Analysis of the mobile phone industry

Mobile phone had become the daily needed element in every ones personal life. It had started its growth slowly. Initial days the major part of the delivery was from the most big electronic equipment producers’ countries like China. Now there was a heavy drift of manufacturing from China to India. India was even producing most cost effective and low cost handsets. Research group ‘Garter’ had made some research to identify the most reliable and best mobile producing and manufacturing company. With just 12 months of its research it came to a conclusion that 68% of the units are produced by India. It had also forecasted that this year also it would be on high scales in manufacturing.

Until 2005 India did not even have a single unit for manufacturing. Due to its low cost of maintenance and cheap labor availability country was able to produce more stable products with more cheap costs. This made a clear way to production to increase dramatically. 31 million mobile phone were produced in the year 2006 according to the Granter reports. Each mobile phone on an aggregate had a street value of US $5.Garter also strongly believes that there will be a consistent growth of nearly 95 million handsets. It also made a prediction by reconciling the history and estimated the growth rate in terms of mobile phone production in market will be of 25%.

With the day to day increase in the mobile connection usages there came up a need for home based mobile manufacturers. With the future of 6.57 million mobile users registering for services in the recent past India is considered as the fast growing mobile market in the world. June 2007 was the beginning in the sub continent fro 178 million mobile users.

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In Bangalore Finnish company elcoteq had set up its first telecom manufacturing company in April 2005. Giant companies like LG and Samsung based from Korea followed suit market leaders like Nokia which came into existence in the year 2006.

Even though Nokia from its planet near Chennai (Madras) has began to export mobile phones to Gulf and Africa states. In addition there are a few locally branded phone vendors and manufacturers such as Spice, Usha Lexus, and BPL that are either manufacturing locally or import the handsets.

Market strategy analysis

In telecom industry to for serving low income consumer in rural and urban areas there is lot of hype in the mobile telecommunications to make their market .There are more than 2.1 billion consumers at the very ‘base of the economic pyramid’, with per capita incomes of less than $1,500. Among all those more than one million which is equivalent to one sixth of world population have $1 income as per capital income, and very few of these have their mobile phones at present. There is also a lot of talk about the social and economic benefits that an increase in mobile penetration can bring to the poorest countries – a recent study by London Business School found that, in a typical developing country, a rise of ten mobile phones per 100 people boosts GDP growth by 0.6 percentage points.

But the penetration of the success of the mpbole networks to low income customers has been patchy at the best.World bank is expecting or estimating that the worlds most population in particulat 75 % are with in the coverage of the mobile networks. Most of the mobile network are focusing on gaining the sutomers from middle class and above middle class. In the growing regions like Asia the mobile penetration in top the lifes of the population are still less than 20% where as in the un grown regions like Africa the mobile pentration rate is still less than 10%.In most cases, MNOs have served the poorest consumers through shared-use models such as GrameenPhone’s Village phone concept in Bangladesh (see textbox), due to the commonly held belief that reaching these consumers is difficult due to two key challenges – affordability and availability.

The affordability of a mobile hand set can be related tgo the high cost of the mobile handset to the poor mans income and its challenges in meeting re occurring costs such as buying recharge cards and minimum monthly amount sent for mobile hand set maintainence. The difiiculty in reaching poor also realtes to the income of the poorer and to the customers who are isolated to the external world – as average revenues per user (ARPUs) fall in the face of increasing capital expenditure (CAPEX) and operating expenditure (OPEX) and distribution/marketing costs, the profitability of these consumers can collapse . This commonly held belief on behalf of both operators and regulators has resulted in various initiatives to address the so called “universal access gap” – universal access funds and subsidies for infrastructure investment in more isolated rural areas being two typical approaches3

TI Case study on mobile market strateget

Now a days the mobile wirle less business stems form the flawed base band startaegy. It just my berish feeling about the mobile industry. Most companys seems like they have mis judged both its competitive landscape and primary customers. Nokia and Ericsson multiple vendore are best performer when compared to TI which has no longer has the strengths in leveraging the manufacturing strategy. (moving towards a fabless model for digital), but it may be late to counter aggressive competition.

TI had also jhandled design losses at sutomers while not neging able to compete with Qualcomm, Interdigital and iCera. This would be considered as its childhood things as if like Broadcom.TI also have like most of the mobile manufacturing companies with majopt baseband provider with wither setup, with their own application products . They also posses their own active development programs running.

