Demand and Supply of Nokia Mobiles

Demand and Supply of Nokia Mobiles

IntroductionWhen mobile phones were introduced in India in the mid-90s, US based Motorola, Sweden's Ericsson and Finland's Nokia dominated the handset market in India. Over the years, the old order has changed. Asian players like Samsung and LG, European brands Philips and Siemens now compete with Motorola and Sony-Ericsson. However, Nokia has been able to race ahead of all other players to become the leading mobile handset maker across the world.

In India its dominance is even more pronounced with a 70 per cent market share, compared to around 30 per cent globally. Its closest rival in the Indian market, Samsung, comes a poor second with less than 10 per cent market share. Its business strategy, management style and marketing savvy have earned it the respect of its peers. In 2004, Nokia was chosen as 'the most respected consumer durables company' in India by the weekly magazine Business World.

The reasons for Nokia's stupendous success in India include amazing branding, a focused marketing exercise and distribution strength, among others. Sanjeev Sharma, CEO, Nokia India, says, “An extensive product range, anticipating consumer trends early — we were the first to introduce a phone for the fashion segment, the 8210 — a retail strategy that ensures consumers across the country get a consistent experience and an excellent staff, all put together, clicked for Nokia.” Nokia's commitment to the Indian consumer was underscored when it became the first, and only, handset major to develop a model suited for Indian conditions. The company launched two models, 1100 and 1108, after intensive research on the Indian customer's specific needs. The phones gave an integrated torch, a sheath covered keypad for dust protection and a slip-free grip. The phones were also introduced in other markets in Asia and Africa. Nokia's first ‘Made for India’ model, the 1100, is the largest selling model in the Indian GSM handset market. The five largest selling handset models in the market are all Nokia's. Besides, the company today has a substantial share of both ends of the market. It has 77 per cent of the $66-$88 phone market and about 68 per cent of the over $330 phone market.

In a marketing first, in March this year Nokia opened a dedicated Concept Store which features the full range of Nokia products including handsets, mobile enhancements, ring tones, graphics, games, software and exclusive Nokia merchandise. The products allow clients to experience the newest applications such as gaming, imaging and e-mail support

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Objectives

-Overview of the world mobile handset industry.

-In-depth analysis of the Asian mobile handset industry.

-The present market position.

-The future projections.

-Geographical and regional segmentation of the industry and the consumers.

-Sales and profitability of the industry.

-Challenges faced by the industry that propels higher competition among the vendors and retail sectors.

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Product Details …

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Economical Products:

1100 better known as “Made for India”

Product features:

Icon-based phonebook with simplified menu navigation

20-chord polyphonic ringing tones with MP3-grade sound

New inverted black and white display Graphical demo mode for phone features both with and without SIM

card Analog clock display Call management (timers, counters) Internal antenna Changeable Xpress-on™ color covers Picture messaging to send a picture greeting Three built-in games

Easy deletion of multiple messages Undo item in SMS editor Price: Rs. 1,744.00 Warranty: Nokia India 1 Year Warranty

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Luxurious Products: N93The Nokia N93i features a 3.2 megapixel camera, Carl Zeiss optics, 3x optical zoom and digital video stabilization. Create DVD-like videos at 30 frames per second with MPEG4 technology and share them on the 2.4" display. For a big screen experience, connect the Nokia N93i to a compatible TV using direct TV out connectivity or via Wireless LAN and UPnP technology. The N93i also features a digital stereo microphone, music player and FM stereo radio, dual mode WCDMA/GSM and triband GSM coverage on up to five continents (EDGE/GSM 900/1800/1900 + WCDMA 2100 MHz networks).

Video Shoot DVD-like quality video up to 30 frames per second Video stabilization Dedicated video capture controls Digital stereo microphone

Imaging 3.2 megapixel camera and Carl Zeiss optics Sharper images with up to 3x optical zoom Autofocus and LED flash

Editing & Sharing 2.4-inch display Cut your videos and burn them to DVDs with Adobe Premiere Elements Post directly to Flickr Share images during video conferencing

Connectivity Nokia Web Browser with Mini Map Support for RSS feeds Connect to your compatible PC via USB, infrared, or Bluetooth wireless

connectivity Play your videos on compatible home electronic devices with Wi-Fi

connectivity

Operating frequency M-156 (Dual-mode) WCDMA 2100EGSM 900/1800/1900 MHz

Display Main display: 240 x 320 with up to 16.7 million true colors Sub-display: 128 x 36

MRP Rs. 42209

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Production ProcessGlobally, mobile phone manufacturing involves seven different segments with varying technology and skill-sets. These are semiconductors or ICs, passive components, PCB fabrication, modular components, plastic parts, box-build assembly and testing. As things stand, there are companies in India that are already in a position to provide most of these components.In most mobile handsets, there are anything between 40-60 components. In China, almost all these are made locally. In India, the local companies can provide about 30 per cent of the components initially.

