nokia brand equity analysis

Nokia Brand Equity Analysis

Table of Contents

Executive Summary

1. Issues and objectives of the project

2. Methodology

3. Competitor’s and External Analysis

4. Internal Analysis of Nokia Corporation

5. Survey Findings

6. Brand Equity Analysis

7. Conclusion

8. Recommendations

9. References

10. Appendices


Executive Summary

Nokia is a powerful Brand. It is a truly global Brand. Key theme of Nokia is to accelerate and innovate.

Nokia is focused on innovative ways of working together with the telecom service operators to

accelerate growth in the mobile market. But the current year (2004) is tough time for the mobile-phone

giant as its market share has slipped and younger buyers turn to rivals such as Samsung. It has a dual

challenge in front of it. The First one is growing and building brand on its core competency of

innovation and technology leadership. The second one is managing its brand well, so that it remains the

leading brand in the segment. Nokia must rethink its strategies if it is to meet these challenges. The

recent social, technological, economic, and political and customer preferences have forced Nokia to

take aggressive measures to adapt and grow and remain profitable.

The project report in the subsequent pages outlines some of the ways through which Nokia can

accomplish this. Nokia has to keep a good handle on the pulse of the market and its B2B customers and

end users. It must build its brand around its core competency of brand differentiation and technological

leadership. Nokia also needs to bring new products to market, and, as the market is showing signs of

saturation, shift its focus onto the replacement market. Finally, by forming strategic alliances with

various stakeholders (viz. operators, consumers, scientist, developers and research community,

governments and communities), Nokia can ensure maximizing its brand awareness and brand image to

the end- user. As long as Nokia is open to reworking its branding strategies, it stands a good chance of

remaining the dominant player in the handset market and perhaps can regain and consolidate its lost

glory in terms of high brand equity valuation.

1.0 Issues and Objectives of the project

Nokia’s current brand valuation has dropped from 6th position last year to current 8th position causing a

corresponding loss in its brand value of over $5Billion (please refer to the table provided below).

Samsung is narrowing the gap fast between itself and the leader. World handset industry is changing

fast.

Indicators Year 2003 Year 2004

Brand Rating 6 8


Brand Value $M 29,440 $M 24,041

% Change -18%

Country of

Ownership

Finland* Finland*

Table: Nokia’s Brand rating and Brand Equity Valuation over the last two years

Source: Top 100 Brands: Business Week August 2004

* Assuming that due to high flux and volatile marketplace country of ownership may change due to

restructuring or acquisition and merger

Other questions facing Nokia amidst the big strategic issue are - should Nokia continue building its

brand when there may not even be a handset in ten years from now? Should Nokia continue with its

current technology leadership position or compete on cost too? How can it grow and remain profitable

at the same time? What marketing mix strategy shall be most appropriate for it?

2.0 MethodologyWe adopted the following methodology in this project: -

1. Industry/company analysis based on secondary research

2. Primary research, including analysis of data based on survey of consumers, interviews with

channel members and comparison of brands in stores

3. Analysis of information gathered through primary and secondary source

4. Conclusions and recommendations

Diagram: Project Methodology

3.0 Competitors’ and External Analysis

Competitors’ and

External Analysis

Diagnosis and Analysis based on Aaker’s Brand Equity Model

Recommendation

Conclusion

Internal Analysis

Survey


Dr. Martin Cooper invented the first modern mobile phone in April 1973. (Marry Bellis, 2002) From

then on, mobile phone industry came into being. Mobile phone system can be divided into three

generations. The first generation was analogue system. In 1991, the second-generation: digital system

was invented and got a huge success. This system was supported by unified standard that was agreed

upon (Global system for Mobile) globally. In 2002, the third generation system (also digital) came into

being. (David Cruickshank, 2002)

From 1973 to 2004, the growth in the use of mobile phones has been dramatic. In 2004, there are 1.52

billion users of mobile phones worldwide and this high growth rate will continue. (Profit, Loss and

Value Added, 2004) Nokia has expected that the mobile phone industry in 2005 to grow approximately

10% in volume from the 630 million units as well as in value, but to a lesser extent. Also, the global

mobile subscriber base to surpass two billion users in 2006. (Nokia defines goals and actions for

leadership in dynamic mobile communications market, 2004)

In the mobile phone industry, there is no a recognized segment definition. However, Nokia, the No.1

player in the world, has divided the market into four segments (See table). (Connecting people, 2001)

Hi-fliers Corporate executives who use a mobile phone to increase productivity at work.

Aged between 25-45. The company sponsors the handset; hence price is not a

major consideration.Trendsetter

s

The first segment to adopt an emerging technology (the early adopters). For

Nokia, these early adopters are 'Trendsetters' who are most receptive to

advanced models. Social

contact

The third segment for Nokia is the upwardly mobile, socially conscious

segment that uses a mobile to stay in touch. Today's youth and affluent

housewives constitute two major chunks of the segment.Assured High-profile celebrities, industrialists and other high "net worth" individuals.

The fact that the segment cannot do without a mobile phone makes it the

'assured' segment. Source: theManageMentor

Currently, several key manufacturers dominate the whole mobile phone markets. Nokia, Motorola,

Samsung are the top three. In the first quarter of 2003, Nokia got a 35% market share, followed by

Motorola (14.7%) and Samsung (10.5%).


