How Nokia is selling cell phones to the developing world
Looking for ways to make mobile handsets practical for people living in developing countries, Finnish mobile-phone maker Nokia Corp. (NOK) has trekked to far corners of the globe, from the narrow alleys of Mumbai to the vast slums of Nairobi. The result is a slew of new features especially designed for places with harsh weather and harsher living conditions. One example: The company created dustproof keypads—crucial in dry, hot countries with many unpaved roads, as Nokia executives learned from visits to customers' homes in India. Innovations like those helped generate sales in 2006 of $3.7 billion for Nokia in India, making the company the market leader in the fastest-growing mobile-phone market in the world.
But Nokia's initiatives for emerging markets reach way beyond traditional product innovation. These days, it's also breaking the mold on how it markets, distributes, and sells phones in developing countries. In India, Nokia estimates there are 90,000 points-of-sale for its phones, ranging from modern stores to makeshift kiosks, even more than China's 40,000. That makes it difficult to control how products are displayed and pitched to consumers. "You have to understand where people live, what the shopping patterns are," says Kai Oistamo, executive vice-president and general manager for mobile phones. "You have to work with local means to reach people—even bicycles or rickshaws."
To get a grip on rural India, the company has outfitted a fleet of distinctive blue Nokia-branded vans that prowl the rutted country roads. Staffers park these advertisements-on-wheels in villages, often on market or festival days. There, with crowds clustering around, Nokia reps explain the basics of how the phones work and how to buy them. Nokia has extended the concept to minivans, which can reach even more remote places.
Members of the emerging markets team discovered something on a recent visit to slums outside Nairobi that may help them improve sales to customers without access to credit. Through conversations with slum dwellers, Nokia learned that many people form buying clubs, pooling their money to buy handsets one at a time until every member has one. The members draw lots to see who gets phones in what order. Now Nokia is looking for ways to encourage this form of self-financing. Communal finance is a far cry from manufacturing mobile phones, but Nokia knows it has to try all sorts of ideas if it wants to capture its share of the industry's next 1 billion customers.