There is also a move towards integrated application processor plus baseband processors. This, until now, was perceived as another TI strength that is fast eroding due to smarter competition. TI’s answer which ought to have been a 3G OMAP-Vox chip is conspicuously absent from its product-line.

Thirdly, the fortunes of its connectivity solutions – WLAN, Bluetooth and GPS – are tied with the mobile chipset design wins compounding the company’s wireless woes. Though independent of the OMAP or custom chips, these are often bundled in the mobile chipsets. TI has spent substantial resources on these technologies with cutting edge R&D work. But it has made a conscious decision to focus on the mobile market though each of these connectivity solutions presents a wider prospect. This dependence on mobile not only drastically reduces their total addressable market, but also implies suboptimal utilization of the related advanced research and development work.

In summary, TI’s competitors are carving shares for themselves with niche products and the company seems all but a muted spectator. In the sequel, I will take a brief look at the financial impact of the wireless reverses for TI and the impact of its focus on the application processor segment.

Broadband mobile internet and rich multimedia phones is one of the long predictive is the deliver on its promise to deliver. Now we observe British customers using these technologies in their daily life. This can be said as the conversion of mopbile content into a multi- million pound concern. Most of the major vendors like ITV, Channel4, EMAP and MSN are now deploying ‘made-for-mobile’ media to capitalize on the public’s appetite for mobile content. This can be said as a majot and drastic drift in the mobile technology. These technologies makes the major stake of the market in the mobile world.All most all the major vendors are deploying these technologies to their production to gain market stakes.

Figures below gives a snapshot of the mobile phone usages

Source : http://www.dynamiclogic.com/eu/events/docs/Aerodeon_MobileStrategy_v100.pdf

Mobile phone had now deliver more than brand engagement using the mobile, advertisers. The vertical difference between the mobile phone and its customers or users with the added advantage of mobile advertisement to control the viewing environment provides more meaningful brand relationship.

But choosing the best brand owners and exploiting their opportunities is a typical task and how is that achieved? In which sector will the mobile advertisement helps or plays a vital role ? and how can the mobile marketing accommodates with the established mix to make all the expected and supported marketing objective , along with measured the targets and achieved outcomes ? All these question and doubts related to the mobile techonolgies and its advertisement will be answered analyzed. And we try to define standards and framework that we plan to develop a mobile marketing & advertising stratagey.

Mobile for All

In UK more than 1.2 billion internet pages are traversed and 3.2 billion SMS texts are sent. There are more mobiles than the population of the UK suggesting that many consumers now own multiple phones. More than 80% of the multimedia phones penetrates in 70% of hard to reach to reach youth market. There is a figure derived depending on the number of visits made to the mobile operator portal in figures its 8 million users visited the mobile operators portal in a month and in year 2004 the mobile operator have generated an unexpected revenue of 1.2 billion pounds, which is clear metrics for us to say that mobile advertisement as the potential advertisement medium. It is a wide reached, pervasive and massive.

With the SMS promotions in UK there was brands to communicate with their customers and prospects through mobile. To create and inline and interactive advertising many brands provide instant and creative responses. They use these promotions for sales promotions and to deliver direct marketing message. They reach out the customers using this mode of advertising. Many of these activities related to promotions are now inline with their brands and their agencies. It is also very impossible to construct with out such a good media.

For example:

a sales promotion mechanic targeted at the youth market without placing mobile at its center. Automotive manufacturers regularly include mobile as a direct response mechanism to extend the traditional ad-impression impact to ‘in market’ prospects and provide an instant channel to consumers who want to learn more about the advertised car – all from the comfort of their sofa. And the financial sector – with First Direct leading the charge – have recognized the power of mobile to add consumer value cost effectively, increase loyalty and cross sell new products to frenetically busy 21st century banking customers.

Source: http://www.dynamiclogic.com/eu/events/docs/Aerodeon_MobileStrategy_v100.pdf

On new media 7% is spent annually in UK for a new media as their media expenditure to reach their targets. But this should be expected as every ‘new media’ must pass through the ‘innovator’ and ‘early adopter’ phases of the technology adoption curve. The mobile market still focuses and belives on market forces, consumer demand for mobile content and changing socio-cultural patterns (which are forcing consumers to spend more time in ‘mobile mode’) . They play a vital role and fuel the customers to the exponential growth in the mobile marketing phase and advertising phase.