Table 1 Worldwide Mobile Terminal Sales to End-Users Estimates for 1Q03

(Thousands of Units)

Company 1Q03 Sales

1Q03 Market

Share (%)

1Q02

Sales

1Q02

Market

Share (%)

Growth

(%)

Nokia 39,479.20 35 32,649.00 34.2 20.9

Motorola 16,561.10 14.7 16,804.30 17.6 -1.4

Samsung 11,878.90 10.5 8,890.40 9.3 33.6

Siemens 8,584.60 7.6 8,121.40 8.5 5.7

Sony

Ericsson 5,384.80 4.8 6,000.80 6.3 -10.3

Others 30,785.50 27.3 22,867.20 24 34.6

Total

Market 112,674.10 100 95,333.10 100 18.2

Source: Gartner Dataquest (June 2003)

Competitor analysis

Motorola

“For more than 75 years, Motorola has proven itself a global leader in wireless, broadband and

automotive communications technologies and embedded electronic products.” (About Motorola, 2004)

However, Motorola is significantly recognized as the world's leading providers of mobile phone, which

role as pioneer, innovator and visionary is well known. (About Motorola, 2004)

In 2003, PCS (Personal communication system, include mobile phone and other wireless products) net

sales represented 41% of the Company’s consolidated net sales. (Motorola 2003 annual report, 2003)

Motorola has set its mobile phone strategy as profitable and sustainable growth through close

relationship with customers, technology leadership and improving cost competitiveness. Motorola are

investing in the development of industry-leading GSM, CDMA, iDEN®, and 3G UMTS products, with

an emphasis on appearance designs and features, including large colour display, Bluetooth®

technology capabilities, flash memory, VGA camera and intuitive user interface. (Motorola 2003


annual report, 2003) In addition, Motorola set flexible price strategy. For example, in the China low-

end market, Motorola set low price for their low-end products to compete with other global

manufacturers. (China daily, 2004) But in the high-end market, Motorola competes by its leading

technology but not price. For instance, Motorola set retail price for US$1,199 for Razor V3 in US

initially. Moreover, Motorola market its products worldwide to carriers and consumers through direct

sales, distributors, dealers, retailers, and, in certain markets, through licensees. (Motorola 2003 annual

report, 2003)

Motorola has continuously evolved its brand. In March 2001, Motorola launched an advertising

campaign to introduce the Intelligence Everywhere™ brand promise and a new Intelligence

Everywhere™ logo. These changes to the Motorola corporate signature were driven by strategy to

unify marketing efforts, and to have all business units go to market as one. (The Motorola brand

identity, 2004)

Samsung

Samsung Electronics Company (SEC) was established in 1969 to produce black and white televisions

and then gradually became a key player in the world home appliance manufacturing industry in 1980s.

In the Asian financial crisis (1997), Samsung restructured the organization (e.g. second phase of new

management) to decrease the debt and strengthen its core competency in manufacturing and R&D.

(Samsung Electronics Timeline & history, 2004) Now, Samsung Electronics intends to earn world

leadership and secure overwhelming competitive strength by operation synchronizing, huge investment

in R&D, and quality and productivity enhancement. (Samsung 2003 annual report, 2003)

Samsung developed it mobile phone product in 1991. (Samsung Electronics Timeline & history, 2004)

Samsung wants to enhance market leadership with a steady stream of high value-added products

featuring innovative technologies and functionality. In 2003, Samsung posted record sales of 55.7

million units, a remarkable growth of 32 percent from 2003 due to the timely releases of new products,

which further diversified the Samsung Electronics mobile product portfolio. Such growth enabled

Samsung Electronics rise to third worldwide in terms of sales volume, with a 12 percent global market

share. (Samsung 2003 annual report, 2003)

In fact, Samsung continuously has a leading position in technology and continuously developed

CDMA, GSM, 3G and Mobile Intelligent Terminals (MITs) products. Meanwhile Samsung will

develop and add more new features into current platform (mobile phone). (Mobile phone of Samsung,


2004) The latest features include 5-mega camera (first in the world), high level voice recognition, text-

to-speech conversion, high-image-quality games and 3D sound effects. In turn, these leading

technologies supported Samsung’s premium price strategy. (SAMSUNG Introduces World’s First 5-

Megapixel Camera Phone, 2004)

In 1993, Samsung introduced a new corporate identity program to strengthen competitiveness. The

logo was redefined to project determination to become a world leader. The strong blue color suggests

stability and reliability, and exudes a warm and intimate feeling. In synergy with the new corporate

identity program, the SAMSUNG Electronics logo is identical to the main SAMSUNG logo, with the

word "ELECTRONIC" incorporated to the lower-right side.

SAMSUNG Electronics, being reborn as the company responsible for the world's most innovative

digital convergence in 21st century, has adopted a new corporate brand slogan "SAMSUNG DIGITall,

everyone's invited.” which conveys SAMSUNG Electronics' desire to make everyone's life more

convenient, abundant and more enjoyable through the development of innovative and multi-functional

products. (Corporate identity, 2004)

Sony Ericsson

Telecommunications leader Ericsson and consumer electronics powerhouse Sony Corporation

established Sony Ericsson Mobile Communications in 2001. Ericsson and Sony equally own this

company. Through the combined strengths of Sony and Ericsson and by its strong consumer-focused

and applications-led strategy, the company is a leading player in the mobile communications industry.

