Back to Black - How BlackBerry Can Win the Smartphone War

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This is a group project for MKTG 1102. What you'll see is a shortened version of the areas to which I contributed. I was also responsible for formatting and creating the layout for the report.

Research in Motion (RIM) is a global leader in wireless innovation, allowing millions of customers around the world stay connected to the people and content that matter most throughout their day (RIM 2011).

Once the leader in the smartphone market with its BlackBerry products, RIM is now suffering from loss of market share to the competition, primarily Apple and Android. Creative Copy has been contracted by RIM to formulate a marketing plan that will help the company gain back lost market share, increase profits and, in turn, increase shareholder value.

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Back to Black - How BlackBerry Can Win the Smartphone War

  1. 1. Back to Black: How BlackBerry Can Win the Smartphone War 1
  2. 2. Back to Black: How BlackBerry Can Win the Smartphone WarTable of ContentsExecutive Summary....................................................................................................................................... 3Problem ......................................................................................................................................................... 4Key Findings, Facts and Assumptions ........................................................................................................... 4 Key Findings .............................................................................................................................................. 4 Facts ...................................................................................................................................................... 6 Assumptions.............................................................................................................................................. 7 Limitations ................................................................................................................................................ 7SWOT Analysis............................................................................................................................................... 8Competitive Analysis ..................................................................................................................................... 9 Company Profiles ...................................................................................................................................... 9 Market Share ............................................................................................................................................ 9 Product Comparison ............................................................................................................................... 10Target Market ............................................................................................................................................. 11 Business Professionals: BlackBerry Veterans ......................................................................................... 11 Students: Possible First-Time Users ........................................................................................................ 11 Incidental Users: BlackBerry Love by Accident ....................................................................................... 12Alternatives ................................................................................................................................................. 13 Alternative #1 - BlackBerry Core: The Ultimate Business Phone ............................................................ 13 Alternative #2 - BlackBerry Light: A Powerful Student Phone ................................................................ 13 Alternative #3 - BlackBerry: Continue Competing with Apple and Android ........................................... 14Solution ....................................................................................................................................................... 14Implementation .......................................................................................................................................... 15 Plan B .................................................................................................................................................... 16Conclusion ................................................................................................................................................... 18Course Concepts ......................................................................................................................................... 19Appendix ..................................................................................................................................................... 20References .................................................................................................................................................. 21 2
  3. 3. Back to Black: How BlackBerry Can Win the Smartphone WarExecutive Summary Research in Motion (RIM) is a global leader in wireless innovation, allowing millions of customers around the world stay connected to the people and content that matter most throughout their day (RIM 2011). Once the leader in the smartphone1 market with its BlackBerry products, RIM is now suffering from loss of market share to the competition, primarily Apple and Android. Creative Copy has been contracted by RIM to formulate a marketing plan that will help the company gain back lost market share, increase profits and, in turn, increase shareholder value. The mobile device market environment is fluid. Players in the market must– at the very least – be adept at keeping up with technological advances. Dramatic expansion in the use of smartphones and their peripheral applications (“apps”) has led to opportunities for the competition to gain market share from RIM. RIM’s once unrivalled image has suffered from a series of setbacks recently. Its answer to Apple iPad, the BlackBerry Playbook, was met with lukewarm reviews and underwhelming sales figures. Rumors have been swirling of problems with new product development and release, and share prices have fallen dramatically over the past year. RIM still retains a healthy market share of global cellphone sales at 2.5% in the third quarter of 2010. However, its share of global smartphone sales has fallen significantly from 20.7% in the third quarter of 2009 to 14.8% in the third quarter of 2010 (Gartner 2010). Fortunately for RIM, the target market for smartphones is vast. Key market segments across age groups and income levels create the need for a variety of phones with different features to appeal to users of each group. Our solution proposes three different new products to appeal to different market groups. We will explore the strengths and weaknesses of appealing to the different market segments. With our chosen alternative, we will outline an integrated marketing strategy to bring the BlackBerry brand back to its rightful place at the forefront of the smartphone movement. 