How to sell high priced niche / luxury products in India?

Many advertising agencies do not seem to get it right when it comes to selling 

• high priced products and services
• luxury products
• B2B products
• through new business models

It seems to me it is because today's communication agencies have learnt their practice and cut their teeth working on the accounts of "FMCG" brands and naturally the culture has seeped so deep into their world view that they tend to see everything through these goggles. 

It is no surprise that they find it very difficult to even recognize, let alone respond to, the odd/niche/new business models. 

Click on this to see the article.

How you too can beat big competitors (KevinKare Story)

I was quite inspired by this story of how a small company from down south took on international giants. I have edited it lightly but the credit goes to the journalist who created the story which appeared in Economic Times Mumbai on August 31 in "Corporate Dossier".  Click here

Reduce Sales Force Attrition - Use "Reverse Gear" Technique

The fact is that the real cost of sales force attrition is much larger than what the accountants will tell you. 

Second fact is that many companies are working under assumptions of the world that ceased at least 15 years ago. 

I recommend a "Reverse Gear" approach which has 4 parts wherein both you and the candidate get an equal opportunity to make a solid decision and start a relationship that lasts. Click here to get to know it...

12 ways to find more customers and 6 ways of filtering them

This always comes up. Whether in a real life marketing situation. Or in a class consisting of experienced people. HOW to increase the sale by HUNTING for new customers.

"Cold calling" is so very traumatizing to learned and dignified MBAs and executives that they would rather die than call cold on someone. In my experience it is not that difficult - but that is a different story for another day.Right now I wish to draw your attention to the fact there are as many as 12 ways of hunting for new customers (and none of them is cold calling)...

http://marketing-list.
blogspot.in/2012/08/12-ways-to-find-buyers.html

8 Do's & Dont's for selling "large projects"

Strategies for selling high value and customized products and services are very different from those used for selling soaps and shoes. Click here ... 

or copy and paste this address in your browser : 

http://more-customers.blogspot.in/2012/08/8-dos-and-donts-of-selling-large.html

Please leave your valuable comments on at the end of the blog post after you finish reading. Was it useful ?

What are you giving ? A quotation or free education and consulting?

Under the garb of finding suppliers, many customers are likely to ask you to quote only to get more educated , to compare if their current arrangements are competitive, and to fish for anything new. Although it is difficult to completely avoid it, you may at least try...

Click :
http://more-customers.blogspot.in/2012/02/are-you-giving-unpaid-consulting-time.html

100+ thoughts for managers (Each Less than 20 words)

CLICK THIS ...

GREAT QUOTES FOR MANAGERS TO READ THEMSELVES


These are not for presenting to others but for self reading and improvement.

A "Meter" to help you estimate how much it will cost you to market your stuff

Peter Drucker famously said; "The main business of any business is to find the customer and keep him happy". In any business there are mainly two types of costs

1. Customer acquisition and retention costs
2. Costs of fulfilling what has been promised to the customer

This blog post refers to first type of costs. Depending on the situation, these consist of the costs associated with market research, spotting the customers, meeting them, communicating with them, convincing them, transacting with them, helping them use the benefits from what you are selling etc. This also includes the costs incurred in appointing channel members and franchisees. All of these - non-mfg costs - add up to a pretty big chunk and can be anywhere from 30% to 60% or even more of all operating costs. 

Since they are so large, it makes sense to understand and estimate these costs  before you jump into a business. The meter given below tells you how difficult it will be to sell the product. The more difficult a product is to sell; the more will be the ratio of marketing cost to sales and hence you will need to keep more gross margin in your pricing formula. 

SALES CHALLENGE METER

The more you observe the following the more will be the difficulty and higher will be your costs

Awareness, Understanding & clarity of the customer

(Customer = Customers' Decision Making Group)

1. That they have a “problem” which needs a solution. There are many products for which the target customer does not know in the first place that he has a problem that needs to be solved! Such a person is obviously has no budget, no intention, no search activity and may not be even open to consideration. A very difficult selling situation to be in.  Insurance selling is difficult because of this.
2. They may be aware that they have a problem but they do not know what kind of solution will solve their problem and who sells the solution. In the annual  business gifts market, it is always a big question what to buy and whom from.  

