Factors Affecting New-Products Success and Failure at Nokia Corporation
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In today’s intensely competitive business world, the success of newly developed products and services is a major concern for most organizations. Manufacturing organizations as well as service providers are increasingly becoming concerned about the success of their new products and services in the marketplace. As a result, new approaches have been developed to replace the old approaches during the development of new products in order to ensure that the new products effectively succeed upon introduction into the market. Small, medium-sized and multinational companies are using holistic approaches during the development of new products in order to guarantee success of the end-products. These holistic approaches include extensive market researches, incorporation of innovativeness within the organization, constant review of performance of existing products in the market, customer focus, target marketing and other strategic marketing approaches used to ensure that newly produced goods and services succeed in the marketplace. For example, most telecommunication companies have been engaged in extensive advertising and production of highly innovative mobile phones in order to lure, attract and retain customers. Despite these efforts, most of these companies usually face numerous challenges as they attempt to ensure success of their new products. According to Charles, Monk and Sciberras, multinational telecommunication companies such as Nokia, Samsung, Motorola and Apple that operate in the constantly-changing technology industry are the most affected organizations (51).
Reason for Choosing this Topic
I have selected this topic because of the increased need to establish various challenges faced by telecommunication companies as they develop and market new products and services. In my view, new product development is a crucial area in every organization. However, if the processes necessary for successful development, implementation and marketing of new products are not carried out effectively, there is high probability and risk of failure of the newly developed products. Thus, it is important for organizations to take appropriate precautions to ensure that new products succeed in the target markets. I have chosen Nokia Corporation due to its popularity, large market share and extensive operations.
Overview of Nokia Corporation
Nokia Corporation is a multinational telecommunications company based in Espoo, Finland. Nokia Corporation majors in production of mobile phones and other portable information and communication technology (ICT) devices. The company also provides multimedia products such as digital music, videos, games and internet applications. Nokia Corporation has a joint venture with Siemens through which it provides telecommunications network equipment and services. In 2012, Nokia Corporation was named the second-largest mobile phones manufacturer in the world based on unit sales (Steinbock 22). According to Steinbock, Nokia Corporation had a global market share of twenty-three percent between January and April 2012 (79).
Nokia Corporation has been the world’s largest manufacturer and best-seller of mobile phones since 1999 (Steinbock & Warner 50). However, over the past six years, Nokia Corporation has been suffering from reducing market share due to increased competition, introduction of technologically advanced products as well as changes in consumer tastes and preferences. According to Federick and Rajesh, the market share for Nokia Corporation greatly declined between 2006 and 2011 due to the introduction of smartphones in the mobile telephony industry (115). Apple Incorporation, which is the largest manufacturer of smartphones and one of the major competitors of Nokia Corporation, introduced the iPhone in June 2007. This led to further decline in the market share for Nokia products. In addition, the introduction of mobile phones operating on the Android Operating System (OS) also led to decreased market share for Nokia because most people preferred the Android OS to Nokia’s Symbian OS. Federick and Rajesh estimate that the introduction of devices using Android OS led to the decline of share price of Nokia Corporation from forty U.S. dollars in 2007 to three U.S. dollars in 2011 (177). In my view, this decline in market share for Nokia Corporation provides a good ground for conducting research studies to determine the major factors that have led to success and failure of new products introduced by the company into the consumer market.
The main objective of this research study is to determine the various factors that have led to the success and failure of new products developed, manufactured and marketed by Nokia Corporation.
This research utilizes both primary and secondary research techniques. Through primary research, various interviews and surveys would be carried out to determine the factors that affect the success or failure of new products at Nokia Corporation. On the other hand, secondary research would involve detailed analysis of previous research studies on factors that lead to success and failure of new products in different organizations. The information obtained would then be compared to the data collected during the surveys.
Although extensive research studies have been carried out to find out various factors that lead to the success or failure of new products in the market, plenty of further researches need to be conducted on specific industries and organizations, especially in the ever-changing technology industry. Most previous research studies have generalized that factors that lead to the success or failure of new products in the market are identical and affects all organizations equally. However, I would argue that these factors are industry specific and may vary from one organization to another. Although certain factors such as inadequate market analysis usually lead to failure of products in most organizations, other factors such as marketing strategies are specific to individual organizations. Thus, this research pper presents an exploratory study that investigates the main factors that affect the success and failure of new products at Nokia Corporation. Various variables in the market place such as existence of stiff competition, sluggish technological advancement and changes in tastes and preferences of consumers are taken into details. In addition, this research paper also explores non-environmental factors or organizational factors such as innovativeness and internal management strategies and their impacts on the success or failure of new products of Nokia Corporation in the market.
