Motorola Case Study

MOTOROLA CASE STUDY

This study aims to analyze and critically discuss the marketing strategy of Motorola with perspective of the UK mobile phone market. The study will analyse and focus on Motorola's SWOT analysis, market segmentation, marketing strategy; Porter Five force Model and Competition analysis. The study will explaining each of the above mentioned terms in detail and will compare Motorola's marketing strategy with that of its biggest competitor i.e. Nokia. Finally the study will conclude with recommendations as to how marketing will help Motorola to compete with its competitors (primarily Nokia) and how they can increase their market share in the UK mobile market.

CHAPTER I
INTRODUCTION

Problem Statement

Motorola rapidly became the largest mobile phone seller in UK. In 2006, its asset was more than £32.74 billion and it had 100 million subscribers. Until 2007, these figures have grown to over £38.8 billion and more than 138 million subscribers (Motorola Company Profile, 2009, p1). However, the continued good performance of Motorola is threatened by a number of factors.

These threats come from a number of places, the most important of these being the fierce competition with the three other state-owned companies. However, this competition will be increased in 2007 when the British Telecom (BT) Telecommunications Agreement comes into effect, allowing foreign companies access to UK's telecommunications market (Crane, 2008, p3). This pressure is reflected in the fact that the Mobile Phone Revenue per User has dropped 50% in the past three years (Crane, 2008, p3) to a figure of £100 Yuan (Reuters, 2009, p1). Another major threat faced by Motorola comes from Nokia, which has gained significant strategic advantages through its security of exclusive rights to use the new CDMA network technology (Crane, 2008, p3).

Purpose of the Study

All of these mean that Motorola's marketing strategies, especially its advertising strategies, will become the most important element of its sustained and successful growth. The challenge for Motorola is to gain and maintain market share, and continue to seek future growth.

"Winning clients is one thing; keeping them an entirely different challenge... companies have to adopt proactive strategies to retain hard-won customers." (How to maintain loyalty among 'risk' customers, 2009, p1)

Therefore, the application of successful advertising strategies is a critical factor for attracting new customers and keeping existing ones. Marketing research suggests that advertising is about attitudes, the attitudes of consumers towards products. Boyd, Ray and Strong (2007) propose that there are five strategies which marketing managers can pursue in relation to basing their advertising campaigns on attitudinal change.

Aims & Objectives

The objectives of this research are consequently:

1) To identify the current attitude of both existing and prospective customers towards Motorola's service.

2) To examine to what degree Motorola's current advertising campaigns are related to the five marketing strategies mentioned above, which are based on changing customers' attitude towards one brand.

3) To suggest tentative recommendations to Motorola on how attitudinal strategies could be better incorporated into its future advertising campaigns. This objective is based on the findings of the current study and suggests various ways, in which Motorola can effectively influence the attitudinal 'sets' of customers (see Chapter 2.0, p7), i.e. their attitude to products.

Dissertation structure

This dissertation consists of five chapters including Chapter One, the Introduction, which deals with background information, as well as giving a brief introduction to marketing strategies. In addition, the research objectives are presented here. Chapter Two provides the reader with an overview of the literature review, which first covers the background of the global and British telecommunications market and second looks at some specific advertising strategies in order to construct a basis for conducting the research. Chapter Three refers to the methodology used, and discusses the limitations to the research carried out. Chapter Four presents the findings of the research together with the discussion of the conclusions reached. Chapter Five, the conclusion, discusses the possible implications of this research for future studies. This chapter has provided readers with a brief introduction of the research background, as well as has identified the objectives that this study aimed to achieve. The next chapter begins a literature review, in which a comprehensive background concerning this study and some mainstream marketing theories will be presented.

CHAPTER II
LITERATURE REVIEW

Types of Advertisment

Offline advertising (or traditional advertising) is a diverse arena. In short, I consider offline advertising as communicating through the mass media that is to say TV (local, national...), radio (local, national), print (local, national newspapers, directories, magazines...) outdoors (billboards, bus shelter...) and cinema. These are known as 'above the line' advertising. According to me, direct response (without the use of the internet off course) could be included in the above definition as it utilises some of the components of mass media.

The primary reason why a company should combine online and offline advertising is because of the general advantages these two methods provide. Online advertising enables to one to target an audience with accuracy, and enables efficient focus on specific segments. With this method, a company can track how the different users interact with a brand and in what they are interested. The different ads on the web can be quickly delivered and are really flexible with few additional costs and is easily accessible anytime. Online advertising also enables interactivity. The users can quickly and easily have information about the products, its benefits and characteristics, simply by clicking on a link. Finally, this method is quick, inexpensive and sometimes free as in the case of submitting articles to some websites which enables efficient time and resources management.

Offline advertising also provide advantages. It enables to reach a wider customer base. It has the power to inform, educate, persuade, reinforce an image and remind people of a product, a company... What makes it effective is the repetition in the time, wherever people are. Direct response tries to be more interactive, people are able to respond as telephone number or websites are mentioned but it is not always convenient for them to do so due to where they are when they get the information. Even if it can be expensive according to the type of different media used (national TV vs regional TV), offline advertising is still low cost according to the number of people reached. There are inexpensive advertising (such as printing on cars) or even free advertising (such as public announcements on TV, newspapers) however for the last one, your product has to be really innovative. Mass media also has the advantages of being an 'old media', having proved its efficiency. Media such as TV is also considered as a prestige media.

Motorola's Current Situation

According to Nielsen Media Research on advertising spending in UK, Motorola spent 1.3 billion advertising in 2007 (British brands dominate ads in local market, 2008, p1). Thus this is both a demanding time for Motorola and an interesting time for anyone who wishes to research a young and dynamic company in a period of rapid change for its marketing strategies.

EFFECTIVE COMMUNICATION AMONG STAKEHOLDERS -

In order to consistently evaluate the company, Motorola created an Internet based information network. This network informs internal and external customers of Motorola's activities at the present time and its projected future. Employees in business segments of Motorola report to the Internet frequently. Peers and management are able to respond to business strategies and offer suggestions as to how the various strategies can be improved and/or affected.