These can be supplied by the component suppliers to the electronic industry, most of whom are based in Bangalore. According to a study by international consultancy KPMG for the Indian Cellular Association, the technology used to make printed circuit boards (PCBs) by Flextronics, D-Link, Jabil Circuit and Celetron in India exceeds the requirements needed to manufacture handset PCBs.

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Market Share

Nokia’s market share (in terms of units sold) has grown to 74% in March ’06 from 61.5% in October ’05. In the colour segment too, Nokia has increased its market share to 55% in March ’06 from 33.7% in October ’05. In terms of value, Nokia’s overall market share has jumped to 70.5% in March ’06 from 57.7% in October ’05. In the colour phone category, its market share (in terms of value) has increased to 59.3% in March ’06 from 40.9% in October ’05.

Sony Ericsson’s market share in the colour segment is marginally more than the Samsung’s at 16.7% (units) and 15.9% (value) in March ’06 and is an improvement over its October ’05 figures of 15.6% (units) and 14% (value). Sony Ericsson’s market share (in terms of units) has improved marginally from 7.1% in October ’05 to 7.6% in March ’06, although in value terms it has increased from 8.7% in October ’05 to 10.2% in March ’06.

The colour segment, where Samsung used to rule once, has seen its market share falling both in terms of units and value. The market share (units) has dropped to 16.3% in March ’06 from 34.9% in October ’05and in terms of value, has dropped to 14.7% in March ’06 from 32.5% in October ’05.Nokia has retained the top slot in Indian GSM market with 79% share, while US giant Motorola has more than doubled its share to 7% this year, according to a study.

Motorola has been able to significantly improve its share to 7% this year from 3% in 2005, according to the latest annual TNS Cell Track 2006 study.

It said the US company's gain was possibly the loss of South Korean handset maker Samsung, whose market share dropped to 4% in 2006 from 6% a year ago.

In the CDMA market, LG has consolidated its position as the market leader with 49% market share this year against 43% in 2005, the study said.

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While Nokia managed to retain its share in CDMA handsets, Samsung and Motorola lost market share from 17% to 8% and 12% to 4% respectively.

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Survey Report

Data sources

The research plan calls for gathering primary, secondary or both types of data.

Primary data was gathered by interviewing a decided sample space for the research

project.

Secondary data was collected from related issues in newspaper and business magazines

and from search engines like google.com, khoj.com and dogpile.com. We started the

investigation by examining the secondary data it helped us lot to know about the current

position of the Nokia handset in the world.

RESEARCH METHODOLOGY

1. Source of data:

Secondary source – Related articles from newspaper and business magazines

and also from internet (google.com)

Primary source – 10 consumers and 5 retailers of different age groups from

Mumbai and Navi Mumbai were interviewed.

2. Nature of data:

Data collected from consumers are opinion. While that from related websites are

facts.

3. Communication approach:

Tool: Questionnaire

Type: Structured

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NOKIA SONY LG MOTOROLA TOTAL

Most like 8 4 2 1 15

Maxi sales 8 5 1 1 15

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GSM CDMA PDA OTHER TOTAL

TECHNOLOGY 8 4 2 1 15

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Future Trends In Handset IndustryDesign Facility In Bangalore International Mobile Phone

Nokia is to set up design facility in bangalore international mobile phone giant Nokia plans to set up a design facility in Bangalore, to cater to the burgeoning demand for its handsets in the country. For Finland-based Nokia, India will emerge as the second largest market in the world by 2010. According to Olli-Pekka Kallasvuo, CEO and President, Nokia, there would be four billion mobile phone subscribers in the world globally by 2010. More than half of them would be from the Asia-Pacific region, including India. Nokia has an 80 per cent market share in the buoyant Indian cellular phone market.

