CASE STUDY - NOKIA
• Began as a forestry company, and for almost 100 years remained in the pulp and paper industry.
• In 1993 Ollila (CEO) told the European Commission that he thought that Europe has lost the computer market to the USA, and consumer electronics to Japan, but could still dominate the emerging telecom market In 2000, the company sold more than 400 million phones.
• Nokia achieves product margins of up to 25%, compared to it’s rivals’ 1 to 3%
• It spends around 9% of revenues or R&D, and around a third of its staff work in design or R&D.
• In 2004, Nokia began to lose sales and market share, faced with increased competition from Sony Ericsson and Samsung.
• One reason was a delay in developing newer clam-shell style hand sets pioneered by competitors such as Samsung and Motorola;
• Another reason is it begin late in developing higher-end camera phones.
• As a result margins dropped to below 20%, and market share to below 30%.
• Nokia successfully recovered its position and in 2007 sold 437 million phones, representing a global market share of 42%.
• Additional functions such as music and navigation have continued to stimulate demand in the more mature markets.
BUILDING ARCHITECTURALPRODUCTS
• Architectural products consists of novel combinations of existing technologies that serve new markets or applications.
The critical issue is to identify or create new market segments.
• Market or buyer segmentation is simply the process of identifying groups of customers with sufficiently similar purchasing behavior
SEGMENTING CONSUMER MARKETS
• Utilitarian theories assume that consumers are rational and make purchasing decisions by comparing product utility with
their requirements.
• This model suggests a sequence of phases in the purchasing decision: problem recognition, information search, evaluation of alternatives and finally the purchase.
• Behavioral approaches have greater explanatory power. These emphasize the effect of attitude, and argue that the buying decision follows a sequence of changing attitudes to a product - awareness, interest, desire and finally action.
• The goal of advertising is to stimulate this sequence of events.
• The balance between rational and behavioral will depend on the level of customer involvement.
• Many purchasing decision involve little cost or risk, and therefore low involvement. Consumers try to minimize the financial,
mental and physical effort involved in purchasing. Advertising is most effective.
• In high cost or potential risk to customer, buyers are willing to search for information and make a more informed decision. Advertising is less effective.
CASE STUDY - PERSIL POWER
• Unilever launched its revolutionary new washing powder ‘Persil Powder’ across Europe.
• Development had taken 10 yeas and more than 100 million pounds. The product contained a manganese catalyst. Unilever claimed washed whiter at lower temperatures.
• Unilever protected its development with 35 patents.
• The company has test marketed the new product in some 60000 households and more than 3 millions washes.
• It was sufficiently confident to launch the product in April 1994.
• Reports by Procter & Gamble, Uniliver’s main rival, and subsequent tests by the British Consumers’ Association found that under
certain conditions, Persil Power significantly damaged clothes.
• Unilever had conducted most of its tests in Dutch households. Typically, northern Europeans separate their whites from their
colored wash, and ten to read product instructions.
• In contrast, consumers in the South are more likely to wash whites and dyed fabrics together, and to wash everything on a hot wash
irrespective of any instructions to the contrary.
COMMERCIALIZING TECHNOLOGICAL PRODUCTS
• Technologists are typically concerned with developing devices, whereas potential customers buy products which marketing
must create from the devices.
• PC is one of technological product examples.
• It is necessary to identify why a potential customer might look for an alternative to the existing solution. It may be because of
lower costs, superior performance, greater reliability, or simply fashion.
IMPLEMENTING COMPLEX PRODUCTS
• Technology and markets co-evolve over time, as developers and potential users interact.
• Technological complexity does not necessarily imply market complexity, or vice versa.
THE NATURE OF COMPLEX PRODUCTS
• Complex products typically consist of a number of components, or subsystems.
• For bundled systems, customers evaluate purchases at the system level, rather than at the component level.
LINKS BETWEEN DEVELOPERS AND USERS
• Few applications and few users. Direct face-to-face negotiation regarding the technology design and use is possible.
• Few applications, but many users. This is the classic marketing case, which demands careful segmentation, but little interaction
with users.
• Many applications, but few users. There multiple stakeholders amongst the user groups, with separate and possibly
conflicting needs. The core functionality of the technology must separated and protected, and custom interfaces developed for the different user groups.
• Many applications and different users. In this case developers must work with multiple archetypes of users and therefore
aim for the most generic market possible, customized for no one group.