Nature of the Product category

1. Whether the product is standard or customized : the latter costs more to sell
2. Some products are difficult to explain for the seller and/or difficult to learn for the customer because the product it may not be possible to inspect the product before purchasing : it may be possible to understand the product only when experienced (music concert).
3. Differentiation based on soft Ps ( 3 Ps of service : People, Process, Physical evidence) is more difficult to sell than the differentiation based on the traditional hard Ps (4 Ps : Product, Pack, Price, Promotion). Example : Restaurant. As the products become similar due to technology being available to many; it is the soft Ps that are increasingly differentiating the offerings. But their selling involves making people experience. It costs more.
4. Difficulty of making a choice and decision : Many competitors with seemingly similar options and a very wide range confuse the customers and increase his reluctance due to his risk perception that he may be buying a wrong product. The sellers need to spend extra money and time at the point of sale to stand out from the clutter and make the differentiation be known and understood. This happens in the apparel market.   
5. Difficulty in implementing the choice : selling is difficult when the product being sold needs the customer to make  changes in their habits and behavior. Before Eureka Forbes sold AquaGuard, people's perception was built on water filters : two drums : one sitting on the top of the other. AquaGuard acceptance was slow because, contrary to this behavior, AquaGuard needed to be fixed on a wall, attached to a water line and to an electrical socket. 
6. Seller needs to meet ambiguous / undefined expectations. This is the bane of all service sellers : whether an ad agency, an interior decorator or a teacher. Customers are notoriously poor in thinking through and articulating their needs and demands upfront. It is impossible to get final approval without reworking a number of times and all this adds up to the cost of acquiring customers and getting their approvals.  

Decision Making Group of the Customer 

1. It is difficult to sell to a large number of people on the client side. It is not easy for SAP to sell an idea of going in for an ERP to people ranging from data entry persons to CFOs because each has its own viewpoint. There are very few to say yes and very many to say no. The costs become high because you need to employ a whole team of people who can contact and deal efficiently at various levels in the organization. 
2. Risk perception is high when the customers consider themselves to be ignorant and have no prior experience in buying products from the category. And, if there is a social distance between the buyers and the sellers, the problem gets aggravated. Example : When a Vice President from the consulting firm is dealing with a Product Manager. The Product Manager thinks it must be a very risky decision !

Buying situation

1. Person-to-person selling is a comparatively easy situation. Person to group, group to person or group to group are more difficult situations. 
2. First to market 
3. Late to market
4. Size of the seller is much smaller than the buyer

On each of these 14 dimensions I suggest you rate your selling situation and then estimate whether your selling costs will be high or low. The more the challenge, the less you will need to spend on expensive means of customer contact like personal selling,  more on the type of salespersons, more on their salaries, more on motivation and training,  more on support from back-office and more on systems to track them and integrate their work with the rest of the company.

5 Myths about Marketing

Although I do not agree with this article, there is some truth in it. That's why I am giving the article to you as it is : in-your-face : articulation.

5 Myths About Marketing

MYTH #1: “Marketing is Useless”

·         Who Says It: The Sales Team. Why They Say It: They can’t see how the activities of the marketing group are helping them make sales.

·         Why It’s a Myth: While it’s true that there are hundreds of thousands of marketing groups that have no intention or ability to help sales groups to sell, there are just as many marketing groups that are an incredible asset to their company and are responsible for increasing revenue and reducing the cost of sales.

·         Why It’s Dangerous: When the sales team believes that marketing is automatically useless, it might not be able to see the benefits of what the marketing team is already doing.  Worse, it prevents the sales team from articulating how the marketing team can provide even more help in the future.

·         How to Cope: Sales management must take the lead, by finding elements of the marketing group’s activities that are having a positive impact, and communicating that benefit to the sales reps.  The two groups should be encouraged to work together and goaled on their ability to do so.

