Case Study 9

Case study 9
Nokia’s pricing strategy
Nokia is the one brand name that inspires all those who are in to the mobile culture. Of the different brands
that touch our lives, Nokia stands out significantly. It has taken mobility a step forward by creating products
with continuous innovation, flooding the market with mobile for every segment. Moreover, the
technological innovation in this industry has made it imperative that every player keeps pace with change,
and Nokia has always been one step ahead in anticipating future market moves and strategizing accordingly.
Interestingly, the company prices its products competitively that it not only ensures that its margins are
covered, but also assures revenue maximization.
Let as sea how Nokia leveraged its segmentation strategies, appealed to various segments with uniquely
designed massages and differentiated between its products at every level to communicate and connect
effectively with the intended target audience. When Nokia position its product to the top end segments, it
does it as a classy product. To the middle segment customer it is in the form of the best alternative. To the
low end segment, the carrot is that Nokia gives real value, as a high-tech product, at a low affordable price.
The pricing strategy of Nokia can be better under stood when juxtaposed with the skimming strategy and
further interposed on Phillip Kotler’s nine price/quality strategies model.
With a vast family of brands that caters to every segments, one can clearly see how Nokia, yielding to the
pressure due to the competitive and innovative mobile hand set market, slides each brand down the segment,
one at time by reducing its prices carefully and consistently.
Here are some live examples of Nokia’s skimming pricing strategy:
Classic Nokia 8250
The nokia phone model 8250, which was available with vendors during the year 2000, was priced at RS
18000 it was without modern features like camera and MMS. The telecommunications infrastructure of the
country was in its initial stages and so were the service provides’ fares. Hence, only the premium segment
could have afforded the phone.
However, with easing of government regulations and increased competition, market dynamics changed, and
during 2004, the price of the model took a nosedive and was made available for Rs.8000-10000.
Now, the model has been completely phased out. Only second hand products are available. Here was one
product which despite market forces, maintained its price distinction and continued to carry a premium
connotation to it.
Neo-classic Nokia 6600
This model from Nokia was made available in 2003, complete with a colour screen, integrated camera and
other contemporary features in the beginning, the product was priced in the range of Rs.21,000-22,000. by
November 2004, it was available in the much lower Rs.15,000-16,000 range the model is currently
available for a price of Rs.9,000-10,000 only.
Modern Nokia 9500 communicator
This is known as the snazziest model ever launched by Nokia in India the Nokia 9500 communicator comes
with office features and large screen, coupled with increased memory and Bluetooth technology. Available
in the market since 2005, it was initially priced at Rs.42, 000. But can be currently bought for just Rs.26,
000.
All the above models were produced in quick succession and Nokia’s strategy was to deliberately allow them
to eat into each other’s market share. At the same time Nokia proliferated the market with as many
models as possible by 2006, at virtually every price point. Each one of Nokia’s models played a role in
catapulting Nokia to the top of the head, in the Indian mobile hand set market.
It would be apt to map Nokia’s pricing strategy on the line of premium, high value, and super value
strategy, especially on the price-quality model.
On the flip side, consistent price cuts in rapid succession have the potential of smearing the brand image.
But, in the buoyant telecom sector, where change is the name of the game, the consumer is discerning
enough to have a rational out look towards a particular brand and its attributes, irrespective of the pricing
strategy.
After all skimming or no skimming, customer benefit is almost always guaranteed in a price-sensitive
competitive market.
Questions:
1. Discuss the segmentation strategy of Nokia and comment on its efficacy.

2. Explain how Nokia used the skimming pricing strategy for its products. Give your comments on
the strategy.
3. What would have happened if Nokia had used penetration pricing strategy instead of skimming?

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Case study 9

Nokia’s pricing strategy

Here are some live examples of Nokia’s skimming pricing strategy:

Classic Nokia 8250

Neo-classic Nokia 6600

Modern Nokia 9500 communicator

1. Discuss the segmentation strategy of Nokia and comment on its efficacy.

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