30-06-2017 Shelley Vishwajeet
Riding on the saddle of unprecedented nostalgia and brand equity, Nokia has an enviable opportunity to make good of its second inning. Nonetheless, how it navigates the changed course and responds to new realities and challenges will largely determine its success.
BY SHELLEY VISHWAJEET
Do brands have rebirth? The common wisdom is that once a brand goes into the slip sliding mode, it’s nearly impossible to pull it back. And brands go into oblivion due to many reasons; some are galloped by others – remember Compaq; and some die because they read the future wrong – remember Oldsmobile, a 100 year plus brand that stuck to its big car designs when consumers were fast changing their preferences to compact vehicles. Examples are aplenty and not many dead and gone brands are known to have a rebirth!
Fortunately for Nokia, once the global mobile handset major and the undisputed king of mobiles in India too where till 2012 it led the volume by a wide margin over the nearest competitor Samsung, the brand had remained alive even when the product and sales had long gone. The brand Nokia carried a huge price tag on its equity too even at its worst ebb, 2014 to be precise, when it had a valuation of over USD 2 billion, something which apart from top 5 Indian (corporate) brands cannot match even today. And fortuitously again, before the brand could become just another chapter, however glorious, in the books of mobility history books, before the brand value was completely eroded, it was brought back by a group consisting largely of former Nokia employees – HMD Global - which obtained the right to use Nokia brand for its mobile handsets and now proudly calls itself “The Home of Nokia Phones”.
In spirit, the December 2016 arrangement between HMD and Nokia is quite unlike what BlackBerry had with the Chinese electronics manufacturing giant TCL Corporation or what TCL had with Alcatel much earlier. Simply because, TCL has little emotional or ‘value’ connect with the brand BlackBerry. The arrangement was primarily aimed at leveraging and blending TCL’s low cost manufacturing value proposition with the mega brand BlackBerry to remain relevant in a business environment where though the handset numbers have been rising but margins have been fast shrinking. As per a Strategy Analytics’ report, more than 95% of the phenomenal USD 53.7 billion profits made on smartphone sales last year were cornered by just two companies – Apple and Samsung - implying that vast majority of smartphone manufacturers are either making miniscule marginal money or incurring losses despite cornering volumes. In this business environment, the BlackBerry-TCL arrangement looks perfect on paper but then the slide in Blackberry’s volume hasn’t stopped.
In contrast, Nokia-HMD arrange- ment appears to have more synergy, both in spirit and substance. And if you add Foxconn, which is going to manufacture Nokia phones in India for India, the combination looks even more attractive. The promise that Nokia-HMD holds has been acknowledged by investors and market watchers the world over, the proof being over 200% jump in Nokia’s brand valuation the day the agreement between Nokia-HMD was made public. Today, the Nokia’s brand value is being quoted at above USD 6 billion, taking it again on top of the chart in its homeland – Finland. And as per Brand Finance’s stats, only four Indian brands – Tata, Airtel, LIC and Infosys - carry a higher brand value than Nokia today. Still, by its own standard, this should be little solace to Nokia/HMD as it remains a long long way from its highest valuation of USD 33 billion in 2008 when it was ranked world’s 9th most valuable brand.
Nonetheless, there is little doubt that people haven’t stopped betting on its potential and that should boost the morale of its new flag-bearers. The buzz and hype surrounding brand’s re-launch with iconic 3310 at MWC 2017, Barcelona was unprecedented as it got more than 70,000 mainline news articles and television coverage besides thousands and thousands of blog posts. No brand has been welcomed back with so much enthusiasm and drumbeats as Nokia – an indication of the nostalgia and goodwill that the name Nokia still carries.
The Positioning and Promotional Strategy
But will nostalgia and residual brand equity suffice to assure Nokia a successful second inning? Can the hype be translated into sales – the ultimate thing that really matters in business? As the saying goes, much water has flown down the river since Nokia came back on the shelves again.
The dynamic global handset market, specially the smartphone market, has been evolving at a superfast pace and has undergone dramatic changes since Nokia went out of the race in 2014. There are new boys on the block and they are really damn smart, restless and aggressive and they have been challenging the old warriors like iPhone and Samsung too with gusto! A new mighty ‘House of Mobile’ with the badge of ‘BBK Electronics Corporation’ has sprung up offering three of the world’s top 10 smartphone brands – Oppo, Vivo and OnePlus – in its arsenal. And this is beside Huawei, another citadel of mobile handsets. The new warriors have one simple philosophy and poser to competitors - do whatever you do, whatever you offer, we will offer the same or better but at a lower price point. The new boys have upstaged iPhone in their homeland, in the number game at least, and are restive to conquer other territories too. And, they can really teach a thing or two to even the most celebrated western marketing gurus when it comes to the art of brand promotion– a new found skill set they acutely lacked not much long ago. Who would have imagined even two years back that a Chinese mobile brand would be signing a Rs 1000 crore cricket association deal in India?