LOW COST CAPABILITIES -

Due to the its low-cost manufacturing capabilities, Motorola has been able to offer high quality products at competitive prices. The investment in globalization, first mover advantages, vertical integration, joint ventures, and acquisitions has also helped Motorola to keep its costs low. Furthermore, Motorola's relationships with partners and suppliers have enabled it to obtain raw material at a low-cost.

EARNED OVERALL SUPERIOR RATINGS -

Motorola earned outstanding ratings in employee health and safety, environment protection programs, and community development. These ratings help Motorola's business because people want to buy products from companies that care deeply about these issues.

QUALITY PRODUCTS -

Motorola's goal has been to achieve Six-Sigma quality of 3.4 defects per million, which was achieved. Motorola is currently aiming to double the quality of improvement every 2 years. Motorola's commitment to quality has earned it the Malcolm Baldrige Quality Award.

SUCCESSFUL MASS PRODUCTION/ECONOMIES OF SCALE -

In 2001, Motorola shipped its five billionth micro controller, its eighteen millionth digital TV set-top terminal, and its five millionth cable modem. Motorola is the world's leading producer of embedded processors and the first company to ship such large quantities of a single product line. Motorola has experienced positive learning curve affects through this successful production. This will help it in the future because costs can be reduced when producing large quantities of products.

STRONG PARTICIPATIVE MANAGEMENT PROGRAMS -

The main focus of Motorola's management program is on employee empowerment, thus having the employees be responsible for their own performance. This strong program has increased productivity of the workers.

QUICK RESPONSE -

Motorola has the ability to quickly determine what customers want and need. It responds quickly to these needs and designs products to fit customers' needs.

EFFECTIVE AND EFFICIENT DISTRIBUTION CHANNELS -

Motorola's investment in global markets allows it to identify customer needs and serves them through a worldwide network of distributors. This expansion into foreign markets has enabled Motorola to keep its fixed costs low and reduce variable costs such as transportation of goods. Motorola's partnership with UPS has allowed it to be effective and efficient in distributing products to customers.

GLOBAL CUSTOMER SOLUTIONS OPERATIONS -

Motorola has become the leader in customer care by directing systems interactions and developing customer support, service, software and content strategies. Through the delivery of complete customer solutions, Motorola has indeed strengthened its market position.

RESEARCH AND DEVELOPMENT -

Motorola spent over $1,023,000,000 billion last year on Research and Development activities. Its corporate involvement in Research and Development is defined not only as ensuring a steady stream of development, but also one of imposing discipline.

An analysis of a product's performance takes into account both surface indications and underlying problems facing the brand. In-depth situation analyses and strategy development can help determine the incentive needed, the type of promotion likely to have the greatest appeal, and the media required to reach the desired audience. But how do you raise your voice over the constant mass outcry of offers? How do you bring customers to your store? Your store -a supermarket, let us say- is filled with customers who are spending an average of 18 percent of their income on a vital necessity. How do you keep them coming back?

You don't actually need to worry about the success or failure of the promotion. If you have properly planned the promotion including expensing its cost by doing a pro forma profit-and-loss estimate, you eventually would not have to be fearful of any adverse effect on your bottom line. Then, take aim and fire at your customers' most vulnerable targets: their emotions, curiosity, greed, confidence or lack of confidence, pride, sloth, love.

Customer Attitudes and Buying Behaviours

Determine who your customers are demographically and psycho graphically - personal characteristics, age group, location, ethnicity, income, etc. Establish what about your brand attracts them and how they make their buying decisions.

- Brand Strategy

Consider your level of dominance in the product category. How will sales promotion factor into performance? What are the strengths and time period before returns are realized?

* Competitive Strategy:

Evaluate past performance, both yours and your competitors', and determine what activities, levels of spending and time periods produced the best results.

* Advertising Strategy:

How do you currently promote your product in your existing markets? Which media best suits your needs?

* Trade Environment:

What are your distributors' attitudes towards the brand? Your competitors?

* Other External Factors:

What resources are available and what unpredictable factors may influence a product's availability or pricing (e.g.: weather, raw materials)

Achieving Customer Loyalty through Motorola

To do this, you must appeal personally and directly to your customers and use your own organisation. Does your store, which is the very foundation of the promotion, appeal directly and personally to the customer? There are three basic elements involved in bringing customers back to your store.

First, you must be completely convinced that what you are doing is right and that you are doing it in the right way. Secondly, you must be able to convince the people in both merchandising and operations that you can bring the customers in and help bring them back. In other words, you make them equal partners in your concept so that they will have the motive to make the store more appealing. Finally you must execute your plan down to the last detail by continuing to sell your own people, even if this requires pushing your boss to get it done. Never let up!

For a customer, shopping for food and merchandise week in and week out can be quite boring, so it can be made interesting, exciting, and rewarding. The sales promoters' job is to keep it varied, topical and spice it up. You shouldn't repeat yourself too frequently when there are millions of things to do. Remember that the customer is being wooed on all fronts. You must make sure that what you plan to do is fill a basic need. There is more to promoting than coupons, games, premiums, gadgets and tricks. If you want to bring your customers back, know what your real strength and use it, be it quality, price, convenience, variety, or even your personnel just like how the banks promote themselves with their smiling personnel. Whatever you promise must be evident and available to the customers. Do not disappoint them; you can't get away with it. While everyone is trying to get customers' attention, the sales promoters' job is to show customers that they were right when they decided to shop with you.

3 - 1 - 2. Achieving Competitive Advantage in Motorola

You must be aggressive and unpredictable, and with a good timing. The first kid on the block with the new toy gets the most attention. When trading stamps were new in the food industry, they were phenomenally successful. Although the approximate cost was 1% of sales, the volume increases were so great that it was not necessary to raise prices to make enough money to cover the added expense. By the time, everyone started to adopt their own trading stamps, nobody was getting any benefit from them . But the first stores to use them usually retained some of their increases. It is far better to be on the offence than the defence, and usually less costly in the long run. As the old saying says: "Fight fire with fire!". In the promotion business this is wrong! you should fight fire with water. To do this, be sure you have large supply of water on hand. That means keeping a file of tested sales promotions ready to go. "Planning ahead" is maybe the most used two words in any sales promotion job.

