The goal of every brand in the market is usually to achieve the required market share and the targeted profitability. When a brand fails to realize its set target in the market, it is said to have failed. Several factors contribute to brand failure within the market. The creation of a strong brand image, brand value, and innovation are associated with brand success in the market. A brand that fails to understand the needs of the customers and innovate could fail in the market. This paper analyzes the brand failure case study for Nokia Windows smartphones. A brief background of the brand first provides a clear view of the case of the Nokia brand failure. The paper then analyzes a wide range of sources and theories on the causes of brand failures. The literature review explains what led to brand failure at Nokia. The paper finally offers short term and long term managerial implications for the brand to reemerge successfully and reposition itself as a valuable product.
Background
Nokia is a Finish multinational communication, electronic, and information technology company. It was founded in 1865 and had dominated the communication and electronic sector for decades. By 2014, the company had subsidiaries in more than 100 countries while also doing business in more than 130 other countries ( Bouwman et al. 2014 ). It recorded an annual revenue of $23 billion and has been listed at the number 415 largest companies in the world, according to the report by Fortune Global 500. In 1998, Nokia was the best selling mobile phone globally. It had dominated the market for decades, making almost $4 billion in profits in 1999 ( Alibage & Weber 2018 ). It has emerged as a major contributor to the mobile telephony industry, where it has assisted in the development of the GSM, 3G, and LTE. The company had dominated the telephone market until 2007 when it began to experience struggles with its phone segment.
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In 2014, Nokia got into a partnership with Microsoft, which later bought it. By 2000, the company was at is a peak in the mobile phone market, occupying more than 60% of the global market share ( Wang, Hedman and Tuunainen 2016 ). It continued to come up with new models of phones. It is still known for the innovation of camera phones, including the Nokia 3600, Nokia series, and Noki N95. Throughout its period up to 2003, Nokia was the market leader in the industry. It continued to record huge profits from the sales of mobile phones. However, 2004 marked the beginning of the struggles of the company as it recorded a decline in the sales revenue from the mobile phone segment. In the first quarter of 2004, Nokia had recorded a drop in its market share by up to 29%. As more firms joined this industry, the competition was stiff, and innovation became the major competitive strategy.
Case Study: Failure of Nokia Windows Smartphones
Nokia's market failure in the mobile phones segment shows how the initially a successful brand to one of the most significant brand failures in the world of business. Nokia had emerged as a pioneer in the smartphone market, constantly introducing new models of phones to its customers ( Sjölander, Blomqvist and SKÚLASON 2014 ). By 2002, Nokia brands had dominated the smartphone markets with Series 60 phone devices. By 1999, Nokia brands were the best selling phones in the world, with the company making over $4 billion net profits from the phone segment alone. Nokia 1100 emerged as the best selling brand, contributing to a considerable proportion of the total sales in 2003. At this time, Nokia brands were dominating the global markets, and it had become a valuable brand in the minds of many customers. Throughout its smartphone brands, Nokia was using Windows until 2011. In 2007, things began to change when competition increased by Apple, introducing the iPhone into the market ( Peltonen 2019 ). The phone came with a full touch screen and app-based operating system, which changed the whole smartphone's perception. Until this time, over 50% of the smartphones sold globally were Nokia brands, while Apple only occupied 5% of the global market share.
The smartphone market was rapidly changing in 2008 as more customers shifted towards iOS and later, Android. At this time, Nokia had not responded to the rising competition and changing customer perception. The customer preference was shifting towards the modern and more effective smartphones as the Symbian platform had become outdated ( Lamberg et al. 2016 ). It was until 2010 that Nokia decided to launch its "iPhone Killer," but this brand failed to be innovative enough to meet the competition. When Apple came with its new smartphone, it changed the brand's perception. As the smartphone market continued to explode with changing perception, customers were opting for modern smartphones. Nokia still spent much time on windows even as Samsung responded by adopting the android operating system for its products. Many customers had rejected the new Nokia smartphones for the more innovative brands such as iPhone and Samsung. By 2010, Nokia was rapidly experiencing a rapid decline in the market share of its phone products. Its new smartphones had fallen short of the competition and to respond to the changing consumer perception. Within six years, Nokia's market share for smartphones had dropped from 90% to just about 10% ( Hanaysha and Hilman 2015 ). It marked its greatest failure within the tech industry. In 2013, Microsoft acquired the firm, which controls more than 90% of the global market share had completely witnessed customer rejection.
