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Interview with Pekka Rantala Nokia on the Russian retail market

During his short visit to Russia, Senior Vice-President of Customer and Market Operations, Nokia in Europe, Pekka Rantala kindly agreed to answer a couple of questions exclusively for Mobile-review.com.

According to our estimates, the share of grey shipments for Nokia products in Russia amounts up to 10 percent. The biggest channel of grey supplies is Ukraine. Consumers go for grey products because of their price the difference is up to 15 percent. Is Nokia undertaking any steps against grey shipments?

Yes, we are taking certain steps and actions, and the most important step, definitely, goes in direction towards consumers. Because over at Nokia, we think we make devices for the consumers. And of course its important that these devices would be very easy and intuitive to use. We really want to remind the consumers that those devices that came from abroad are not meant for Russia as you know devices for Russia include Russian language support and all other aspects. Its also important to know where we are going with all these devices. In fact, they are not just mobile phones anymore they are becoming something much bigger, like multimedia computers. Im sure its a more important thing for the consumers to purchase a device tailored to their local market. So our primary activities include communication with consumers.

Nokia pays great attention to developing its brand retail network in Russia, including that in the regions: regular launches of new concept stores, shops-in-shops, the first Nokias flagship store, opened in Moscow. Are you putting the same effort into developing brand retail networks in other countries? Or is it so only in Russia? What is your experience in this area in Russia? Do you consider your brand shops efficient and profitable? Whats your vision for further development of retail in Russia?

Thats a good point. First of all, we opened the first, and I mean globally the first, flagship store in Russia, Moscow last year in December. And I assure you its not a coincidence it was very well-though and planned when and where we should open the first shop. Its a sign of importance of the Russian market. Generally speaking, Nokia is a global brand, which is well-known in every part of the world for mobile telephony and mobile multimedia computers in particular. So its important for us to find a consistent and harmonious way of how to build up the brands name in different parts of the world. When it comes to our retail operations in Russia or in Latin America or in the USA, whatever, our aim is that the consumers would feel more or less the same when they call at our stores in different parts of the world. But of course, if you ask about the level of investments and importance, Russia is placed very high in our rankings its one of the top markets for us and were doing a lot of work here to establish our presence in the retail networks in Russia. Now, as regards why we decided to open our own flagship stores First of all, weve already told this publicly, we are not aiming to open hundreds and hundreds of own stores. We want to have ten flagship stores in different parts of the world, because we want to show a kind of a bench mark for the rest of the distribution network, i.e. what is the right way to demonstrate these new functions of our devices to the consumers, and of course we talk here about experience. We know its difficult, especially when you have a device, for example Cannon and the first thing you think of is camera, but if it is Nokia it would be phone, thats the first thing that comes to your mind. So our task is to show to the consumers that Nokia today means something more that a mobile phone. Thats why we have decided to open a couple of own stores, where we could totally control environment, demonstrate functionality of our camera-phones or music-phone, etc. And of course, our goal is to learn using the experience we acquire, we can make relevant changes in the ways we are promoting our devices. For us its not only investment into retailing, its also a kind of investment into learning about the best ways to sell and advertise our devices. Answering your question, I must say Russia is important, basically these flagship stores are the crown jewel, the highest level of our retailing. Another thing, which is important, is that the consumers in different parts of Russia will have the possibility to have the same experience in stores they visit regularly. This means that youre not going to see tens of our flagship stores appearing in Russia, but there will be concept stores, which will be totally Nokia-branded; we already have many concept-stores in CIS countries. Along with flagship stores and concept-stores, such layer as shops-in-shops also exists, where we have a certain area in other shops. Our idea is that while in flagship stores almost everything is possible, I mean we own the space, invest a lot into them, there are other layers, other retail stores, where we might have smaller space, but we still want to invest into them and provide the consumers with the right to experience Nokias solutions. In the end its a kind of pyramid that is our aim. What you see in the flagship store, you should be able to see roughly or exactly the same in other stores that constitute the pyramid. For us retailing is extremely important we use try to communicate with the consumers in numerous ways but right now we think that demonstrative marketing is essential, when we introduce new experience, we must find the ways to get these devices to the hands of the consumers and retail stores are very fitting places for that. Thats why we think that retailing is so important. Nowadays we also want the distributors to learn more about the way how to sell our devices, to present them not as phones, but as multimedia computers, when it comes to the N-Series. At the same time we have ordinary mobile phones, which should be sold as phones. However over at Nokia we are in a situation right now, when we need to learn many new things almost everyday, but the same goes for the distributors, and we really want to help them in this: we want to train our dealers and retailers, and of course we would like to learn something from them as well, since they are the ones who meet the consumers. For us it has been a major, even a giant step, when we started producing all-in-one devices instead of phones. That is the point here we need to invest a lot into education, because there is still a possibility that this kind of device will be sold as a phone by a dealer in Russia, or in France or in the US, if we dont train them. And if that happens, then, of course, the consumers will get disappointed. There have actually been a lot of discussions about our devices, as they are big; they are not the smallest mobile phones available. But on the other hand they are one of the smallest cam-coders that exist on the market. The same applies to this. That is why we want to make sure that the dealers use proper arguments we have a really big interest in brining that into the retail area.