MYTH #2: “Marketing is Strategic”

• Who Says It: Marketing Executives  Why They Say It: If the marketing function is considered strategic, nobody will look too closely at whether it’s really having a positive impact on revenue or profit.  Instead, they’ll simply assume that spending money on marketing is important, which makes it easier for marketing executives to grow their empire.
• Why It’s a Myth: Marketing is a tactical function that’s supposed to make it easier for the company (and specifically the sales team) to create profitable revenue.
• Why It’s Dangerous: Marketing groups that are “strategic” end up consuming large amounts of money on activities and expenditures that are of marginal value.  Example: brochures that nobody reads and advertisements that nobody understands.
• How to Cope: Top management must measure marketing in a quantifiable manner, with every measurement tied to specific activities of the marketing group.  For example, if marketing runs an advertisement, it MUST include a way to measure response in terms of profitable revenue.

MYTH #3: “Marketing Drives Sales”

• Who Says It: Marketing Managers Why They Say It: They’re trying to take credit for the work of the sales team.
• Why It’s a Myth: Most marketing professionals have never sold anything.  Therefore, they know little or nothing about selling.  While they certainly can (and will) kibbitz from the peanut gallery, their advice and suggestions about selling are usually useless.
• Why It’s Dangerous: There are few things more demotivating that having an entire group of people running around taking credit for your group’s hard work.  This myth thus drives a huge wedge between sales and marketing, making it impossible for the two groups to work together, except as adversaries.
• How to Cope: The easiest way to fix this problem is to put the marketing group under the CSO or VP of Sales.  Short of this, top management must make it clear to the marketing group that they are there to help Sales, not to tell them what to do.

MYTH #4: Marketing Creates Brands”

• Who Says It: Business Schools Why They Say It: MBA programs are big money makers, and marketing is a popular major within them.  The focus on branding makes marketing seem important, like it’s a way to hypnotize people into buying things they don’t need…. like MBAs, come to think of it.
• Why It’s a Myth: Brands are always a reflection of the product and the experience of buying the product.  The activities of marketing groups, like advertising, PR, etc. can only build on the brand that’s created, not by marketing, but by the customer’s experience with the product.
• Why It’s Dangerous: Every year pointless brand marketing consumes billions of dollars, most of which is totally wasted because they’re not measured in any meaningful way, and cannot be mapped to increases in revenue and profit.
• How to Cope: Pick a brand identity (name, logo, etc.) that makes sense and stick with it.  Then focus on the customer experience, both with the product and the buying of the product.  If you do that right, your brand will take care of itself.

MYTH #5: “Marketing Defines Products”

• Who Says It: Junior Marketers Why They Say It: Most low level marketing activity is lot less fun than hanging out with engineers and pretended that you understand what the “customer” (whom you’ve never seen) actually wants.
• Why It’s a Myth: Most marketing professionals do not have sufficient contact with customers to know what they’ll be wanting in the future.  Furthermore, most marketing professionals lack the expertise in product development to know what’s possible to build.  Therefore, their “market requirements” are usually ignored, and rightly so.
• Why It’s Dangerous: Even when (as is usually the case) the engineering group ignores marketing input, it still takes time and effort to neutralize their influence.  And if that time and effort isn’t spent, then you can end up with “marketing driven” engineering groups that never build anything because the requirements keep changing.
• How to Cope: Get marketing out of the product design business.  Instead, have marketing meet with sales and jointly gather information from the customer base about what they’d like to see in the future.  Then bring the R&D group into the discussion, especially with real live customers.

Why is Samsung and Apple winning when others are losing?

Comment added on Jan 27, 2013 

I have been following this market for over an year now and you can see all my blog posts below. It seems I was right about Samsung being on the right path !

The last quarter figures for 2012 show that there were only 2 major winners and it is clear to me how they won : Samsung and Apple. This was mainly due to their focus on smartphone shipments reaching tens of millions of units. They were innovative and won by proactively anticipating new products that will be needed to cater to new age needs and being ahead of others in bringing them to market. What a deadly combination of 5 things : true examples of risk takers, entrepreneurs and mobilizers. 

1. insightful  understanding of the emerging needs of the customer which could not have been visible to the companies doing standard market research by asking customers and the trade
2. risk taking ability of the companies to bet on an unsubstantiated insight in order to undertake development of products
3. more risk-taking in developing a range and a steady sequence of products that would make a deep impact on the market
4. managing risks associated with developing products based on emerging technologies which are not yet proven
5. having an outstanding speed-to-market.