1 The definition of smartphone, for the purposes of this report: a high-end mobile phone that offers more advanced computing ability and connectivity than a contemporary feature phone (i.e. a modern low-end phone). A typical model will combine the functions of a portable media player and camera phone; possess a high-resolution touchscreen, GPS navigation, Wi-Fi and mobile broadband access. A smartphone runs a complete mobile operating system. (Wikipedia 2011) 3
  4. 4. Back to Black: How BlackBerry Can Win the Smartphone WarCompetitive Analysis Company Profiles RIM has gained much of its success with its flagship product, the BlackBerry. Introduced in 1999, the BlackBerry has since evolved with a highly successful line of sleek phone handsets. The BlackBerry is a status symbol amongst business professionals, particularly because of its instant-messaging (BBM) technology. Apple Inc. designs consumer electronics, software and computers. It released the first touchscreen phone—the widely successful iPhone—in 2007. Apple’s reputation is built on products with innovative technology, sophisticated design, and intuitive operating systems that virtually anyone can master. Android is an operating system owned by Google Inc. Distinct for being an open-source platform, Android is available across multiple brands of phone handsets, including HTC, Samsung and Motorola. Android phones are an affordable, high-performance alternative to other smartphones. RIM faces different challenges from these companies respectively. Apple has a huge following of consumers loyal to its brand. Because it releases updated versions of its products only once or twice a year, its products are always met with widespread anticipation. In recent years, Android’s popularity has been growing exponentially: unlike its competitors, its target market is not restricted to mid-high end consumers. Android handsets have a broad range of price points, which enables it to target low-to- high end consumers. Market Share Figure 3: North American smartphone market share from 2010-2011 9
  5. 5. Back to Black: How BlackBerry Can Win the Smartphone War RIM had a strong hold of the smartphone market in 2010, but faltered this year in the midst of poor sales figures declining stock prices and negative publicity. Its competitors’ figures, d It respective market shares grew in 2011: Apple’s market share jumped by 6%, a 28% gain for the company. The Android platform suddenly took 36% of the marketplace, an astonishing 287% increase from 2010. Product Comparison BlackBerry Apple Android Torch 9800 iPhone 4 HTC Status Price (CDN$) 699.99 649.99-759.99 399.99 Release date August 2010 July 2010 September 2011 Screen Size 3.2” 3.5” 2.6” Screen Resolution 360x480 640x960 320x 480 Processor 624 MHz 1 GHz 800 MHz Operating System WebKit iOS4 Android 2.3 Keyboard Slide-out QWERTY Touchscreen QWERTY Storage 512mb+4GB microSD 16GB / 32GB 512mb+2GB microSD External Storage microSD None microSD Camera (MP) 5.0 rear 5.0 rear, 2.0 front 5.0 rear, 0.3 front Wireless Tethering No Yes Yes Face-time No Yes No GPS Yes Yes Yes Table 2: Comparison of s : smartphones: Blackberry Torch 9800, Apple iPhone 4, Android (HTC) Status : The iPhone 4 surpasses the BlackBerry Torch in most of these technical specifications. However, the phones share a similar price point, which can lead consumers to perceive the iPhone 4 as having more value. BlackBerry’s other competitor, the HTC Status, he Status captured BlackBerry’s signature design, including its hardwired QWERTY keyboard. The k name “Status” also plays on BlackBerry’s reputation as a status symbol of business professionals. Evidently the Status is not as powerful as the Torch, but its price point is vidently 60% less, which can appeal to consumers seeking an inexpensive BlackBerry alternative. Black It may even tempt BlackBerry loyalists into converting to Android. 10
  6. 6. Back to Black: How BlackBerry Can Win the Smartphone WarTarget Market As a high-priced status symbol with business-focused functionality, the BlackBerry currently appeals to middle-class and upper-class consumers. iPhones, on the other hand, are known for productivity as much as they are known for entertainment, particularly with internationally successful games like “Angry Birds” and other novelty applications. As such, it appeals to younger generations of consumers. Although there are some similarities between these two target markets – a largely middle class upbringing, a relatively high level of education among the adult users and an urban geographic location – the marketing mix will be distinct depending on which of these markets RIM chooses to focus on. Business Professionals: BlackBerry Veterans Located mainly in major metropolitan centers, this urban group is characteristically: Born within Generation X (Gen Xers) or Baby Boom cohorts. Gen Xers are considered skeptical shoppers who gravitate towards products of convenience. They have money to purchase high-end products that are functional, reliable, and support their lifestyles. Financially stable with middle-class consumers earning at least $30,000. according to Stats Canada, 87% of families and 42% of individuals fall within this bracket (Statistics Canada 2011). This bracket also includes upper-class consumers with incomes of $70,000 and above. Educated with some form of tertiary education. Successful in middle-management to executive white collar workers. This group feels a strong need to be connected to the workplace even when not at work. They are compelled to check emails, send and receive electronic files, and manage their schedule at all times---whether they’re in the office or not. Behaviourally, these consumers are self-sufficient and lead comfortable lifestyles, although they proceed cautiously with large purchases. Students: Possible First-Time Users Also located in major metropolitan centers, the student population is characteristically: Young adults (or Gen Yers) are brand conscious and technologically savvy. They tend to be early adopters of new technology, and are less susceptible to marketing ploys and direct sales pitches. Gen Yers are trendsetters and, as such, are highly valuable to any marketing strategy. Financially limited, with incomes that differ depending on their family of origin. 11