We can identify many parallel and identical symptoms between their consistent growth in web and the anticipated growth in mobile internet. There are many metrics and critical factors have to be made fruitful and fulfilled before the Internet became an accepted medium for advertisers to reach their

customers.

With the advent of high speed internet and drastically drift from the ‘pay-per-minute’ to the way of showing up the destop like feature with multimedia on the browser. High speed download made the advertisements reach the customers in the most effective manner.The Internet advertising explosion only really started when media owners began to publish online destinations that offered the kind of

coverage that advertisers’ need to meet audience reach thresholds. And to maintain momentum it was essential that industry wide online planning currencies were developed in conjunction with independent studies demonstrating online’s effectiveness.

There are many arguments going on the raising or overwhelming prices with the online web media expenditure. There was a recent study by the face consultancy exemplifies that a specific age group between 16 to 25 are spending more time on the online traversing, browsing through and surfing net than watching TV.

The factors that demand and force the mobile internet before it makes it path will be of no different from parents but there are factors that gaurentee the growth will create a brand new chances and opportunities fro advertisers. Mobile advertising specifically refers to display advertising, that is, any advertising inserted into the stream of mobile media (WAP sites, video, games and music) consumed by your

customers using their mobile handsets.

For developing a mobile advertisement will flourish only with four advertisements

i. The usage of the low and flat rate internet services in UK

ii. The wholesale migration of Web media inventory to the mobile internet.

This may be achieved by the development of new made-for-mobile

content or existing online content may be repurposed and optimised for

mobile browsing.

iii. The development of a mobile media planning currency.

iv. The publication of large scale, peer reviewed independent studies that

demonstrate the effectiveness of mobile advertising in a language that

brands understand.

Nokia Mobile stratagey

Product life cycle-Nokia

Introduction

When mobile phones like Nokia are being developed they are supposed to require a lot of advertising and promotions. These helps in making market to the products. Also Nokia had invested large amount of its budget in promoting and developing of its innovative products. One of the lucky factor that helped Nokia is its competitors. There were no much competitors available when Nokia had first launched its product other than some major vendors like Sony. The price with which the competitors entered into market also helped a lot in achieving the nokia in establishing its foot print.

There are also many factors said below which effects a company standards

Growth

This stage involves basic things like establishing a company into the market with appropriate trade mark. This step involves many factors to be considered like competitors and maintaining standards. It is also the phase where the major cost is involved and making the first foot step into the market.

Maturity

No major cost is incurred in this phase as the brand name reaches the customers and they will be well matured in identifying the best products as per their requirements and the standards they need in the product they choose to use.

Decline

In this stage the height reached from the previous life cycle should be hold to make them selves standard without any potential drifts. It should make its R&D wing to fly fast in making and introducing innovative and competitive products with many features.

In communications market with all the technology stake available. There are many competitors as said below

* Sony Ericsson

* Samsung

* Motorola

* Siemens

* Panasonic

* NEG

* Sagem and

* Toplux

Nokia must keep its hand upper in the market from all its competitors using many market strategies. To be a leader Nokia should keep its strategies running successfully. It should also focus on its principles. Nokia is also considered as the worlds best phone selling organization or company. Nokia with its principles and strong strength in its policies nokia reached its lead postion as No1 vendor in market. It had achived 66 percent growth in 2000 when compared to the year 1999.

Some of the company’s success was attributed to a strong second half in 2000 when

59 percent of sales occurred.

1. Nokia 37.2% (34.7% 1Q02)

2. Motorola 17.3% (15.5%)

3. Samsung 9.8% (9.6%)

4. Siemens 8.5% (8.8%)

5. Sony-Ericsson 5.2% (6.4%)

Source : http://www.123helpme.com/view.asp?id=120850

Marketing principles

===============

There are many priorities within a business, but in a marketing

orientated company like Nokia, many of the following principles will

be high on the agenda:

1. Customer satisfaction:

Many practical and market analysis is required to identify what makes the sutomer more happy. In short known as customer satisfaction.

2. Customer perception: This should make the way the customer expects from the product. The design and development of the product should do in the [perspective of the customer.

3. Customer needs and expectations:

Future analysis and estimation along with expectation about the future needs makes the company sustain .