At the other end of the smartphone market, two Chinese firms - Huawei and ZTE - came into the "top 5" list of smartphone manufacturers. Who got squeezed ? It is RIM (Blackberry), LG, HTC, Nokia. The ones to get squeezed were neither risk-taking innovators nor were they efficient manufacturers.  Huawei grew by 90% year-over-year, allowing the company to capture 4.9% of the market.

Of course, at the top end too there is a tussle between Apple and Samsung as they are encroaching on each other's territories and also fighting court battles. Apple has introduced a low priced iPhone last month whereas Samsung has introduced pricy formats like Note which have larger and brilliant AMOLED screens. But I am not addressing Apple vs Samsung issue below.

I wrote this post sometime in October 2012

My student Atul Dubey asked my views  on what should Samsung do now. 

I did some thinking and fishing on this subject including speaking to Divya who manages Tata Docomo store in Pune and my insight is that iPhone is bought not entirely for the features of the iPhone 5 device. 

There are still many who want to buy iPhone 5 because it is an "Apple". These trend setters want to own the "latest" model of the "trendiest" brand in one of the "most visible personal gadgets" category in the world. Owning an iPhone 5 is a way of defining oneself and telling the whole word who they are!

When a product gets branded, some additional adjectives stick to the physical product and that is why they say the brand is more valuable than the physical product and that is why  branded products are more expensive. In case of the Apple brand, the adjectives that come to the mind are : "top of the line", "best designed", "pioneering", "path breaking". 

Actually, Samsung already is ahead of Apple in India in the mass market (a) in sales revenue (b) in width and depth of distribution (c) in range of products (d) in the share of advertising and store display space. Then where is the problem? It is in a niche market : when it comes to the "movers and shakers" of the market - probably top 1% of the Indian households ( Top 1 million households) - they still  probably prefer to go to an Apple store as compared to a Sony or a Samsung store.

My impression is that Samsung does not need to change its path to "intercept" Apple and dent it. In fact Samsung has been good at finding and placing bets for a long time. They have displayed an uncanny ability not only to spot the "next wave" but to also have the couage to make big bets on these waves : 

• ENTRY INTO CELL PHONES : It is unusual for a household appliances company (with chassis consisting of bulky electromechanical components like motors, compressors, speakers and picture tubes) to enter into personal gadgets market (chassis consisting of densely packed surface mounted components and computer chips). They were the first household durables company to make this transition and bet on the cell phone category in a major way so as to leave their own country-cousin LG behind.
• BETTING ON COLOR PHONES : Who would have thought that in a cell phone category which is essentially a listening and talking device, a display would be important? But Samsung showed a great insight and made big bets on the cell phone being an entertainment device over a period of time and and invested a lot in colour displays. This left their German and Americal cell phone makers like Siemens and Motorola behind.
• FORESEEING THE SHIFTING OF THE BATTLE GROUND : Their latest master stroke was to recognize that the battle in cell phones will shift to software from pure hardware. Accordingly they placed huge bets on the Android operating system. Nokia - working on the assumption that hardware improvements is the way to go - was left gasping for breath and was fatally injured. ( see an earlier blog post at the end ).
• CREATING A NEW MID-SIZE SCREEN MARKET : They created a new screen size called tab(let) which was bigger than a cell phone but smaller than a laptop. They launched a new sub-brand called Galaxy to drive the new market of large sized smart phones and small sized portable laptop screens. 

My feeling is that Samsung is already on the right track and it should not frame their task as countering iPhone 5.  They must frame their task differently. They must see it  is a war based on brand and not a war of products or models. They must aim for a time when the trendsetters - the movers and shakers - would prefer to come to Samsung stores instead of going to Apple stores as they currently do. 

They must introduce a technology in personal gadgets that will become a talk of the town. They have foresight and a good R&D and the task should not be difficult for them. As and when they can do this, it will create a really big bang because Samsung has far more stores in India than Apple.

