Elasticity of Nokia

Demand Analysis
Demand Analysis
Nokia Demand Factors
Nokia Demand Curve
Nokia Demand Curve
Nokia Demand Overview
Demand & Law of
Demand
History
NOKIA
DEMAND ANALYSIS OF

JERIN ABRAHAM GEORGE

BY:
SHWETA SHUKLA
 • Finnish multinational telecommunications,
information technology, and consumer
electronics company.
• Founded in 1865.
• 153 – year old history.
• CEO: Rajeev Suri
Nokia Demand Factors

Nokia Demand Overview

Elasticity of Nokia

Demand Analysis

Nokia Demand Curve

Nokia Demand Curve
Demand Analysis

• Named to Ethisphere's 2018 world's most

Demand & Law of

ethical companies list.

History
Demand
 How Law of Demand applicable to Nokia???

• The law of demand expresses a relationship between

the quantity demanded and its price. It may be
defined as “the amount demanded increases with a
fall in price, and diminishes with a rise in price”. Thus
it expresses an inverse relation between price and

Nokia Demand Overview

Nokia Demand Factors
Elasticity of Nokia

Demand Analysis

Nokia Demand Curve

Nokia Demand Curve
Demand Analysis

Demand & Law of

demand.

History
• The mobile phone market is a good example of how

Demand
to explain some basic concepts of supply and
demand. For example, it shows how improved
technology and increased supply – can reduce price,
even as demand rises

• According to Evalueserve – Nokia, one of the world’s

largest mobile manufacturer, recorded an
approximately 39 per cent fall in its average selling
price (ASP) between 2005 and 2009.
 • Nokia creates differentiation in devices
based on different price point segments.
• Pricing is heavily dependent on the
competitor prices e.g. Smartphones
segment is typically have a price bracket
(400-600€).
Nokia Demand Factors
Demand Analysis
Elasticity of Nokia

Nokia Demand Curve

Nokia Demand Curve

Demand & Law of

Demand Analysis

Nokia Demand Overview

• Demand is different for different device

History
Demand
segments depending on geographical
region, local taxes, distribution chain etc.
• Marginal revenue for a smartphone (high
segment) is greater than a low end
phone.
• There is no ”perfect competition” among
different players in mobile phones market
and is not ”oligopoly” either even though
there are small number of big players.
 • Nokia shipped 83.7 million handsets worldwide in Q2
2012, down -5% annually but up +1% sequentially.
• Demand for mobile phone handsets is expected to grow
even more in future.
• Typical demand curve of Nokia looks like:

Nokia Demand Overview

Nokia Demand Factors
Elasticity of Nokia

Demand Analysis

Nokia Demand Curve

Nokia Demand Curve

Demand Analysis

Demand & Law of

History
Demand
 • Nokia tries to capture multiple price points on the overall
demand curve of mobile phones.
• The different price points are used for differentiation
among mobile phones for targeted set of consumer
segments.
• Example: 600€ phone is smartphone for developed
markets and 100€ phone is a low-end feature phone for

Nokia Demand Factors

growing markets.

Nokia Demand Overview

Elasticity of Nokia

Demand Analysis

Nokia Demand Curve

Nokia Demand Curve
Demand Analysis

Demand & Law o

History
Demand
 FACTOR FACTOR FACTOR FACTOR
1 2 3 4
Price of Price of
The Substitut Compli
Consu
Price e Goods mentary mers
Point (Ex: Goods Tastes

Nokia Demand Overview

Nokia Demand Factors
Elasticity of Nokia

Laptops,
Demand Analysis

Nokia Demand Curve

Nokia Demand Curve
of (Ex:
Demand Analysis

&

Demand & Law of

tablets, Plastic
each Prefer
PDSs

History
Covers,
Phone

Demand
etc) accessor ences
ies etc.)

FACTOR FACTOR FACTOR FACTOR

5 6 7 8
Chan External Custom Adver
Macroe er’s
ges conomi
tising
in cs (Ex: Income Expen
Popul Inflatio ses
ation n, IT
Boom)
 Nokia: Demand Analysis Overview

The following are necessary for

Nokia Demand Factors

Nokia Demand Overview

Demand Analysis

Nokia Demand Curve

Nokia Demand Curve
Elasticity of Nokia
Demand Analysis

Demand & Law of

demand analysis of mobile phones of

History
Demand
Nokia:
• Sales Forecasting.
• Production Planning.
• Cost Analysis.
• Pricing Strategy.
• Advertising Costs.
• Resource and Inventory
Management.
 Example: Demand – Supply Curves for different phone
segments showing different “Equilibrium Points”

Nokia Demand Overview

Nokia Demand Factors
Elasticity of Nokia

Demand Analysis

Nokia Demand Curve

Nokia Demand Curve
Demand Analysis

Demand & Law of

History
Demand
Total Revenue of Smartphones (if sold at Eq. Point) =

Total Revenue of Featurephones (if sold at Eq. Point) =

• A smartphone like Nokia usually has a
price elasticity which is above unity.

• Some of the models of Nokia which are

Nokia Demand Overview

Nokia Demand Factors
Elasticity of Nokia

Demand Analysis

Nokia Demand Curve

Demand Analysis

Nokia Demand Curve

Demand & Law of

extremely high priced, it is a luxury
commodity and thus it is a fairly inelastic

History
Demand
commodity.