Martin Roll: Nokia’s Fall From Grace Calls for a Return to Its Pioneering Days

Leaders tend to be successful. Market leaders tend to shape the industry, guide its trajectory and weave exciting experiences for customers.

By Martin Roll

With the advent of the Internet, which has facilitated instant and constant connection among customers, market leaders have also tended to continuously innovate, have a strong feel for the pulse of the market and most of the time preempt customer demand.

This rather broad description can be generalized across industries.

It is especially applicable to the mobile phone industry, which has seen new players, new technologies and new rules of the game.

Brand leaders have been challenged and brand warriors aspiring to lead the market have been successful.

One such market leader — Nokia — is under immense pressure to protect its dominant leadership position. The Finnish company has been the market leader in the global mobile phone industry for as long as one can remember. It has dominated the market with its customer-friendly designs and value-adding features, says Martin Roll, a global business & brand strategist based in
Singapore.

Nokia still continues to be the leading mobile phone company, having sold 108 million handsets in the first quarter of 2010, up 16 percent from the same period last year.

But the company has come under immense pressure in recent years, especially from innovator Apple. Its market value, which was more than $208 billion in 1999, has fallen to $45 billion in 2010.

So what were the reasons behind the market leader’s mighty fall?

Market leaders are notorious for their complacency.

Examples abound in the global market. Sony, the leader in mobile music with its Walkman, lost the market to Apple’s iPod.

General Motors and Ford, two of the biggest car companies in the world, slowly and steadily lost their position to Toyota. Dell, once the leader in personal computers, lost the market to a resurgent HP and the emerging Lenovo.

All these market leaders rested on their past achievements while not investing in innovation, new technologies and new avenues to create brand experiences.

The business models and the brand ideals behind their erstwhile success gradually became so entrenched that they eventually turned around to become strategic liabilities rather than strategic assets.

So it is with Nokia. Despite its reputable battery life, customer-friendly features and quality, it lacked the excitement that some of its newer competitors brought to the market.

Nokia followed a strategy of incremental innovation.

Although such a strategy may have offered short-term efficiencies and cost savings, the long-term consequences have been disastrous.

It will be hard for anyone to immediately name a Nokia innovation that has shaken the global mobile phone market.

In contrast, Motorola introduced the highly successful RAZR phone line, Apple introduced the hugely popular iPhone and RIM the Blackberry phenomena.

Such a conservative strategy has hit Nokia very hard .

While it used to enjoy 20 percent operating margins, it will likely achieve just 11 percent to 13 percent this year.

Over the past six months, the average price of Nokia handsets has fallen 18 percent to $206.

Profits have dropped to $467 million, sending its shares down a whopping 14 percent on the day of its earnings announcement.

While customers are only too eager to lap up iPhones and Blackberrys, Nokia’s conventional designs and features have fallen short of customer expectations.

Nokia needs to follow the basic rules of strong global brand strategies to re-establish its brand equity.

Customers around the world gravitate toward those brands that create excitement, ones that offer immense symbolic value and enhance customers’ sense of belonging to a global community of brand patrons.

Given this, dependable quality and user-friendly features become basic ingredients and not differentiating advantages.

For far too long, Nokia built its brand on those basic ingredients, which undoubtedly served it well. But given the changing landscape, Nokia should focus on the brand experience.

Nokia should lead the innovation curve to position itself as a pioneering innovator and not just a passive adapter of market trends.

Leaders can, and do, make successful comebacks.

Such comebacks depend on the strategic brand blueprint.

By following some of the fundamental branding guidelines outlined above, Nokia can retake its position as one of the global iconic brands.

Martin Roll is a global business & brand strategist.

http://www.venturerepublic.com

Download brochure: http://www.martinroll.com/brochure2009

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