Nokia Layoffs: The Result of Weak Marketing

Last Updated May 30, 2011 11:45 PM EDT

Nokia is slashing 7,000 jobs or 12 percent of its workforce, to trim operating costs by $1.47 billion while competitors, such as Ericsson and Apple, have seen their sales and profits climb. Nokia plans to increase the cuts to 17% by the end of 2012. The reason given is that Nokia failed to capitalize on the smartphone boom. That is only part of it.

Another major contributor is failed marketing.

Just hired their first CMO in 146 years

While Nokia has been in business since 1865 and making portable phones since 1984, the Company hired its first Chief Marketing Officer, Jerri DeVard, on January 1st of this year. Surprisingly, Jerri's background is primarily with consumer brands. Why is that a problem? Consumer brand marketers have had less than a stellar record after they joined high-tech companies. John Sculley (from Pepsi to Apple 1983-1993) and Cammie Dunnaway (from Frito-Lay to Yahoo! 2003-2007 and Nintendo 2007-2010) come first to mind. Nokia's hope is that Jerri's past position with Verizon Communications and her familiarity with U.S. wireless carriers will help Nokia to re-establish meaningful distribution in the U.S., where it has little if any presence in the smartphone market. With Verizon's recent acquisition of the iPhone and continuing sales of Android-platform phones, Nokia is going to have to do a lot more than hire a former Verizon marketer and partner with Microsoft to get U.S. cell carriers to focus on its smartphone products.

Brand immaturity - using numbers instead of names
Instead of giving their phones names to help the brand identity, such as competitors iPhone, Android, and Blackberry, Nokia continues to number their phones. For example, Nokia's flagship smartphone model is called N8. Catchy isn't it? When asked, why they use numbers instead of names, Nokia executives have told me they do it because it is hard to create names that are not already taken. Apple doesn't seem to have problems naming their products. They even named the cover of the iPad2. Even Google, in spite of their penchant for perpetual beta, was savvy enough to come up with a non-Google name for their smartphone OS platform. I think it is a lot harder to lose billions of dollars in market share and slash your work force by up to 17% than it is to come up with a decent brand-name platform.

Not listening to the marketplace
Good marketers have a marketing information system to monitor, analyze, report and take action on what is going in their marketplace. Research in Motion introduced the Blackberry in 1999. It was so popular with users that some jokingly called it the "Crackberry." Apple introduced the iPhone in 2007. Its popularity skyrocketed. Don't you think someone in Nokia's marketing department would have taken notice and been more proactive about developing a competitive product?

Marketing communications
While traveling between London and Helsinki, Finland, I saw a Nokia ad in the British Air flight magazine. It was for the Nokia 9000. This was a great product that many friends in Finland owned and loved. It was an early smartphone that could access the Internet, send and receive e-mail, and send and receive faxes in addition to be a full-functioning phone. The headline of the ad was "Pocket Phone... Pocket Fax." It did not have the company or product name in the headline and it did not tell you that it could do e-mail (which is more important to most than fax capability). Upon reading the body text of the ad, which data shows that no more than 1 out of 6 people read, it had a great line that read, "It's an office in your pocket." This marketing communication did not reach its potential because the most important part was buried in the body copy that most readers (83.3%) don't read. Too bad that the person that approved the ad did not know this data.

Product-driven rather than market-driven
The tragedy of Nokia is that, like too many technology-focused companies, they were product-driven rather than market driven. Instead of listening to the marketplace and hiring people with sufficient marketing expertise to properly brand and communicate the benefits of their product, they focused on making a better mousetrap. They made great mousetraps, but the problem is that the market preferred mousetraps from others that knew how to also market them.

The lesson here is that to be successful in an increasingly competitive marketplace, being customer focused, or market-driven, is likely to give you a big advantage over being an inside-out thinker that is product-driven.

What do you think is the reason Nokia has gone form the top cell-phone maker to a follower in the smartphone market?

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Ira Kalb is president of Kalb & Associates, an international consulting and training firm, and professor of marketing at the Marshall School of Business at University of Southern California (USC). Follow him on Twitter.

image courtesy of flickr user, John.Karakatsanis

  • Ira Kalb

    Ira Kalb is president of Kalb & Associates, an international consulting and training firm, and professor of marketing at the Marshall School of Business at University of Southern California. He has won numerous awards for marketing and teaching, authored ten books and created marketing inventions that have made clients and students more successful. He is frequently interviewed by various media for his expertise in branding, crisis management and strategic marketing. Follow him on Twitter at @irakalb

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