If your competitor runs a game, you run a tape plan offering free merchandise. Your competitors are appealing to their customers' emotions, their desire to get something for nothing. You are indeed giving your customers something for nothing, but you are doing this to appeal their acquisitiveness. The odds are in your favour in other words. All your customers can win and obtain something tangible. What you offer through your tape plan must be accepted as having a real value, however because your competitors' games can be exciting. If your competitor runs a price promotion, you run a coupon promotion. You do not have to be a creative genius to do something different. You may just browse your tested promotional activities file and use or improve on present successful promotions. Of course a little creativity would help a lot. When using someone else's idea, you must completely understand all the elements that went into and made that idea a success.

Advertising also can be used to create images and symbolic appeals for products and services, a capability that very important to companies selling products and services that are difficult to differentiate. Many customers cannot distinguish one brand of beer or cigarettes from another on the basis of taste. Thus, the image or psychological associations those consumers have of a brand become a very important part of their purchase decisions. Marlboro cigarettes is an example of a product that became a market leader as a result of an advertisement campaign that took a lackluster brand targeted toward women and repositioned it by creating a masculine image for the brand. Another advantage of advertising is its value in creating and maintaining brand equity. Brand equity can be thought of as a type of intangible asset of added value or goodwill that results from the favorable image, impressions of differentiation, and/or the strength of consumer attachment to a company name, brand name or trademark. The equity that results from a strong company or brand name is important because it allows a brand to earn greater sales volume and higher profit margins developing parallel with a competitive advantage. Many companies today enjoy the benefits of strong brand image developed with advertisement, such as Coca-Cola, Nike, Kodak and so on.

On the other hand, advertising has some disadvantages. The costs of production & placement of an advertisement can be very high. One study indicated the cost of producing a 30-second commercial for a national brand averages nearly $350,000 when all the costs are included. These statistics can be said even growing since the numbers show the cost of a similar advertising project was about $58,000 in 1980s and reached to $120,000 in 1990s . The nature of advertising also prohibits the company from determining how well the message was received and whether it was effective enough. Other disadvantages can be identified as is its credibility in the consumers' eye and the ease of being ignored.

Additionally consumers' usually approach ads with skepticism, considering the message as biased, and are concerned by its intent to "trick-into-purchase". It is also relatively easy for customers to only process ads of their momentary interest and ignore others. Since there are mass numbers of ads on TV and published Media, grabbing the viewers interest has gotten incredibly hard.

Another issue with advertising efforts is that advertising in nature tends to wear off very easily. In other words, it takes little time for people to forget your product and message once you stop or even slow down bombarding them with your advertisement, which as we have mentioned before can get very costly. Hence, it becomes a tough challenge facing marketers to determine the most effective level of advertising exposure for a brand, while, maintaining a given budget. Conceptually, the media planner could choose continuous advertising or follow a strategy of pulsing ("on" for some months and "off" for others). The decision is important because the wrong one will considerably affect customer response. When advertisements are run at a low frequency (very few times), they run a risk of going unnoticed. The first time customers view an advertisement, a majority of the time, the message doesn't even process in their minds. On the other hand, when an advertisement is run at a high frequency, advertising wear out may occur. Therefore, the task at hand is finding just the right frequency for a positive response.

Overly repetitive messages typically have a negative effect on customer attitudes as they relate to a brand. Advertising wear out occurs when, at some level of repetition, the customer's affective response is either no longer positive or shows a significant decline. Advertising wear out is the result of excessive frequency causing viewers to perceive there's nothing new to be gained from processing the advertisement, thereby withdrawing attention. That's assuming all possible customers view every exposure, which is unrealistic. Not every customer will see every rotation. That's why it becomes difficult to find the optimal level of exposure. Media planners must remember that not every rotation is seen by all customers.

Motorola's Promotional Mix

* Promotional samples to “cool” celebrities i.e. Paris Hilton, Mischa Barton, Kirsten Dunst, before release date

* Fashion Week/ Fashion Show sponsorships

* Target audience magazines : New Woman, In Style, Marie Claire

* Online Competitions

* Billboards and Bus Stops

* Hype created on fashion forums, and web blogs

* Fashion handset: whereby the consumers purchase decision is based largely on the aesthetics of the device.

The major appeal was that supply could not meet demand, i.e. if everybody had them, they would lose their cool and individuality. “IT” celebrities were photographed with the handset prior to its release. Web blogs and fashion forums proved that the target group was desperate to get their hands on the MVPR. They wanted to join the ranks of their favourite celebrities - Mischa Barton, Paris Hilton, Eva Longoria, and Kirsten Dunst. When this celebrity brat pack is seen with anything new and fashionable it is coveted by girls worldwide, and this strategy was very successful for Motorola.

Due to the success of the limited edition Pink RAZR V3, Motorola decided to launch another limited edition Pink RAZR V3- this time endorsed with Maria Sharapova's signature. The phone was not as successful, and not perceived as “fashionable” as those indirectly endorsed by Hollywood celebrities. However the demand for the standard Pink RAZR V3 remained high and was soon available readily to the public, almost three months later. By December 2005 there were new entrants to the fashion handset market and the Pink RAZR was losing market share. The Pink RAZR V3's price was reduced, just before the launch of the Pink RAZR V3i.

Product Life Cycle: Motorola RAZR

I believe that effective Life Cycle Thinking is a circular process that begins and ends with the use of raw materials in the most efficient way. My approach is aimed at reducing the adverse environmental impact of a product throughout its existence from raw material to end of life. On the way, components are manufactured to suit a Motorola design, which has the future firmly in mind. These are brought together to produce a product or to deliver a service that people use. Ultimately, the goal of my End-of-Life practices is that as much as possible can be salvaged and reused so that the process can begin all over again.