4. Generating income or profit: This principle clearly states that

the need of the organization is to be profitable enough to

generate income for growth and to satisfy stakeholders in the

business. Although satisfying the customer is a big part of a

companies plans they also need to take into account their own

needs, such as:

5. Making satisfactory progress: Organization should produce the widely acceptable and reliable things to achieve

6. Be aware of the environment: Marinating the environment and cost of the environment and product develop will make you to release the product in the price expected to deliver with. If the environment or any production cost increases it obviously puts its finger in the price of the product, so choosing the environment is vital and crucial to make up the product.

Along with all its policies an organization should also be focused on its external factors which adds value to its market . It should also be aware of some of the major influsing factors like P.E.S.T factors (political, environmental, social

and technological) and also S.W.O.T (strength, weakness, opportunity

and threat).

A business to make its place and to be successful it should take all these constraints into action. These all strategies should be accounted into business to make it a successful enterprise.

Investigating consumer trends

An organization to be in par with the market trends there are factors that should be accounted to make it a successful organization they should do a continuous market research to emerge in the market with new innovative ideas. An important part of this market research is to track out the sales records in order to pin pointed identify the products which are likely to put up its experience in raise in sale. This slanysys not only includes the factors that are raising the sales and increasing the company revenue. It also matters to analyze the products for which the market value is getting degraded. Which sales are likely to fall?

There will be continuous demand in the customers. Changes in customer demand, which continue in the same direction for more then 2 years, show a long-term trend or saturation is occurring within the market. This is definitely a bad market for businesses to

be in (the mobile phone market is in the first year of a continuing

trend) and the company must consider changing their market or product

to a market or product that is currently showing a continuing upwards

trend.

When Mobile phones were first introduced they were not such a popular

item and there weren’t as many competing companies in the market. So

Nokia and a few other companies (Sony and Panasonic) could charge

higher prices then they would in the highly competitive market that

they are in today, as there aren’t so many companies competing for

market share.

NOKIA analysis of SWAT

If a company is going into negative growth there should be some basic analyses that make in identifies the ways to cope with the market as said earlier there are some basic strategies that need to be followed like SWOT analysis. This should be done over the market.

What I have found out by analysing S.W.O.T is that Nokia’s main

weaknesses are:

1. Nokia is promoting the products that were already in the stabilized and saturated state. It is still making its advertisements in the products that are already reached the customer with good and positive feedback. It should focus on its new products and should introduce new products with various features that adds value to its market. It should work with promoting those new launched products with new features.

2. Observed rate of wages from the day the organization have started and the current day have drastically increased. Off course the cost of the environment have also increased daily. To overcome this the organization should focus on re usable products and the machinery which reduces the human efforts. It in turn increases the productivity by reducing the human efforts and their wages.(The average number of employees in 2002 was 52714 and this was a

decrease from 57716 in 2001).

3. Importing of the equipments and the needed materials from the source location had increased drastically.

To counter this nokia should have its organization na d branches setup in all the global areas whene they consume their materials.This intern helps in produciong the products from the area where the materials are available . Which also increases the productivity by reducing the time in exporting an importing. Its also decreases the cost of exporting and importing.

I have also discovered that Nokia have established themselves as one

of the most popular mobile communications companies in the market with

a total of over 52000 sales in 1997 which was a 34% increase from

1996’s sales.

There are also many political factors which is effecting the growth of the company . With the icrease of the G3 technolgy many competetors are using their influence to attain their licence which is a costly affair which has cost companies a total of 110 billion euros so far, are always around to stop Nokia from properly developing strategies and

further conquering the communications market. Also taxes such as

import and export have an affect on Nokia’s development and these are

more-or-less impossible to avoid unless a company can afford to run

factories in every country and continent in the world.

Analysis of my research

———————–

Form the basic analysis that I did to make the market analysis I choosed a specific set of people and age group which gives me the precise information on analyzing the Nokia market. These specialized and selective band of people provided me a group of outcomes. I tried to make some population (a specific group of people) so that I can derive and generalize about the entire world population to determine abput nokia and its standards and the way it penetrated to the population lives.

About 55 percent of people in this world population holds or owns their own mobile phones. From the students population with in the age group of eleven and twelve had already owned a mobile phone. They use it as their main media mum of communications.