The new design centre in Bangalore would anticipate trends and designs of cell phone users across the sub-continent. The Finnish firm, which already has two design centres – in London and Espo in Finland – plans another facility in Rio de Janeiro. The Asia-Pacific region would account for 50 per cent of Nokia’s sales shortly. The company has a manufacturing unit in Chennai, with a capacity of 20 million handsets a year. Besides the nearly 8 million new subscribers who are signed up every month in India, Nokia sees tremendous potential in the replacement market, which accounts for 65 per cent of the business today. The replacement market is expected to account for 90 per cent of handset sales in India by 2010.

500 million mobile phones in India by 2010

THERE will be 500 million mobile phone connections in India by 2010, and about $20 billion of investments will flow into the telecommunications and IT sectors by then. According to Vision 2010, drawn up by the government, 85 per cent of India’s geographical area would get cellular coverage by the end of 2007, while total phone connections would add up to about 250 million. Over the next three years, the coverage would be extended to 90 per cent of the country’s geographical area. At present, about 40 per cent of India’s geographical area is covered by the telecommunications network, and the country has a tele-density of 17 per cent.

Federal Communications and Information Technology Minister Dayanidhi Maran notes that as per Vision 2010, rural connectivity would be enhanced to touch the 50 million-mark in 2007, and 80 million by 2010. India is all set to emerge as the third largest mobile phone market in the world in early 2007, next only to China and the US. In November, there were 136 million

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mobile phone subscribers in India. Every month, India’s mobile phone subscriber base expands by seven to eight million; in the first quarter of 2007, India is expected to overtake Russia, which currently ranks third with 152 million subscribers. However, Russia adds a mere 2 million new subscribers every month. The GSM (Global System for Mobile Communications) subscriber base touched the 100 million-mark in India in November, making it the third highest GSM market after China and Russia. There are an additional 36 million CDMA (Code Division Multiple Access) subscribers in India. Industry observers feel that 2007 will see the addition of 10 million new subscribers every month in India, making it the fastest growing cellular phone market in the world. The government’s target of 250 million subscribers by the end of 2007 is likely to be reached towards the end of September.

The mobile handset sales continue to grow worldwide, going up from 482.5 million in 2003 to 561 million in 2004. This growth rate is expected to gradually slow down over a period of five years. The estimated growth figures for these five years are—10% in 2005, 7.7% in 2006, 6.4% in 2007, 4.8% in 2008 and 2.6% in 2009. Notwithstanding the gradual decline in the growth figures, the annual handset sales are predicted to reach 767 million by 2009. Mobile handsets with innovative features have gained a lot of popularity in the developed nations. But the developing markets, which are not yet saturated, namely, India, Russia, Brazil, Mexico, and China, will mainly carry on the global handset sales.Some of the prominent companies, namely, Samsung, LG, and Sony Ericsson will see remarkable growth in this year. Though maintaining a huge gap from its nearest rival, Motorola, Nokia is expected to lose some market share in this year.

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Problems

Nokia India: Pathetic apathy for the Indian customer

Nokia is selling some of its degraded products that have software problems. If customer come across such problem in a new set, they waste lot of time in running around service centers as it does not help much, the company informs for replacement set after repeated follow up only.

This promise is never fulfilled, if it is fulfilled the customer gets either a secondhand phone or a hand set which is even worse than the defective hand set. After some time the same problems occurs in supplied set also and customer runs around Nokia Service Center again and again.

Problems with Substandard Nokia Handset

The phone works well after initial period of purchase, the problem starts after few days, near the end or after the end of guarantee period. Following are the general problems observed-

• Some of the hand set has software problems which work well during initial period, but after some time problem starts and finally it crashes which requires replacement of hand set. Replaced hand set also gives same experience.

• In some of cases after 5-6 days of purchase, at the end of guarantee expiry or with in one month after expiry of guarantee period the phone started giving a minor problem of restarting / rebooting and crashes at the end.

• The phone switches-off on its own a few times in spite of having network.

• Poor battery performance, needing recharging every 3-4 hrs this is not helping even after replacement with new battery.

• Nokia mobile generate temperature, if the conversation goes more then 15 Minutes.

• It switches off suddenly while you are sending or replying SMS. So have to keep watch after sending or replying SMS if it is working or not or else you will end up having a switched off phone in your pocket ensuring you miss important calls.

• Bad network transmission, automatic switching-off of the phone & headset clarity problem. Some consumers complain of N73 that it starts giving problem like hanging, auto

shut and auto re-start, when camera is used there are black flickering lines on the screen, voice is at low pitch whenever the call is received or call is made even

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though volume is at full.