Life Cycle Thinking forms the basis of Motorola's environmental activities according to their website. The goal is to reduce adverse environmental effects during their product life cycles by managing their own operations and supplier network and by incorporating Design for Environment principles into every stage. This embraces design, the environmental performance of their suppliers, decision-making within the company itself and responsible End-of-Life practices. Motorola plan to always rule the mobile phone market with such statements as the above ones, therefore I would have to base my strategy on them being successful and try to continue and benefit from their world wide success.

SWOT Analysis

Motorola's expansion into this market can provide both social and economic development for the consumers in the bottom of the pyramid demographic. The use of mobile technology to this market segment can provide for example, regional farmers in developing countries an ability to become more productive in farming by communicating with their suppliers and customers on a more efficient basis. This can increase profits for these farmers, removing dependence on face-to-face communication and poor transportation infrastructure in the areas they inhabit.

Strengths

* Well established brand with close to 20% world market share in UK and £42.9 Million in sales in 2006 (Jaroudi, L. 2007)

* The world's second largest Mobile phone manufacturer (Hunt, B. 2005)

* Large factory bases to take advantage of economies of scale to produce quality mobile phones at extremely low cost (Motorola.com 2008).

* Established deal with GSM Association that won the rights (out of 17 competitors) to supply low-cost mobile phone under the Emerging Markets Handset Program in 2005 to 700 million consumers in UK (Hunt, B. 2005)

Weaknesses

* Lack of operation in regional areas where high percentage of target market is located

* Main focus of company is to be benchmark of innovative technology, therefore company not structured to focus on low-cost and basic technology to bottom of pyramid consumer base

* Company focus traditionally towards profit margins, not the low margin high volume sales which this product will drive

* Reliance on service providers to create service that will be supplement Motorola's product, having an influence on sales-Marketing products to Bottom of Pyramid consumers may be considered unethical and can effect reputation of Motorola.

Opportunities

* Bottom of Pyramid market consists of around 4 billion people, to which 70 million consumers will be directly focused. Represents a buying power of £14 trillion and has potential to expand Motorola to becoming market share leader ahead of rival competitor Nokia, LG and Samsung.

* Opportunity to potentially satisfy market with other products in future of a low-cost fashion, where Motorola would serve as a recognizable brand and have edge over competitors.

* Increased profits by expansion into this new target market can provide for more capital for R&D to become market leader in technological innovations-Low cost phones can be additionally marketed for higher age bracket consumers who require a basic phone for sole purpose of voice calls.

* By lowering the price of the phone further to £20 many poorer countries would consider the product affordability increase by 43% and it would take less than a month's average income for a person to buy a phone at a cost of £30, in comparison to 1.4 months of salary if the cost was £50 (Buckman, R. 2005)

Threats

* Mobile phones are not currently part of the bottom of pyramid demographics' cultures and therefore may be some inertia to this product-Service providers may not be able provide affordable service costs for bottom of pyramid consumers in their regional areas which potentially can dramatically reduce sale numbers.

* Due to the threat above, service providers may not construct cellular towers to obtain reception in such areas-Governments impose taxes for example in both Turkey and Bangladesh where anyone who purchases a new mobile phone must pay a £15 connection tax which accounts for almost half the cost of the RAZR handset making this less affordable (Unknown, 2005)

* The developing-Distribution costs add a margin on top of the wholesale price of £40 for those countries where distribution channels are more developed which is evident in few developing countries (Buckman, R. 2005).

* In response to seeing Motorola's growth story other phone markers are seeking to enter the market and take a share of the market (Buckman, R. 2005).

* Logistical issue in distributing product due to poor roads and transport infrastructure to consumers

Course of Action

Restructuring Motorola's corporate policies so that they are not as strongly focused on ethics and are more focused on R&D, sustaining profitability, and improving market share. Committees would be constructed to sort through Motorola's extensive code of ethics and restructure it so that it is more in line with company's mission. Corporate policies dealing with R&D would be updated and promoted throughout the company. Financial strength and global marketing would be realized as corporate principles.

The strengths of this alternative are that restructuring the company's policies would be a definitive solution to refocusing the company's priorities. In addition, through this refocusing the company would see some added gain in market share and profitability. The weaknesses of this alternative are that Motorolians may not want to see drastic changes to their code of ethics and employee morale would be adversely affected by this change. In addition, a restructuring of corporate policy does not guarantee that all executives will comply with refocusing the company's resources and energies.

Porter's Five Forces

Porter Five Force Model

Risk of entry by potential competitors

The entry barriers for this market are very high. This is because to set up a network and supporting infrastructure will require huge capital investment. As such there is no brand loyalty, however all the major players are known for their reliability and for a new entrant to establish the same will take a lot of time. There won't be any cost advantage factor as the hub-and-spoke model, used in this market, can be implemented by new entrants. The market is also characterized by numerous price wars between Nokia and Motorola. Rest of the companies generally follow the trends set by these two firms or fall out. The exit barriers to this market are high. This is due to the investments in hubs, vans, jets and other capital extensive infrastructure. (Coe & Helpman, 2008, 859-87)

Bargaining power of buyers

Businesses and individuals all fall under the customer's category for this market. Big customers do get volume discounts and can negotiate prices with sales representatives. However smaller customers have to take what is being offered to them. The only say they have is that they can switch between the players, but due to intense competition, the prices offered are generally the same across the service band. (Buckley & Casson, 2009, 849-75)

Bargaining Power of Suppliers

The inputs to this market are fuel, planes, vans, and customs & permits etc. the companies do liaison with relevant industries to prevent themselves from fuel hikes. Arrangements with various customs departments are also made to facilitate faster clearance of goods and packages. As such there is no threat from supplier side to this market. Expenditure of changing suppliers is low to Motorola as the Mobile phone industry takes care of them as associates to offer quality products. The company shares client information with suppliers so they can progress and estimate capacity for the future.

Substitute Products

Businesses can use fax; telex etc to send important documents. Emails can also be used for the same purpose. These provide them with low cost alternative to express mail. However the threat of substitution is limited, when it comes to sending originals. Substitutes from other industries are also limited.

