Case 1: Blackberry

Benjamin Lieu Kari Morrison Jaskaran Sanghara Vivian Ou Calvin Sawyer Gloria Wong

JK and the Implementers From Set 1K Buddy

FMGT 1K MKTG 1102 Instructor: Jeff Collier 10/19/2009

INTRODUCTION In 1992, Research In Motion (RIM) introduced a two-way pager as their first product. Since then, RIM has released numerous devices, none more popular than their Blackberry product line. The Blackberry line boasted all-in-one capabilities. Partnered with voice and data transmissions, it became the mobile device that could do it all. However, existing mobile device companies are still in direct competition and RIM will need to continue developing their technology to win dominance in the Smartphone market.

PROBLEM How can RIM develop Blackberry to overtake its competitors in terms of sales and market shares?

KEY FINDINGS The first Blackberry was introduced in 1998 as a wireless hand held computer. In 1999, Blackberry's lines of products were equipped with voice and data transmission. This led to an explosive demand. RIM's employees grew from 1250 in 2001 to 7000 in 2009. They have a new and expanded target market.

ASSUMPTIONS A prevalent assumption weve made is that RIM will continue to have enough capital and resources necessary to pursue new technologies and innovations. This is important because research and development requires large amounts of investments. Another is that existing RIM customers will continue to be loyal to the Blackberry brand regardless of new marketing strategies and products. This assumption is made so that market shares can only grow. RIM has the ability to develop new types of products.

SWOT ANALYSIS Strengths High customer loyalty to the Blackberry line creates a long lasting business relationship. The term crackberry is used to describe users addiction to the device. To date, there are approximately 28.5 Blackberry subscribers worldwide1. The RIM brand is well established globally and this allows for a larger market for future product launches. According to RIMs 2008 report, 92% of RIMs revenue comes from outside of Canada. Blackberry has built a strong platform for future product innovation. They have a trusted name.

Weaknesses The majority of Blackberries are manufactured in Canada where labour costs are much higher than developing countries. These costs are reflected in the relatively high prices of Blackberrys. RIM is narrow in terms of its product lines. It is largely dependent on the success of Blackberrys as their major product. They lack another product that can bring in consistent revenue. The emailing client is not completely stable. There have been instances where it experiences outages that require time to fix and that could offset existing customers2.

Opportunities New emergence of popular social networking sites, such as Facebook and Twitter, create a need for a device with easy access to the internet. Site software could be developed for easier integration of mobile device and website. GPS technology is gaining increasing acceptance worldwide. This could be a good function that Blackberry could invest in. This would appeal to an audience with this specific need, increasing Blackberrys market3. Nokia, who currently owns the most global market share of Smartphones, has recently been losing shares as new companies are emerging with similar or improved handsets. Blackberry could potentially occupy more market share if they position themselves to be the replacement product.

Threats One of Blackberries major competitor, Apple, reached a non-exclusive deal with China Unicom, the 2nd largest carrier in China, to distribute the IPhone4. This is in direct competition of market shares within China. There is an increasing popularity in touchscreen capabilities. In 2008, approximately 15.8% of mobile phones have touchscreens and it is projected to increase to 39% in 20155. Only the Blackberry Storm from of the Blackberry line has touchscreen capabilities. Netbooks are becoming inexpensive and often cheaper than certain Blackberrys6. Netbooks serve as lightweight laptops that serve the same functionality of Blackberrys and also possess the ability to do more as an overall device. In the past 2 months, Nokia has launched 3 new Smartphones that targets the same market as Blackberry. They have released the Nokia X6 featuring 32GB of internal memory, and the Nokia X3 with emphasis on it doubling as a proficient musical device 7. Nokia has also showcased the 7705 Twist, with a full QWERTY keypad8. Different companies are constantly releasing new innovative phones with features that a Blackberry lacks. For an example, Samsung is launching the Blue Earth Phone which is solar-powered. This would definitely be appealing to the eco-friendly market segments.

COMPETITIVE ANALYSIS One of the most prominent competitors to RIMs Blackberry in North America is Apples IPhone. In terms of the global Smartphone sales in Q2 2009, the IPhone owns 13.7% of the market, following closely to Blackberrys 20.9%9. In the USA, AT&T currently holds exclusive rights to distribute the IPhone until 2010 and Verizon is already in talks to reach a contract with Apple once the exclusive rights expires 10. The IPhone is positioned as a more interactive device. It boasts many 3rd party applications and video capabilities that are widely captivating. Its demographics were initially Gen X, but its popularity has grown to include Generation X and parts of Baby boomers. The only company that has more shares of the global Smartphone sales than RIM is Nokia. A strong reason behind their strong sales is their research and development department. It is present in 16 countries and employs over 39,000 people which represent 31% of Nokia's workforce. The Nokia brand is extremely strong, valued at over $34.9 billion and ranks fifth in most valuable global brand according to Interbrand/BusinessWeek Best Global Brand of 200911 whereas Blackberry is ranked 63rd.

In 2008, they released the Nokia E71 which they positioned directly against Blackberry and offering it at lower prices. Nokia has successfully placed a product at every price point in the mobile device category to drive its revenues and sales.