  7. 7. Back to Black: How BlackBerry Can Win the Smartphone War Educated with a high school diploma. They are likely pursuing tertiary education. Many within this group did not know a world without the Internet, and they demand to be connected at all times. Unlike business professionals, however, the primary purpose of connecting is to socialize with peers. Gen Yers are very discerning when it comes to technology and a product’s performance. They expect products to deliver value and brands to keep their promises. Incidental Users: BlackBerry Love by Accident Tweens and seniors are not considered focal points for the BlackBerry’s target market. However, tweens are likely to follow the lead of the technology mavens, Gen Y. Tweens have a great amount of spending power yet less cash overall, so they make the majority of their purchasing decisions with their parents. Meticulous and quality conscious, seniors have money to spend but are late adopters who take more time to make purchasing decisions. Seniors are also an unlikely target group for BlackBerry though they may be influenced by family members or former colleagues who attest to the value and quality that BlackBerry’s offer. 12
  8. 8. Back to Black: How BlackBerry Can Win the Smartphone WarAlternatives Alternative #1 - BlackBerry Core: The Ultimate Business Phone Rather than emulating the iPhone, RIM must return its attention to the consumers who stood by it for years: business professionals and corporations. A smartphone designed to meet and exceed their needs can win back their loyalty. Features Conference video-calling over 4G Cloud servers and Bluetooth for and Wi-fi wireless synching between phone and computers at home or work PowerPoint Projector, with a compact bulb powerful enough to Infrared technology (faster than project presentations on a wall Bluetooth) for fast file transfer and anywhere--without needing a to read q-codes conference room Price $599.99 for device, $149.99 with a 3-year contract. This is slightly higher than the BlackBerry Torch, but less expensive than the iPhone 4. Corporations that purchase in large quantities may qualify for wholesale pricing. Target Market Corporations and individuals business professionals 24-40 m/f split Advantages / Increase in revenue with new price x Slightly higher target price Disadvantages Targets affluent, higher-income x Technological development required market segment with more capital x Abandons the larger, broad market Secure already loyal target market Regain consumer confidence in x Brand may lose the “cool” image brand that Apple and Android have captured Features never before seen technology (Conference video calling over 4G) Table 4: Profile of BlackBerry Core Alternative #2 - BlackBerry Light: A Powerful Student Phone Designed with the student budget in mind, the BlackBerry Light is a streamlined phone that integrates only the most necessary BlackBerry features (BBM instant messaging, cameras, app marketplace, QWERTY keyboard) into one compact, affordable phone. Features Enterprise Server Express - Superior speech-to-text for University Edition: A hub for accurate voice commands accessing school e-mail, course Available in many colours, including content, schedules, etc. snap-on faceplates Lightweight Back-lit QWERTY keyboard Price $199.99, significantly less than the HTC Status. Free with a 3-year contract 13
  9. 9. Back to Black: How BlackBerry Can Win the Smartphone WarReferencesBerkow, Jameson, Postmedia News. "RIM faces U.S. legal probe." The Montreal Gazette. May 25, 2011. http://www.montrealgazette.com/technology/faces+legal+probe/4835222/story.html#ixzz1T4YTNC 6F (accessed July 23, 2011).Daly, Brenon. "Inorganic Growth > RIM calls Internationally." Inorganic Growth. June 16, 2011. http://blogs.the451group.com/techdeals/ma/rim-calls-internationally/ (accessed July 23, 2011).Gartner. "Gartner Says Worldwide Mobile Phone Sales Grew 35 Percent in Third Quarter 2010; Smartphone Sales Increased 96 Percent." Gartner. November 10, 2010. http://www.gartner.com/it/page.jsp?id=1466313 (accessed July 13, 2011).geekaphone. "RIM vs the World | Geekaphone Blog." Geekaphone. 2011. http://www.geekaphone.com/blog/rim-vs-the-world/ (accessed July 20, 2011).Gizmofusion. "Developers Dropping BlackBerry App Support, Good or Bad?" Gizmofusion. June 21, 2011. http://gizmofusion.com/2011/06/developers-dropping-blackberry-app-support-good-or-bad/ (accessed July 23, 2011).Grewal, D.G., Levy, M., Lichti, A., and Persaud, S. Marketing: Canadian Edition. Toronto: McGray-Hill Ryerson Limited, 2011.Hartley, Matt. "Other shoe drops for RIM staff." The Montreal Gazette. July 26, 2011. http://www.montrealgazette.com/business/money/Other+shoe+drops+staff/5157905/story.html (accessed July 26, 2011).Ogg, Erica. "Anonymous letter bemoans RIM management woes | Circuit Breaker." cnet. June 30, 2011. http://news.cnet.com/8301-31021_3-20075817-260/anonymous-letter-bemoans-rim-management- woes/ (accessed July 23, 2011).—. "RIM misses on revenue, announces layoffs | Circuit Breaker - CNET News." cnet. June 16, 2011. http://news.cnet.com/8301-31021_3-20071715-260/rim-misses-on-revenue-announces-layoffs/ (accessed July 20, 2011).Research in Motion. Google Privacy Policy. July 26, 2011.Statistics Canada. "Av." Average income after tax by economic family types. 2011. http://www40.statcan.ca/l01/cst01/FAMIL21A-eng.htm (accessed July 25, 2011).—. "Family income, by family type." Statistics Canada. 2011. http://www.40.statcan.ca/l01/cst01/FAMIL106A-eng.htm (accessed July 26, 2011).Wikipedia. "Smartphone." Wikipedia. 2011. http://en.wikipedia.org/wiki/Smarphone (accessed July 26, 2011). 21

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