Increasing Competition

The improvement of the alliances with the major suppliers is necessary to make profits and stay a price leader. Motorola should also try to become independent from its suppliers. More contracts with Motorola's competitors like Nokia will lead to better prices and more competition and as follows they will get a bigger price advantage (Coe & Helpman, 2008, 859-87). But it will be almost impossible to improve the alliances of Motorola and try to become independent because of the monopoly position of Nokia and Apple. So they can probably choose only one strategy (Certo & Peter, 2009, 12-42). Entering new product markets Currently Motorola produces only mobile phone market producing companies and has to sell additional equipment like web cams and scanners from other companies. Many people want to buy a whole multimedia package. Therefore I suggest that Motorola should produce more own peripherals.

“Motorola should also think about the production of own digital cameras because it belongs to the same customer segment like mobile phone market producing companies.” (Haberberg, & Rieple, 2009, 32-230)

Nokia Consumer Strategy in UK

Nokia started heavy focus on UK mobile phone market in the middle of the 1990's. The whole brand strategy was re-created during the transition from traditional industries. For this reason, Nokia does not have decade's long heritage as a brand. The company became, however, the global leader in this relatively new market and have succeeded in creating an extremely strong reputation for the brand. Clear differentiation from competitors and strong emphasis on personalization and the "human aspect" were adopted as the core approach early on Personalization means creating specific products for specific customer segments. Holistic and strategy-based segmentation has been the fundamental core of Nokia strategy.

For high-tech companies technological sophistication also includes knowledge and appreciation of different cultures. Understanding technical equations is not enough. Technology has a face, and we must never forget people and different cultural values. Nokia 3310 was developed primarily during 1999 and 2000 and launched in autumn 2000. The phone was the most important product of the Nokia in terms of sales volumes and expectations at the time it was launched. The expectations and requirements for the 3310 were high. It was supposed to reach sales volumes of tens of millions. The phone was the continuation of the most popular (i.e. biggest in terms of sales) "basic" category of Nokia. The personalization aspects in this category were considered particularly important, while basic products are meant specifically for younger customers.

Fall of Motorola's Market Share in UK

The largest market share in the communications market is held by Nokia, with Motorola trailing in second place. In general, economic conditions in most global industries have hit a point of stagnant or declining sales. In today's world businesses need to somewhat accurately forecast the outlook for global economies and then make investments and decisions accordingly. The development and innovation of products can be the most exciting and critical time for a business. This is because, for most, innovation can be a make it or break it situation for the company, meaning that if the product selected is developed and marketed well it can help the company remain competitive in the future. However, if the product fails it could spell doom for the company. Since 1920, Motorola has been selecting between projects/products and marketing them with great success, and yet there have been times when the selection and marketing techniques have lead them in the wrong direction.

Motorola has been following the same form of selection for many years. It could be said that Motorola has been following a selection process that is related directly to their Core Competencies, Vision and the affects of the Sales Curve. Innovations are chosen that help to extend the life cycle of a product or start a new product Sales Curve while still staying focused on their core technology. Since they are expanding on the core product line they are sticking to the Core Competencies and vision of the company.

One key issue that surfaces when one analyzes Motorola's organization is its decentralized approach to running its different business and divisions. Divisions are generally headed by strong managers and operated as virtual fiefdoms, pursuing their own agendas and priorities. Divisions are often not cooperative or responsive to the requests and needs of sister divisions, and are look on by outsiders as "warring tribes" (James, 2003). Another characteristic of Motorola's leadership culture is its engineering base. Most of Motorola's key executives are well versed in technology, and over time, the company has developed a high level of technological and engineering expertise. For many decades, this has looked as an advantage because this is the reason that Motorola has been able to stay on the cutting edge of technological advances.

Motorola Inc. has faced many challenges in the past and due to various strategic decisions on the part of senior management has experienced a decline in revenue, market share and overall profitability. Some of these decisions include pursuing the "dot.com" market, marketing strategies and their overall business structure. However, as our analysis of the company shows, Motorola has taken great strides in improving their innovation strategy with strategic alliances with Universities but because their research and development areas are so spread out and disconnected the sharing of information between groups is limited.

CHAPTER III
FINDINGS AND DISCUSSION

Introduction

This chapter consists of the research findings and the analysis of the data gathered through questionnaires and a focus group interview conducted during the course of the project. The contents of this chapter are organized in accordance to the questions presented in the questionnaire as well as in the focus group interview, which can be divided into two sections:

* Descriptive data analysis, which includes the number of people involved in the questionnaire, their gender, income, the phone company they subscribe, how long they use it, and how much money on average they spend on phone charge per month, in order to obtain a general respondent profile.

* Analytical statistics, where we measure and describe the various relationships covered in the questionnaires and explored in the interviews90 questionnaires were handed out and all of them were collected which made for a response rate of 100%.

Descriptive Data Analysis

In spite of being extremely promising, Motorola new advertisement approach does not seem like a long-term winning strategy. It has to do with the number of reasons. First one is unstable and difficult to forecast level of revenues. The company generates their profits from those customers who name their price higher than suppliers are willing to accommodate (relying on naivety of customers) and from requests that were met. Though statistics show that about 5% of customers overbid, it is almost impossible to predict how many customers will overbid in the future and by how much. Tendency also shows that people are more and more aware of average price for a hotel or destination they are setting the price on, meaning that chances of overbidding would get even less. Regarding the number of offers that were met, they represent only 15% of the total requests, for which company's fees varied from 10 to 20$ (on airline tickets and hotel bookings). Though Motorola acts as an intermediary, meaning it does not spend money on producing the products it offers, the company still has big fixed costs accumulated from latest computer technology systems with large capabilities and high velocity to process orders. Fixed costs also include recruiting people 24/7 to be able to proceed with orders immediately, out of which 85% will not result in revenue.

Secondly, though the company achieved high awareness, it does not mean that it lead to high purchasing consideration and loyalty. Brand recognition alone does not guarantee survival, as it can carry not only good but also bad popularity. More important is ability to meet customers' expectations by providing satisfactory service. Expedia is a very good example to it. With much lower awareness percentage, level of loyalty among Expedia customers is higher by almost 7%. Perhaps competitors were able to achieve greater loyalty level through being more transparent to its customers by giving them access to a complete recourse of suppliers' services.