Sony Ericsson is separated from Sony and Ericsson and takes responsibility for R&D, marketing sales,

and distribution as well as customer services. Sonny Ericsson has strong technology development

capability. It has R&D in Sweden, Japan, China, US and UK. (Sony Ericsson mobile communications,

2004)

In 2003, Sony Ericsson sold 27.2 million units globally, which is 19% higher than previous year. Sales

reached Euro 4,673 million, representing an increase of 12% compared to 2002. Income before taxes

was Euro -130 million due to organization restructuring. However, the success of restructuring in turn

supports Sony Ericsson’s huge achievement in the first three quarter in 2004. In the first three quarter,

Sony Ericsson sold 29.5 million units and got sales of total Euro 4,510 million. Income before tax

reached 256 million. (Combined data from Sony Eriksson press resources, 2004)

Sony Ericsson announced its first joint products in March 2002 and now has a full product portfolio

covering all target groups, which includes GSM, CDMA, TDMA, Satellite, and TDC products. (Press


sources, 2004) In addition, Sony Ericsson developed lots of advanced features. The example is its new

V800, the first true convergence handset in the world. It is a mega pixel camera phone for 3G

consumer services - Video telephony, enhanced imaging and superior entertainment in a sleek compact

design. (Press sources, 2004) Sony Ericsson brand could be understood the polymer of Sony and

Ericsson brand. In fact, this brand completely inherits Ericsson’s brand identity: “the global leader in

providing communications solutions and the prime innovator of telecommunication industry that drives

for this advanced communication to happen. (How we want to be perceived, 2004) Meanwhile, Sony

brand, the most innovative and creative brand (message from management, 2004) add its spirit

“innovative and creative” into this brand identity. Correspondingly, Sony Ericsson brand will set up

advantages over other competitors’ brand based on this comprehensive power.

4.0 Internal Analysis of Nokia Corporation

Nokia Corporation is a mobile communications company primarily offering voice-centric mobile

telephones, enhanced communicators, entertainment and gaming devices and media and imaging

phones. Effective January 1, 2004, the Company reorganized its structure and now includes four

business groups: Mobile Phones, Multimedia, Networks and Enterprise Solutions. Nokia manufactures

and sells mobile phones for all major standards and customer segments in over 130 countries.

Multimedia focuses on bringing mobile multimedia to consumers in the form of advanced mobile

devices. Networks are a provider of network infrastructure, service delivery platforms and related

services to mobile operators and service providers. Enterprise Solutions offers businesses a range of

devices and mobile connectivity solutions based on end-to-end mobility architecture (Nokia website,

2004)

The new structure also includes three horizontal groups that support the business groups: Customer and

Market Operations, Technology Platforms and Research, Venturing and Business Infrastructure.

Customer and Market Operations include Nokia's sales and marketing organization, as well as

manufacturing, logistics and sourcing. Technology Platforms is responsible for Nokia-wide technology

management and development. Research, Venturing and Business Infrastructure includes the Nokia

Research Centre, Nokia Ventures Organization, Business Infrastructure and Operating Resource

Sourcing. Venturing at Nokia contributes to Nokia's renewal by identifying and developing new

businesses. (Nokia website, 2004)


Source: Nokia Website

Current Performance

Nokia is currently the world’s largest mobile phone manufacturer, with 64.4% of the GSM/TDMA

market and 2.9% of the CDMA market. For 2003, the total mobile telephone sales volumes achieved

by Nokia reached a record level of 179.3 million units, representing growth of 18% compared with

2002. Nokia net sales increased slightly from third quarter 2003 levels. This was a result of the mobile

device market share gains in Europe and continuing strong mobile device sales in China, Latin

America and the rest of Asia offsetting the negative sales development in North America. Sales in the

infrastructure business grew significantly in Europe, Latin America and Asia as investments in

capacity and coverage increased. Please refer to the Appendix for information on three years financial

performance of Nokia.

Core Competency of Nokia

Nokia’s technical and designing capabilities, innovativeness and customers trust in these capabilities is

Nokia’s biggest core competency. Its global reach, work culture, partnerships and internal branding are

other distinctive advantages.

Brand Analysis

Nokia has thus far managed to establish a powerful brand that has been widely recognized as the key to

its recent successes. Nokia brand is an asset that has been carefully built and managed by the Nokia

brand managers during the past ten years. In addition to a superior design, Nokia developed its


expertise to mobilize its R&D efforts coupled with market research to bring about a winning product.

A cross functional team consisted of engineers, graphic designers, sociologists, psychologists, market

researchers and product managers. Nokia has successfully segmented the market to target specific

demographic groups. For example, in the year 2000, different phones were marketed to appeal to the

“rugged” user, the “sophisticated” user, and the youth market, among others. With all these product

innovations, designed to satisfy customer preferences, Nokia has reinforced its brand image of

providing cutting-edge communications technology. (A Tale of Two Mobile Telephone Makers, 2000)

Brand Personality

Analysts have positively characterized the company by describing it as “young, sexy, sophisticated, hip

and generally ‘with it.’ Subsequently, Nokia leveraged its superior marketing strategies and powerful

brand to avoid the price wars that have recently afflicted its key competitors. (Nokia expects to meet

estimates, 2001.)

Brand's positive associations

What is it about Nokia that people within the company - and outside of it - most admire? People tend to

be attracted to Nokia's distinct way of operating and clear values of customer satisfaction, respect,

achievement and renewal. Additionally customers perceive Nokia a fast innovator, reliable and hi-tech

product. There is a strong band of loyal customers who have trust and take pride in buying Nokia's

latest models as soon as it is introduced in the market.

B2B and end-users Customers

Telecommunication companies like AT&T, Rogers and Aliant are few of the B2B customers of Nokia.

These operators buy Nokia handsets in volumes and sell that to the end users at a much cheaper price

(major portion of the price is hidden in the scheme cost). Nokia has demonstrated success in delivering

a wide range of mobile voice connectivity and security solutions to suit specific business needs. Nokia

has been co-branding phones with operators in the north America since 1991 as well as providing

modified hardware for the inside of the phone. The pen-based Nokia 6108 and Nokia 3108 for

inputting Chinese characters provide an excellent example of how hardware design can meet the needs

of a specific market.


End users may directly buy handsets from the market as well. Please refer to the distribution channel

diagram for a better understanding of this. Nokia has varied segment of customers with a vast

demographics and economic class. Age group may vary from even 14 years to 70 years. Older

customers are found to be more loyal to Nokia as compared to the younger customers.

