Will Lower Prices Help Nokia Regain Its Edge?For years the Finnish electronics giant Nokia

| July 19, 2015

Will Lower Prices Help Nokia Regain Its Edge?For years the Finnish electronics giant Nokia

Will Lower Prices Help Nokia Regain Its Edge?

For years the Finnish electronics giant Nokia owned an enormous share of the world’s cell phone market, easily beating out early competitors such as Motorola and Sony Ericsson. Recently, however, it has found itself facing competition from Apple’s iPhone, which has begun to lower its prices, and from Research in Motion’s BlackBerry devices. The company seems to be trying various strategies, but some observers think Nokia has lost its strategic focus. Nokia’s chief executive, Olli-Pekka Kallasvuo, announced that the company would focus on software, citing a deal with Microsoft to create business-oriented mobile applications. Another executive declared that Nokia would become the “world’s biggest entertainment media network.” Indeed, it recently launched its “Comes with Music” downloading service, which was the first of its kind in the Middle East. But it has done poorly elsewhere due to stiff competition from Apple’s iTunes. Yet another executive announced the debut of the Booklet 3G, a laptop computer that would make the “personal computer more social, more helpful, and more personal.” At a meeting in New Delhi, India, Tuula Rytilä-Uotila, Nokia’s vice president of products, announced that the company planned to lower the prices of Nokia’s smart phones. “We want to take smart phones to a wider audience by bringing down the prices of such phones. The strategy is to be present in all price ranges.” The company hopes to stimulate demand for its low-end mobile phones and perhaps put some indirect pressure on Apple and Research in Motion, whose handsets are more sophisticated.

 

Questions for Critical Thinking

1. Do you think Nokia will regain lost ground with its new pricing strategy? Why or why not?

2. Will Nokia’s low-end cell phones make good loss leaders (a product sold at a low price to stimulate other sales)? Why or why not?

 

Sources: Company Web site, www.nokia.com, accessed May 11, 2010; Arik Hesseldahl, “Nokia’s Kallasvuo: We Must ‘Move Even Faster,’ ” BusinessWeek, April 22, 2010, http://www.businessweek.com; Mark Ritson, “Nokia Brand Needs Firm Direction,” Branding Strategy Insider, April 5, 2010, http://www.brandingstrategyinsider.com; Abbas Jaffar Ali, “Nokia Announces the X6 and ‘Comes with Music’ Service for the Middle East,” T-Break Tech, February 11, 2010, http://tech.tbreak.com; John Paczkowski, “Nokia Agitating for a Handset Price War?” All Things Digital, February 1, 2010, http://digitaldaily.allthingsd.com.

 

 

Q161

Choose a product that you purchased recently. Identify the various media that were used to promote the product and analyze the promotional mix. Do you agree with the company’s marketing strategy, or would you recommend changes to the mix? Why? Create your own print ad for the product you chose, using any business strategies or knowledge you have learned in this course so far.

 

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