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I wrote this post in April 2012

A great event - Samsung overtaking Nokia

I have been always fascinated by the cell phones due to technology, competition, fast life cycles and strategies. 15 years ago no one had heard of Nokia of Finland. Within these 15 years we came to a stage where no one in the world can say they have not heard of Nokia. And just when it seemed invincible, came the famous "Burning Platform" speech last year from their new CEO. He said that Nokia was sitting on a burning platform and had to make a choice of diving out into the sea from its place or risk being burnt alive. (You can see the actual speech below in blue font at the very end of this post). Well, well, it has happened far sooner than expected. Samsung has overtaken Nokia and become a leader.

I have been watching the rise of Samsung for over a decade because, as VP of Marketing and Sales at Onida, I competed with Samsung in the TV business. Its rise to the top is an amazing story of correct anticipation, willingness to take risks, and openness to organizational changes.

I remember that 25 years Samsung was a downmarket brand of TVs. My impression is based on the fact that most Indian workers coming back from Dubai carried Samsung TVs. The rest, who could afford, bought Sony. But I must admit I was wrong in my conclusions. Samsung has played its cards correctly since then.They went into mobile market at the right time ( ahead of Japanese and LG). They correctly judged that the next wave in cell phones would be driven by entertainment and content and began making phones accordingly. By the time the world recognized that this indeed was the trend, Samsung was ahead already.

When all handset makers including Nokia were improving their products, Samsung correctly judged that what needed to be improved was the customer experience and not necessarily their product. A few years before others did, they saw that Android System was  capable of improving the customer experience and they were the first to bet on it and launch a big range of Android based phones 3 years ago. That is precisely when the decline of Nokia began.

Last - but - not least - a very interesting story. Around 1995 they appointed McKinsey to find out why their globalization efforts were failing. Crisp diagnosis by McKinsey was "the problem is that you speak Korean in the board room". Within 6 months they inducted global managers in their top management.

I am reproducing below the recent article from MINT in red font and later an old article giving the "Burning Platform" speech in blue font.

 

Samsung now largest mobile phone maker

South Korean firm ends Nokia’s 14-year run at the top; Galaxy phones power Samsung to record $5.2 bn profit

Seoul/Hong Kong: Samsung Electronics Co. Ltd overtook Nokia Oyj as the world’s biggest vendor of mobile phones for the first time, ending the Finnish company’s 14-year run as the global leader, according to an industry study. 

Samsung shipped 93.5 million handsets in the first quarter, 36% more than a year earlier, compared with 82.7 million for second-ranked Nokia, researcher Strategy Analytics said in a statement on Friday. Demand for Galaxy smartphones helped Samsung post first quarter net profit on Friday of 5.05 trillion won ((Rs25,250 crore today), beating analysts’ estimates.

Samsung’s quarterly handset division profit nearly tripled to 4.27 trillion won, accounting for 73% of total profit, and operating margins rose to 18.4% from 12% in the preceding quarter on strong sales of the Galaxy S and the Note phone/tablet, the surprise consumer hit of recent months. The handset division shifted more than 20,000 Galaxy phones an hour in the quarter and contributed most of its operating profit.

Nokia had been the biggest mobile phone maker by shipments since 1998, when the company took over the spot from Motorola Inc. Nokia reported a €1.34 billion (Rs9,300 crore today) first quarter operating loss after handset sales slumped. Both smartphones and low-end handsets declined as Nokia’s ageing portfolio was outpaced by handsets running Google Inc.’s Android. Its handset shipments in China fell 62%.

Last year, Samsung became No. 1 in Europe while Nokia retained the No. 1 position in most emerging markets, Tom Kang, a Seoul-based research analyst at Strategy Analytics, said in a phone interview on Friday. “In the first quarter, we expect Samsung took a lot of market share from Nokia in Asia. China and India were the two biggest markets where Samsung gained,” he said.

Apple Inc. is the world’s third biggest maker of mobile phones after shipments rose 89% to 35.1 million last quarter, according to Strategy Analytics.

Nokia dropped as much as 2.5% to €2.69, the lowest price in more than 15 years based on closing prices, and was trading down 0.6% as of 11.31am in Helsinki. Samsung gained 2.5% to a record 1.374 million won at the close in Seoul, pushing its market value to $190 billion, 11 times that of Japanese rival Sony, though still only one-third of Apple’s, the world’s most valuable company.