Literature Review
Studies have focused on research on the role of branding and brand values in the market. The term brand describes the image and reputation that a product has in the market ( Hanaysha and Hilman 2015 ). Customers play a crucial role in determining the value of the brand in the market. Brands that provide value in the mind of the customers are more likely to emerge successful in the market. Various scholars have argued that the only way to ensure the prosperity of a particular brand in the market is to create and maintain a positive brand image in the minds of the customers. A study into the causes of brand failure focuses finds that those firms that fail to develop competitive and positive brands in the minds of the customers are more likely to witness a decline in their market share. Strong brands must, therefore, stand out and differentiate themselves from the rivals. With a powerful differentiation tool, brands can have a positive influence in the minds of the customers, thus increased demand. Zenker (2014) defines a brand as a powerful device that can communicate the preferred image of the products. As a result, creating value in the minds of the buyers plays a great role in setting a positive brand image with the buyers. Without constant creation of brand value, even the firms that initially dominated the market share may not survive in the long run.
Customers usually require performance from a brand. As long as the performance of the brand meets the customer expectations, they are more likely to remain loyal to that particular brand. However, studies into brand positioning show that brand performance and brand image are the main determinants of the success of a brand in the market ( Mindrut, Manolica, and Roman 2015 ). Other branding theorists have related brand failures with a lack of innovation. The customer preferences are ever-changing. A brand that is dominating the market at a particular time may not retain the same market share after a specific time when they fail to innovate. Innovation requires the constant release of products with new ideas aimed at boosting the position of the brand in the market. The growth of technology has made innovation not an option but a necessary process for firms that want to survive in the market. According to m olinillo, Ekinci, and Japutra (2019), constant innovation is the only way to respond to ever-changing customer needs. Customers are a very demanding lot with rapidly changing preferences. They would always want the latest technology while also seeking to minimize their expenditure. If a business fails to be innovative, the brand is more likely to become irrelevant and out of date in the market.
Researchers have also examined the role of technology in brand failure in the market, especially in cases where firms fail to innovate. Technology is one of the factors that is rapidly leading to changing customer preferences. The rapidly changing technology requires that the brands remain relevant by offering value to the buyers. Brexendorf, Bayus, and Keller (2015) note that customers usually want the most trendy brand driven by technology. As many technologies continue to grow and new products emerge, the initial brands are more likely to be rendered irrelevant. In research conducted by Sinapuelas, Wang, and Bohlmann (201), among the causes of product failure in the tech industry, findings show that technology remains a significant risk. Rapid advancement in technology has come out as a major cause of changes in customer preferences, and those brands that fail to adopt would experience brand failure in the market.
At some stage, response to the rapidly changing customer preferences requires brand repositioning. Saeed and Siddiqui (2016) define brand repositioning as a process by which the firm changes the status of the brand in the market. Depending on the prevailing market conditions, a firm may vary the marketing mix as a way to protect the brand from failure. Brand repositioning comes with the need to rebuild a brand identity. The loss of brand image may require the need for rebranding and repositioning of the brand in the market. The benefits of brad repositioning are to rebuild the image of the brand in the minds of the customers. Repositioning of the brand has emerged as a way to increase the relevancy of the brand in the market.
The business environment is rapidly changing, and this calls for the firms to change their brands to fit into the changing business environment. According to Zenker (2014), failing to respond to the changing business environment can present the greatest root for brand failure. Firms that respond to the changes in the market places are more likely to remain strong brands. Destructive technology has emerged as the greatest threat to the survival of the brand in the market. The inability to respond to the changes in the market could hence lead to failure.
Brand failure in the market has also been studied regarding understanding the needs of the customers. According to Saeed and Siddiqui (2016), customers determine the success or failure of a product in the market. One of the mistakes that most firms commit when introducing a product into the market is failing to understand the needs and problems of the customers—some firms go-ahead to produce a product and then persuade the customers to buy. However, the most proven approach to the success of a brand is to get to market and understand what the customers want. Talking to the customers about what they need before going ahead to produce is necessary to reduce brand failure in the market. The worst mistake that most firms make is to the first product without understanding what the needs the product will solve.