Sub-brands: N-Series and E-Series. Nokia has always enjoyed high loyalty of consumers. One of the reasons for that was Nokias strategy to promote firstly the very brand, not just its products. Establishment of two sub-brands (N-Series and E-Series) appears to be a deviation from this brand-focused concept. Are you going to promote separate categories now, or will Nokia brand remain the top priority? Do you plan on launching new products that will have personal names, like Motorolas ROKR?

A few words about the N-Series and the E-Series. Perhaps we havent seen too many of E-Series devices yet there have been more N-Series phones so far. But the entire N-Series marketing is based on the assumption that it will contribute back to the mother-brand. So that Nokia N-Series will help the mother-brand, Nokia, to renew itself. That is our main idea. Our philosophy is not to take a violent departure from the mother-brand, but rather to create a progressive twist to the mother-brand, Nokia. Thus we see the N-Series as a part of Nokia brand, as a sub-brand, and when we get to develop the N-Series, we always develop it together with the brand of Nokia. So we believe that everything we do for Nokia N-Series also helps to drive the mother-brand even further. But of course there will be strong campaigns, based on Nokia-branded devices, so its not going to be only Nokia N-Series. Speaking about these names, like ROKR or RAZR, I think our approach to the N-Series is a bit easier, but, of course, we created Nokia 5500 and named it Sport that is one example of us using names. Naturally, communicators started the whole thing ten years ago, now everybody just talks about communicators. I just dont want to speculate now, whether we will have more unique names for our products in the future or not. But if you look at what has happed over the last two years, you will see that we have really taken some steps concerning our numbering and naming not all devices now have four-digit indexes, the E- and N-Series now use two-digit numbers and on top of that they make use not of the entire set of numbers. The N-Series starts with 7, 8 and 9. I believe we have managed to help the consumers in getting to know what is what now.

Software updates. In the UK Nokia has launched the service that allows end-users to update software on their own. Will this service be available for Russia? If yes, when and for what products? Do you have plans for developing post-sales support?

We really want to care about our consumers and of course we want to establish long-lasting relationships between Nokia and the consumer. And we do understand that the kind of relationship that we can offer to our care services is also very important and we think of it as an area to develop in the future. The possibility to download software is, perhaps, the latest message to our consumers and we really believe that many consumers will be very happy about this development, as it means that most consumers who are able to download software either over the air or in a more common way, will definitely save some time. The same thing is actually happening in many other industries. So, all in all, yes, its very important for us, and its not going to be a UK-only service, the same thing will be taking place in Russia and we are looking forward to starting this service, lets say, by the end of this year on the Russian market. We are very excited about this, because it also opens a very good relevant channel for us to get feedback. And when it comes to contacts that we have throughout the entire European area through the care-organization, its really huge, so that we have millions of contacts every month, because consumers may have some issues with their devices and surely they come to us. At the same time its a kind of opportunity for us to really strengthen the relationship and I believe uploading updates over the air is something that many consumers would prefer.

Do you consider the experience of launching Nokia 8800 Black as a Special Edition for Russia successful? Do you plan to offer such special editions in Russia in future?

First of all, we are really happy about the experience, definitely its a good kind of bench mark and reference for our possible future projects. So yes, we do believe its a very effective way of promoting our products. All in all we think that the key to success for Nokia in future is to understand the consumers, and thats why we made the biggest ever segmentation study several months ago. And probably there hasnt been any similar studies made ever we used more than 6 billion data points collected world-over, and the Russia was one of the key markets that we looked at. And we continue updating that data. So we have found out the markets segmentation, basically there are certain segments that exist everywhere, but of course size of the segments differ from market to market. That gives us a good foundation to look at the Russian market and then to decide which product or product categories do fit best in this market. And Im sure than in future we will see more devices of the kind you have just mentioned for the Russian market it might be something that Nokia would do alone, or products created with the help of our customers, or even a third-party would do that, for example they would use our devices for the Russian market as a platform and then offer more content and opportunities. Thats the best thing about having open operating systems in these devices, so either we can do it alone, or somebody might enhance our products.

Translated by Oleg Kononosov (oleg.kononosov@mobile-review.com)

Published - 06 October 2006

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