“Samsung and Apple are out-competing most major rivals, and the smartphone market is at risk of becoming a two-horse race,” said Neil Mawston, an analyst at Strategy Analytics.

CLSA analyst Matt Evans said in a recent report that “Samsung’s smartphone success in the first quarter was the flip-side of Nokia’s disappointment”.

Nokia, which had long been the leader in the smartphone segment until last year, has suffered a sharp decline in sales since it abandoned its own smartphone operating system and switched to the largely untried Windows Phone. It managed to sell only 12 million smartphones in the first quarter.

The near duopoly in high-end smartphones is unlikely to come under much threat this year or next, according to Bernstein analysts, and Samsung will look to keep that momentum going next week with the launch in London of a third generation of Galaxy S, hoping to boost sales ahead of the summer Olympics, where the group is among the leading sponsors.

“The Galaxy S3’s specifications are expected to be sensational, and it’s already drawing strong interest from the market and consumers,” said Brian Park, an analyst at Tong Yang Securities.

“We anticipate very strong demand for the Galaxy S3,” Robert Yi, Samsung’s senior vice-president and head of investor relations, told analysts. “When there’s strong demand in the market, we don’t necessarily need to spend a lot of marketing dollars to promote sales.”

Samsung also regained the lead from Apple as the world’s biggest vendor of smartphones in the first quarter. Smartphone shipments surged 41% in the quarter, the analysts said.

Finland-based Nokia faces a key test this week when chief executive Stephen Elop finally unveils a plan to reverse a sharp slide in the fortunes of the world's number one mobile phone maker. Nokia holds a strategy and financial briefing in London on Friday, two weeks after it reported a 21 percent slump in fourth quarter earnings and Elop promised: "The industry's changed and now it's time for Nokia to change faster." Here is a copy of the text from an internal Nokia memo from the CEO Elop to the company's employees. Here's over to the letter which several analysts have termed 'brutually honest'.

Hello there,

There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform's edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a "burning platform," and he needed to make a choice.

He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times - his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a "burning platform" caused a radical change in his behaviour.

We too, are standing on a "burning platform," and we must decide how we are going to change our behaviour.

Over the past few months, I've shared with you what I've heard from our shareholders, operators, developers, suppliers and from you. Today, I'm going to share what I've learned and what I have come to believe.

I have learned that we are standing on a burning platform.

And, we have more than one explosion - we have multiple points of scorching heat that are fuelling a blazing fire around us.

For example, there is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.

In 2008, Apple's market share in the $300+ price range was 25 percent; by 2010 it escalated to 61 percent. They are enjoying a tremendous growth trajectory with a 78 percent earnings growth year over year in Q4 2010. Apple demonstrated that if designed well, consumers would buy a high-priced phone with a great experience and developers would build applications. They changed the game, and today, Apple owns the high-end range.

And then, there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under €100. Google has become a gravitational force, drawing much of the industry's innovation to its core.

Let's not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally - taking share from us in emerging markets.

While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.

The first iPhone shipped in 2007, and we still don't have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.

We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.

At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America. Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead.

At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, "the time that it takes us to polish a PowerPoint presentation." They are fast, they are cheap, and they are challenging us.

And the truly perplexing aspect is that we're not even fighting with the right weapons. We are still too often trying to approach each price range on a device-to-device basis.

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren't taking our market share with devices; they are taking our market share with an entire ecosystem. This means we're going to have to decide how we either build, catalyse or join an ecosystem.

This is one of the decisions we need to make. In the meantime, we've lost market share, we've lost mind share and we've lost time.

On Tuesday, Standard & Poor's informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody's took last week. Basically it means that during the next few weeks they will make an analysis of Nokia, and decide on a possible credit rating downgrade. Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.

Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It's also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on.

How did we get to this point? Why did we fall behind when the world around us evolved?

This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven't been delivering innovation fast enough. We're not collaborating internally.

Nokia, our platform is burning.

We are working on a path forward -- a path to rebuild our market leadership. When we share the new strategy on February 11, it will be a huge effort to transform our company. But, I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future.

The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same.