Products

Nokia aims to offer high value-adding products to its customers, including operators, consumers and

enterprises, by persistently renewing its competences and brand portfolio. Nokia has a wide brand

portfolio comprising of over 200 products positioned across cheap to luxury brand continuum. Brands

share a sub brand type architecture where Nokia as the master brand drives other sub brands such as

Nokia5468 or Nokia1473 etc. It is quite similar to the approach adopted by Dell Computers. Recently

Nokia launched an upmarket luxury brand called Vertu priced in the range of $400 to $4500. To

further the focused renewal of its brand portfolio, Nokia introduced and started shipping several new

mobile devices during the current year. The newly launched products strengthen its high-end and mid-

range offering and include a trio of fashion-category phones, the Nokia 7260, Nokia 7270 and Nokia

7280; third mega-pixel imaging smart phone, the Nokia 6670; and the Nokia 9300 enterprise smart

phone.

Pricing

Price of Nokia phones in the showroom (without any operator-scheme) ranges from $200 to $10,000 at

the high end (e.g. Vertu). However, as part of one-three years plan, operators offer handsets in the

range of $25 to $400.

Promotion

Besides regular IMC, Nokia releases Co-op advertisement with operators like-Telus, and Rogers

Distribution Network

Handset end- users do not purchase directly from Nokia – instead, they enroll in cellular calling plans

from service providers. Nokia sells its phones to the mobile service provider after building each

handset using many components manufactured by other vendors. This position puts Nokia at a

negotiating disadvantage, where it is constrained by the costs of the handset components themselves,

while it is simultaneously at the mercy of the service provider when selecting a handset-selling price.

Component Vendors

Telecom Service

Operator

Handset Makers Consumer


Diagram A: Value Chain – Service Provider Channel

Diagram:

Diagram B: Value Chain – Distributor Channel

Alternatively, as shown in diagram B it may also sell to the end users using distribution channel.

Joint Ventures and Partnerships

Collaboration is a key ingredient in Nokia's growth strategy. They work with other companies, research

institutions, authorities, and industry organizations to further the competitiveness of company and the

strength of the industry as a whole. Nokia has entered several joint ventures, particularly in the areas

of manufacturing and research and development.

Nokia meets technology challenges

Mobile communications is merely a part of Nokia's future that now embraces also mobile multimedia,

entertainment, games and serious business solutions. The company has changed to meet the challenge

head-on.

Great Organization Culture encouraging Innovation and Risk Taking

Despite its size, Nokia's management structure is not excessively hierarchical. It aims to provide a

platform for personal growth through value-based leadership. Respect for individual qualities, as well

as a willingness to work together in a constructive, positive, even enjoyable, way are all essential for

high-quality work culture. Motivated and satisfied employees of Nokia create a service profit chain,

which helps internal branding in Nokia to evolve inside out.

Nokia's success so far has been very much a team effort. At Nokia one is allowed to make mistakes.

Risk taking is encouraged. One of the greatest challenges before Nokia is maintaining an innovative

edge as a company grows. Key to maintaining an innovative edge is speed and flexibility in decision-

making. Decision making at Nokia is quite decentralized. In addition the company believes in equal

opportunity and openness towards people and new ideas. It is also noteworthy that job rotation is

strongly encouraged even at very senior levels. Thus all this leads to a great innovative and service

culture in Nokia.

Component Vendors

Distribution Channel

Handset Makers

Consumer


Partner Relationship Management (PRM)

Nokia Research is an information-sharing channel for researchers working in academia or the business

world to promote cooperation. Nokia’s innovation networks extend beyond the company and include

research centres, academics and business partners, and entrepreneurs. Nokia is also partnering with

companies like Ford and Nissan to carry out path breaking researches for introducing GPS base

telephony in cars. All this is giving a big brand identity to Nokia.

Primary ResearchWe conducted a consumer survey in Nova Scotia, Canada (with 30 responses) to gauge the consumer

perception of Nokia brand vis-à-vis its competing brand. This survey was designed to give us insights

on developing a positioning map for Nokia and other details, which we have already mentioned above.

5. 0 Survey FindingsWe conducted a consumer survey (Questionnaire, having 19 Questions), as part of our primary

research, involving 30 respondents in Nova Scotia. We tried our best to conduct the survey personally

by reading out to the respondent questions from the questionnaire and noting down their responses.

This helped us in getting candid responses for our survey. We also interviewed channel distributors

(direct product selling as well as service providers). For confidentiality reasons, we would not be

mentioning the names of the channel partners whom we interviewed. The findings are summarized as

below: -

• Nokia had the highest unaided brand recall. Nokia was recalled 29 times compared to Motorola

(26), Samsung (14) and Sony Ericsson (6) times. Motorola was recalled 19 times in the first place

compared to Motorola (5) and Samsung (5). The bar chart and pie chart for the recall for the brands

is given in Graph 1 and Graph 2 in appendix 2.

• Nokia had more “positive” brand associations compared to a neutral or a negative brand

association. Positive words like “Durable, reliable and beautiful” were mentioned 22 times in the

first and 17 times in the second recall. Neutral words such as “small, handy” were mentioned 8 and

5 times respectively in the first and second recall. The bar chart for brand association response is

given in Graph 3 in appendix 2.


• Price and quality were the most critical factors in mobile phone purchasing decisions. Quality and

price got a mean score of 4.500 compared to functions (3.900), appearance/design (3.967) and

radiance protection (3.567) on a five-point scale with 5=very important and 1= very unimportant

• Nokia was rated the best on five key attributes: performance, price, appearance/design, quality and

radiation protection vis-à-vis its competitors (five-point scale with 5=very important and 1= very

unimportant). The brand evaluation scores (mean score) are given in Graph 4 in appendix 2.

