Nokia had actually been edged out by rivals in the mobile phone market who launched brand-new and much better products which resulted to Clients shifting to android phones which resulted to Nokia decreasing their asking price in order to increase the rate of sales however they lost in the rate of profitability and consumer loyalty. The customer power is high; nokia is concentrating on the smart device segment because it has the greatest margin in the market, the consumers are increasing in spite of the high rate of recession, product and price distinction is getting lower which is leading to the difficulty of purchasers making a decision about the specific phone they will want to buy.
A lot of consumers get phones on agreement and switching from one phone to another is hard and pricey and with other brands leading in the smart device market, it will be difficult for customers to switch from Samsung or iPhone to Nokia.
The majority of the other brand names own circulation shops while nokia does not truly have sufficient circulation channels, making it tough for purchasers to reach their product quickly in some countries.
Rivals were rapidly capturing up with Nokia’s Symbian platform. As the Symbian OS was not enhanced for touchscreen gadgets, users were relying on the Android, Blackberry OS, and Apple’s iOS. Nokia struggled to equal competitors such as Apple, Samsung, Google, and RIM in the high-end smart device market. Nokia is not just competing with high-end producers but likewise low end producer. brand name acknowledgment is a necessary factor for success in the market, nokia’s trademark name has actually suffered a good deal. The level of differentiation in price and item is low, making it hard and unnecessary for clients to change from brand names, which can likewise create problems for brand-new brand names getting in the industry to acquire the attention of consumers in the mobile phone market.
The smartphones sales are providing profits for the brands, and wholesalers are focusing on brands that have the highest market shares in the industry (where nokia is lagging behind).consumers find it hard to switch from their existing handset producer to another when they are on a contract because it is difficult and expensive to change so they wait till when the contracts expires. The fact that nokia was not only slow in launching smartphones with the latest version of its Symbian operating system, development of new software services and hardware designs, but also in catching up with the touch screen technology left an open space in the industry for new brand players into the industry. It failed to gain the presence, brand recognition and customer loyalty in the USA as the consumers are known to have a strong impact in the global smartphone industry.
THREAT OF SUBSTITUTION:
The adoption of Android was growing fast and became the latest trend in the smartphone industry. The sleek touch screen look with numerous applications to go with it made the irresistible for consumers even though it wasn’t price friendly. Smartphones have become a daily necessity in our daily lifestyle so it is most unlikely for consumers to switch to a substitute products resulting to the low rate of substitution.
The ability to communicate with people and do several things at the same time will always make smartphones unique. Consumers tend to do different things on different products(for contacting people, usage of social media, emails and VOIP systems are substitutes, digital cameras for photography, TV/radio/iPod for listening music, tablets for internet browsing, reading books, emailing etc.) All these other values from substitute products can be found in a smartphone that is relatively cheaper compared to the substitute products and can be carried around with ease. Nokia had been the market leader in the mobile phone market since 1998 but in 2004, Younger buyers opted for trendier mobile phones offered by rivals such as Motorola, Samsung, and Sony Ericson.
THREAT OF NEW ENTRY:
The smartphone industry is difficult to penetrate because patents and proprietary is required so as to not get involved in legal battles over patent issues. Brand recognition is important for success and it will take a while for new players to build up their brand name. it will difficult for new players to get a share in the profitability of the market share In the industry as the few major players already account for most of the market share. The capital involved in the industry is very high owing to the funds that will be invested in areas of production, R&D, marketing budget and distribution channel in order to get to consumers. The distribution channel in the industry is very complex, without the right distribution channel, consumers can’t get access to the products.
Nokia doesn’t depend on suppliers leading to the moderate rate of suppliers’ power in the industry.
Cite this essay
Nokia’s Porters 5 Forces. (2016, Dec 27). Retrieved from https://studymoose.com/nokias-porters-5-forces-essay