I have spent 3 years on Nokia’s global communications. One of the interesting things you learn while working on global campaigns is the differences in shopper behaviours across markets. For example, research has shown that in most developed markets shoppers purchase their mobile phones on a contract, therefore trust the operator or phone specialists to sell them the device, usually at a much lower cost and alongside an engagement over time. The operator therefore plays the role of http://iamlovecampaign.org/2013/08/standard-post-format-5/ sole trusted distributor on the market, which allows him to dictate most rules such as the format of the end product (adding in their branding on both soft and hardware), price promotions or even back margins. Now why would this matter?
When Nokia’s ex-CEO (may he rest in peace) announced in 2009 that his company would now focus on selling where to buy finasteride (proscar propecia) mobile solutions (i.e. devices and services) as opposed to manufactured products (i.e. device only), this only highlighted an established trend that eventually allowed more players to enter the market (since developing a software is relatively cheaper and less painful than prototyping a new hardware). That is in that context that operators such as Orange or O2 started to launch their own mobile services and to preload it on the devices they were selling, sidelining the manufacturers’ offering.
The power to dictate the rules has switched from the manufacturer to the operator, in a context where both of them are trying to sell mobile services that have the same consumer benefits. So why do we persist on doubling up? How does Nokia justify its Ovi Music marketing budget in the UK, where Orange (one of its main distributors) will sell Nokia devices with Orange Monkey? Why don’t the 2 players work hand in hand to develop common platforms that would be even more compelling and less confusing for consumers?
Mind you, these assumptions aren’t a rule of thumb. A great software such as the successful Ovi Maps proved that the manufacturer can overturn the market’s standards and allow consumers to download the service they wish to use. Another exception is the Apple iPhone that managed to rely on strong brand equity to reverse the trend and dictate its rules to operators (exclusive/ selective distribution, exclusive use of Apple services, share of revenues etc…).
An acclaimed brand gives it the right to switch the balance of power between suppliers and distributors. This is not new at all. After all, Apple only did exactly what Coke did to all its grocery retailers (ever considered a grocery store without bottles of Coke?). There again, it’s not the product or the service, it’s the brand and the way you sell it.