New Product Development
New product development refers to various activities and processes involved in the generation, creation and production of new products. Some of the major activities and processes involved in new product development are idea generation, idea screening, concept development, business analysis, market testing and commercialization.
Factors influencing the success of new products at Nokia Corporation
Nokia Corporation has been partnering with other companies in order to ensure that its new products are successful in the target markets. For example, Nokia established a strategic partnership with Microsoft Incorporation in order to enable it to manufacture new smartphones that operates on Windows Phone operating system. Windows Phone is a product of Microsoft. This move was meant to facilitate replacement of Nokia’s Symbian operating system with the new Windows Phone OS. According to Federick and Rajesh, Nokia realized that most customers preferred smartphones with Windows (194). Thus, the introduction of smartphones by Nokia that incorporates the Windows Phone operating system greatly assisted in the success of new products of the company. Consequently, the first Windows Phone handsets, the Lumia 710 and Lumia 800, from Nokia Corporation were introduced in October 2011.
b) Organizational Culture
Nokia has a suitable organizational culture that encourages learning within the organization (Ropponen 209). The learning culture of Nokia Corporation facilitates generation of ideas and development of new products in the company. In my view, a learning culture also facilitates transfer of knowledge and sharing of ideas and information amongst employees. This facilitates creativity within the company. Consequently, the company is able to manufacture highly innovative products that succeed in the highly competitive market.
c)Production of Market Driven or Customers Focused Products
Due to the ever-changing environment, companies in the technology industry have been forced to discover new ways of meeting the needs and preferences of customers. Most companies have been forced to focus not only on the quality and cost of the products but also the need to differentiate their products from those of competitors. In my view, Nokia has effectively differentiated its products from those of rival companies like Samsung, hence leading to increased success of the products in the market.
d)Proper Planning and Organization
Adequate planning and organization enables flexibility within a company. Nokia has effectively utilized planning and organizing skills during production of its products. This has helped in manufacturing products with no or minimal defects, thus, leading to increased success of the products in the market.
e)Compatibility of New Products with Current Resources of the Organization
In my opinion, most new products of Nokia Corporation usually succeed during their development and implementation because of their compatibility with current resources of the organization such as existing technological equipments and machinery and skills, knowledge and expertise of the workers. This makes it easy for the company to manufacture new products efficiently and effectively because production techniques are duplicated. Compatibility of new products with existing technologies usually results into success of the products due to ease of development.
f)Ability of Products to Meet the Needs of Consumers
The level of need of a product usually determines the level of acceptance of new products. Most products of Nokia Corporation usually succeed in the market because they are often tailor-made to suit the needs of the customers. This has been achieved through development of highly innovative products that meets the expectations of the customers. For example, the company developed the Lumia 710 and 800 handsets in order to meet the increasing demand of consumers for smartphones that do not operate on Symbian operating systems.
Nokia Corporation is considered as one the most innovative mobile manufacturers in the world. The company usually conducts extensive research studies in the mobile telephony and telecommunications industries to establish the various technological changes that occur in the industries. For example, Nokia Corporation collaborates with prestigious universities such as Massachusetts Institute of Technology, Stanford University and University of Cambridge to conduct its researches. Information and ideas generated during these research studies are usually used to develop high-quality products with high performance and appealing features. This has facilitated the acceptance of Nokia’s products by consumers whenever they are introduced into the market, hence increased success of the new products. For example, Nokia Corporation was the first company to introduce a mobile handset (Nokia N8) with 12 megapixels and autofocus camera (Steinbock & Warner 206).
h)Extensive Supply Chain
Nokia Corporation boosts of far-reaching distribution channels for its products. Most products of the company are extensively distributed to global markets through millions of middlemen. This helps in ensuring that the products are readily available in the consumer markets. According to Naresh and Peterson, extensive distribution of newly manufactureed products usually facilitates the success of such products in the market because most purchases for new products are usually made at the early stages of its introduction into the market (225). Thus, if the products are readily available at this stage, consumers will be enticed to make prompt purchases. In addition, Nokia also uses extensive marketing and advertising techniques to create awareness and inform consumers about its new products long before their introduction into the market. Pre-advertising for new products usually creates eagerness amongst the consumers. Consequently, most potential consumers make numerous purchases immediately the products become available in the market. This usually leads to great success of new products. Moreover, adverting products before their introduction into the market also creates familiarity with the products amongst consumers. This helps in easy and quick acceptance of new products, thereby leading to success.
