Today global management consultancy Arthur D. Little announced that Nokia is the recipient of its first annual BRIC Award for outstanding success in the emerging markets. Announced at GSMA’s 2009 Mobile Asia Congress, the award recognises the company with the most successful strategy for BRIC market growth.
Out of the 400 multinational corporations (MNCs) screened for the award, Nokia’s emerging market strategy was chosen because it is most closely aligned to BRIC 2.0 – Arthur D. Little’s best practice approach to successfully capturing the critical emerging market middle segment. Defined as the area in between premium and low-cost, and depending on the industry, the middle segment typically represents between 60-90% of the addressable market for foreign MNCs, and is rapidly growing consistently across all emerging markets.
Petter Kilefors, Global head of Arthur D. Little’s Strategy and Organization Practice, said: “We are thrilled that Nokia’s BRIC market achievements will mark the first of Arthur D. Little’s annual awards for emerging market success.  As local players from each of the emerging markets aggressively pursue global growth, Nokia’s story serves as a best practice model for how and why mature market companies must respond in order to avoid losing ground to these new competitors.”
Breaking into the BRIC middle segment
Arthur D. Little found that despite major opportunities for growth, the majority of MNCs are not exploiting the BRIC middle segment – which is critical to achieving significant penetration in these key growth markets. In response to this shortfall, the consultancy conducted in-depth analysis of the few MNCs that did manage to achieve both above average market share and growth in BRIC countries to identify a single “BRIC Market Winner” that exemplifies a best practice approach to maximizing emerging market growth.
Nokia was short-listed alongside the following four MNCs, all of whom demonstrated convincing strategies for growing their share of the BRIC middle segment:

• Metso - an engineering and technology company, has demonstrated its commitment to successfully entering new markets by remaining adaptable throughout the early phases of new market entry, especially in China
• Alfa Laval - an equipment manufacturer in the heat transfer industry has successfully positioned its brand throughout India, and has maintained a consistently high-performing operational record in all BRIC markets.
• Ermenegildo Zegna - In 1991, Zegna was the first brand to arrive in Greater China.  Troday the company has 73 stores across the country.  This luxury retail-led strategy has ensured Zegna’s premier brand positioning within this important market.
• Indesit - a leading white goods company, regarded highly within the Eastern European market and Russia in particular.  Because of a recent partnership with ETA Star Appliances, the brand is now poised to enter the Indian market.

Each of the short-listed companies was identified for its high turnover share and growth rates in BRIC countries.
Fight, Focus, Simplify
Arthur D. Little’s BRIC 2.0 strategy argues that mature market companies, who have previously targeted their premium products to the emerging markets’ high-end consumers, must now switch paths and begin to drive growth in the emerging markets’ middle segments.  To achieve this, companies must address the following three key ingredients when reconsidering their BRIC market strategies:

• Fight - Combine international brand power with proven, local go-to-market approaches;
• Focus - First invest in a single, key region; roll out to subsequent regions once a strong market position is achieved;
• Simplify - Actively leverage the MNCs’ technical expertise to design new product and service offerings that address local needs, far beyond simple copying or de-engineering of existing offerings.

Nokia’s success
With an annual seven per cent growth rate of turnover share of BRIC countries, Nokia’s emerging market presence grew significantly in between 2005 and 2007. To achieve such success in these constantly changing markets, the global mobile phone giant had to rethink its early strategy, which focused on the premium segment, by developing lower-cost handsets with functionality that appealed to the growing middle segment.
Nokia’s path to success in the Chinese market in particular mirrors the fight-focus-simplify approach Arthur D. Little recommends:

1. Fight - With numerous domestic and international players in the handset market in 2003, Nokia decided to leverage its global premium brand power to fight head-to-head with local players for increased share of the growing Chinese middle segment.
2. Focus - By expanding distribution channels and opening sales centers outside of China’s first-tier, international cities, Nokia re-focused away from premium markets to the regions where it was most likely to penetrate China’s growing middle segment.  At the same time, Nokia introduced new handset models that addressed the specific needs of Chinese customers.
3. Simplify - Nokia introduced simplified mobile phone models that were cheaper and could therefore compete with domestic companies on price.

The result? Today Nokia is China’s mobile handset market leader, with a market share of about 38% in 2008. China is also Nokia’s largest market, with India, Russia, and Brazil all situated within the mobile giant’s top ten global markets.
Arja Suominen, Senior Vice President for Nokia Communications, added: “As the mobile telecommunications leader, it is critical that we expand our customer base in line with the high-growth markets.”
She concluded: “It is more important than ever to take the time to understand the unique local customer needs in these markets. The fight-focus-simplify approach that Arthur D. Little outlined today emphasizes how critical this is for global companies looking to grow their businesses. We are very honored that our success in China has been cited with this prestigious award.”
The full award presentation given at GSMA 2009 Mobile Asia Congress is now available for
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