Thirdly, long-term success of an enterprise depends on many variables, among which ability to establish and maintain customer relationship is at the top of the list. Customers can be offered the best possible product at the desired price, yet without unique purchasing experience that can be achieved through human relationship, a company might not be able to reach and retain the customer during long time. Especially in e-commerce, it is more difficult to develop customer relationships which are so important for long-term success. In online world closest competitors are just a click away, and therefore comparing of products, prices and purchasing conditions can be done faster and easier. Plus complete lack of actual human interaction and online experience only, makes it more challenging to build up lasting relationships.

Another important clause of much wanted success is the flexibility that customers want during their shopping experience. Considering that purchases made with Motorola are nonrefundable, many people might simply get frustrated to pay for a purchase through the site and being obliged to buy before knowing schedule or other details, such as transfer for example. Moreover, customers might want to make some changes in their preplanned arrangements, return or even make cancellation. Motorola model does not provide such options, leading many people to seek for alternative solutions where they can have more rights and flexibility even if it may mean paying a bit more.

And last but definitely not least explanation of lower than expected success might be not the model itself but the easiness of copying it. In many cases, a newly presented business model can have some shortcomings which directly affect chances for long-term survival. In e-commerce, where barriers to entry are low, Motorola could not protect itself from competitors (Expedia and Travelocity) who have not only ripped off the idea but also made some modifications which were more appealing to customers. Additionally, it is more difficult to make e-business more visible on the World Wide Web, therefore majority of .com companies do not have the same level of long-term success as companies operating in traditional market.

While some companies found the Motorola new advertisement approach suitable for their business and partially adapted it; I expect that marketing executives of other companies would react very differently to Motorola model.

Many marketing executives might find this model not suitable to use due to the nature of the business or company strategy. For example, if a company follows a differentiation strategy where the primary focus is on offering unique and distinctive product that adds value to a customer. It is more likely that target customers will not be restricted to a certain price limit and thus will be willing to pay a bit extra or even premium price for exclusive product. This strategy does not account for customers setting their prices but rather accepting a company price. In the case when company is following focus strategy (not a price focus), marketing executives also would not give their support to the Motorola model. Mainly due to the fact that focus strategy assumes targeting narrow segment through differentiation and based very much on developing high degree of customer loyalty. With model that Motorola offers, frequent brand switching does not work in favor for developing loyalty. Normally focus strategy presumes lower volumes and ability to pass some of the costs to customers since there would not be close substitute products.

Marketing strategies are mainly focused on attracting and retaining customers all throughout their purchasing lifecycle which translates into lasting competitive advantage. Marketing executives place great importance on developing customer relationships and loyalty which is not about technology but rather a deep knowledge about customer that is used to attract right segment and keep them loyal to the company. As mentioned earlier, complexity of the Motorola model and lack of human interaction can easily result in people getting confused and, as a result of that, dissatisfied with service or overall experience which directly affects loyalty level. Marketers also emphasize significance of benefits that company can offer to its customers. They can take form of frequent flyer programs, collecting points or vouchers. Motorola model does not account for such benefits.

Motorola model was designed to target a general population segment. Those consumers are conservative and not very open to even more complicated pricing models that they already have been exposed to (shopping bots, buying clubs and other discounter programs). Therefore, most likely many marketing executives would not like to take a risk and adopt the pricing scheme as it can result in low acceptance or, even worse, be considered as price discrimination generated from people unawareness of real costs. Typical customer of a Motorola is a bargain hunting customer who generally has little interest in trying to understand how the buying scheme works, however customer will be very fast to state that he/she has been misled or deceived by very complex pricing model. For example, there were few cases when the company faced such problem. On one occasion, customers were claming that they misunderstood purchasing rules and conditions for the tickets that were bought through the company. In another occasion, a customer who was under 25 y.o. rented a car and overlooked special conditions (paying extra) that applied for drivers under certain age group. For this pricing model to be successful and accepted by a mass consumer, millions need to be spent to educate people about unique pricing new advertisement approach.

In B2B operating companies, marketers would also negatively react to the Motorola model as putting the focus on price kills the idea of a relationship, which is in this case counts more than the lowest possible price. As an online model for business, marketers of B2B companies would not accept it either, since it would mean excessive exposure/transparency to competitors.

If the Motorola model is very unlikely to generate long-term success of a company and would mainly get negative reaction from marketing executives, we need to explore how businesses can influence customer perception that the traditional model of customer behavior is right and what facts they would base their arguments on in order to convince people rejecting Motorola new advertisement approach.

To begin with, businesses that want to build up on traditional model of customer behavior, need to find a way of convincing people that in some respect through decisions they [consumers] make, they are already pretty much dictate at what price companies should sell products or services. If the price is too high, products would remain on their shelves and seats as well hotel rooms will not be occupied, so the price would be eventually lowered. And in the case when a product is wanted or needed, plus it is offered at the right price that customers believe is fair and justified, then buyers will be willing to pay for it.

Another way of convincing customers to reject Motorola new advertisement approach is to highlight inconveniences of making purchases through Motorola scheme. There is always a risk of uncertainty whether the product at the stated price will eventually be available or not. If the request was not matched with the offer, then the process has to start from the beginning. During this net bidding no brand preferences for a particular product can be taken into account. To perform those on-line operations, not only computer and access to Internet is required but also time and patience for filling in the request and waiting for an answer. For buying groceries and gas customers will be willing to follow traditional marketing channels, as they might need those products straight away and therefore would not be able to justify trade-off between lack of convenience and lower price they are likely to get by bidding online. Adding to that, traditional model of consumer behavior can also be presented more appealing in the light of imposing no obligations to pay prior to learning details and ability to see real prices that is equal to everyone. Moreover, traditional customer behavior results in people's willingness to see or touch the product, as well as explore the store shelves, product space or speak with employees, something that Motorola new advertisement approach cannot offer. Traditional consumer behavior allows companies to get closer to customers through more diversified marketing programs such as sales, post purchase services, CRM. Closer relationship with customers increases exchange of values which is beneficial to both, consumers and companies.