Thankfully again for Nokia as it will not have to spend that kind of money on brand building! As per HMD’s own survey, the brand awareness in India is close to 95%. So one can say it is starting with a fairly low handicap when it comes to mobile course. That’s a big plus for a company which for now will be operating on a very tight budget. Still, sooner or later HMD will need to shell out a tidy sum if it wishes to turn brand awareness into mindshare and market share. No escaping that!
So what route it will take as far its brand communication line is concerned? Both Ajey Mehta, VP India for HMD Global and Nokia’s chief flag-bearer in India and Jyotsna Makkra, Marketing Head India for HMD Global make it amply clear that they will not go for celebrity endorsements or high profile event associations but instead focus on innovative and human values driven product connect strategies and campaigns. (Please read Ajey Mehta and Jyotsna Makkar’s interviews for more on this).
In effect, Nokia will not be opening its campaign taking the spec route but will take an altogether different approach to reclaim its position under the sun - by connecting to the connected generation via intrinsic and deeper human values. The same will be reflected in its promotional and communication line too. Pekka Rantala, Chief Marketing Officer for HMD Global, who was recently in New Delhi for Nokia smartphones launch, voices the same sentiment. “The Nokia brand is still one of the cornerstone elements and it allows us to take a difference stance in the market — not just tech alone. We are able to bring not just a technology angle but also a human angle. This philosophy we believe will help us also as we take a different approach to Android, for example.” Jyotsna Makkar is quick to clarify that taking a different route in no way implies that Nokia doesn’t have the capability to offer the best of technologies but flaunting specs is not going to Nokia’s communication line. “We want to appeal to more intrinsic and deeper human values”.
Only time will tell how successful will this strategy be but there is no doubt that there are scores of enlightened and new age consumers for whom certain deeper values associated with a brand are strong influencers in making a product choice. It’s like – Nokia or Samsung – same features, same price, but different set of customers will have different raison d’être to opt for one of them.
Product and Sales Strategy
Nokia was synonymous with feature phones. The Nokia 1100 has been the largest selling mobile phone in the history of handsets – it sold more than 250 million units during its existence. The 3310 was another blockbuster – with more than 126 million units sold! And unlike most parts of the world, India remains a strong and still a growing market for feature phones and outsells smartphones in terms of volume. Close to 60% of all the phones sold out here are feature phones and last year, Indians bought more than 145 million feature phones. This is a market HMD/Nokia has strong eyes on. And with Nokia coming, even up-scale consumers in metros may love to flaunt a Nokia feature phone along with smartphone.
“Nokia somehow gives you that ‘kick’, where you would like to flaunt it,” says Ankita Sharma, a senior retail industry professional in her thirties. Keeping two different phones, one smartphone and another a feature phone, is a common and done thing in many countries. Nokia would surely love to see this trend catching up in India too.
Nonetheless, Nokia must be acutely aware that if it has to become a relevant player in India again, it will have to get a strong foothold in the smartphone segment too. This is a segment which gives margin but where competition is fierce and this is a really an untested market for the HMD think tank. The newly launched Nokia 3, 5 and 6 smartphone range do look worthy offerings but like pointed out earlier, samrtphone game has today boiled down to – more bang for the bucks.
So, Nokia is going to be there in both the handset segments and is going to follow multi retail platform strategy. For feature phones, it has opted for offline channels, but for smartphones, it’s a mix. While Nokia 6 will be available exclusively on Amazon for now, Nokia 3 & 5 can be bought off the shelf.
The Road Ahead
So is it going to be a smooth sailing for Nokia in its second inning? Experts’ opinions are divided. While Shobhit Srivastava of Counterpoint Research believes that Nokia’s brand value gives it a strong base to quickly carve out a market for itself; Taron Mohan, CEO of NextGen Telesolutions, on the other hand feels that the road ahead is going to be really tough for Nokia as market dynamics have completely changed since its last inning. (Please read adjoining experts’ interviews for more on this).
Yet, in the final analysis, the positives for Nokia measure out the challenges by a long hand. Brand Nokia still has a phenomenal awareness which translates into saving of hundreds of crores in brand building; it has a strong and proven team in place; its global R&D team is top class, and icing on the cake is its manufacturing partnership with Foxconn in India which is headed by a very distinguished man called Josh Foulger, who has had a deep professional and emotional connect with the brand, who would definitely ensure a great build quality and cost competitiveness for HMD/Nokia products. The going certainly looks promising! This phoenix looks all set to rise again!