Factors Influencing Failure of New Products at Nokia Corporation
Every new product introduced into the market usually experiences some challenges or difficulties upon its introduction. If these problems persist, the product may fail. In relation to Nokia Corporation, some of the major factors that have affected the ability of its products to succeed in the market include high level of competition, legal challenges, over-optimism and weak positioning strategies of new products in the market.
Increase in competition in the global business arena usually forces companies to focus highly on the development of new products. This is because most businesses view new products as a major source of revenues. According to Irwin, new products of Nokia Corporation often fail due to stiff competition from rival firms such as Samsung, Apple and Motorola (189). In my view, availability of close substitutes in the market also leads to failure of new products of Nokia because consumers opt to purchase products of the competitors. Consequently, new products of the company are likely to fail due to low consumption in the market.
Nokia has been faced with various lawsuits in relation to some of its products. For example, in 2009, Apple Inc. sued Nokia for duplicating its iPhone. Apple Inc. alleged that Nokia stole some of its patents when manufacturing new handsets. This has created doubts and suspicions amongst consumers on the authenticity of products of Nokia. Consequently, there has been reduced acceptance of Nokia’s products in some markets such as Japan and Asia (Irwin 216).
c)Inadequate Assessment of the Market
Another major factor that has greatly influenced the performance of new products of Nokia is the level of assessment of the target market. According to Ropponen, Nokia Corporation sometimes do not conduct adequate market researches and assessments (193). This results to wrongful targeting of markets or development of products that do not adequately meet the expectations of customers. Similarly, Nokia has also been challenged with improper or weak positioning strategy when introducing new products into the market. This usually results into poor performance of the products in the market, and finally product failure. For example, in 2003, Nokia prematurely introduced the Nokia 6108 handset. The handset had numerous performance problems and was recalled back a few months later (Federick & Rajesh 307).
In some cases, Nokia becomes over-optimistic about the potential performance of its new products in the market. For example, it might project unrealistic sales forecasts or faulty estimates on the potentiality of the target market. This usually results into excessive use of organizational resources such as finances in promoting the new products. When such products fail, it becomes a huge drawback to the company.
e)Rapid Changes in the Consumer Market
Various rapid changes or technological advancements in the consumer markets have also led to failure of new products from Nokia Corporation. For instance, Nokia was forced to unveil new models of handsets with sensitive touch-screens in order to remain competitive in the market. As a result, previous models that were introduced into the market a few months before the introduction of touch-screen handsets were considered to have failed because the company was not able to generate adequate revenue to cover up for the costs incurred for manufacturing the handsets.
Other factors that influence failure of new products at Nokia Corporation include poor implementation of marketing strategies, irresponsive behaviors by competitors and early withdrawal of products from the market. Similarly, the inability of the company to deliver benefits promised to consumers during new product development also leads to failure of such products in the market. Conducts of competitors also affect the performance of new products in the market. For example, Apple Inc. has been running campaigns in the media to discourage consumers from purchasing smartphones of Nokia. This has led to reduced success of Nokia’s smartphones because consumers believe that the products do not perform well as claimed by Apple.
This research paper reveals that the major factors that lead to success or failure of new products at Nokia Corporation can be categorized into two major groups, namely environmental factors and organizational factors. Most environmental factors cannot be controlled by the company. Environmental factors relate to marketplace variables such as the level of price competition, presence of principal competitors and the size and rate of growth of the market. Moreover, the speed at which consumers accept new products introduced into the market and the role of the government in the market may also influence the success and failure of new products. On the other hand, organizational factors refer to those factors that the company has the ability to control and manage their impacts on the new products. Examples include controllable factors such as workforce, marketing strategies and promotion of products.
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