TARGET MARKET RIM has established itself as a world leader in mobile devices. Its next step is to continually increase revenues and to do so, it will need to overcome certain marketing obstacles. The traditional buyer profile of a Blackberry is business individuals of North America. Its relatively fast communication abilities appealed greatly to those in business situations where e-mails dominated. This is not true of current day Blackberry. They are trying to reposition themselves as a product that everybody should have. Its recent global expansion suggests that the Blackberry is making itself a commonplace to a different segmentation as well as existing customers. It is available in 135 different countries, over 350 mobile carriers. There is now a Blackberry product available for different price points, from the Blackberry Pearl to a more high-end Blackberry

Storm. Their current day marketing strategy reflects a differentiated segmentation strategy, where RIM targets several market segments.

ALTERNATIVE #1

Diversify the product line by producing a new handset line that is appealing to a new target market. This new line should be developed as a more consumer friendly device.

Advantages

New target market which leads to greater revenues and higher market share. Blackberry can position themselves against competitors like Apple to seem more consumer friendly. RIM already has an existing customer base to launch their new product lines.

Disadvantages

Heavy investment in R&D is required to launch new product lines.

Risk in alienating existing customers and causing them to lose their perception of value in the phone. Potentially harm brand value by possibly introducing an inferior product.

ALTERNATIVE #2

Strengthen market penetration by increasing investment in advertisements will attract new consumers to the target market. Blackberry currently lacks effective visual advertisements and promotions.

Advantages

Consumers will have increased brand recognition from being exposed to increased advertising in the media and on the internet. RIM will be able to reach more of their target market because an increased number of consumers will be able to afford it. Intensified distribution will attract more targeted consumers.

Disadvantages

Competitors can take over new markets by developing products with new technology. If RIM already reaches a high percentage of their target market, they will miss out on opportunities of reaching out to other target markets.

Lose revenue due to sales/promotions if RIM already reached a high percentage of their target market.

ALTERNATIVE #3

Incorporate new technologies and services into current products and develop them for existing target markets.

Advantages

Promote new technology which will lead to overtaking competitor markets. Attract more of the markets share with the new product/services. Keep current customers from switching to other competition.

Disadvantages

The new product/service fails to attract consumers which lead to expenses and little or no revenue. Very expensive to create, with high risk. Flaws or problems may occur with the new product/service, which could potentially harm the loyalty of their customers.

SOLUTION Blackberry should opt for diversifying their products by producing a new handset that is similar to the Apple IPhone. This will position it to directly compete for the IPhones target market and overtake a portion of Apple's sales. Although the disadvantages are quite big, Blackberry has the money to pay off the risks that could occur to them. Some of the risks that may occur are that they might alienate some of their existing customers and ruin the blackberry brand; however, if this occurs, blackberry has the opportunity of winning those same customers back and they can easily pay off the amount of debt to the new product. If blackberry strives to take out its leading competition, it has the potential to become the only dominant phone in its era.

IMPLEMENTATION PLAN To create a user friendly phone similar to the Apple IPhone that is visually appealing and inviting. It should have the same capabilities as the other Blackberry's except it should be more straight-forward so consumers have an easier time using the device. The price point should compete with other brands, giving customers great value. We will increase Blackberry's

advertising and sales promotions to reach markets before the competitors. With increased promotion, Blackberry will then distribute the new product extensively to retailers.

PLAN B Blackberry's backup option should be to strengthen the market penetration. They can use advertisements and promotions to attract new consumers in their target market. Although this alternative is not as rewarding as the solution, it is a much safer option because there is less capital that can be lost in this option.

COURSE CONCEPTS 1. Used SWOT for situation analysis for Blackberry 2. Apply growth strategies to seek for ways to grow RIM's business. In the first alternative, we used diversification strategy. In addition, market penetration strategy is applied in the second alternative. Lastly, we chose product development strategy to expand RIM's business. 3. Used the Marketing Mix to develop product, place, price, and promotion for the implementation of our solution. 4. Differentiated Segmentation Strategy is Blackberry's current approach in marketing their product to several market segments. 5. Blackberry is attempting to reposition their brand as a product not only for business people, but useful to any individual with communication needs.

REFERENCES/BIBLIOGRAPHY

http://www.rim.com/investors/pdf/Q1F10_financial.pdf http://news.cnet.com/8301-1035_3-10218474-94.html http://news.cnet.com/8301-1035_3-10218474-94.html

http://www.media.asia/DigitalMedia/Newsarticle/2009_09/China-iPhone-distribution-dealnot-exclusive-Apple/36900
5

http://venturebeat.com/2009/09/05/touchscreen-popularity-fueling-lots-of-startups/ http://hardware.slashdot.org/article.pl?sid=08/10/04/1827200 http://www.nokia.com/press/press-releases/showpressrelease?newsid=1338896

http://conversations.nokia.com/2009/09/10/nokia-7705-twist-launched-stateside-on-verizonphoto-gallery/
9

http://www.appleinsider.com/articles/09/08/21/canalys_iphone_outsold_all_windows_mobil e_phones_in_q2_2009.html
10

http://www.mediapost.com/publications/index.cfm?fa=Articles.showArticle&art_aid=104847 http://www.interbrand.com/images/studies/-1_BGB2009_Magazine_Final.pdf

11

http://www.interbrand.com/images/studies/BestCanadianBrands2008.pdf http://www.rim.com/products/index.shtml http://www.nokia.com/about-nokia/financials/quarterly-and-annual-information

http://www.rogers.com

http://www.blackberryvsiphone.com/blackberry-vs-iphone/the-blackberry-bold-vs-the-iphone3g http://www.lucafiligheddu.com/2009/01/palm-pre-blackberry-bold-android-g1-iphone-whatsbest.html