No more a wanted brand, nokia is working to charm app-loving consumers like apple and samsung are. in 2011 it couldn’t. can it this year?
Back in the early 2000s, Indians didn’t buy a mobile phone. They bought a Nokia. Not anymore.

Competition has chipped away at Nokia’s citadel sans remorse since the first half of the previous decade. From over 75% market share in India in 2006 and over 70% in 2007 (in terms of volume sales), Nokia’s share fell to 54.1% in 2009 (as per IDC) and to a lower 39.0% in 2011 (as per Voice & Data). 2012 has been more unforgiving. As per GfK-Nielsen data, for Q1, 2012, the Finnish giant’s share in the country fell to 36.9%. Here’s a quick check on how Nokia’s brand image has accompanied its diminishing sales in the journey downhill: six years back, in 4Ps B&M’s Most Valuable Brands ranking Nokia was the 3rd most valuable brand in the country. In 2012, it is at no. 73. A long fall you would reckon. Indeed.

So what got the better of Nokia? It is to be remembered that Nokia became a success in India not only because of its strong distribution partnerships, but investments in innovation and brand-building too. More than anything, it was the brand recall and the small surprises from Nokia that made Indian buyers happy. All this has changed over the past couple of years. Little wonder that from being the leader globally a year back by a handsome margin, Nokia has today been relegated to the #2 spot by rival Samsung (with a 23.5% share as opposed to Nokia’s 20.8%; source: IDC Worldwide mobile phone tracker).

The story of the fall of Nokia, the dramatic revival of Samsung, and the advent of Apple can be told in the same breath. Post-2009, Samsung and Apple moved on with the times. Nokia chose to run backwards. The ambush of smartphones in 2010, highlighted by launches like the 3G version of the iPhone series, and Samsung’s Android-based Galaxy range, saw the beginning of the end of Nokia’s misery drive on the outdated, bug-laden Symbian and MeeGo platforms. When 2010 ended, Nokia seemed to be headed nowhere.

Lost for words and stuck in an ecosystem marked by snowballing demands from smartphone users in the form of more user-friendly app stores and higher quality operating softwares, Nokia made a smart move early last year (February 2011) – a quick patch-up with Microsoft in its attempt to surf the smartphone tide on the Windows Phone 7 (WP7) version surfboard. It was decided that Symbian and other OS platforms would be wounded up over the course of two years as they were failing to compete with Android and iOS. It was a different shot at survival for Nokia. With the deal, it tried to revive its chances of changing a future that appeared discouraging owing to declining profits and brand value. It agreed to sell WP7 across wider price points and in more number of markets. In Q4, 2011, Nokia shipped its new smartphone innovation – the Lumia range. The company also spent over Rs.200 crore ($40 million) in marketing and advertising to create awareness about the Lumia launch (globally it spent $300 million together with AT&T and Microsoft). Posters of the smartphone flooded the Delhi Metro stations, and popular public places in Delhi, Mumbai, Bangalore et al. The ATL campaign, “The Amazing Everyday”, included a helicopter ride for consumers in Bangalore, Hyderabad and Chennai, an interaction with tennis star Sania Mirza at Ambience Mall in Gurgaon, a dance performance by a foreign troupe in Mumbai, a musical event in Delhi, and even toll exemptions for more than 15,000 cars at DND Freeway connecting Delhi and Noida. Even a Lumia Sky Party was organised where winners from a Facebook contest were taken for a free 45 minute ride in a Lumia branded Jet Airways plane. But the outcome was not pleasing.
Even until Q1, 2012, the new OS-based phone had failed to amuse buyers. Bad news. For every Lumia handset that was sold by Nokia in the past quarter, it was selling five (destined-to-be-killed) Symbian OS handsets. Nokia did succeed in creating a buzz with its Lumia 800 smartphone – but even in a market where the smartphone category has been growing at a rate of 87% y-o-y (in 2011), the new launch has failed to entertain prospective buyers. Vendors have called the Lumia range overpriced and a product that lacks innovation. Unlike the “iPhone killer” it was touted to be a few months before launch, the product has seen industry watchers complain of battery issues, software glitches and a lack of solid marketing. Translation: when everything about the Lumia – from the hardware to its advertising – is a problem, how could it improve Nokia’s brand value? As expected, it didn’t.

If 2012 is to be different, Nokia has to deal with multiple challenges. First, it has to increase meaningful advertising activity multifold and soon. No one walks into a store today to buy a Windows Phone. So Nokia has to first get consumers to believe that Nokia is good and Windows is good. Second, the company has to work out a way to get its consumers tuning-in to the Microsoft Marketplace (app and media store) that appears to have absorbed Nokia’s Ovi store for no good. Third, it has to get a good deal done with Microsoft to ensure that “property” problems are not shared. Two examples: Bing has 1.27% of the search engine market .The WP7 loaded Nokia runs Bing and not Google which controls over 97% of the Indian search market. Zune music player was a failure in India (and US). The WP7 OS has preloaded Zune player and music store.

Android and iOS handsets are bestsellers today because they do what Nokia doesn’t at present – engage users. Blame Lumia or Nokia if you will for not having spiced up its WP7 offering, but Lumia hasn’t helped Nokia’s numbers. Twelve months back (Q1, 2011; data by IDC), Nokia’s smartphone market share was 23.6% and it was the world’ no.1 smartphone seller (far ahead of Apple, RIM and Samsung which had shares of 18.3%, 13.6% and 11.3% respectively). This year (Q1, 2012), Nokia’s share in this segment has fallen hard and fast to 8.2%, while that of Samsung (the new #1) has increased to 29.1% and Apple (#2) to 24.2%. Lumia hasn’t been the magic potion it was believed. It hasn’t done much good to Nokia’s brand value either.

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Source : IIPM Editorial, 2013

An Initiative of IIPMMalay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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