• Nokia was placed significantly higher than its nearest competitor (Samsung) in the brand-

positioning map (Graph 5 in appendix 2). This positioning map was made after evaluating the five

key attributes and finding the most critical factor (price and quality here) for purchasing decisions.

• Nokia was placed high on Competence (4.133), Sincerity (3.867) and low on Sophistication

(3.667), Ruggedness (3.033) while evaluating the five dimensions descriptive words (Sincerity,

Excitement, Competence, Sophistication, and Ruggedness) of the Jennifer Aaker’s personality

theoretical framework (brand personality construct). Evaluation was done on a 5-point scale

(5=extremely descriptive, 1=not at all descriptive). Refer to appendix 2 (Table 6) for Nokia’s brand

personality mean evaluation scores.

• Switching on to a new mobile phone generally takes long (more than a year). 40% of respondents

would not like to switch over to a new mobile set before a year. Only 20% responded positive in

switching over to a new mobile set in between a time frame of 9-12 months. (Refer Graph 7 in

appendix 2 for switching time comparison)

• Respondents had a mixed response on preferred pricing level while making their next mobile

purchasing decision. 36.67% customer preferred a price level of $100-150, 16.67% preferred $150-

200 and 23.33% preferred $200-250. (Refer Graph 8 in appendix 2 for preferred pricing

comparison)

• Nokia (64.28%) was behind Samsung (75%) in terms of percentage satisfaction level of the

existing handsets. 9 out of 14 respondents were satisfied with their Nokia mobile phone and

wanted to recommend it to others. The rest 5 respondents were neutral in their response. Out of the

16 of the respondents who did not purchase Nokia, 6 were neutral in their response.


• Out of 14 respondents who chose Nokia as their recent mobile phone purchase only 2 respondents

agreed to pay more less than $15 as price premium. Rest all were in the range of $15-$100. Non-

Nokia users (Motorola users in particular) were very likely to buy Nokia as their next mobile

phone.

• TV advertisements (76.6%) and Internet (53.3%) were seen as the top sources of information about

Nokia brand. A decent percentage of respondents also came to know about the brand from friends

(43.3%) and print media (46.6%).

• Key demographic details of the respondents – 50% Male and 50% Female respondents. 60% of the

respondents were in the age group of 25-35. 37% of them had a Bachelors degree to their credit.

33% of them have their household income greater than $40,000. 77% of them were Canadian

citizens and 67% of the respondents were having white as their ethnic background. (Refer Table 10

in appendix 2 for demographic details).

We also had interviewed key persons at two of the electronic product chain stores (Future Shop and

Radio Shack) and two of the mobile service providers (Telus and Rogers) in Nova Scotia. The key

findings out of the interviews are as follows: -

• Customers are not very brand sensitive when they make a purchase decision. They look more

in terms of benefits (key attributes, functions) that the mobile phone is offering.

• Medium to high involvement of customers in purchasing mobile phone

• Nokia has decent brand equity where customers are highly aware of the brand.

• Nokia has recently launched a model 3205i exclusively for Telus Mobility.

• Nokia has not yet launched `flip-open` style phones even though customers have a preference

for that style.

• No point of presence of Nokia banner or advertisements in any of the shops

• Nokia does not have an aggressive promotional strategy (at least in Nova Scotia)


6.0 Brand Equity Analysis

We took the inputs from our primary and secondary research to do some diagnosis and come out with

brand equity analysis for brand Nokia. We decided to base our brand equity analysis on the brand

equity models given by Aaker (brand loyalty, brand awareness, perceived quality, brand associations,

other proprietary brand assets) and Keller (brand knowledge) brand equity model.

Brand Knowledge

• Brand Awareness

Nokia has the highest top of the mind recall compared to its competitors. Hence it has high

brand salience. The aided recall (brand recognition) for Nokia is also higher compared to its

competitors

• Brand Image

Nokia has significant positive brand associations compared to neutral or negative associations.

Customers acknowledge Nokia for its reliability. The perception of the customers towards the

brand is also positive.

Brand Loyalty

Customers who already have a Nokia mobile phone are ready to re- purchase a Nokia mobile phone by

paying a price premium. This means that Nokia users are loyal towards their brand. The loyalty factor

of customers having other brands is less as compared to Nokia. Loyalty factor helps in attracting new

customers by creating awareness and reassurance in the brand (Aaker, 1991). Nokia can also use this

factor to respond to threats posed by competitors.

Brand Awareness

We already have mentioned that Nokia has the highest brand awareness in the market. Another factor

that buttresses our stand of Nokia’s high brand awareness is that a significant number of non-Nokia

users are ready to switch over to Nokia brand in their next mobile phone purchase.

Perceived Quality

Nokia is positioned at the top of the mobile phone category in terms of perceived quality factor. The

brand-positioning map positions Nokia high both in terms of Price and Quality (refer Graph 5 in the


appendix). This factor differentiates Nokia from its competitors and affects purchasing decisions of

potential customers as well as builds positive associations with its channel members.

Brand Associations

As already mentioned by us, Nokia has positive brand associations to its credit. This factor would work

as a significant parameter for potential customers for their purchasing decisions towards Nokia.

Other Proprietary Brand Assets

Nokia has over 100 small and large patents in the area of technology and research. This factor helps the

company with a competitive advantage by restricting competitors to capture its customer base and

loyalty. It is more of a strategic branding strategy to face the competition.

Brand Personality

As a person, Nokia stands for competence, which means reliable, intelligent and successful. It also

stands for sincerity, which means down-to-earth, honest, wholesome and cheerful.

Brand Elements

Logo of the brand is `Nokia` which is short and easy to remember as a brand name. It has a punch line

``Connecting People`` which fits very well with the business that Nokia is into and the strategic

direction that it wants to see for itself in the future.

