Nokia Pricing Strategies

8/3/2019 Nokia Pricing Strategies

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Nokia-Pricing strategies

Group 2


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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 inconverging 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


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Global market share of Nokia


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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


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Nokia

71%

samsung

10%

LG

3%

Motorola

3% sony ericsson

10%

others

3%

Market Share ofMobile Phone companies in India


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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 theorganisation. 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.


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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 longrun 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.


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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 reducethe 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/

Different pricing strategies in Mobile handset industry


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Market skimming strategy

The practice of price skimming involves charging a relatively high price

for a short time where a new, innovative, or muchimproved 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 priceskimming strategy is,

therefore, to benefit from high shortterm profits (due to the newness

of the product) and from effective market segmentation.

Nokia used this strategy for many of its highend products.


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Nokia-segmentation

The first of these segments is Live. This segmentcomprises first time users

whose basic need is to stay in touch, with voice asthe main driver. This

segment would be served basic handsets whichwould be low on features and

price. These will be functional phones and the

target group for these phonesrange from SEC C (low socio-economic class) to

SEC A1+ (very high socioeconomic class)markets.

The second segment Connect comprises moreevolved users who look for

more functionality, features and connectivity.

Accordingly, phones in thissegment would have GPRS, camera and music

capabilities.

The next two segments, Achieve and Explore,consist of high-end users who

would be offered Nokias top-end handsets. Forexample, Achieve segment

comprises company executives who need to havebusiness functionalities in

their phones. Nokias E-series (Enterprise series)

is aimed at this segment withhandsets having Qwerty keyboards and full

Internet capabilities.

Explore would be the most prominent segmentfor the company in the coming

years. This segment comprises high lifestyleusers. This segment would see the

most vibrant growth in the coming years. Thephones aimed at this segment

will focus on five different functionalities:applications, imaging, mobile TV, music andgaming.


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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

theNokia 2710.

The Nokia 3000 series are mostly midrange phones targeted

towards the youth market. Some of the models in this

series are targeted towards young male users.

Nokia 5000 seriesActive series

Many of the 5000 series phones feature a rugged

construction or contain extra features for music playback.


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NOKIA 500-700 SERIES

The Nokia 6000 series is Nokia's largest family of phones. It

consists mostly of midrange to highend 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

fashionconscious users, particularly towards women.

Some phones in this family also test new features. The 7000

series are considered to be a more consumeroriented

family of phones when contrasted to the businessoriented

6000 series.

Nokia 8000 series Premium series

This series is characterized by ergonomics and

attractiveness.


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NOKIA-PREMIUM SERIES

The Nokia Cseries is an affordable series optimized for

social networking and sharing

The Nokia Eseries is an enterpriseclass series and includes

businessoptimized 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.


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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 itsdesign and customization, with

removable covers.

Due to underdeveloped

infrastructure base only the

premium segment was targetedwith the then price being 18000

In 2004,after easing of

government regulations,

increased competition, the

product was made available at

800010000


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NOKIA-6600

The Nokia 6600 is a mobile

phone launched in Q2 2003, costing

2100022000.

In november 2004, the price was

150001600

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.


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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, Wi-

Fi, 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


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Analysis on Nokias Pricing strategy The aforementioned examples highlight how Nokia effectively

used the marketskimming 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 highend

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


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Analysis on Nokias 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.


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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.

Nokia Pricing Strategies

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