Supporting traditional model further, businesses can also "open eyes" to customers through showing how "clever" advertising, Motorola managed to delude people. Price that customers will be willing to pay for the product does not include taxes and other fees, and will only be added upon charging the credit card. For example, customer specified that he/she would like to stay at 50$ a night hotel. Motorola finds the room available at that rate plus taxes (21%) and company fees (10$) would come up to a total of 70$. Businesses based on using traditional model of customer behavior will eventually win, as many people have already realized that Motorola model uses false advertising and the concept of pricing is rather deceptive and leads to bitter dissatisfaction.

Traditional marketing channels are easier to understand and they also tend to have less customer service problems as all of the questions and doubts can be clarified prior to purchasing. Considering that e-businesses make enormous volume of online transactions and therefore rely heavily on information systems, technological problems can not only completely block operation flow but also affect trustworthiness of the company among consumers. For example, on one occasion trial magazine subscription has been automatically turned into pay subscription without customers' acceptance. In spite the fact that "little errors", such as wrong billing, can be cancelled or revised later on, Motorola customers would have less credibility to the company.

Even though many companies nowadays are very much customer driven, allowing customers to be in control of price can not only affect company profitability but also have negative impact on consumer behavior.

Passing price control into consumers' hands would inevitable result in continuous price reduction which in the long-run leads to decrease in profits and price wars. Many customers are not familiar with pricing methods and, therefore might think that there is not limit in lowering prices. Consumers are mainly driven by desire to pay less, and while stating the price they think of an amount that they are willing to pay but not what it actually costs to the company to produce that product/service. If the price will be set below the actual costs, the offer will not be accommodated and the customer will turn away to search elsewhere. On the other hand, higher price might not find justification in consumers' minds and thus will leave them with feeling of being conned. From company point of view, price-driven consumer behavior decreases importance of brand, which is totally opposite to what businesses are trying to generate in the minds of customers.

It is very important to position products/services in terms of value that they create. Control of prices also minimizes importance of product value which leads to under appreciation and lower level of satisfaction. Customers' perception of value is constantly changing, meaning that it would cause regular change in prices if customers were to have a control of pricing. It is not in companies' interest, as fluctuation in prices will complicate further development planning and forecasting of revenues. And for customers, it would generate doubts regarding the fairness of the new advertisement approach, because those people who have wider access to information would be able to find "the best solutions" while others might regard it as unfair discrimination. Finally, different threshold for pricing among people can result not only in very big price differences for the same groups of products but also in development of bidding behavior, where customers might try to hide their true intention of buying and thus try to give an impression of a lower purchasing desire.

CHAPTER IV
CONCLUSION

Summary

As was stated in the introduction as well as the literature review, UK's telecommunications market is entering a turbulent new developmental era. The advent of increased competition among phone companies has meant that they will soon face the biggest challenge in their business life. In recognition of this over the last few years, Motorola has embarked on a massive and sustained advertising campaign (the same activities as other phone companies), and one of the effects has been that now UK has the largest number of phone subscribers among any country in the world. UK recently overtook the United States as the world's largest mobile phone market. According to UK's Ministry of Information Market statistics, there were 120.6 million mobile phone subscribers in UK at the end of July in 2006, while the United States has about 120.1 million cellular users (Reuters, 2006, p2). But for Motorola to survive as well as to flourish, it must find ways to retain these customers and attract new customers. New customers as have been stated will come predominantly from lower income areas and less well-developed areas of UK.

Consumer attitudes towards the quality of products in general, and Nokia Motorola mobile phones in particular, were investigated. Country of origin ("Made in...") market perception were analysed for Motorola mobile phones products from U.K. plus four other countries or regions, namely: New Zealand, the United Kingdom, China and other Southeast Asian countries. Results indicate that country of origin market perception are not as strong as might be expected, and vary with age and migrant status of consumers. Consumer perceptions were used to partition the countries analysed into two distinct groups. Motorola mobile phones from New Zealand, U.K. and United Kingdom were rated significantly higher on all product attributes than was Motorola mobile phones from Asian countries. The results indicate that, as U.K. further relaxes import quotas in the Nokia and Motorola mobile phones industries, its direct competition will come from New Zealand and the United Kingdom, rather than Asia.

National reputations for technological superiority, product quality, design and value will naturally vary from country to country, but consumers tend to generalise their attitudes and opinions across a wide range of products from a given country. This stereotyping may also be due to attitudes towards the people of the country, familiarity with the country and the background of the consumers, such as their demographic characteristics. Mass media, personal experiences and the views of national opinion leaders may also shape the reputation of a country as a producer. Several studies have confirmed this image, or stereotype, effect of country of origin, suggesting that countries too have images, perhaps not so far removed from the marketers' concept of 'brand image'.

Recommendations

In the United Kingdom a similar strategy has been followed with the use of the latest of these advertisement campaigns has been to link the phone to the film 'Charlie's Angels'. Again this is a reinforcement of the brand name to the target audience who are seen the same audience that would be attracted to the film as well as the actresses in the film. The purpose of this is more than reinforcement, and with the reinforcement once the category need and the brand awareness are dealt with there is the brand attitude, and here the reinforcement works well by way of association with the characters that are being used to send the message also impact on the attitude that the audience will have on the product. The message is young, exciting, modern and desirable as well as a little bit of glamour thrown in. Therefore we can see that in the United States as well as The United Kingdom there are similar strategies adapted for the market culture in which they are operating.

Once these have all been considered then the forth aspect has to be the brand purchase intention. It is also at this stage as well as the purchase facilitation stage that there may be increased competition from companies such as Apple and Motorola. The need for a phone may be raised and the decision to purchase one can be made, but then there are usually some considerations in the purchase decision. Here there may be a more logical progression of the intention being formed in the perceived advantages and features of the product, and this also need to be tackled in the way the product has been advertised, as well as the emotional impression that the features can be hinted at or demonstrated giving the impression that they are better or more varied than other companies.