7.0 Conclusion

As part of this project, we did competitor’s analysis along with external analysis for Nokia to find out

the opportunities and threats that Nokia was facing in the present context. We also preformed internal

analysis for Nokia brand to find out its strengths and weakness. Our customer survey and interviews

with channel members that were based in Nova Scotia, Canada reflected the primary research findings.

Insights from all these findings were used as inputs to prepare a brand equity analysis.

Nokia has high brand knowledge. Brand awareness and brand image is significantly higher than its

competitors. Customers are loyal to Nokia brand to a satisfactory degree but they also seek key

attributes (functionality and reliability) in their brand. Perceived quality is high for Nokia brand and it

attracts positive brand associations compared to its competitors. Nokia has state of the art research and

development centres across the globe that employs the best talent available in the industry. This

talented human capital adds significant value to the overall brand value of the company. The cutting


edge R&D initiatives help Nokia to build their other proprietary brand assets (in terms of patents). This

strategic move equips Nokia with a competitive advantage to face the threat arising out of its

competitors.

Nokia is truly a global brand with its presence in all the continents. It uses the virtues of being a global

brand to consolidate its brand equity. It has country specific websites and offers specific products

related to the consumer behaviour of that specific market. It is seen more as a `Master Brand` in the

Brand Relationship Spectrum. The brand identity of Nokia (core and extended) provides its customers

with a value proposition that stresses on functional as well as emotional benefits. Nokia has primarily

relied on TV advertisements as well as Internet advertising for its marketing communication plans,

particularly in North America. In recent times, Nokia has tied up with Telus Mobility and Rogers for

co-operative advertising campaigns. This strategy builds good relationship with the channel partners as

well as reduces the high advertising costs. Nokia has a good opportunity in the area of customizable

software and user interfaces to cater to the demand of the operator of cellular services. This calls for

customization related to the unique functionalities that the operator seeks.

There are challenges arising from the external environment where the world of telecom is moving

towards convergence. There is a very difficult task before Nokia to position itself with the rise of

strong competitors like Samsung. There are also issues related to customers (whom to target, first time

users or replacement users), technology (which technology to focus company’s resources) which the

Management at Nokia has to sort out to maintain its high brand equity

8.0 Recommendations

Continue with Product Differentiation. Nokia should avoid commoditization that arises in

mature markets such as North America. Nokia therefore should offer next generation of

handsets that work on the concept of convergence with MP3, camera and computing facilities

all built in to attract “cool” and “hep” teenagers and young adults. For professional users,

Nokia should provide the ability to remotely access their data and files through the handset.

Mass customize for your operator (Telus, Rogers etc). Service providers also want customers

to see the names of their respective companies and not only those of the handset makers.


Nokia can tie up an operator in a long-term contract and use co-branding. Operators can be

lured to use the Nokia brand to attract customers.

Nokia should continue selling to the end user through distribution channel. Nokia should

continue with direct-to-consumer advertising, including sponsorships and product placements.

(The way Intel has done for “branding the ingredient” and branding to the end-user).

Leverage Nokia brand in future diversification in other related business such as networking

and Internet services. Customers are expected to have positive associations.

Future lies in the replacement market (European and American markets are fast approaching

saturation by 2006, the only viable source of growth for the mobile handset industry is the

replacement market)

Come out with flip open design to cater to the demand of this design of phones, which is huge

according to our findings.


9.0 References

Aaker, David A., ``Managing Brand Equity``. The Free Press, 1991.

Bellis, Mary. (2002), History of Cellular/mobile phone. Retrieved Nov 13, 2004 from

http://inventors.about.com/library/weekly/aa070899.htm

Cruickshank, David. (2002) Mobile phone history. Retrieved Nov 13, 2004 from

http://www.see.ed.ac.uk/~dgmc/ieetalk/sld003.htm

“Profit, Loss and Value Added: The Mobile Phone Industry – Activity”. Biz/ed. (2004). Retrieved Nov

13, 2004 from http://www.bized.ac.uk/educators/16-

19/business/marketing/activity/profitloss.htm

“Nokia defines goals and actions for leadership in dynamic mobile communications market”.

Phonecontent.com. (November 2004) Retrieved Nov 20, 2004 from

http://www.phonecontent.com/bm/news/nokia/548.shtml

“Connecting people”. TheManagerMetor.com. (2001). Retrieved Nov 10, 2004 from

http://www.themanagementor.com/kuniverse/kmailers_universe/mktg_kmailers/0702_6.htm

“Gartner Says Worldwide Mobile Phone Industry Experienced an 18 Percent Increase in Unit Sales in

First Quarter of 2003”. Gartner.com (2003). Retrieved Nov 10, 2004 from

http://www3.gartner.com/5_about/press_releases/pr2june2003b.jsp

“About Motorola”. Motorola website. (2004). Retrieved Nov 2, 2004 from

http://www.motorola.com/content/0,,1,00.html

“Motorola 2003 annual report”, Motorola website. (2003) Retrieved Nov 2, 2004 from

http://phx.corporate-ir.net/phoenix.zhtml?c=90829&p=irol-

SECText&TEXT=aHR0cDovL2NjYm4uMTBrd2l6YXJkLmNvbS94bWwvZmlsaW5nLnhtbD

9yZXBvPXRlbmsmaXBhZ2U9MjY2NzQzOCZhdHRhY2g9T04=

http://phx.corporate-ir.net/phoenix.zhtml?c=90829&p=irol-SECText&TEXT=aHR0cDovL2NjYm4uMTBrd2l6YXJkLmNvbS94bWwvZmlsaW5nLnhtbD9yZXBvPXRlbmsmaXBhZ2U9MjY2NzQzOCZhdHRhY2g9T04



http://www.phonecontent.com/bm/news/nokia/548.shtml

http://www.bized.ac.uk/educators/16-19/business/marketing/activity/profitloss.htm

http://www.bized.ac.uk/educators/16-19/business/marketing/activity/profitloss.htm

http://www.see.ed.ac.uk/~dgmc/ieetalk/sld003.htm

http://inventors.about.com/library/weekly/aa070899.htm


“Motorola to launch new handsets in China”. China daily. (Nov, 2004). Retrieved Nov 5, 2004 from

http://english.sohu.com/20041123/n223130288.shtml

“The Motorola brand identity: Motorola corporate signature”. Broadband Motorola. (2004). Retrieved