Display panel light not glowing; display is there but no light due to starting of sudden vibration. Vibration stops only after removal of battery. But when battery is fixed back vibrations starts immediately.

Faulty handsets in Indian Market:

Nokia 6255 CDMA

The Nokia 6255 is technically faulty phone as it gets hanged, switch off, asks for transfer of data with out using phone, and gets disconnected several times. The replacement phone also gives the same problem.

Once this phone goes dead, you will not be able to do anything, as with CDMA technology, you don’t have SIM cards, which you can put in another phone, and keep your work going. The phone dead means you are out of communication.

Phones where problem observed are 1101, 1112, 1120, 1600, 2112, 2300, 2600, 2865, 3105, 3100, 3120, 3155CDMA, 3220, 3230, 3250, 6030, 6125, 6131, 6233, 6225CDMA, 6260, 6265, 6255 CDMA 6270, 6280, 6600, 6630, 6670, 6708, 7610, 668 i, N70, N80, N93, E50

If a phone starts giving problem, Indian customer falls into trap of Nokia Service never ending circle. In most of the cases matter never reported to concerned authorities due to lack of time on such matters.

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Conclusion

In India Nokia’s dominance is even more pronounced with a 71 per cent market share, compared to around 30 per cent globally.

Nokia's stupendous successes in India include amazing branding, a focused marketing exercise and distribution strength, among other brands.

An extensive product range, anticipating consumer trends early. Nokia were the first to introduce a phone for the fashion segment. A retail strategy that ensures consumers across the country get a consistent experience and an excellent staff, all put together, clicked for Nokia.

Over half a billion mobile phones are sold every year, and despite sluggishness in other parts of the technology industry, the number continues to grow.

Sales are being driven, in part, by the surge of new subscribers in the developing world, particularly in India and China. In the developed world, meanwhile, where markets are so saturated that most adults already carry a mobile phone, existing subscribers are switching in droves to today's more advanced models.

Meanwhile, the number of mobile phones in use, at around 1.4 billion, overtook the number of fixed-line phones last year.

Nokia's commitment to the Indian consumer was underscored when it became the first, and only, handset major to develop a model suited for Indian conditions.

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Bibliography

Web site:www.google.comwww.nokia.comwww.dogpile.comwww.businessline.com

Magazines: Business today

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http://www.dogpile.com/

http://www.nokia.com/

http://www.google.com/


ANNEXURE

Retailers Questionnaire

1. Name of Respondent: __________________________________

2. Address: _________________________________________________________________

3. Contact No:___________________

4 Age Group:

Years 10 – 1718 – 2526 – 3334 +

6. Total house hold income from all source:___________________

7. Which mobile do you select out of this?

a) Nokia b) Sony Ericsson c) L.G d) Motorola

8. Which hand set has maximum sales volume?

a) Nokia b) Sony Ericsson c) L.G d) Motorola

9. Which type of Hand set has sales volume?

a) Colour b) CDMA c)GSM d)Others

10. Why people go for other mobiles than nokia?

a) New technology b) Features c) Sound system d) Quality

11. What are the common problems faced by nokia users?

a) Battery b) Keypad c) Feature d) Others

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Customers Questionnaire

1. Name of Respondent: __________________________________

2. Address: _________________________________________________________________

3. Contact No:___________________

4 Age Group:

Years 10 – 1718 – 2526 – 3334 +

5. Occupation: ____________________________

6. Total house hold income from all sources: ___________________

7. Which mobile do you select out of this?

b) Nokia b)Sony Ericsson c) L.G d) Motorola

8. Why do you go for mobile other than nokia?

b) New technology b) Features c) Sound system d) Quality

9. What are the common problems faced by nokia users?

b) Battery b) Keypad c) Feature d) Others

10. Price of nokia mobile is

a) Very high b) Fairly High c) Reasonable d) Cheap

11. How satisfied are you from your mobile phone?a) Very satisfied b) Fairly satisfied c) Not very satisfied d)Not at all satisfied

12. Which Nokia's product/market segment is you referring toa) Fashion b) Sports c) Gaming d) business to business

13 why do you prefer nokia mobiles? a) Durability b) easy application c) sound quality d) battery life14. How frequently do you change your mobile?

a) 6 mths b) 12mths c) 18mths d) 24mths or more

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Demand and Supply of Nokia Mobiles

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