In other studies, the lack of market research and ineffective use of the marketing mix can lead to product failure. Market research remains an essential process because it helps not only in understanding the competition but also the needs of the customers ( Saeed and Siddiqui 2016 ). The effective use of the marketing mix can also help ensure the success of a brand in the market. The product aspect of the marketing mix needs to ensure that the brand meets the needs of the customers. At the same time, the promotional elements of the marketing mix need to focus on communicating the benefits of the product to the customers. It is, therefore, necessary to understand the needs of the customers before producing and launching a new product.
Discussion
Based on the literature, one of the major reasons why Nokia Windows smartphones failed was due to a lack of innovation. The smartphone market was rapidly changing as the technology continued to advance. The rival firms such as Apple and Samsung were rapidly innovating, coming up with the more improved feature of smartphones. Apple was designing new models of smartphones with the iOS operating system as Samsung maximized on the android operating system ( Alibage & Weber 2018 ). The new models of creative features were taking the smartphone market by tides. The consumer preference was rapidly shifting towards more effective brands. While all these were happening, Nokia did not respond by any innovation. It continued to rely on its already large market share without taking into consideration that the technology was changing, and there was a need to create something modern. It was until the market share of Nokia began declining that it responded to the competition. Nokia introduced its windows smartphone in 2007 to tackle the rising competition from Apple's iPhone. Despite a late response to competition, Nokia had a chance to rebrand itself and reposition itself as a valuable brand in the minds of the customers. However, the introduction of Nokia windows smartphones was a significant failure for the brand.
While introducing the Nokia windows smartphone to tackle Apple's iPhone, Nokia did not consider what the customers needed. It never undertook market research to identify what customers' problems were before coming with a product to solve these problems. Instead, the firm only produced the product as a way to respond to the rising competition ( Peltonen 2019 ). Nokia windows smartphone did not meet the competition, and customers did not find value in it. It did not come in small size and attractive, as was the iPhone. It provides the importance of understanding the needs of the customers before designing a product. The design features and performance should meet the expectations of the customers. With such responses, a brand is more likely to lose to the rivals in the market. Firms, therefore, need to focus on constant innovation always to offer customers something trendy in the market. The sale of phones in the current market depends on how stylish the product looks. Nokia phones did not even have the front camera at first, yet its rivals had designed classic phones with both front and back cameras. Failing to innovate and understand the needs of the customers, and it greatly contributed to brand failure.
Brands tend to become irrelevant with time as rivals innovate new products. Technological advancement makes products obsolete and the need for new ones. As a result, rebranding and repositioning from time to time are necessary. Nokia was a global brand for over a decade before it eventually became irrelevant in the minds of the customers ( Peltonen 2019 ). The company did not constantly rebrand and reposition itself through innovation to retain its value in the minds of the customers. As technology advanced, the brand was becoming obsolete based on its functionality. Nokia failed to rebrand and reposition itself as a way to retain its market share. The outcome was a drop in the market share by up to 80%. It also led to the loss of brand value perception in the minds of the customers.
Managerial Implications
In the short-run, the management needs to focus on repositioning itself by focusing more on product innovation. There is a need to innovate by introducing new products into the market consistently. Innovation needs to focus on product features and functions that consumers demand. The management should, therefore, invest more in market research and development. In this, it will be able to understand the needs of the customers and design products aimed at meeting these needs. Building a strong brand image requires constant innovation to offer aways a quality brand that meets the needs of the customers. As a firm that has already lost its brand value on the mind of customers, repositioning offers an opportunity to win back customer loyalty ( Saeed and Siddiqui 2016 ). However, this requires clear evidence of a quality brand, which should be visible in the product. Constant innovation of most trendy smartphones will help it reposition as a strong brand in customers' minds.
In the long run, the management can focus on building a strong brand image and trust with customers. After repositioning itself as the most innovative brand, the management needs to establish a strong brand image and lasting relationship with customers. Creating brand value allows the business to develop a favorable impression of the brand in the mind of the consumers. At this stage, the firm needs to apply the 4Ps of marketing effectively. The firm should produce a wide range of innovative smartphones and offer them to customers. The brands should come with the most trendy features and incorporate the most modern technologies. Secondly, the firm should have an extensive distribution strategy to ensure the products are in the reach of the customers. Marketing communication should focus on communicating the product features and selling the brand qualities ( Saeed and Siddiqui 2016 ). Depending on the pricing strategy chosen, the focus should be on positioning in the minds of customers as a valuable brand. This strategy will ensure that the brand’s initial perception in the minds of the customers is changed. It should emerge as a valuable brand that offers quality to customers.
References
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