Nov 2, 2004 from http://broadband.motorola.com/mso/MotoCorpLogoGuidelines.pdf

“Samsung Electronics Timeline & history”. Samsung website. (2004) Retrieved Nov 5, 2004 from

http://www.samsung.com/AboutSAMSUNG/CompanyProfile/TimelineHistory/sec_timeline08

.htm

“Samsung 2003 annual report”. Samsung website. (2003). Retrieved Nov 20, 2004 from

http://www.samsung.com/AboutSAMSUNG/CompanyProfile/AnnualReport/pdf/2003/007_Bu

sinessoverview.pdf

“Mobile phone of Samsung”. Samsung website. (2004). Retrieved Nov 20, 2004 from

http://www.samsung.com/Products/MobilePhone/aboutourdivision/index.htm

“SAMSUNG Introduces World’s First 5-Megapixel Camera Phone”. Samsung website. (2004).

Retrieved Nov 11, 2004 from

http://www.samsung.com/PressCenter/PressRelease/PressRelease.asp?seq=20041020_000007

4352

“Corporate identity”. Samsung website. (2004). Retrieved Nov 8, 2004 from

http://www.samsung.com/AboutSAMSUNG/CompanyProfile/CorporateIdentity/index.htm

“Sony Ericsson Mobile Communications”. Sony Ericsson website. (2004). Retrieved Nov 9, 2004 from

http://www.sonyericsson.com/spg.jsp?cc=global&lc=en&ver=4001&template=pc2&zone

=pc&lm=pc2

“Press resources”. Sony Ericsson website. (2004). Retrieved Nov 5, 2004 from

http://www.sonyericsson.com/spg.jsp?cc=global&lc=en&ver=4001&template=pc1_1&zone=p

c&lm=pc1

http://www.sonyericsson.com/spg.jsp?cc=global&lc=en&ver=4001&template=pc2&zone=pc&lm=pc2

http://www.sonyericsson.com/spg.jsp?cc=global&lc=en&ver=4001&template=pc2&zone=pc&lm=pc2



http://www.samsung.com/AboutSAMSUNG/CompanyProfile/AnnualReport/pdf/2003/007_Businessoverview.pdf

http://www.samsung.com/AboutSAMSUNG/CompanyProfile/AnnualReport/pdf/2003/007_Businessoverview.pdf


“How we want to be perceived”. Ericsson website. (2004). Retrieved Nov 14, 2004 from

http://www.ericsson.com/about/compfacts/mission_vision.shtml

“Message from management”. Sony website. (2004). Retrieved Nov 9, 2004 from

http://www.sony.net/SonyInfo/Environment/management/message/coo/index.html

Nokia Website. (2004).www.nokia.com. Retrieved Nov 24, 2004

“A Tale of Two Mobile Telephone Makers”. 8 Cahners Business Information, , May 2000.Haas

School of Business, U.C. Berkeley

“Nokia expects to meet estimates “. CNET. September 12, 2001

http://www.nokia.com/

http://www.sony.net/SonyInfo/Environment/management/message/coo/index.html

http://www.ericsson.com/about/compfacts/mission_vision.shtml


10.0 AppendicesAppendix: 1 - THREE YEAR FINANCIAL SUMMARY

NOKIA: THREE YEAR FINANCIAL SUMMARY

(Unit: Euro in thousands)

Key Index 2001 2002 2003

Net Sales 31,191,000 30,016,000 29,455,000

EBITDA 6,092,000 6,504,000 6,302,000

EBIT 3,948,000 5,193,000 5,164,000

Net Profit 2,200,000 3,381,000 3,592,000

-1,279,000

-1,341,000

-1,410,080

Intangibles 1,984,000 668,000 371,000

Long Term Invest. 1,576,000 1,343,000 551,000

Fixed Assets 2,514,000 1,874,000 1,566,000

Current Liabilities 9,566,000 8,412,000 8,280,000

Long Term Debt 117,000 125,000 20,000

Minorities 196,000 173,000 164,000

Total Shareholder Eq 12,205,000 14,281,000 15,148,000

Stocks/Inv. 1,788,000 1,277,000 1,169,000


Cash 1,854,000 1,496,000 1,145,000

KEY RATIOS 2001 2002 2003

Net Profit Margin 7.05 % 11.26 % 12.20

ROE 19.12 % 25.53 % 24.41

Cur. Ratio 1.6200 2.0900 2.4200

Debt/Capital 0.0500 0.0200 0.0200

World Vest Base Inc., Copyright © 2003

Appendix -2

0

5

10

15

20

Nokia Motorola Samsung Sony Others

first recallsecond recallthird recall

Graph 1 - Bar chart for the recall for the brands

NokiaMotorolaSamsungOthers


Graph 2 – Top of the mind recall for the mobile brands

0

5

10

15

20

25

Positive Neutral Negative

first recallsecond recallthird recall

Graph 3 - Bar chart for brand association response

0

1

2

3

4

5

Functions

Price

Appearnce

Quality

Protec

tion

NokiaMotorolaSamsungSony Ericsson

Graph 4 - Brand evaluation scores (mean)

High (Price)

3.5

Nokia

Samsung


Graph 5 - Brand Positioning Map

Sincerity 3.867Excitement 3.800Competence 4.133Sophistication 3.667Ruggedness 3.033

