Nokia Pricing Strategv Presentation on

Story of Nokia
About Nokia
Narket of Nokia
resenLed 8y
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About Nok|a
When moblle phones were lnLroduced ln
lndla ln Lhe mld90s uS based MoLorola
Swedens Lrlcsson and llnlands nokla domlnaLed
Lhe handseL markeL ln lndla Cver Lhe
years Lhe old order has changed Aslan
players llke Samsung and LC Luropean
brands hlllps and Slemens now compeLe
wlLh MoLorola and SonyLrlcsson
Powever nokla has been able Lo race
ahead of all oLher players Lo become Lhe
leadlng moblle handseL maker across Lhe
world ln lndla lLs domlnance ls even more
pronounced wlLh a 70 per cenL markeL
share compared Lo around 30 per cenL
globally lLs closesL rlval ln Lhe lndlan markeL
Samsung comes a poor second wlLh
less Lhan 10 per cenL markeL share
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Story of Nok|a
@he 8eglnnlng
@he Moblle LvoluLlon
Moblle 8evoluLlon
@he flrsL nokla company began wlLh ldesLam's
aper mlll on Lhe banks of noklanvlrLa rlver
8eLween 1863 and 1867 Lhe company would
8ecome a ma[or lndusLrlal force buL lL Look a
Merger wlLh cable company and a rubber flrm
@o seL nokla corporaLlon on Lhe paLh Lo elecLronlcs
Lduard polon founds flnnlsh rubber works whlch
LaLer became nokla's rubber buslness
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WlLh Lhe sLarL of llnnlsh cable works
nokla venLure lnLo cable and elecLronlcs
8uslness sLarLed
Cable works sLarLs lLs flrsL elecLronlcs deparLmenL
Selllng and operaLlng compuLers
nokla Ab llnnlsh 8ubber Works and llnnlsh Cable works
formally merge Lo creaLe nokla CorporaLlon
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Story of Nok|a
@he 8eglnnlng
@he Moblle LvoluLlon
Moblle 8evoluLlon
ln 1981 nordlc moblle Lelephone nM@ Lhe flrsL lnLernaLlonal
Moblle phone neLwork ls bullL and slmulLaneously ln 1982
@he nokla ux200 Lhe company's flrsL dlglLal Lelephone
swlLch goes lnLo operaLlon
nokla launches lL flrsL hand held moblle phone and Lhen
LqulpmenL made by nokla ls used Lo make Lhe flrsL CSM
Call
ln 1992 nokla decldes Lo focus on lLs LelecommunlcaLlon
buslness CSM Lechnology became more famous and !orma ollla
8ecame Lhe presldenL of nokla and wlLh hls efforL before Lhe
Lnd decade nokla became Lhe masLer of Lhe buslness
@oday nokla has nserles and eserles and ls recognlzed as Lhe
llfLh mosL valued brand ln Lhe world also has launched
Cvl lLs new lnLerneL servlce brand
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The Brand
lndlan Success
lnnovaLlon
@he reasons for noklas sLupendous success ln lndla lnclude amazlng
brandlng a focused markeLlng exerclse and dlsLrlbuLlon
sLrengLh among oLhers
nokla ls one brand name LhaL lnsplres all Lhose who are lnLo moblle culLure
Cf all Lhe dlfferenL brand LhaL Louch our llves nokla sLands ouL slgnlflcanLly
lL has Laken moblllLy sLep by creaLlng producL wlLh conLlnuous lnnovaLlon
And floodlng Lhe markeL wlLh moblle of every segmenL
ln a markeLlng flrsL ln March Lhls year nokla opened a dedlcaLed ConcepL
SLore whlch feaLures Lhe full range of nokla producLs lncludlng handseLs
moblle enhancemenLs rlng Lones graphlcs games sofLware and excluslve
nokla merchandlse
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resence
8elevance
erformance
AdvanLage
8ondlng
uo l know
abouL lL?
uoes lL offer me
someLhlng?
Can lL dellver?
uoes lL offer me someLhlng
oLher Lhan Lhe oLhers?
noLhlng else besLs lL?
Weak relaLlonshlp/
Low share of caLegory
expendlLure
SLrong relaLlonshlp/
Plgh share of caLegory expendlLure
8rand uynamlcs yramld
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MarkeL SegmenLaLlon
unlque Messages
roducL ulfferenLlaLlon
@op SegmenL Classy roducL
Mlddle SegmenL8esL AlLernaLlve
Low Lnd SegmenLPlgh @ech roducL [ Low rlce
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CopyrlghL 2009 !lMnCluA
Sklmmlng rlclng
rlce SenslLlvlLy
LsLlmaLlng uemand Curves
rlce LlasLlclLy of uemand
r|ce sk|mm|ng ls a prlclng sLraLegy ln whlch a
markeLer seLs a relaLlvely hlgh prlce for a producL
or servlce aL flrsL Lhen lowers Lhe prlce over
Llme lL ls a Lemporal verslon of prlce
dlscrlmlnaLlon/yleld managemenL lL allows Lhe
flrm Lo recover lLs sunk cosLs qulckly before
compeLlLlon sLeps ln and lowers Lhe markeL
prlce
rlce sklmmlng ls
someLlmes referred Lo as rldlng down Lhe
demand curve @he ob[ecLlve of a prlce sklmmlng
sLraLegy ls Lo capLure Lhe consumer surplus lf
Lhls ls done successfully Lhen LheoreLlcally no
cusLomer wlll pay less for Lhe producL Lhan Lhe
maxlmum Lhey are wllllng Lo pay ln pracLlce lL ls
lmposslble for a flrm Lo capLure all of Lhls surplus
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lnelasLlc uemand
LlasLlc uemand
8s 13
8s 10
100 103
(a) lnelasLlc uemand
8s13
8s 10
30 130
(b) LlasLlc uemand
rlce LlasLlclLy of uemand
8s 18000
(2000)
8s 800010000
(2004)
nCklA 8230
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nokla's Sklmmlng prlce sLraLegy
nIGn MLDIUM LCW
2PlCPvALuL
S@8A@LC?
3SuL8 vALuL
S@8A@LC?
18LMluM
S@8A@LC?
4CvL8CPA8ClnC
S@8A@LC?
3MLuluMvALuL
S@8A@LC?
6CCCuvALuL
S@8A@LC?
78lCll
S@8A@LC?
8lALSL LCCnCM?
S@8A@LC?
9LCCnCM?
S@8A@LC?
nIGn
MLDIUM
LCW

