M.A., Vermeulen, I. and Kuilman, J.G., 2012. Market positioning: the shifting effects of niche overlap. Industrial and Corporate Change, 21(6), pp.1451-1477.
Faryabi, M., Fesaghandis, K.S. and Saed, M., 2015. Brand Name, Sales Promotion and Consumers’ Online Purchase Intention for Cell-phone Brands. International Journal of Marketing Studies, 7(1), p.167.
Franek, J. and Zmeškal, Z., 2013. A Model of Strategic Decision Making Using Decomposition SWOT-ANP Method. In Financial Management of Firms and Financial Institutions 9th International Scientific Conference Proceedings (Part I-III). Ostrava: VŠB–Technical University of Ostrava (pp. 172-180).
Grünewälder, A., 2014. Analysis of Nokia‘s Corporate, Business, and Marketing Strategies: Examination of Nokia’s strategy execution in three steps. diplom. de.
He, N., 2012. How to Maintain Sustainable Competitive Advantages—–Case Study on the Evolution of Organizational Strategic Management. International Journal of Business Administration, 3(5), p.45.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Monroe, C., 2012. An Analysis of the UK Mobile Phone Industry and Nokia’s Strategic Positioning.
NASDAQ.com. 2017. Nokia Corporation Competitors. [online] Available at: https://www.nasdaq.com/symbol/nok/competitors [Accessed 2 Jun. 2017].
Nokia. 2017. Nokia | Networks & Technologies. [online] Available at: https://www.nokia.com/en_int [Accessed 2 Jun. 2017].
Rothaermel, F.T., 2015. Strategic management. New York, NY: McGraw-Hill.
Still, K., Huhtamäki, J., Russell, M.G., Basole, R.C., Salonen, J. and Rubens, N., 2013, January. Networks of innovation relationships: Multiscopic views on Finland. In ISPIM Conference Proceedings (p. 1). The International Society for Professional Innovation Management (ISPIM).
Virki, T., Carew, S. and Rigby, B. 2012. Nokia, Microsoft take high-stakes shot at smartphone market. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/digital-life/digital-life-news/nokia-microsoft-take-highstakes-shot-at-smartphone-market-20120903-259jw.html [Accessed 2 Jun. 2017].
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