mktg fin-case ppt

8/8/2019 Mktg Fin-case Ppt

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CASE STUDY

Ekta Manghwani

Roll no.33


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Guess the company

5 letter word.

It has topped the list of the most trusted brands of India for3 years in a row from 2008-2010.

Tag line- C_ _n _ _ t_ n_ P_ _ _l _


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INTRODUCTION

Nokia launched its first mobile phone, the Talkman, in 1984.

The machine was large and heavy by today's standards but

the company was sure one day everyone would want one.That prediction proved correct.

It became the most successful European company of the

1990s.

Dominant player in Indias Rs.30,000 crore handset market.


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HANDSET MARKET ININDIA-2009

Only 5 local manufacturers in 2008 and the

number stands at 28 now!

Local manufacturers have grabbed 17.5%market share [from 0.9%, a year back]

Nokias market share fell from 56.2% share in

2008 to 54.1% in 2009.


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Contd

Top 5 Local manufacturers of 2009 & 2010

Of the local manufacturers, Micromax leads therace and has increased its market share from 4.8%in 2009 to 8% in 2010.


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Problems

1. Unwillingness to re-invent its business,even if it

meant completely changing its products.

2. It was never located at the heart of theIT industry

, among competitors who might force it to keep

innovating.

3. Since AppleInc. introduced its iPhone in Jan.,

2007,Nokia shares have fallen by 47%.4. Shrinking profit margins & market share.


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Lateentry in dual sim phones

Tariff wars haveresulted in consumers picking upprepaid cards from new entrants to utilizeultra-cheap call rates

So they are opting fordual sims, the USP of mostdomestic handset makers.

Forexample, Micromax launched this feature in 23of the 26 models.

Nokia did not have presence in thisspaceuntil lastmonth when it launched 2 low-cost handsets with thisfeature.


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Main consumer market leaded by

Samsung.

17% market share.


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Micromax giving tough competition to

Nokias low-price models.

Micromax is a challenger brand in the highly competitive

mobile handset market.

It is shaking up the market dominated by MNCs.

It was in 2008 that Micromax ventured into the mobile handsetmarket.

Launched its first phone in the rural market with a very unique

USP- 30 days battery standby time. Micromax X1i priced at

Rs 2150-successful.


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Contd..

Severe logistics pressure -distribution channel

Micromax created a distribution network comprisingof 34 superdistributors, 450 distributors and

around 55,000 retailers.

One of the highlights of theirdistribution strategy

was that Micromax managed to make thesedealerspay in advance by offering them more margins.


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Competition from domestic players

Heavy investment in distribution models in ensuring qualitystandards by domestic players.

Huge pricedifference between the products of domestic

players & that of Nokia. Micromax, Karbonn, Lava & otherdomestic players offer

featurerich phones, providing more value for less money,targeting Nokias core customer base.

Difficult forNokia to match up to its competitors products. Consumers go fordomestic players products because of

price & featuresdespite of quality issues.

Difficult forNokia to compete at this level (Rs.3000) &also match them at features front.


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Contd..

Local manufacturers* have grabbed 17.5%

market share [from 0.9%, a year back]

Only 5 local manufacturers in 2008 and the

number stands at 28 now!


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Global

Handset

Vendor

(Market

share %)

2008 Q1

2009

Q2

2009

Q3

2009

Q4

2009

2009 Q1 10 Q21

0

Nokia 39.8% 38.15% 37.8% 37.3% 37.6% 37.7% 37% 36.1%

Samsung 16.7% 18.7

%

19.1% 20.7

%

20.4% 19.8% 22.7% 20.7

%

LG 8.6% 9.2% 10.9% 10.9% 10.1% 10.3% 9.3% 10%

RIM 2% 3% 2.9% 2.9% 3.2% 3% 3.6% 3.6%

Sony

Ericson

8.25% 5.9% 5.1% 4.9% 4.3% 5% 3.6% 3.6%

Others 24.85% 25% 24.2% 23.3% 24.4% 24.2% 24.4% 26%

Declining global market share of Nokia


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From Porters 5 force model

Rivalry

High concentration ratio-industry dominated by few

players-Nokia, Samsung, Micromax, Karbonn, Spice,

Videocon, Lava

Existence of Cut-throat competition

To regain its market share, Nokia should make

competitive payments to its dealers. Rural distribution model should be strengthened.

Increase the margin of distributors from current level.


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Target Scope

Advantage

Low CostProduct

Uniqueness

Broad

(Industry Wide)

Cost Leadership

Strategy

Differentiation

Strategy

Narrow

(Market Segment)

Focus

Strategy

(low cost)

Focus

Strategy

(differentiation)

Porters generic strategies


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Cost leadership strategy

Cost leadership strategy used by domestic players.

The firm sells its products either at average industry

prices to earn a profit higher than that of rivals, or

below the average industry prices to gain market

share.

As the industry matures and prices decline, the firms

that can produce more cheaply will remain profitablefor a longer period of time.

Nokia should also invest in its technology to

provide a feature-rich phone at competitive prices.


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Differentiation Strategy

Development of a product or service that offers

unique attributes that are valued by customers and

that customers perceive to be better than or different

from the products of the competitors.

The value added by the uniqueness of the product

may allow the firm to charge a premium price for it.

Successful execution of this strategy by Apple iPhone.Corporate reputation for quality and innovation.

Nokia should come up with innovative models to

save its declining market share.


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Focus Strategy

The focus strategy concentrates on a narrow segment

and within that segment attempts to achieve either a

cost advantage or differentiation.

Examples :-

Micromax in lower segment.(CA & differentiation)

Samsung in middle segment.(CA & differentiation)

Apple & Blackberry in high-end segment.

(Differentiation)


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Measures

Become competent in smart phonesegment.

Entry in high-enddevises.

Nokia is launching 3 smartphones this Christmas-E7,

C7 & C6.

Nokia must innovate in midsegment Rs.5000-Rs.8000-new features with low price.

Be proactive to competition.

In Porter's view, thedynamism of markets isdrivenby innovation.

Innovation is the key to success.Nokia must innovate.

mktg fin-case ppt

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