r
o
d
u
c
t

u
a
|
|
t
y
r|ce
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Lxamp|es of r|ce sk|mm|ng
nCklA 8230
nCklA 6600
nCklA 9300 CommunlcaLor
8s 18000
8s 42000 8s 2100022000
8s 800010000 8s 26000
8s1300016000
8s 900010000
8s 24000
8s 10300
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enetrat|on r|c|ng
nokla's AdopLlon
enetrat|on pr|c|ng ls Lhe prlclng Lechnlque of
seLLlng a relaLlvely low lnlLlal enLry prlce ofLen
lower Lhan Lhe evenLual markeL prlce Lo aLLracL
new cusLomers @he sLraLegy works on Lhe
expecLaLlon LhaL cusLomers wlll swlLch Lo Lhe new
brand because of Lhe lower prlce eneLraLlon
prlclng ls mosL commonly assoclaLed wlLh a
markeLlng ob[ecLlve of lncreaslng markeL share or
sales volume raLher Lhan Lo make proflL ln Lhe
shorL Lerm
now lf nokla would have adopLed Lhls pollcy Lhen
Lhe prlces of Lhe new hlgh Lechnology and hlgh quallLy
seLs would have been low ln Lhe sLarLlng whlch would
have led Lo
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nokla 8elnvenLlng
neLbook
@he Morph ConcepL
LnvlronmenL
Werecycle
WeconcepL
Llke mosL of Lhe companles Loday nokla ls also
relnvenLlng lLself Lhrough lnnovaLlon and becomlng
more envlronmenL frlendly
Launch of neLbook Launch of neLbook
@he Morph ConcepL
e @hls ls an lnlLlaLlve by nokla Lo
become more envlronmenL frlendly lLself and
Also runnlng awareness program for Lhe
people
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A Lxamp|e of Morph concept
WL" concepL producLlon cycle
e
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uest|ons for D|scuss|on 1 ulscuss how nokla used Lhe sklmmlng prlclng sLraLegy
for lLs producLs Clve your commenL on Lhe sLraLegy
2 WhaL would have happened lf nokla have used Lhe
peneLraLlon prlclng sLraLegy lnsLead of sklmmlng?
3 ulscuss Lhe segmenLaLlon sLraLegy of nokla and commenL
on lLs efflcacy?
1nANkCU