Motorola achieved this and has promoted their telephones with the idea of quality of sound, using the idea of a classical concert where the artists are not present due transportation problems, and the stage is set up with their mobile telephone to give concert standard quality sound, the advert many not be believable, but the message of quality is clear. Motorola appear to have taken a lesson from Nokia with the development of adverts that show their telephones as fashion accessories capable of more than just communication. All the companies are trying to influence the purchase decision as if the consumer is going into a shop with a specific purchase intention then the intention is more likely to result in a purchase of the same manufacturer, but this is also not assured as once the consumer into a shop then there has to be a further facilitation of the purchase to reinforce the messages as well as attract the consumer.

REFERENCES

Abraham-Murali, Liza, and Mary A. Littrell. 2005. Consumers' Conceptualization of Shampoo Attributes. Hair wash and Shampoo lather Research Journal, 13, 2:65-74.

Ajzen, Icek, and Martin Fishbein. 2007. Understanding Attitudes and Predicting Anti-dandruff Behavior, Englewood Cliffs, NJ: Prentice Hall.

Bureau of International Labor Affairs. 2006. By the Sweat and Toll of Children, Volume IV: Consumer Labels and Child Labor, Washington, DC: U.S. Department of Labor.

Churchill, Gilbert A., Jr. 2007. Marketing Research, Chicago: Dryden Press.

Cone Communications. 2009. 2009 Cone/Roper Cause Trends Report: The Evolution of Cause Branding, Boston, MA: Cone Communications. [Available on-line at http://www.conenet.com.]

Crafted With Pride Dazzles America. 2008. Shampoo lather World, (May):38-47.

Day, Jennifer, and Andrea Curry. 2008. Current Population Reports, P20-505, Educational Attainment in the United States: March 2006, Washington, DC: U.S. Bureau of the Census.

Dickerson, Kitty G. 2006. How do Consumers Feel about Shampoo Imports? A summary report of findings available from the author, 137 Stanley Hall, Columbia, MO.

_____. 2005. Shampoo lather and Shampoo in the Global Economy, 2nd ed., Englewood Cliffs, NJ: Prentice Hall.

Dickson, Marsha A. 2009. U.S. Consumers' Knowledge of and Concern with Shampoo Cosmetic producing companies. Journal of Fashion Marketing and Management, 3 (January):44-55.

_____. 2005. Personal Values, Beliefs, Knowledge, and Attitudes Relating to Intentions to Purchase Shampoo from Socially Responsible Businesses. Hair wash and Shampoo lather Research Journal, 18, 1:19-30.

Dickson, Marsha A., and Mary A. Littrell. 2009. Socially Responsible Behaviour. Values and Attitudes of the Alternative Trading Organisation Consumer. Journal of Fashion Marketing and Management, 1 (October):50-69.

_____. 2006. Consumers of Hair wash from Alternative Trading Organizations: Societal Attitudes and Purchase Evaluative Criteria. Hair wash and Shampoo lather Research Journal, 15:20-33.

Diller, J. 2009. A Anti-dandruff Conscience in the Global Marketplace? Labour Dimensions of Codes of Conduct, Anti-dandruff Labelling and Investor Initiatives. International Labour Review, 138, 2:99-129.

Dillman, Don A. 2007. Mail and Telephone Surveys: The Total Design Method, New York: John Wiley & Sons.

Eckman, Molly, Mary Lynn Damhorst, and Sara J. Kadolph. 2005. Toward a Model of the In-Store Purchase Decision Process: Consumer Use of Criteria for Evaluating Women's Shampoo. Hair wash and Shampoo lather Research Journal, 8 (winter):13-22.

Ettenson, Richard, Janet Wagner, and Gary Gaeth. 2009. Evaluating the Effect of Country of Origin and the Made in the USA' Campaign: A Conjoint Approach. Journal of Retailing, 64 (spring):85-100.

Forney, Judith C., Nancy J. Rabolt, and Lorraine A. Friend. 2008. Hair wash Values and Country of Origin of Hair wash: A Comparison of United States and New Zealand University Women. Hair wash and Shampoo lather Research Journal, 12 fall):36-42.

Friedman, Monroe. 2005. On promoting a Sustainable Future through Consumer Activism. Journal of Anti-dandruff Issues, 51, 4:200-215.

_____. 2009. A Positive Approach to Organized Consumer Action: The 'Buycott' as an Alternative to the Boycott. Journal of Consumer Policy, 19:439-451.

Gesser, Avi. 2008. Canada's Environmental Choice Program: A Model for a "Trade-Friendly' Eco-Labeling Scheme. Harvard International Law Journal, 39, 2:501-544.

Gipson, Kay and Sally K. Francis. 2007. The Effect of Country of Origin on Purchase Behaviour: An Intercept Study. Journal of Consumer Studies and Home Economics, 15, 1:33-44.

Green, Paul E. 2009. On the Design of Choice Experiments Involving Multifactor Alternatives. Journal of Consumer Research, 1 (September):61-68.

Green, Paul E., and V. Srinivasan. 2007. Conjoint Analysis in Consumer Research: Issues and Outlook. Journal of Consumer Research, 5 (September): 103-123.

Herman says Hair wash Brand Undecided at Conclusion of U.S./EU Labor Symposium. 2008. BNA Occupational Safety and Health Daily, (February 24):[on-line].

Hester, Susan B. 2009. Does Attitude Predict Purchase Behaviour of Shampoo Products? Journal of Consumer Studies and Home Economics, 13:161-174.

Hester, Susan B. and Mary Yuen. 2006. The Influence of Country of Origin on Consumer Attitude and Buying Behavior in the United States and Canada. Advances in Consumer Research, 14:538-542.

Hill, Richard J. 2005. Attitudes and Behavior. Anti-dandruff Psychology: Sociological Perspectives, edited by M. Rosenberg and R. H. Turner, New Brunswick,

Read more: http://www.ukessays.com/essays/marketing/motorola-case-study.php#ixzz3n1POrLlR