I have also observed that the age group of people with the age fourty to fifty does not prefer not to use their mobile phones and do not holds or uses the mobile phone. And the people with sixty five does not hold their mobile phones.My results show that the current youth market has already been capitalised on by the communications companies, and the market has become saturated or is definitely near saturation. This is reflected

in the fact that Nokia’s sales have decreased by 4% and this has been

said by many Wall Street writers to be the tip of the iceberg and they

are prophesising that sales will continue to decrease until the

marketing strategy is revised.

The majority of the people who answered my questionnaire had an income

of £30000-£40000 and this shows that the current market certainly has

enough money to purchase a new phone, the youth market had an average

of under 10000, but as they have the most disposable income are more

likely to buy new models of mobile phones, but if the majority of the

population has a large income they can afford mobile phones but as a

lot of them have families and other financial commitments they may be

a bit apprehensive about spending a large amount of money on a new

mobile phone, so if a phone was launched at this market it should be a

available at a lower price then the phones aimed at the youth market.

My research also showed that “pay as you go” was the most popular

pricing option for the entire population, especially the youth in

which 100% of people had chosen this plan, but in the more mature

consumers they said that they would probably choose a “pay monthly”

system as they would not be bothered with the hassle of “toping up”

every time they ran out of call time. Also I found out that some 75%

of the youth market will change their payment plan to a “pay monthly”

system as the “pay as you go” system had proven to be very expensive,

due to the high call rates to other mobile networks, and because on

the “pay monthly” system you can get free text messages (SMS) and free

call time, but the amount depended on the network you had a contract

with.

My primary research backed up my secondary research and showed that

Nokia was the biggest selling brand of mobile phones, with 75% of my

participants claiming that they owned a Nokia phone, compared to a

very small 7% for Nokia’s closest rivals, Sony. This has shown me that

Nokia are already a very well established brand amongst the consumers

and that they do not need to spend any money (or a small amount if

entering a new market) on promoting the brand as a whole and should

concentrate the majority of their promotional expenditure on singular

models or new technologies that are being discovered or being

released.

My research showed that the most popular places that mobile phones are

bought in are Carphone warehouse and The link which accounted for 85%

of the sales of mobile phones to the people I questioned. Small

dealerships such as selective network outlets and major household

appliance stores, like John Lewis or the O2 stores accounted for a

very small amount of sales (less then 10%). If a phone is to be

successfully distributed it is only logical that it should be released

in the main dealerships before the other smaller outlets if it is

going to reach its maximum selling potential.

According to my research the three most important things that

consumers are looking for in a mobile phone are; long battery life, a

stylish casing, and good SMS (text messaging) features. If a phone is

to be successful in the market environment it must include all of

these, but the consumers have to be told that your product has these

available, this is what the company should try and promote through

advertising and not just the brand name.

I have found out that most people do not conduct heavy research, if

they do any research at all (only 65% did research into mobile

phones), and the most common forms of research are magazines and

window-shopping. This means that it is important for a product to

stand out to the consumer and look good statistically in a magazine so

that it will stand out to the consuming population who research in

magazines, and the people who ask floor sales people for advice on

which handset to purchase.

Price was a difficult variable to analyse as my research has shown

that it was a 50-50 split between people who said price was a key

factor, and those who didn’t really care about the price as long as

the phone was offering everything they wanted, although upon further

inspection most people would not like to spend over £175 on a handset,

but could be persuaded to pay a little more by a strong advertising

campaign or a good all-round package, that includes; cheap call rates,

free text messages and some free accessories, for example, a hands

free kit or an in car charger.

I have also found out that the most popular food shops are Sainsbury’s

and Marks & Spencer, this gives us an idea of where to put promotional

fliers and leaflets about up and coming releases into the market, and

as people are usually bored while waiting in lines for a till, they

will want something to look at and if a flier is conveniently placed

near in the lines then that could get more customers interested in a

Nokia mobile phone instead of one of their competitors, also people

who shop in these 2 main supermarkets tend to be either middle or

upper class and will pay extra for “quality” in brand name products.

Revised marketing strategy

As Nokia’s current sales figures are decreasing and they show no sign

of increasing again

In the near future, I have come up with a revised marketing strategy

that will re-launch Nokia and its products and increase sales to what

they have been in the past, and probably higher then they have been

since they were first released.