Diversification Ansoff Matrix
Diversification is an Organisational Strategy for sustainability and growth. Its not a new strategy by any means but it is a necessary one. Nokia, the leading consumer mobile phone producer have now taken the next step towards creating new markets with new products and services. Let’s take a closer look at this strategy!
Competition influences Diversification
Diversification is a direct result of competition. This can occur at many different levels – Competitors in the same space can offer the same product at different price points, or they offer different features and functionality in their products, or they offer value added services and brand loyalty programmes. Given that we live in the Age of Now – consumer demand is fickle and fast- companies must be able to adapt and react quickly to the changing needs of the consumer before the next trend comes along. Nokia currently own a 40% market share of the consumer mobile phone market however profit margins appear to be dropping as Apple and RIM gain greater profits in the Business Smart Phone sector. If Nokia were to maintain at status quo – you’d eventually see them shrink and disappear.
Product Diversification 101
New Products in New markets.
- Smartphones Nokia releases the N97/N900 Fully featured Smartphones to compete with Apple iPhone and RIM BlackBerry in the corporate market. An area where Nokia is practically unknown and traditionally very weak.
- Nokia is also looking to expand its reach in the US markets.
- Online Services – Nokia Xpress/X3/X6 – comes with Music, offers users services in the same breath as Apple iTunes, Lifecasting (Social Networking) – allows users to post locations in Facebook.
- Nokia Booklet 3G – A completely new product to combine the world of computing mobility and connectivity with online and offline communication.
- Nokia Money -It will enable consumers to send money, pay for goods, services and bills, and recharge their prepaid SIM cards.
- Nokia Messaging – Push email services. Operating in the vast India market – Nokia looks to partners with telco carriers to email on their phones similar to how Rim offers enterprise email on the Blackberry.
Product Development 102
New Features in Current Markets
- Nokia joins forces with Microsoft Office Mobile to offer Microsoft software on Nokia Phones.
- Nokia Maemo platform on the N900 – A simple Operating system developed by Nokia and used on their N900 device.
Overall, this is a hugely aggressive move by Nokia to reinvent themselves. They are looking at all the latest technology trends and jumping on the bandwagon -with Social Media, Mobile payments, Computing, Software, Email and Entertainment are steps into the unknown. The risk is obvious for Nokia – By investing in these offerings they hope consumers will continue to follow the Nokia brand and only time will tell how good these products are and if Nokia can stand up to the competition.
Microsoft, Google, Apple, Ebay, Oracle, Amazon are all examples of successful Organizations that have diversified and diversified again. While Yahoo, Sun Microsystems and IBM may well be on the way out if not already…
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Devon Wong
Clifford Wong
Case Study: Nokia’s Product Market Diversification Strategy
Diversification Ansoff Matrix
Diversification is an Organisational Strategy for sustainability and growth. Its not a new strategy by any means but it is a necessary one. Nokia, the leading consumer mobile phone producer have now taken the next step towards creating new markets with new products and services. Let’s take a closer look at this strategy!
Competition influences Diversification
Diversification is a direct result of competition. This can occur at many different levels – Competitors in the same space can offer the same product at different price points, or they offer different features and functionality in their products, or they offer value added services and brand loyalty programmes. Given that we live in the Age of Now – consumer demand is fickle and fast- companies must be able to adapt and react quickly to the changing needs of the consumer before the next trend comes along. Nokia currently own a 40% market share of the consumer mobile phone market however profit margins appear to be dropping as Apple and RIM gain greater profits in the Business Smart Phone sector. If Nokia were to maintain at status quo – you’d eventually see them shrink and disappear.
Product Diversification 101
New Products in New markets.
Product Development 102
New Features in Current Markets
Overall, this is a hugely aggressive move by Nokia to reinvent themselves. They are looking at all the latest technology trends and jumping on the bandwagon -with Social Media, Mobile payments, Computing, Software, Email and Entertainment are steps into the unknown. The risk is obvious for Nokia – By investing in these offerings they hope consumers will continue to follow the Nokia brand and only time will tell how good these products are and if Nokia can stand up to the competition.
Microsoft, Google, Apple, Ebay, Oracle, Amazon are all examples of successful Organizations that have diversified and diversified again. While Yahoo, Sun Microsystems and IBM may well be on the way out if not already…
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