What Nokia's Collapse Teaches Us About Brand Building?

This week Nokia collapsed into the arms of Microsoft, selling its critical handset division to the software giant.

Nokia’s decline was stunning. The stock traded at over $40 per share in 2007. It now trades at about $5. It once had a market share of over 30%. It now has less than 4%.

This is partly a story about technology and defensive strategy; Nokia failed to respond effectively to changing technology and competitive attacks.

It is also a story about branding.

Nokia tried to play in all segments of the market. The company sold cheap, basic cellular phones and advanced high-end smart phones under the same brand. This approach worked well for a while. Eventually, however, the Nokia name lost meaning. What does the Nokia brand stand for? What does the brand mean? It isn’t clear.

In a competitive market, brands have to stand for something. Being a nice brand that people like isn’t enough.

Many technology companies fall into the same trap; they use the same brand to serve everyone. This is one reason these firms tend to come and go. Technology changes over time. Brands endure. Firms that rely on technology alone often struggle to hold customers over time.

You need to build a brand that people care about. These are the brands that are unique and have meaning.