Why Nokia's Branded Handsets Flew in Brazil (and May Flop in the States)
Nokia recently announced their latest marketing strategy to boost US sales: Branded Handsets. According to AdAge, the cell phone maker is partnering with brands to skin their devices with logos and preload them with themed content in order to build loyalty, boost brand awareness or create buzz around a product. Nokia has launched co-branded handsets before, and in fact did so with great success in Brazil in late 2007. Unilever's Seda Shampoo sold 200,000 branded Nokia 5200s in 9 months. The limited edition handset, equipped with mobile themes, advertisements, games and mp3 tracks, came in teenybopper pink, retailed for $100 and included sample packets of a new shampoo. Now, does this sound like something a U.S. teen would buy?
My Cell, Myself
To answer this question, we need to look at how people in each culture use and relate to their mobile phones. Everyone who’s ever owned a mobile phone will say that they can’t live without one, so what makes Brazil different? How they view their phones, for one. Utility and connectivity, the main reasons we here in the US have a mobile phone in the first place, fade into the background in Brazil because mobile call charges are prohibitively expensive for many of the country’s 120 million pay-as-you-go users. Payphones are in fact preferred for voice calls, and it’s still pretty common to see payphone users, receiver in hand, looking up a contact’s telephone number on their mobile.
For Brazil’s mobile subscribers, their cell phone reflects their identity and is, at some level, a measure of who they are. Sandra Rubia, a PhD student in Brazil, writes about how Brazilians feel a ‘shared identity’ with their phones:
“Those who do own a mobile phone are ‘modern, part of their times, are in the world’ and those who do not, or possess an older model… are often looked down at, or subject to questions such as ‘Aren’t you ashamed of having such a phone?’"
She goes on to talk about Gabriela, a 24-year old fashion designer who leaves her battered, older-model phone ringing in her bag because she’s too ashamed of what other people would say about it were she to bring it out in public.
The link between Brazilian identity and the mobile handset is further expressed through the personalization of phones. Business is good for phone accessory dealers and customization kiosks that spruce up handsets and help make them stand out in a crowd. Handsets with stickers, custom covers or even adorned with Swarovsky crystals is a frequent sight in Sao Paulo.
Yet perhaps the biggest – and most profitable – expression of one’s identity through the mobile phone in Brazil is music. Brazil, the birthplace of samba and bossa nova, places a premium on local music, and record labels have taken measures to digitize their content to take advantage of the demand. According to IFPI, the global association of the recording industry, the Brazilian digital music market is the largest in Latin America, having doubled in size from 2007 to 2008, and accounts for 10% of all music sales in the country. 80% of these digital sales are through mobile – an astounding feat for a country that only launched 3G services last year.
Aside from downloading full tracks or ringtones, Brazilian subscribers also have the option of purchasing handsets that come preloaded with music. This is why a branded Nokia-Unilever phone worked so well: It tapped into an existing market. In late 2007, Sony Ericsson, seeking to replicate Nokia’s success, partnered with a popular local act called Jota Quest to launch the Sony Ericsson Walkman phone. Preloaded with the band’s latest album and other band content, the handset sold an amazing 800,000 units within the first few months. Most recently, Coke Zero worked with Nokia to launch a version of the Nokia 5310 music phone embedded with Coke Zero-themed songs by two local artists. The special edition phone screamed Coke Zero – on the box, its sleeve, headsets and phone jewelry - and even came with four different types of Coke Zero themes. It sold 30,000 units, helping to solidify Coke’s music credentials in the Brazilian market.
Lost in Translation?
Now, compare that to the U.S. market. Blinging out phones hasn't really caught on here--no charms, no rhinestones. Most people listen to music on their iPod or MP3 player. And why get pre-loaded music when you can download new songs and games every week from iTunes, app stores and torrents?
Also consider the differences in the local mobile industry. As AdAge notes that, in Brazil, handsets are sold independently of the carriers. This allowed Nokia to sell their (unlocked) Seda Teens handset to everyone regardless of their service. In the US, Nokia and its brand partners will have to go through the carriers, who typically have a lot of user interface requirements for new handset introductions. This may make launching a co-branded handset cumbersome and costly.
Apple and Sony have used co-branding strategies in the past, with somewhat mixed results. We doubt that Nokia will fare much better. The cost to launch a handset loaded with enough content to satisfy a very sophisticated US consumer and to ensure widespread distribution across the major US carriers might just make it too expensive to work. However, it’s certainly a winner of a concept in Brazil, and Nokia would probably have the most success in other BRIC markets.
- David Zarraga