Table 6 - Nokia’s brand personality mean evaluation scores

less 6m6-9m9-12m1-1.5ymore 1.5y

Graph 7 – Switching time comparison

High (Quality)

Motorola

Sony Ericsson

Low (Quality)

Low (Price)


less5050-100100-150150-200200-250more

Graph 8 – Preferred pricing level for customers

0

24

68

1012

14

Nokia Motorola Samsung Others

Latest purchase

satisfied andrecommendation attitudeneutral satisfied andrecommendation attitude

Graph 9 – Comparison of customer’s satisfaction level

Gender M FFrequency 15 15Percent 50% 50%

Age <16 16-24 25-35 36-45 >45Frequency 0 3 18 5 4Percent 0.00% 10.00% 60.00% 16.67% 13.33%

EducationElementary

School High school College Bachelor Master or moreFrequency 0 0 9 11 10Percent 0.00% 0.00% 30.00% 36.67% 33.33%

Household income <20000 20000-25000 25000-30000 30000-35000 35000-40000 >40000 RefuseFrequency 3 4 3 3 2 10 4Percent 10.00% 13.33% 10.00% 10.00% 6.67% 33.33% 13.33%


Nationality Canadian Chinese India US South America OthersFrequency 23 2 0 0 0 5Percent 76.67% 6.67% 0.00% 0.00% 0.00% 16.67%

Ethnic group White Yellow BlackFrequency 20 8 2Percent 66.67% 26.67% 6.67%

Table 10 - Demographic Details

Appendix-3

Nokia Mobile Phone Brand Survey Questionnaire

Notice: We are second year MBA students in Saint Mary’s University and want to develop a study of

consumer attitudes toward Nokia mobile phone brand. It is voluntary to write this questionnaire and

respondents can withdraw at any time. In addition, all responses will be anonymous and confidential.

We will not track or identify the respondent.

Brand Equity Survey

1. Can you recall the brands in the mobile phone (cell phone) category?

2. When you consider purchasing a mobile phone, how important are the following attributes. Rate

each of the following attributes on a five-point scale where 5=very important and 1=very

unimportant.

Attribute

Very

important Important Neutral Unimportant

Very

unimportantFunction 5� 4� 3� 2� 1�Price 5� 4� 3� 2� 1�Appearance/Design 5� 4� 3� 2� 1�Quality 5� 4� 3� 2� 1�Radiation

Protection5� 4� 3� 2� 1�


3. Evaluate each brand on the following attributes using a five-point scale, where 5=very satisfactory,

4=satisfactory, 3=neutral, 2=unsatisfactory, 1=very unsatisfactory. Please write the number that

best corresponds to your level of satisfaction for each brand/attributes.

Attribute Motorola Nokia Samsung Sony EricssonFunction � � � �

Price � � � �

Appearance/Design � � � �

Quality � � � �

Radiation

Protection� � � �

4. Please list all words that come to your mind when you think of Nokia mobile phone?

5. Respondents will rate Nokia brand personality on a 5-point scale (5=extremely descriptive of the

brand and 1=not at all descriptive of the brand).

Attribute

Extremely

Descriptive Descriptive Neutral

Slightly

Descriptive

Not at all

DescriptiveSincerity 5� 4� 3� 2� 1�Excitement 5� 4� 3� 2� 1�Competence 5� 4� 3� 2� 1�Sophistication 5� 4� 3� 2� 1�Ruggedness 5� 4� 3� 2� 1�

6. How often would you change your mobile phone?

凾 Less than 6 months

凾 6-9 months

凾 10-12 months

凾 > 1 year but < 1.5 year

凾More than 1.5 year

7. Which of the following price ranges are you willing to pay for your mobile phone?

凾 Less than $ 50

凾$50-100

凾$100-150


凾$150-200

凾$200-250

凾More than $250

8. Which is your latest mobile phone brand (Nokia, Motorola, LG, Sony Ericsson, Siemens, Sharp,

Panasonic, Samsung)?

9. Considering my recent purchase of mobile phone, I am completely satisfied.

凾 strongly agree

凾 agree

凾 neutral

凾 disagree

凾 completely disagree

10. I would recommend my latest mobile phone brand to others without any hesitation

凾 strongly agree

凾 agree

凾 neutral

凾 disagree

凾 completely disagree

11. How much more are you willing to pay for your favorite mobile brand?

凾 Less than $ 15

凾$15-30

凾$31-50

凾$51-75

凾$76-100

凾More than $100

12. For the next purchase of a mobile phone, how likely you are to buy a Nokia mobile phone?

凾 very likely

凾 likely

凾 neutral


凾 unlikely

凾 very unlikely

13. Where would you prefer most to buy Nokia mobile phone?

凾 Electronic product chain stores (e.g. Futureshop)

凾 Network providers (e.g. Rogers)

凾 Electronic department of Superstores

凾 Retail shops

凾 Others. Please specify

14. From where did you come to know about Nokia mobile phone?

(You may check more than one option.)

凾 Family and/or friends

凾 Advertisements (includes TV, prints, billboard and outdoor)

凾Magazines and newspapers

凾 Internet

凾 Others. Please specify

15. What is your gender?

凾Male 凾 Female

16. What is your age group?

凾 <16

凾 16-24

凾 25-35

凾 35-45

凾 >45

17. What is your education background?

凾 elementary school

凾 High School

凾 College Diploma

凾 Bachelor degree

凾Master degree or higher


18. What is your yearly household income?

凾 Less than $20000

凾 $20000-25000

凾 $25000-30000

凾 $30000-35000

凾 $35000-40000

凾More than $40000

凾 Refuse to answer

19. Your nationality (citizenship) and ethnic group?

nokia brand equity analysis

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